<PAGE>
As filed with the Securities and Exchange Commission on February 23, 1999
Registration No. 333-61063
---------
811-7689
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
Immediate Income Builder
FORM N-4
REGISTRATION STATEMENT UNDER THE [ ]
SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 1 [X]
and
REGISTRATION STATEMENT UNDER [_]
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11 [X]
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
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
- --------------------------------------------
effective date of the Registration statement.
Title of Securities Being Registered: Single Premium Immediate Variable Annuity
- ------------------------------------
Contracts
--------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485.
- ------
on May 1, 1998 pursuant to paragraph (b)(1)(iii) of Rule 485.
- ------
60 days after filing pursuant to paragraph (a)(i) of Rule 485.
- ------
X on May 1, 1999 pursuant to paragraph (a)(i) of Rule 485.
- ------
If appropriate, check the following box:
This post-effective amendment designates a new effective date
------
for a previously filed post-effective amendment.
<PAGE>
PFL LIFE INSURANCE COMPANY
PFL RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
FORM N-4
Cross Reference Sheet
Pursuant to Rule 495(a)
Under the Securities Act of 1933
PART A
Showing Location of Information in Prospectuses
Form N-4
Item No. Prospectus Caption
- -------- ------------------
1. Cover Page..................................Cover Page
2. Definitions.................................Definitions
3. Synopsis....................................Summary of the Contracts
4. Condensed Financial Information.............Condensed Financial Information;
Financial Statements
5. General Description of Registrant,
Depositor and Portfolio Companies
(a) Depositor..............................PFL Life Insurance Company
(b) Registrant.............................The Separate Account
(c) Portfolio Company......................The Funds
(d) Fund Prospectus........................The Funds
(e) Voting Rights..........................Voting Rights
6. Deductions and Expenses
(a) General................................Charges Under the Contracts
(b) Sales Load %...........................N/A
(c) Special Purchase Plan..................N/A
(d) Commissions............................Distributor of the Contracts
(e) Expenses - Registrant..................Charges Under the Contracts
(f) Fund Expenses..........................Other Expenses including
Investment Advisory Fees
(g) Organizational Expenses................N/A
7. Contracts
(a) Persons with Rights....................Facts About the Contracts;
Types of Annuity Payment
Options; Fixed, Variable or
Combination Annuity Payments;
Voting Rights
(b) (i) Allocation of Premium............Allocations of Your Premium to
i
<PAGE>
the Separate Account
(ii) Transfers........................Allocations of Your Premium to
the Separate Account
(iii) Exchanges........................N/A
(c) Changes................................Facts About the Contracts;
Types of Annuity Payment
Options; Premium; Addition,
Deletion, or Substitution
of Investments
(d) Inquiries..............................Summary of the Contracts
8. Annuity Period..............................Types of Annuity Payment Options
9. Death Benefit...............................Death Proceeds
10. Purchases and Value
(a) Purchases..............................Purchase of a Contract; Premium
Allocation
(b) Valuation..............................Variable Annuity Units
(c) Daily Calculation......................Variable Annuity Units
(d) Underwriter............................Distribution of the Contracts
11. Redemptions
(a) By Owners..............................Types of Annuity Payment
Options - Period Certain Annuity
By Annuitant...........................N/A
(b) Texas OP...............................
(c) Check Delay............................Payments Under the Contract
(d) Lapse..................................N/A
(e) Free Look..............................Summary of the Contracts; Free
Look Privilege
12. Taxes......................................Tax Considerations
13. Legal Proceedings..........................Legal Proceedings
14. Table of Contents for the Statement
of Additional Information..................Statement of Additional
Information
ii
<PAGE>
PART B
Showing Location of Information in Statement of Additional Information
Caption in Statement of
Form N-4 -----------------------
Item No. Additional Information
- ---------- ----------------------
15. Cover Page.................................Cover Page
16. Table of Contents..........................Table of Contents
17. General Information and History............(Prospectus) PFL Life
Insurance Company
18. Services
(a) Fees and Expenses of Registrant.........N/A
(b) Management Policies.....................N/A
(c) Custodian...............................Custody of Assets
Independent Auditors....................Independent Auditors
(d) Assets of Registrant....................Custody of Assets
(e) Affiliated Person.......................N/A
(f) Principal Underwriter...................Distribution of the Contracts
19. Purchase of Securities Being Offered........Distribution of the Contracts
Offering Sales Load.........................N/A
20. Underwriters................................Distribution of the Contracts;
(Prospectus) Distribution of
the Contracts
21. Calculation of Performance Data.............Historical Performance Data
22. Annuity Payments............................(Prospectus) Types of Annuity
Payment Options
23. Financial Statements........................Financial Statements
PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the registration statement.
iii
<PAGE>
PFL IMMEDIATE
INCOME BUILDER
Issued Through
PFL RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT
By
PFL LIFE INSURANCE COMPANY
PROSPECTUS
MAY 1, 1999
This prospectus and the mutual fund prospectuses give you important information
about the contracts and the mutual funds. Please read them carefully before you
invest and keep them for future reference.
If you would like more information about the PFL Immediate Income Builder Fixed
and Variable Single Premium Immediate Annuity Contract, you can obtain a free
copy of the Statement of Additional Information (SAI) dated May 1, 1999. Please
call us at (800) 525-6205 or write us at: PFL Life Insurance Company, Financial
Markets Division, Variable Annuity Department, 4333 Edgewood Road N.E., P.O. Box
3183, Cedar Rapids, Iowa, 52406-3183. A registration statement, including the
SAI, has been filed with the Securities and Exchange Commission (SEC) and is
incorporated herein by reference. The SEC maintains a web site
(http://www.sec.gov) that contains the prospectus, the SAI, material
incorporated by reference, and other information. The table of contents of the
SAI is included at the end of this prospectus.
PLEASE NOTE THAT THE CONTRACTS AND THE UNDERLYING PORTFOLIOS:
. ARE NOT BANK DEPOSITS;
. ARE NOT FEDERALLY INSURED;
. ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY;
. ARE NOT GUARANTEED TO ACHIEVE THEIR GOAL; AND
. ARE SUBJECT TO RISKS, INCLUDING LOSS OF PREMIUM.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
MANAGED BY FIDELITY MANAGEMENT & RESEARCH COMPANY:
VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Money Market
VIP High Income
VIP Equity-Income
VIP Growth
VIP Overseas
VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Investment Grade Bond
VIP II Asset Manager
VIP II Asset Manager: Growth
VIP II Index 500
VIP II Contrafund
VARIABLE INSURANCE PRODUCTS FUND III (VIP III):
VIP III Balanced
VIP III Growth & Income
VIP III Growth Opportunities
VIP III Mid Cap Portfolio
The immediate annuity contract has fixed and variable payment options. There are
fourteen portfolios you can select from if you choose to receive variable
payments. You can choose any combination of fixed and variable payments.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE.
<S> <C>
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 Payment.....................................
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
CONDENSED FINANCIAL INFORMATION........................................
APPENDIX B
HISTORICAL PERFORMANCE DATA............................................
APPENDIX C
ILLUSTRATIONS OF ANNUITY PAYMENT VALUES................................
</TABLE>
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.
<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.
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.
<PAGE>
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 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 stated 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 underlying fund prospectuses:
MANAGED BY FIDELITY MANAGEMENT & RESEARCH COMPANY
VIP Money Market
VIP Equity-Income
VIP Growth
VIP High Income
VIP Overseas
VIP II Asset Manager
VIP II Investment Grade Bond
VIP II Asset Manager: Growth
VIP II Index 500
VIP II Contrafund
VIP III Balanced
VIP III Growth & Income
VIP III Growth Opportunities
VIP III Mid Cap
Depending upon their investment performance, your variable annuity payments may
go up or down with the investment performance of any of these portfolios.
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.___% to 0.___% annually of average daily net
assets.
<PAGE>
In some states, a charge for applicable premium taxes ranging from 0-3.5% is
deducted from the premium when paid.
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 the Certain Only 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 in Appendix B 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 Department
4333 Edgewood Road N.E.
P.O. Box 3183
Cedar Rapids, IA 52406-3183
(800) 525-6205
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
EXPENSE TABLE
=================================================================================================================================
SEPARATE ACCOUNT ANNUAL EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
=================================================================================================================================
<S> <C> <C> <C>
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 or
year)/(1)/................................................... None more to variable annuity payments)...............
Surrender Charge............................................. None Administration Charge............................ 0.15%
----
There is no surrender charge with respect to variable Total............................................ 1.35%
annuity payments under the contract. For an explanation
of the surrender value, see "SURRENDER VALUE".
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL EXPENSES/(2)/
(as a percentage of average net assets and after expense reimbursements)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL
PORTFOLIO
MANAGEMENT OTHER ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
=================================================================================================================================
<S> <C> <C> <C>
VIP Equity Income.......................................................... 0.50% 0.08% 0.58%/(3)/
VIP Growth................................................................. 0.60% 0.09% 0.69%/(3)/
VIP High Income............................................................ 0.59% 0.12% 0.71%/(3)/
VIP Money Market........................................................... 0.21% 0.10% 0.31%
VIP Overseas............................................................... 0.75% 0.17% 0.92%/(3)/
VIP II Asset Manager....................................................... 0.55% 0.10% 0.65%/(3)/
VIP II Asset Manager: Growth............................................... 0.60% 0.17% 0.77%/(3)/
VIP II Contrafund.......................................................... 0.60% 0.11% 0.71%/(3)/
VIP II Index 500........................................................... 0.24% 0.04% 0.28%/(4)/
VIP II Investment Grade Bond............................................... 0.44% 0.14% 0.58%
VIP III Balanced........................................................... 0.45% 0.16% 0.61%/(3)/
VIP III Growth & Income.................................................... 0.49% 0.21% 0.70%
VIP III Growth Opportunities............................................... 0.60% 0.14% 0.74%/(3)/
VIP III Mid Cap............................................................ % % %
=================================================================================================================================
</TABLE>
/(1)/ There is currently no charge for any transfers, although PFL reserves the
right to charge $15 for each transfer in excess of six per year.
/(2)/ The fee table information relating to the portfolios is for 1998 and was
provided to PFL by Fidelity Management & Research Company, and PFL has not
independently verified such information.
/(3)/ A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into arrangements
with their custodian whereby credits realized, as a result of uninvested cash
balances, were used to reduce custodian expenses. Including these reductions,
the total annual expenses for 1998 presented in the table would have been: ___%
for VIP Equity-Income Portfolio; ___% for VIP Growth Portfolio; ___% for VIP
High Income Portfolio; ___% for VIP Overseas Portfolio; ___% for VIP II Asset
Manager Portfolio; ___% for VIP II Asset Manager: Growth Portfolio; ___% for VIP
II Contrafund Portfolio; ___% for VIP III Balanced Portfolio; and ___% for VIP
III Growth Opportunities Portfolio.
/(4)/ Fidelity Management & Research Company agreed to reimburse a portion of
VIP II Index 500 Portfolio's expenses during 1998. Without this reimbursement,
the portfolio's management fee, other expenses and total annual expenses would
have been _____%, ____% and ____%, respectively.
<PAGE>
EXAMPLES
The following examples indicate the expenses you would pay in various
situations, based on actual portfolio expenses for 1998, and the following
assumptions:
. a $1,000 investment (and, therefore, a 1.35% separate account charge);
. a 5.0% annual return on assets;
. monthly payments;
. a 5% assumed investment return;
. there are no premium taxes;
. there are no transfers;
. the entire premium is allocated to each subaccount; and
. the annuitant is a 65 year old male.
(Any different assumption(s) would result in different expenses.)
<TABLE>
<CAPTION>
================================================================================================================================
SINGLE LIFE ANNUITY
SINGLE LIFE ANNUITY 20 YEAR CERTAIN ONLY WITH EMERGENCY CASH(SM)
HE CONTRACT CANNOT BE ANNUITY AND THE CONTRACT AND THE CONTRACT IS
SURRENDERED) IS NOT SURRENDERED SURRENDERED
=====================================================================================
SUBACCOUNTS 1 YEAR 3 YEARS 1 YEAR 3 YEARS 1 YEAR 3 YEARS
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
VIP Money Market $19 $53 $19 $53 $19 $53
- --------------------------------------------------------------------------------------------------------------------------------
VIP High Income $20 $56 $20 $56 $20 $56
- --------------------------------------------------------------------------------------------------------------------------------
VIP Equity-Income $20 $57 $20 $57 $20 $56
- --------------------------------------------------------------------------------------------------------------------------------
VIP Growth $16 $46 $16 $46 $16 $46
- --------------------------------------------------------------------------------------------------------------------------------
VIP Overseas $22 $62 $22 $62 $22 $62
- --------------------------------------------------------------------------------------------------------------------------------
VIP II Investment Grade Bond $19 $55 $19 $55 $19 $55
- --------------------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager $21 $58 $21 $58 $20 $58
- --------------------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager: Growth $20 $57 $20 $57 $20 $56
- --------------------------------------------------------------------------------------------------------------------------------
VIP II Contrafund $16 $45 $16 $45 $16 $45
- --------------------------------------------------------------------------------------------------------------------------------
VIP II Index 500 $19 $53 $19 $53 $19 $53
- --------------------------------------------------------------------------------------------------------------------------------
VIP III Balanced $19 $54 $19 $54 $19 $53
- --------------------------------------------------------------------------------------------------------------------------------
VIP III Growth Opportunities $20 $56 $20 $57 $20 $56
- --------------------------------------------------------------------------------------------------------------------------------
VIP III Growth & Income $20 $58 $20 $58 $20 $57
- --------------------------------------------------------------------------------------------------------------------------------
VIP III Mid Cap $ $ $ $ $ $
================================================================================================================================
</TABLE>
The above tables will assist you in understanding the costs and expenses of the
contract and the underlying funds that you will bear, directly or indirectly.
The expense table assumes that your entire premium is allocated to the separate
account; therefore, it reflects expenses of the separate account as well as the
underlying portfolios.
The tables do not reflect any deductions for taxes. Any applicable premium
taxes are deducted from the premium when you buy the contract.
THE EXAMPLES ARE NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
Financial Information. Condensed financial information for the subaccounts is
- ---------------------
in Appendix A to this prospectus.
<PAGE>
1. THE ANNUITY CONTRACT
This prospectus describes the PFL Immediate Income Builder. This is a single
premium immediate annuity contract offered by PFL Life Insurance Company.
An annuity is a contract between you, the owner, and an insurance company (in
this case PFL), where the insurance company promises to pay you an income in the
form of annuity payments. You choose the frequency of these payments and the
first annuity payment date.
You can use the contract to provide periodic payments over your lifetime or some
other specific period of time you select.
The contract is "fixed and variable" because you can allocate your premium
between fixed and variable annuity payments. The amount of the fixed annuity
payments will not vary and are guaranteed by PFL. The amount of the variable
annuity payments will vary depending on the investment performance of your
investment choices.
It is a "single premium" contract because you purchase it with a single premium.
You cannot pay additional premiums.
The contract is an "immediate" contract because the annuity payments must
generally begin within 30 days.
2. ANNUITY PAYMENTS
ANNUITY PAYMENT DATES
We provide annuity payments to the payee on each payment date. You select
either a monthly or quarterly payment frequency when you purchase the contract.
Payments will generally be made by electronic funds transfer. Semi-annual or
annual payment frequencies and other disbursement options may be available, if
we approve. The first payment date is typically 30 days after the contract
issue date. All subsequent payment dates will generally be on the same day of
the month as the first payment date.
PAYMENTS UNDER THE CONTRACT
We usually make payments within seven days of the payment date or receipt of all
applicable written notices and/or proofs of death.
IF:
We will not pay interest on amounts represented by uncashed annuity payment
checks if the postal or other delivery service is unable to deliver checks to
the payee's address of record. Uncashed variable annuity payments will not
participate in the performance of the portfolios. The payee is responsible to
keep us informed of their current address of record.
FIXED, VARIABLE OR COMBINATION PAYMENTS
You allocate your premium between fixed and variable payments under a payment
option when you buy the contract. You may choose all fixed, all variable or a
combination of fixed and variable annuity payments. Please note that a single
payment option is generally required.
Any portion of your premium allocated to a fixed payment option will always
remain allocated to fixed annuity payments. However, you may transfer from
variable annuity payments to fixed annuity payments at any time.
If you choose a combination of fixed and variable annuity payments, a portion of
your annuity payments will be fixed and a portion will vary according to the
investment experience of the portfolios underlying the subaccounts. We will
guarantee the dollar amount of any fixed portion of each annuity payment;
however, the amount of the variable annuity payments will depend upon the
investment experience of the portfolios underlying the subaccounts and is not
guaranteed.
Under certain joint and survivor payment options, the annuity payments decrease
upon the death of the annuitant or secondary annuitant (as described for payment
options 5, 6, 8, and 9) whether they are fixed or variable.
ASSUMED INVESTMENT RETURN (AIR)
The assumed investment return you choose is used in the calculation of variable
annuity payments.
IF:
. the performance of the applicable subaccounts after all expenses is equal
to the AIR on a modal basis;
THEN:
. the variable annuity payments will remain constant.
* * *
<PAGE>
. the performance of the subaccounts after all expenses exceeds the AIR on a
modal basis;
THEN:
. the variable annuity payments will increase.
* * *
IF:
. the performance of the subaccounts after all expenses is less than the AIR
on a modal basis;
THEN:
. the variable annuity payments will decrease.
* * *
A "modal basis" refers to the frequency of payments. For example, for monthly
payments to increase, the performance of the subaccounts must exceed the monthly
equivalent AIR; for quarterly payments to increase, the performance of the
subaccounts must exceed the quarterly equivalent AIR.
You choose either a 3.5% AIR or a 5% AIR.
IF:
. you choose a 5% AIR instead of a 3.5% AIR;
THEN:
. you will receive a higher initial payment; and
. payments will increase less during periods of good investment performance
(i.e., when investment performance exceeds the AIR) and decrease more
during periods of poor investment performance (i.e., when investment
performance is below the AIR).
* * *
IF:
. you choose a 3.5% AIR instead of a 5% AIR;
THEN:
. you will receive a lower initial payment; and
. payments will increase more during periods of good investment performance
(i.e., when investment performance exceeds the AIR) and decrease less
during periods of poor investment performance (i.e., when investment
performance is below the AIR).
See Appendix C for an illustration of the difference in the two AIRs.
PAYMENT OPTIONS
You select the payment option and the number of guaranteed years, if any. You
cannot change the payment option and guarantee period after we issue the
contract. We currently offer the options described below.
The amount of variable annuity payments will depend on the investment
performance of the portfolio(s) you select. The number of annuity payments may
depend on how long the annuitant or a secondary annuitant, if any, lives.
Therefore, the sum of annuity payments may be less than the premium (except for
option 10--Life Annuity with Premium Refund Payments).
1. Certain Only Annuity. This option provides annuity payments for a
--------------------
guaranteed period (10-30 years). You choose the guaranteed period. If the
annuitant dies prior to the last guaranteed payment date, we will either:
. continue payments as they become due; or
. pay the present value of the remaining guaranteed payments in a lump sum to
the beneficiary when we receive due proof of the annuitant's death.
No additional payments will be made under this option after all the guaranteed
payments have been made.
If the lump sum death benefit is chosen and the payments under this option are
variable, the present value of the remaining guaranteed payments is calculated
as of the date we receive written notice of the annuitant's death, using the AIR
you chose when the contract was issued. If the payments under this option are
fixed, the present value of the remaining guaranteed payments is calculated
using interest rates (determined by PFL) in effect on the date we receive due
proof of death.
Under this option, you, as the owner, can make full or partial surrenders from
the contract prior to the last guaranteed payment date. Any surrender must be
at least 25% of the full surrender value. A partial surrender will reduce all
future payments. See "SURRENDER VALUE."
You should consult a tax advisor before requesting a full or partial surrender.
2. Single Life Annuity. This option 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 level of annuity payments, due to the risk
that only one annuity payment will be made if the annuitant dies before the
second payment date.
No surrenders are permitted under this option.
3. Single Life Annuity with Period Certain. This option provides annuity
---------------------------------------
payments for a guaranteed period (5 to 30 years) or for the life of the
annuitant, whichever is later. The final annuity payment will be the later of
either the last guaranteed payment or the scheduled annuity payment immediately
prior to the annuitant's death. If the annuitant dies prior to the last
guaranteed payment date, we will make payments to the beneficiary when we
receive due proof of the annuitant's death. No additional payments will be made
if the annuitant dies after all guaranteed payments have been made.
No surrenders are permitted under this option.
4. 100% Joint and Survivor Life Annuity. This option provides annuity
------------------------------------
payments for the annuitant and the secondary annuitant's lifetimes. After the
death of either the annuitant or the secondary annuitant, we will continue to
provide the full amount of annuity payments to the survivor. Annuity payments
stop when both the annuitant and the secondary annuitant die.
No surrenders are permitted under this option.
5. Joint and Survivor Life Annuity with Reduced Annuity Payments to the
--------------------------------------------------------------------
Secondary Annuitant. This option is similar to option 4 above, except that
- -------------------
annuity payments are higher while both the annuitant and the secondary annuitant
are living, and then are lower if the annuitant dies before the secondary
annuitant. The final annuity payment will be the one made immediately before
the last surviving annuitant's death. No additional annuity payments will be
made after the death of both annuitants.
If the annuitant dies before the secondary annuitant, the amount of the fixed
------
annuity payments will be reduced to the percent you select: either 50%, 66.67%
or 75%. For variable annuity payments, the number of variable annuity units
------
will also be reduced to 50%, 66.67% or 75%.
If the secondary annuitant dies before the annuitant, we will continue to make
annuity payments as they are due, and the amount of the annuity payments will
not go down due to the death.
No surrenders are permitted under this option.
6. Joint and Last Survivor Life Annuity. This option provides annuity
------------------------------------
payments for the annuitant's and secondary annuitant's lifetimes. Payments are
higher while both annuitants are living and decrease upon the death of either
------
the annuitant or the secondary annuitant. The final annuity payment will be the
one made immediately before the death of the last surviving annuitant. No
additional annuity payments will be made after the death of both annuitants.
Upon the first death, the amount of the fixed annuity payments will be reduced
------
to a percent you select: either 50%, 66.67% or 75%. For variable annuity
payments, the number of variable annuity units will also be reduced to 50%,
------
66.67% or 75%.
No surrenders are permitted under this option.
7. 100% Joint and Survivor Life Annuity with Period Certain. This option
--------------------------------------------------------
provides annuity payments for a guaranteed period (5-30 years) or for the
annuitant's and joint annuitant's lifetimes, whichever is later. The final
annuity payment will be the later of the last guaranteed payment or the annuity
payment made immediately prior to the last surviving annuitant's death. No
additional payments will be made if both annuitants die after all guaranteed
payments have been made.
If both annuitants die prior to the last guaranteed payment date, we will
continue to make guaranteed payments to the beneficiary as they become due for
the remainder of the guaranteed period.
No surrenders are permitted under this option.
8. Joint and Survivor Life Annuity with Period Certain and Reduced Annuity
-----------------------------------------------------------------------
Payments to the Secondary Annuitant. This option is similar to option 7 above,
- -----------------------------------
except that annuity payments are higher while both the annuitant and the
secondary annuitant are living, and then are lower if the annuitant dies before
the secondary annuitant and after the guaranteed period. The final annuity
payment will be the later of the last guaranteed payment or the annuity payment
made immediately prior to the last surviving annuitant's death. No additional
payments will be made if both
<PAGE>
annuitants die after all guaranteed annuity payments have been made.
If the annuitant dies before the secondary annuitant and after the guaranteed
period, the amount of the fixed annuity payments will be reduced to the percent
------
you select: either 50%, 66.67% or 75%. For variable annuity payments, the
number of variable annuity units will also be reduced to 50%, 66.67% or 75%.
- ------
If the secondary annuitant dies before the annuitant, we will continue to make
annuity payments as they are due, and the amount of the annuity payments will
not go down due to the death.
No surrenders are permitted under this option.
9. Joint and Last Survivor Life Annuity with Period Certain. This option
--------------------------------------------------------
provides annuity payments for a guaranteed period (5-30 years) or for the
annuitant's and secondary annuitant's lifetimes, whichever is later. Payments
are higher while both annuitant(s) are living and decrease after the guarantee
period upon the death of either the annuitant or the secondary annuitant. The
------ --
final annuity payment will be the later of the last guaranteed payment or the
annuity payment made immediately prior to the last surviving annuitant's death.
No additional annuity payments will be made after the death of both annuitants.
Upon the first death after the guaranteed period (or the end of the guaranteed
period if the first death occurred prior thereto), the amount of the fixed
------
annuity payments will be reduced to a percent you select: either 50%, 66.67% or
75%. For variable annuity payments, the number of variable annuity units will
------
also be reduced to 50%, 66.67% or 75%.
No surrenders are permitted under this option.
10. Life Annuity with Premium Refund Payment. This option provides annuity
----------------------------------------
payments for the annuitant's lifetime. The final annuity payment will be either
the payment made immediately prior to the annuitant's death or the premium
refund benefit.
We will pay the premium refund benefit to the beneficiary if, at the date of the
annuitant's death, the sum of all the annuity payments made is less than the
premium. The premium refund benefit will be the premium less the sum of the
previously distributed variable and fixed annuity payments.
No surrenders are permitted under this option.
11. Single Life Annuity with Emergency Cash(SM). This option provides annuity
-------------------------------------------
payments for the annuitant's lifetime. You can only receive variable payments
under this option. With the Life with Emergency Cash(SM) feature, you are able
to surrender all or a portion of the Life with Emergency Cash(SM) benefit. The
Life with Emergency Cash (SM) benefit will continue through age 100 of the
annuitant.
The amount you surrender must be at least 25% of the Life with Emergency
Cash(SM) benefit. We will provide you with a Life with Emergency Cash(SM)
benefit schedule as a rider to the contract that will assist you in determining
the amount you have available to surrender.
The Life with Emergency Cash(SM) benefit is also a death benefit that is paid
upon the death of the annuitant.
For qualified contracts the death benefit ceases at the date the annuitant
reaches the IRS age limitation (determined at the contract issue date).
See "SURRENDER VALUE."
You should consult a tax advisor before requesting a full or partial surrender.
12. Joint and Survivor Life Annuity with Emergency Cash(SM). This option
-------------------------------------------------------
provides annuity payments to the annuitant and the secondary annuitant while
both are living. You can only receive variable payments under this option.
After the death of either the annuitant or the secondary annuitant, we will
continue to provide the full amount of annuity payments to the survivor. With
the Life with Emergency Cash(SM) feature, you are able to surrender all or a
portion of the Life with Emergency Cash(SM) benefit. The Life with Emergency
Cash(SM) benefit will continue through age 100 of the younger of the annuitant
and the secondary annuitant.
The amount you surrender must be at least 25% of the Life with Emergency
Cash(SM) benefit. We will provide you with a Life with Emergency Cash(SM)
benefit schedule as a rider to the contract that will assist you in determining
the amount you have available to surrender.
<PAGE>
The Life with Emergency Cash(SM) benefit is also a death benefit that is paid
upon the death of the last annuitant. We will provide a Life with Emergency
Cash(SM) benefit schedule as a rider to the contract.
For qualified contracts the death benefit ceases at the date of the IRS joint
age limitation (determined at the contract issue date.)
See "SURRENDER VALUE."
You should consult a tax advisor before requesting a full or partial surrender.
Other payment options may be made available.
Please note that IF:
. you choose a Single Life Annuity, 100% Joint and Survivor Life Annuity,
Joint and Survivor Life Annuity with Reduced Annuity Payments to the
Secondary Annuitant, and Joint and Last Survivor Annuity; and
. the annuitant(s) dies before the due date of the second annuity payment;
THEN:
. we may make only the one payment.
Please also note that the federal income tax laws may limit your payment options
where the contract is used as a qualified contract.
3. PURCHASE
CONTRACT ISSUE REQUIREMENTS
PFL will issue a contract only IF:
. PFL receives all information needed to issue the contract (all the
information on the order form); and
. PFL receives your entire premium payment.
PREMIUM PAYMENT
The minimum premium for a contract is $25,000. Amounts less than $25,000 may be
accepted with approval from our home office. You cannot make additional premium
payments.
You will allocate the premium to variable, fixed, or to a combination of
variable and fixed payment options. We apply your premium to the contract
within two business days after receipt (at the Administrative and Service
Office) of the later of the premium and a properly completed order form.
If the order form is incomplete, we will request the necessary information. If
the information is not provided within five days, we will return the premium
unless we obtain your specific consent to let us keep it until the order form is
completed.
The date we credit the premium and issue the contract is called the contract
issue date. On the contract issue date, we allocate the premium (net of any
premium tax deduction) as you specify in the order form.
You should make checks for premium payments payable only to PFL Life Insurance
Company and send them to the Administrative and Service Office. Your check must
be honored in order for us to pay any associated payments and benefits due under
the contract.
ALLOCATION OF PREMIUM PAYMENT
We will invest the amount of your premium that you allocate to the subaccounts
of the separate account in the designated subaccount(s) on the contract issue
date. You must allocate percentages that are whole numbers, not fractions.
Your allocations must equal 100%. The minimum allocation to any subaccount is
5% of the total amount allocated to the subaccounts.
VARIABLE ANNUITY UNITS
Any portion of your premium allocated to the subaccounts will be used to
purchase variable annuity units. We will determine the number of variable
annuity units based upon:
. the premium reduced by any premium taxes,
. the annuitant's age and sex (and the age and sex of the secondary
annuitant, if any),
. the payment option you choose,
. the frequency of payments you choose,
. the AIR you choose,
. the first payment date, and
. the variable annuity unit value of the subaccounts you initially
select.
<PAGE>
The number of variable annuity units allocated to each subaccount will not
change unless you transfer among the subaccounts, transfer from variable to
fixed annuity payments or receive cash through a surrender (if allowed).
However, if you choose a joint and survivor payment option and benefits are
reduced due to the death of one of the annuitants, the number of variable
annuity units will be reduced at that time.
We calculate the amount of your variable annuity payment on the variable annuity
payment calculation date by taking the number of variable annuity units in each
subaccount and multiplying them by the variable annuity unit value of each
subaccount. This calculation is performed for each subaccount, and the sum of
the subaccount calculations will equal the amount of your variable annuity
payment.
The variable annuity unit value in a particular subaccount on any valuation day
is equal to:
. the variable annuity unit value for that subaccount on the immediately
preceding valuation day; multiplied by
. the net investment factor for that subaccount for the valuation period;
multiplied by
. the daily factor for the valuation period.
The daily factor for the valuation period (the period of time beginning at the
close of business each valuation day and ending at the close of business on the
next valuation day) is a discount factor that reflects the AIR. Please refer to
the Statement of Additional Information.
The net investment factor used to calculate the variable annuity unit value for
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:
. the net asset value of a portfolio share held in that subaccount
determined as of the end of the current valuation period, plus
. 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
. a per share credit or charge for any taxes reserved for, which we
determine to have resulted from the investment operation of the
subaccount.
(b) is the net asset value of a portfolio 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 (shown in the contract
specifications section of the contract).
4. INVESTMENT CHOICES
THE SEPARATE ACCOUNT
The separate account currently consists of fourteen subaccounts.
The Underlying Funds. The subaccounts invest in shares of the underlying funds.
- --------------------
Fidelity Management & Research Company provides investment advice and
administrative services for all of the underlying funds offered through this
contract. The following subaccounts are currently offered:
VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Money Market
VIP High Income
VIP Equity-Income
VIP Growth
VIP Overseas
VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Investment Grade Bond
VIP II Asset Manager
VIP II Asset Manager: Growth
VIP II Index 500
VIP II Contrafund
VARIABLE INSURANCE PRODUCTS FUND III (VIP III):
VIP III Balanced
VIP III Growth & Income
VIP III Growth Opportunities
VIP III Mid Cap
The general public may not purchase these underlying funds. The investment
objectives and policies may be similar to other portfolios and mutual funds
managed by the same investment adviser or manager that are sold directly to the
public. You should not expect that the investment results of the other
portfolios and mutual funds will be comparable to those of the underlying funds.
<PAGE>
More detailed information about the underlying portfolios may be found in their
current prospectuses. This includes a description of each portfolio's investment
objectives, policies, and strategies. These prospectuses are attached to this
prospectus. You should read the prospectuses for each of the underlying funds
carefully before you invest.
PFL may receive expense reimbursements or other revenues from the funds or FMR.
The amount of these reimbursements or revenues, if any, may be based on the
amount of assets that PFL (or its affiliates) or the separate account invests in
the underlying funds.
The investment objectives and policies of certain portfolios are similar to the
investment objectives and policies of other portfolios that may be managed by
the same investment advisor 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 any
other portfolio, even if the other portfolio has the same investment advisor or
manager.
TRANSFERS
You may transfer all or a part of the value of variable to fixed annuity
payments by providing us with a notice you have signed or an electronic notice
that gives us the facts that we need. If you transfer from variable annuity
payments to fixed annuity payments, the fixed annuity payments will be a
continuation of the payment option under which the variable annuity payments
were being made, or a continuation of the fixed payment option that may already
exist.
For example, if you received variable annuity payments for two years under a 10
Year Certain and Life Option and elect to transfer to fixed annuity payments,
your payment option would be an 8 Year Certain and Life Option. If your variable
payment option is Life with Emergency Cash(SM), the fixed payment option will be
Life only, Life with Premium Refund or Life with Period Certain. The period
certain cannot be greater than the annuitant's remaining life expectancy
determined at the contract issue date. (Life with Emergency Cash(SM) is only
available with variable annuity payments.)
Transfers from variable to fixed annuity payments may have tax consequences. You
should consult a tax advisor before making a transfer from variable to fixed
annuity payments.
You may not transfer from fixed to variable annuity payments.
Transfers are made using the variable annuity unit values for the end of the day
when we receive your request (that is, at the end of the valuation period during
which we receive them.
You may transfer amounts among subaccounts by telephoning us or by providing us
with a notice you have signed or an electronic notice that gives us the facts
that we need.
We reserve the right to impose transfer charges.
The percent of the allocation in each subaccount will change over time with its
investment performance. You should periodically review the allocations in light
of market conditions and financial objectives.
5. EXPENSES
The following are all the charges made under the contract.
SEPARATE ACCOUNT CHARGE
A daily charge is deducted from the assets of each subaccount for our assumption
of mortality and expense risks, and our administration expenses. If the amount
you allocate to variable annuity payments is less than $50,000, a daily
mortality and expense risk charge will be deducted at an effective annual rate
of 1.20%; otherwise, the mortality and expense risk charge will be 1.00%.
An administration expense charge will also be deducted daily from the assets of
each subaccount at an effective annual rate of 0.15%. We guarantee that the
mortality and expense risk and administrative charges will never increase.
The mortality risk arises from our obligation to provide annuity income for your
life (and the life of the secondary annuitant, if any) no matter how long that
might be. The expense risk results from our obligation to cover the cost of
issuing and administering the contracts, no matter how long we may incur such
cost or how large that cost may be. The administration expense charge is for the
costs of
<PAGE>
administering the contracts. We may earn a profit from the separate account
charge (and expect to do so). Any profit can be used for distribution expenses
or for any other purpose.
EXPENSES OF THE FUNDS
The portfolios are charged management fees and incur operating expenses. The
effect of these fees and expenses is reflected in the performance of the
portfolios underlying the subaccounts. See the attached prospectuses for a
description of the portfolios' fees and expenses, and therefore affects the
variable annuity unit value.
PREMIUM TAXES
Some states charge a premium tax based on the amount of your premium. State
premium taxes currently range from 0% to 3.5%. In addition, some counties,
cities or towns may charge additional premium taxes. If you live in a place that
has premium taxes, any amount needed to provide for the applicable premium taxes
is deducted from your premium. We allocate the remainder of your premium to the
subaccounts and/or to the purchase of fixed annuity payments.
OTHER TAXES
We reserve the right to charge for certain taxes (other than premium taxes) that
may be incurred due to the contracts or the separate account. Currently, we do
not charge for any other taxes.
SURRENDER VALUE
There is no express or calculable surrender charge for variable annuity under
the contract. For a discussion of surrender value, see "SURRENDER VALUE".
TRANSFER FEE
There is currently no charge for transfers. We reserve the right to charge $15
for each transfer over six per contract year (all transfers made simultaneously
will be treated as a single request).
6. TAXES
Note: The following information on federal income taxes is just a general
- ----
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. More
discussion about taxes is in the Statement of Additional Information.
GENERAL
TAX LAW IS COMPLEX AND TAX CONSEQUENCES WILL VARY ACCORDING TO THE ACTUAL STATUS
OF THE CONTRACT OWNER AND, IF APPLICABLE, THE TYPE OF RETIREMENT PROGRAM FOR
WHICH THE CONTRACT IS PURCHASED. THEREFORE, A PERSON, TRUSTEE OR OTHER ENTITY
CONTEMPLATING THE PURCHASE OF A CONTRACT MAY NEED LEGAL AND TAX ADVICE.
This prospectus does not provide a detailed description of the federal income
tax consequences of purchasing a contract. Special tax rules, not discussed
herein, may apply to certain purchase situations. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a prospective purchaser should always consult a qualified tax
advisor.
TAXATION OF PURCHASERS OF NON-QUALIFIED CONTRACTS
Corporations, Trusts and other Non-Natural Persons. Under section 72(u) of the
- --------------------------------------------------
Internal Revenue Code of 1986, as amended (the "Code"), if a non-natural person
such as a corporation, trust or partnership owns an annuity contract, annual net
increases in the value of the contract are generally includable in the non-
natural person's gross income currently, unless the annuity is an immediate
annuity. For this purpose, an immediate annuity is an annuity that is purchased
with a single premium payment, that has an annuity starting date commencing no
later than one year from the date of purchase, and that provides for a series of
substantially equal periodic payments to be made no less frequently than
annually during the annuity period. Generally, the contract should qualify as an
immediate annuity, but corporations, trusts, partnerships and other entities
that are not natural persons should consult a tax advisor if they seek to rely
on the exception from section 72(u) for immediate annuity contracts.
Natural Persons. Section 72 generally provides that a contract owner is not
- ---------------
taxed on increases in the value of the contract until an amount distributed from
the contract is received (or deemed received) by the contract owner, either
<PAGE>
in the form of annuity payments, as contemplated by the contract, or in some
other form (i.e., surrender or death proceeds). However, this tax deferral
generally applies only if:
. the investments in the separate account are "adequately diversified" in
accordance with Treasury Department regulations,
. PFL, rather than the contract owner, is considered the owner of such assets
for federal income tax purposes, and
. the contract includes certain provisions regarding distributions that must
occur in the event that a contract owner dies.
Distributions Prior to the Annuity Starting Date. If a contract is surrendered
- ------------------------------------------------
prior to the annuity starting date, in the case of a Certain Only or Life with
Emergency Cash(SM) option, amounts received by the contract owner are includable
in his or her income to the extent that such amounts exceed the "investment in
the contract." For this purpose, the investment in the contract at any time
equals the premium (to the extent that such premium was neither deductible when
made nor excludable from income as, for example, in the case of certain
contributions to qualified contracts), less any amounts previously received from
the contract which were not includable in income. Also, the surrender value may
be subject to a penalty tax, described below. In general, an assignment of the
contract (or other change of ownership) before the "annuity starting date"
without full and adequate consideration will be treated as a distribution from
the contract and taxed in the same manner as a surrender before the "annuity
starting date" (except where the contract is transferred between spouses or
incident to a divorce).
The "annuity starting date" is the latter of the day upon which the obligations
under the contracts become fixed or the first day of the period, which ends on
the first payment date. In most cases, the annuity starting date for a contract
will be the contract issue date.
In certain situations, the contract provides for a death benefit upon the death
of a contract owner; annuitant or secondary annuitant. This distribution is
includable in the recipient's income as follows:
. if distributed in a lump sum, it is taxed in the same manner as a
surrender;
. if it is distributed in the form of annuity payments, it is taxed in the
same manner as annuity payments (see below).
Distributions On or After the Annuity Starting Date. A portion of the annuity
- ---------------------------------------------------
payments received during each taxable year is generally treated as tax-free
recovery of your investment in the contract and the remainder of such annuity
payments is taxable as ordinary income, until all such investment in the
contract has been recovered. Once the entire amount of the investment in the
contract has been recovered, all annuity payments are fully taxable as ordinary
income. For these purposes, the investment in the contract will generally be
your premium, reduced by any previous distributions other than annuity payments
from the contract to the extent such previous distributions were received tax-
free, with certain adjustments to take into account certain payments projected
to occur after the death of the annuitant.
The formulas for computing the taxable portion of the annuity payments prior to
recovery of the investment in the contract are quite complex and differ
depending on the extent to which your premium has been allocated to variable or
fixed annuity payment options. To the extent your premium has been allocated to
fixed annuity payment options, an "exclusion ratio" is generally computed based
on the ratio of the investment in the contract allocable to the fixed annuity
payment option to the total amount projected to be paid under the contract, and
the portion of each fixed annuity payment that is excludable from tax is equal
to the exclusion ratio multiplied by the fixed annuity payment. To the extent
your premium has been allocated to variable annuity payments, the excludable
amount of the variable annuity payments for each taxable year is generally
computed by dividing the investment in the contract allocable to variable
annuity payment options by the number of years over which annuity payments are
expected to be made.
If annuity payments cease by reason of death of annuitant before the entire
amount of the investment in the contract has been fully recovered tax-free, a
deduction is allowed for the amount of the unrecovered investment in the
contract for the last taxable year of the annuitant.
Partial surrenders from the Certain Only or the Life with Emergency Cash(SM)
benefit may be fully taxable as ordinary income and may not result in
recomputation of the exclusion ratio applicable to fixed annuity payments or the
excludable amount applicable to variable annuity payments.
<PAGE>
A transfer of ownership of the contract, the designation of an annuitant or
other payee who is not an owner of the contract or the assignment of the
contract may result in certain income or gift tax consequences to the owner that
are beyond the scope of this discussion. A contract owner who is considering any
such transfer, designation or assignment should consult a tax advisor.
Penalty Tax on Certain Distributions. Distributions received (or deemed
- ------------------------------------
received) from an annuity contract (before or after the annuity starting date)
may be subject to a penalty tax equal to 10% of the amount treated as taxable
income. There is an exception for distributions from immediate annuities, and
annuity payments under the contract should therefore generally not be subject to
the 10% penalty tax. However, it is unclear whether Life with Emergency Cash(SM)
benefit and Certain Only surrenders will be subject to the 10% penalty tax if
such surrenders are made before the taxpayer reaches age 59 1/2 or are not
attributable to the taxpayer's becoming disabled. In addition, the 10% penalty
tax does not apply to distributions from a contract made on or after the death
of a contract owner and, under certain circumstances, to distributions made
under a contract issued in connection with a structured settlement agreement. A
tax advisor should be consulted if there is a question as to whether a
distribution will be subject to the 10% penalty tax.
Aggregation of Two or More Contracts. The Treasury Department has specific
- ------------------------------------
authority to issue regulations that prevent the avoidance of section 72(e) of
the Code through the serial purchase of annuity contracts or otherwise. There
may be situations in which the Treasury Department may conclude that it would be
appropriate to aggregate two or more deferred or immediate annuity contracts
purchased by the same owner. Accordingly, a contract owner should consult a
competent tax advisor before purchasing more than one annuity contract in a
calendar year.
Contracts Obtained through an Exchange. Section 1035 of the Code generally
- --------------------------------------
provides that no gain or loss shall be recognized on the exchange of one annuity
contract for another. A number of special rules and procedures, however, apply
to section 1035 transactions. Prospective contract owners wishing to take
advantage of section 1035 should therefore consult their tax advisor.
TAXATION OF PURCHASERS OF QUALIFIED CONTRACTS
The contracts are designed for use as Individual Retirement Annuities ("IRA") or
in connection with deferred compensation plans established and maintained by
state or local governments or tax-exempt organizations. Important differences
exist between the tax rules, which are applicable to IRAs and deferred
compensation plans. These rules are complex and may vary depending on individual
circumstances. Adverse tax consequences may result from distributions prior to
age 59 1/2 (subject to certain exceptions); distributions that do not conform to
applicable commencement and minimum distribution rules; and in other
circumstances. Therefore, no attempt is made to provide more than general
information about the use of contracts as IRAs or when owned by eligible
employers in connection with deferred compensation plans. Contract owners,
annuitants, and beneficiaries are cautioned that the rights of any person to any
benefits under qualified contracts may be subject to the terms and conditions of
the plan itself, regardless of the terms and conditions of the contract, but
that PFL is not bound by the terms and conditions of such plans to the extent
such terms conflict with the contract, unless PFL specifically consents to be
bound. A brief description of some of the federal income tax rules that apply to
IRAs and deferred compensation plans is set forth below. PFL may amend the
contract as necessary to conform it to requirements of applicable law.
Individual Retirement Annuities. The contract is designed for the use as an IRA
- -------------------------------
purchased through a tax-deferred rollover contribution from another IRA, a
retirement plan qualified under section 401 or section 403(a) of the Code or tax
sheltered annuity contract under section 403(b) of the Code. Amounts held under
a deferred compensation plan under section 457 of the Code cannot be rolled over
or transferred to an IRA.
Distributions From an IRA. In general, payments from an IRA which are not
- -------------------------
rolled over must be included in gross income as ordinary taxable income in the
year in which they are received. Required minimum distributions must begin by
April 1 of the calendar year following the calendar year in which the IRA owner
attains the age of 70 1/2. Certain other mandatory distribution rules apply upon
the death of the IRA owner.
Ten Percent Penalty Tax on Early Distributions. Distributions received (or
- ----------------------------------------------
deemed received) from an IRA may be subject to a penalty tax equal to ten
percent (10%) of
<PAGE>
the amount treated as taxable income. In general, however, there is no such
penalty tax on distributions:
. made on or after the date on which the taxpayer reaches age 59 1/2;
. made to a beneficiary (or to the estate of the taxpayer) on or after the
death of the taxpayer;
. attributable to the taxpayer's becoming disabled;
. which are part of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
his or her designated beneficiary;
. made to the taxpayer to the extent such distributions do not exceed the
amount allowable as a deduction for federal income tax purposes allowed to
the taxpayer for amounts paid during the taxable year for medical care;
. if certain conditions are met, made to an unemployed taxpayer after
separation from employment, for health insurance premiums;
. made for qualified first time homebuyer expenses for the taxpayer or certain
of the taxpayer's family members; or
. made for qualifying higher education expenses for the taxpayer or for certain
of the taxpayer's family members (including tuition, fees, books, supplies,
and equipment required for enrollment, attendance, and room and board at a
post-secondary educational institution).
Code Section 457 Deferred Compensation Plans. The contract may be purchased by
- --------------------------------------------
a state or local government or tax-exempt organization that is an employer
sponsoring a deferred compensation plan under section 457 of the Code in order
to effect distribution of plan benefits to participants under the plan. In
general, distributions from a deferred compensation plan are prohibited unless
made after the participant attains age 70 1/2, separates from service, dies, or
suffers an unforeseeable financial emergency. Distributions under plans that
meet the requirements of section 457 of the Code are taxable as ordinary income
in the year paid or made available to the participant or beneficiary.
Generally, required minimum distributions must begin by April 1 of the calendar
year following the later of the calendar year in which the participating
employee
. attains the age of 70 1/2, or
. retires.
Certain other mandatory distribution rules apply upon the death of the
participating employee.
Amounts held under a deferred compensation plan under section 457 of the Code
cannot be rolled over or transferred to an IRA.
In general, assets under non-governmental plans are owned by the sponsoring
employer and are subject to the claims of general creditors of the employer, and
depending on the terms of the plan the employer may be legally entitled to draw
on these assets for purposes unrelated to its section 457 plan obligations.
Life with Emergency Cash(SM) Benefit. The Internal Revenue Service has not
- ------------------------------------
addressed in a ruling of general applicability whether a distribution feature
such as the Life with Emergency Cash(SM) feature comports with the Code's
distribution requirements for IRAs and deferred compensation plans.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution from a contract that is taxable income to the
recipient is generally subject to withholding for the recipient's federal income
tax liability at rates that vary according to the type of distribution and the
recipient's tax status. Section 3405 of the Code governs withholding and is
summarized below:
Non-Periodic Distributions. The portion of a non-periodic distribution that
- --------------------------
constitutes taxable income will be subject to federal income tax withholding
unless the recipient elects not to have taxes withheld. If an election not to
have taxes withheld is not provided, 10% of the taxable distribution will be
withheld as federal income tax. Election forms will be provided at the time
distributions are requested. If the necessary election forms are not submitted
to PFL, PFL will automatically withhold 10% of the taxable distribution.
Periodic Distributions (distributions payable over a period greater than one
- ----------------------------------------------------------------------------
year). The portion of a periodic distribution that constitutes taxable income
- -----
will be subject to federal income tax withholding as if the recipient were
married claiming three exemptions. A recipient may elect not to have income
taxes withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
<PAGE>
Deferred Compensation Plans. Distributions from a non-qualified deferred
- ---------------------------
compensation plan meeting the requirements of section 457 of the Code are
generally subject to regular wage withholding rules.
Certain states also require withholding of state income tax whenever federal
income tax is withheld.
CONTRACT OWNERS THAT ARE NONRESIDENT ALIENS OR FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to contract owners that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies and any required tax forms are submitted to
PFL. In addition, purchasers may be subject to state premium tax, other state
and/or municipal taxes, and taxes that may be imposed by the purchaser's country
of citizenship or residence. Prospective purchasers are advised to consult with
a qualified tax advisor regarding U.S., state and foreign taxation with respect
to the purchase of a contract.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the contracts could change by legislation
or other means. It is also possible that any change could be retroactive (that
is, effective prior to the date of the change). A tax advisor should be
consulted with respect to legislative developments and their effect on the
contract.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax consequences under
these contacts are not exhaustive, and special rules may apply to other tax
situations not discussed in this prospectus. Further, the federal income tax
consequences discussed herein reflect PFL's understanding of current law and the
law may change.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of distributions under a contract depend on
the individual circumstances of each contract owner or recipient of the
distribution. In particular, gift and/or estate tax consequences may result in
situations where a contract owner is not also the annuitant, payee, and
beneficiary. A competent tax advisor should be consulted for further
information.
7. SURRENDER VALUE
SURRENDERS
You may not surrender any portion of a contract unless either the Certain Only
------
or Life with Emergency Cash(SM) payment option is selected. No other payment
----------------
option allows surrenders. If you elect a Certain Only payment option the
- ------------------------
surrender value is 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.
If a partial surrender is made, it must be at least 25% of the full surrender
value and all future payments will be reduced. Surrenders may have adverse tax
consequences.
YOU SHOULD CONSULT WITH YOUR TAX ADVISOR BEFORE REQUESTING A FULL OR PARTIAL
SURRENDER.
SURRENDER VALUE
There is no surrender charge applicable to variable annuity payments under the
contract. In the cases when the contract can be surrendered (i.e., Certain Only
or Life with Emergency Cash(SM) options) the determination of a surrender value
depends on specific individual circumstances such as the annuitant's age and
sex, the number of annuitants, the amount of the current payment (when the
surrender is requested), and the number of payments already made.
If you select a Certain Only payment option with fixed and/or variable annuity
payments you may surrender all or a portion of your contract. For fixed annuity
payments the surrender value is 98% of the present value of the remaining
payments (using PFL's declared interest rates in effect at the time of the
surrender). For variable annuity payments, the surrender value is the present
value of future payments (which are assumed to be equal to the most recent
payment) discounted at an interest rate no greater than 4.5% (if you have a 3.5%
AIR) or no greater than 6% (if you have a 5% AIR).
<PAGE>
If the Life with Emergency Cash(SM) option is selected, please refer to the
Emergency Cash(SM) benefit schedule in your contract rider for the information
you need to determine your surrender value.
8. PERFORMANCE
Performance information for the subaccounts may appear in reports and
advertising. The performance information is based on adjusted historical
investment experience of the subaccounts and the underlying funds and does not
indicate or represent future performance.
Total returns of the subaccounts may be advertised. Total returns are based on
the overall dollar or percentage change in value of a hypothetical investment.
Total return quotations reflect changes in portfolio share price, the automatic
reinvestment by the separate account of all distributions and the deduction of
applicable annuity charges.
A cumulative total return reflects performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the performance had
been constant over the entire period. Because average annual total returns tend
to smooth out variations in a subaccount's returns, you should recognize that
they are not the same as actual year-by-year results.
Some subaccounts may also advertise yield. These measures reflect the income
generated by an investment in the subaccount over a specified period of time.
This income is annualized and shown as a percentage. Yields do not take into
account capital gains or losses.
The Money Market Subaccount may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the subaccount
over a seven day period. Effective yield is calculated in a similar manner
except that income earned is assumed to be reinvested. The VIP II Investment
Grade Bond and the VIP High Income Subaccounts may advertise a 30 day yield
which reflects the income generated by an investment in the subaccount over a 30
day period.
Appendix B contains performance information that you may find useful. It is
divided into various parts, depending upon the type of performance information
shown. Future performance will vary and future results will not be the same as
the results shown.
9. DEATH BENEFIT
If the owner dies before the first annuity payment, the premium (plus or minus
investment performance) will be paid as a death benefit. More information on
how we pay it is in the Statement of Additional Information.
If an owner, who may or may not also be an annuitant, dies on or after the
annuity starting date, we will pay the remaining portion of the annuity payments
due under the contract, if any, in the same manner and frequency (at least as
rapidly) as under the method of distribution used before such owner's death.
If the deceased owner's surviving spouse is the sole successor owner, then on
such owner's death such surviving spouse may elect to become the sole owner
under the contract and to continue the contract as his or her own.
If a non-natural person is named as an owner, then the primary annuitant, as
defined in the Code, shall be treated as an owner solely for the purposes of the
distribution at death rules. The entire interest in the contract must be
distributed upon the annuitant's death, if the annuitant dies prior to the first
payment date.
If the deceased owner was also the annuitant, then the annuitant's beneficiary
is entitled to the proceeds described above in this section (unless the deceased
owner's surviving spouse is the sole successor owner). If no person is named as
the beneficiary, the owner's estate shall be deemed the beneficiary.
Note carefully. In instances where the owner's estate is deemed to be the
- --------------
successor owner or beneficiary, it may be necessary to open a probate estate in
order to exercise ownership rights to, or receive death proceeds from, the
contract. If no probate estate is opened because the owner has precluded the
opening of a probate estate by means of a trust or other instrument, unless we
have received written notice of the trust as a successor owner or beneficiary
prior to the owner's death, that trust may not exercise ownership rights to, or
receive death proceeds from, the contract.
In all events, distributions upon the death of an owner will comply with section
72(s) of the Code.
<PAGE>
10. OTHER INFORMATION
PFL LIFE INSURANCE COMPANY
PFL Life Insurance Company was incorporated under the laws of the State of Iowa
on April 19, 1961 as NN Investors Life Insurance Company, Inc. It sells life and
health insurance and annuity contracts. PFL is a wholly-owned indirect
subsidiary of AEGON USA, Inc. All of the stock of AEGON USA, Inc., is indirectly
owned by AEGON n.v. of the Netherlands, the securities of which are publicly
traded. AEGON n.v., a holding company, conducts its business through subsidiary
companies engaged primarily in the insurance business. PFL is licensed in the
District of Columbia, Guam, and in all states except New York.
THE SEPARATE ACCOUNT
PFL established a separate account, called the PFL Retirement Builder Variable
Annuity Account, under the laws of the State of Iowa on March 29, 1996. The
separate account receives and currently invests the premium payments under the
contracts that are allocated to it for investment only in shares of the Variable
Insurance Products Fund, the Variable Insurance Products Fund II, and the
Variable Insurance Products Fund III. Fidelity Management and Research Company
manages these funds.
The separate account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940. However, the SEC does not supervise the
management, the investment practices, or the policies of the separate account or
PFL. The obligations to pay the benefits due under the contract are PFL's
responsibility.
The assets of the separate account are held in PFL's name on behalf of the
separate account and belong to PFL. However, those assets that underlie the
contracts are not chargeable with liabilities arising out of any other business
PFL may conduct.
Information about the separate account can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. You may obtain information about the
operation of the public reference room by calling the Commission at 1-800-SEC-
0330. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains other information regarding the separate account.
VOTING RIGHTS
PFL will vote all shares of the underlying funds in accordance with instructions
we receive from you and other owners that have voting interests in the
portfolios. We will send you and other owners written requests for instructions
on how to vote those shares. When we receive those instructions, we will vote
all of the shares in proportion to those instructions. If, however, we determine
that we are permitted to vote the shares in our own right, we may do so.
Each person having a voting interest will receive proxy material, reports, and
other materials relating to the appropriate portfolio.
DISTRIBUTOR OF THE CONTRACTS
AFSG Securities Corporation is the principal underwriter of the contracts. Like
PFL, it is an indirect wholly-owned subsidiary of AEGON USA, Inc. It is located
at 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001. AFSG Securities
Corporation is registered as a broker/dealer under the Securities Exchange Act
of 1934. It is a member of the National Association of Securities Dealers, Inc.
(NASD). It was incorporated in Pennsylvania in 1986.
Commissions of up to 6% of premium payments will be paid to broker/dealers who
sell the contracts under agreements with AFSG Securities Corporation. These
commissions are not deducted from premium payments. In addition, certain
production, persistency and managerial bonuses may be paid. PFL may also pay
compensation to banks and other financial institutions for their services in
connection with the sale and servicing of the contracts.
NON-PARTICIPATING CONTRACT
The contract does not participate or share in the profits or surplus earnings of
PFL. No dividends are payable on the contract.
VARIATIONS IN CONTRACT PROVISIONS
Certain provisions of the contracts may vary from the descriptions in this
prospectus in order to comply with different state laws. See your contract for
variations since any such state variations will be included in your contract or
in riders or endorsements attached to your contract.
<PAGE>
YEAR 2000 MATTERS
In October, 1996, PFL adopted and presently has in place a Year 2000 Assessment
and Planning Project (the "Plan") to review and analyze existing hardware and
software systems, as well as voice and data communications systems, to determine
if they are Year 2000 compatible. The Plan provides for a management process,
which ensures that when a particular system, or software application, is
determined to be "non-compliant" the proper steps are in place to either remedy
the "non-compliance" or cease using the particular system or software. The Plan
also provides that the Chief Information Officer report to the Board of
Directors as to the status of the efforts under the Plan on a regular and
routine basis. PFL has engaged the services of a third-party provider that
specializes in Year 2000 issues to work on the project.
The Plan has four specific objectives: (1) develop an inventory of all
applications; (2) evaluate all applications to determine the most prudent manner
to move them to Year 2000 compliance, if required; (3) estimate budgets,
resources and schedules for the migration of the "affected" applications to Year
2000 compliance; and (4) define testing and deployment requirements to
successfully manage validation and re-deployment of any changed code. It is
believed that all mission critical systems are Year 2000 compliant as of
December 31, 1998, with validation testing to continue through and including
June 1999.
As of the date of this prospectus, PFL has identified and made available what it
believes are the appropriate resources of hardware, people, and dollars,
including the engagement of outside third parties, to ensure that the Plan will
be completed.
The Year 2000 computer problem, and its resolution, is complex and multifaceted,
and the success of a response plan cannot be conclusively known until the Year
2000 is reached (or an earlier date to the extent that the systems or equipment
addresses Year 2000 data prior to the Year 2000). Even with appropriate and
diligent pursuit of a well-conceived response plan, including testing
procedures, there is no certainty that any company will achieve complete
success. Further, notwithstanding its efforts or results, PFL's ability to
function unaffected to and through the Year 2000 may be adversely affected by
actions (or failure to act) of third parties beyond its knowledge or control.
IMSA
PFL is a member of the Insurance Marketplace Standards Association (IMSA). IMSA
members subscribe to a set of ethical standards involving the sales and service
of individually sold life insurance and annuities. As a member, we may use the
IMSA logo and language in advertisements.
DELAY OF PAYMENTS
PFL may be permitted to delay any payments from the separate account if:
. the New York Stock Exchange is closed other than for usual weekends or
holidays or trading on the Exchange is otherwise restricted; or
. an emergency exists as defined by the SEC or the SEC requires that trading be
restricted; or
. the SEC permits a delay for the protection of owners.
In addition, transfers of amounts from and within the subaccounts may be
deferred under these circumstances.
Pursuant to the requirements of certain state laws, we reserve the right to
defer fixed annuity payments for up to six months.
If a recent check has been submitted as the premium, we have the right to defer
any payments until the check has been honored.
LEGAL PROCEEDINGS
There are no legal proceedings to which the separate account is a party or to
which the assets of the account are subject. PFL, like other life insurance
companies, is involved in lawsuits. In some class action and other lawsuits
involving other insurers, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, PFL believes that at the present time there
are no pending or threatened lawsuits that are reasonably likely to have a
material adverse impact on the separate account or PFL.
<PAGE>
FINANCIAL STATEMENTS
The financial statements of PFL are in the Statement of Additional Information.
The subaccounts began operations in 1999, and do not yet have any financial
history.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Glossary of Terms
The Contract--General Provisions
Federal Tax Matters
Investment Experience
State Regulation of PFL
Administration
Records and Reports
Distribution of the Contracts
Other Products
Custody of Assets
Historical Performance Data
Legal Matters
Independent Auditors
Other Information
Financial Statements
<PAGE>
APPENDIX A
CONDENSED FINANCIAL INFORMATION
The subaccounts had not commenced operations as of December 31, 1998, therefore
there is no condensed financial information to report at the date of this
prospectus.
<PAGE>
APPENDIX B
HISTORICAL PERFORMANCE DATA
The following is a description of each portfolio and a graph 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 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>
VIP EQUITY-INCOME PORTFOLIO
[GRAPH 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 HISTORICAL ANNUAL TOTAL RETURN*
OF YEARS TOTAL RETURN* (Periods Ended 12/31/1998)
==============================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- --------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- --------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- --------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- --------------------------------------------------------------------------------------------------------------
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 $ %
==============================================================================================================
</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
VIP Equity Income Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP GROWTH PORTFOLIO
[GRAPH 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 HISTORICAL ANNUAL TOTAL RETURN*
OF YEARS TOTAL RETURN* (Periods Ended 12/31/1998)
==============================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- --------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- --------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- --------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- --------------------------------------------------------------------------------------------------------------
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 $ %
==============================================================================================================
</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
VIP Growth Portfolio, adjusted to reflect the 1.35% separate account charge.
<PAGE>
VIP HIGH INCOME PORTFOLIO
[GRAPH 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 HISTORICAL ANNUAL TOTAL RETURN*
OF YEARS TOTAL RETURN* (Periods Ended 12/31/1998)
==============================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- --------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- --------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- --------------------------------------------------------------------------------------------------------------
1985 $522 N/A Since Inception %
- --------------------------------------------------------------------------------------------------------------
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 $ %
==============================================================================================================
</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
VIP High Income Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP MONEY MARKET PORTFOLIO
[GRAPH 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 %
- --------------------------------------------------------------------------------------------------------------
1983 $535 7.69% 5 Years %
- --------------------------------------------------------------------------------------------------------------
1984 $555 8.99% 10 Years %
- --------------------------------------------------------------------------------------------------------------
1985 $564 6.67% Since Inception %
- --------------------------------------------------------------------------------------------------------------
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 $ %
==============================================================================================================
</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
VIP Money Market Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP OVERSEAS PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--January 1987
<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 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
1986 $500 N/A
- -------------------------------------------------------------------
1987 $446 N/A
- -------------------------------------------------------------------
1988 $453 6.68%
- -------------------------------------------------------------------
1989 $538 24.61%
- -------------------------------------------------------------------
1990 $497 (3.16)%
- -------------------------------------------------------------------
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 $ %
================================================================================================================
</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
VIP Overseas Portfolio, adjusted to reflect the 1.35% separate account charge.
<PAGE>
VIP II ASSET MANAGER PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--May 1990
<TABLE>
<CAPTION>
=================================================================================================================
MONTHLY PAYMENT ADJUSTED ADJUSTED HISTORICAL AVERAGE ANNUAL
YEAR AMOUNTS AT END OF HISTORICAL ANNUAL TOTAL RETURN*
OF YEARS TOTAL RETURN* (PERIODS ENDED 12/31/1998)
=================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 $ %
================================================================================================================
</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
VIP II Asset Manager Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP II ASSET MANAGER: GROWTH PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--January 1995
<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 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 $ %
================================================================================================================
</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
VIP II Asset Manager: Growth Portfolio, adjusted to reflect the 1.35% separate
account charge.
<PAGE>
VIP II CONTRAFUND PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--January 1995
<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 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 $658 N/A
- ----------------------------------------------------------------------
1996 $750 19.68%
- ----------------------------------------------------------------------
1997 $875 22.49%
- ----------------------------------------------------------------------
1998 $ %
================================================================================================================
</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
VIP II Contrafund Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP II INDEX 500 PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--August 1992
<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 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 $ %
================================================================================================================
</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
VIP II Index 500 Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP II INVESTMENT GRADE BOND PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--June 1989
<TABLE>
<CAPTION>
================================================================================================================
MONTHLY PAYMENT ADJUSTED ADJUSTED HISTORICAL AVERAGE ANNUAL
YEAR AMOUNTS AT END HISTORICAL ADJUSTED TOTAL RETURN*
OF YEARS TOTAL RETURN* (PERIODS ENDED 12/31/1998)
=================================================================================================================
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 $ %
================================================================================================================
</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
VIP II Investment Grade Bond Portfolio, adjusted to reflect the 1.35% separate
account charge.
<PAGE>
VIP III BALANCED PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--May 1997
<TABLE>
<CAPTION>
MONTHLY PAYMENT ADJUSTED ADJUSTED HISTORICAL AVERAGE ANNUAL
YEAR AMOUNTS AT END ANNUAL HISTORICAL TOTAL RETURN*
OF YEARS TOTAL RETURN* (Periods Ended 12/31/1998)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1982 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 N/A N/A
- -------------------------------------------------------------
1996 N/A N/A
- -------------------------------------------------------------
1997 $555 N/A
- -------------------------------------------------------------
1998 $ %
- --------------------------------------------------------------------------------
</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
VIP III Balanced Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
VIP III GROWTH OPPORTUNITIES PORTFOLIO
[GRAPH APPEARS HERE]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--May 1997
<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 N/A N/A 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 N/A N/A 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 N/A N/A 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 N/A N/A Since Inception %
- ----------------------------------------------------------------------------------------------------------------
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 N/A N/A
- -------------------------------------------------------------
1996 N/A N/A
- -------------------------------------------------------------
1997 $594 N/A
- -------------------------------------------------------------
1998 $ %
- --------------------------------------------------------------------------------
</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
VIP III Growth & Income Portfolio, adjusted to reflect the 1.35% separate
account charge.
<PAGE>
VIP III MID CAP PORTFOLIO
["CHART APPEARS HERE"]
Chart Specifications:
- --------------------
. 5% AIR
. $500 initial monthly annuity payment
. Fund inception date--May 1997
<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 1 Year %
- ----------------------------------------------------------------------------------------------------------------
1983 5 Years %
- ----------------------------------------------------------------------------------------------------------------
1984 10 Years %
- ----------------------------------------------------------------------------------------------------------------
1985 Since Inception %
- ----------------------------------------------------------------------------------------------------------------
1986
- -------------------------------------------------------------
1987
- -------------------------------------------------------------
1988
- -------------------------------------------------------------
1989
- -------------------------------------------------------------
1990
- -------------------------------------------------------------
1991
- -------------------------------------------------------------
1992
- -------------------------------------------------------------
1993
- -------------------------------------------------------------
1994
- -------------------------------------------------------------
1995
- -------------------------------------------------------------
1996
- -------------------------------------------------------------
1997
- -------------------------------------------------------------
1998
- --------------------------------------------------------------------------------
</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
VIP III Mid Cap Portfolio, adjusted to reflect the 1.35% separate account
charge.
<PAGE>
Fidelity Management & Research Company (FMR) is the investment advisor for the
underlying funds. FMR is a registered investment advisor under the Investment
Advisors Act of 1940. FMR is the original Fidelity company and was founded in
1946. It provides numerous mutual funds and other clients with investment
research and portfolio management services. It maintains a large staff of
experienced investment personnel and a full complement of related support
facilities. As of December 31, 19____, it advised funds having more than
_______ million shareholder accounts with a total value of more than $__________
billion. FMR charges the portfolios an investment management fee. These fees are
part of the portfolios' operating expenses. See the attached prospectuses for
the underlying funds for discussions of the Underlying funds' expenses.
THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS INVESTMENT
OBJECTIVE.
PFL may receive expense reimbursements or other revenues from the funds or FMR.
The amount of these reimbursements or revenues, if any, may be based on the
amount of assets that PFL (or its affiliates) or the separate account invests in
the underlying funds.
The underlying funds' prospectuses 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 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
the same investment advisor 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 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 underlying funds 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
participating in an underlying fund. 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 funds. In the event of any conflict,
we will take any steps necessary to protect owners, annuitants, secondary
annuitants and beneficiaries.
<PAGE>
APPENDIX C
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 which 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 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).
[GRAPH APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
================================================================================
MONTHLY PAYMENTS ASSUMING DIFFERENT GROSS PORTFOLIO RETURNS
================================================================================
MONTHLY PAYMENT AT THE GROSS PORTFOLIO RETURNS*
END OF CONTRACT YEAR
---------------------------------
<S> <C> <C> <C>
0.0% 6.0% 10.0%
================================================================================
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 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 10%.
Monthly variable annuity payments are shown with the 3.5% AIR and the 5%
AIR.
<PAGE>
[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
----------------------------
<S> <C> <C>
3.5% 5%
================================================================================
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
PFL IMMEDIATE 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 PFL Immediate Income Annuity Contract offered by PFL
Life Insurance Company. You may obtain a copy of the prospectus dated May 1,
1999, by calling 1-800-525-6205, 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: May 1, 1999
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TABLE OF CONTENTS
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GLOSSARY OF TERMS
THE CONTRACT--GENERAL PROVISIONS
Transfers
Delay of Transfers
Entire Contract
Assignment
Beneficiary
Change of Beneficiary
Incontestability 4
Misstatement of Age or Sex 4
Modification of Contract 4
Nonparticipating 4
Owner 4
Proof of Death 4
Proof of Survival 4
Death Before First Payment Date 4
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
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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
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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 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.
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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 Fidelity Management &
Research Company 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. 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.
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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 of the
effect of an assignment.
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.
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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.
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.
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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
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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
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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.
Required Distributions. In order to be treated as an annuity contract for
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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.
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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 interest rate. 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:
(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;
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(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
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PAYMENTS
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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 interest rate 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
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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
(ASSUMING 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.
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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.
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. Prior to April 30, 1998, AEGON USA Securities,
Inc. (also an affiliate of PFL) was the principal underwriter for other
contracts issued through the separate account. During 1998 and 1997 the amount
paid to AEGON USA Securities, Inc. and/or the broker-dealers for their services
was $___________ and $2,337,939.76, respectively. No fees had been paid to
AEGON USA Securities, Inc. and/or the broker/dealers for their services to the
separate account during 1996 or prior years. During 1998 the amount paid to
AFSG Securities Corporation was $_________________ ]
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.
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HISTORICAL PERFORMANCE DATA
MONEY MARKET YIELDS
We may from time to time disclose the current annualized yield of the Money
Market Subaccount for a 7-day period in a manner which does not take into
consideration any realized or unrealized gains or losses on shares of the
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of securities
and unrealized appreciation and depreciation and income other than investment
income) at the end of the 7-day period in the value of a hypothetical account
having a balance of 1 unit at the beginning of the 7-day period, dividing such
net change in account value by the value of the account at the beginning of the
period to determine the base period return, and annualizing this quotient on a
365-day basis. The net change in account value reflects (i) net income from the
portfolio attributable to the hypothetical account; and (ii) charges and
deductions imposed under a contract that are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for the separate account charge. Current Yield will be
calculated according to the following formula:
Current Yield = ((NCS x ES)/UV) x (365/7)
Where:
NCS = the net change in the value of the portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation
and depreciation and income other than investment income) for the 7-day
period attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses of the subaccount for the 7-day period.
UV = the unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a contract, the yield for
the Money Market Subaccount will be lower than the yield for the Money Market
Portfolio. The yield calculations do not reflect the effect of any premium
taxes or surrender charges that may be applicable to a particular contract.
We may also disclose the effective yield of the Money Market Subaccount for the
same 7-day period, determined on a compounded basis. The effective yield is
calculated by compounding the base period return according to the following
formula:
Effective Yield = (1 + ((NCS-ES)/UV))/365/7/-1
Where:
NCS = the net change in the value of the account (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation and income other than investment income) for the 7-day
period attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses of the subaccount for the 7-day period.
UV = the unit value on the first day of the 7-day period.
The yield on amounts held in the Money Market Subaccount normally will fluctuate
on a daily basis. Therefore, the disclosed yield for any given past period is
not an indication or representation of future yields or rates of return. The
Money Market Subaccount actual yield is affected by changes in interest rates on
money market securities, average portfolio maturity of the Money Market
Portfolio, the types and quality of portfolio securities held by the Money
Market Portfolio and its operating expenses.
16
<PAGE>
OTHER 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.
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.
17
<PAGE>
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.
HYPOTHETICAL 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 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
Our Financial Statements as of December 31, 1998, 1997 and 1996, 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.
18
<PAGE>
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). Our financial
statements, which are included in this Statement of Additional Information,
should be considered only as bearing on our ability to meet our obligations
under the contracts. They should not be considered as bearing on the investment
performance of the assets held in the separate account.
19
<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.
/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./4/
(b) Form of Broker/Dealer Supervision and Sales Agreement by
and between AFSG Securities Corporation and the
Broker/Dealer./4/
(4) (a) Form of Contract for the PFL Immediate Income Annuity./7/
(5) (a) Form of Application for the PFL Immediate Income Annuity.
/7/
(6) (a) Articles of Incorporation of PFL Life Insurance Company./1/
(b) ByLaws of PFL Life Insurance Company./1/
(7) Not Applicable.
(8) (a) Participation Agreement by and between Variable Insurance
Product Funds and Variable Insurance Products Fund II,
Fidelity Distributors Corporation, and PFL Life Insurance
Company, and Addendums thereto./2/
(b) Participation Agreement between Variable Insurance Products
Fund III, Fidelity Distributors Corporation, and PFL Life
Insurance Company./3/
(c) Amended Schedule A to Participation Agreement by and
between Variable Insurance Product Funds and Variable
Insurance Products Fund II, Fidelity Distributors
Corporation, and PFL Life Insurance Company./8/
<PAGE>
(d) Amended Schedule A to Participation Agreement between
Variable Insurance Products Fund III, Fidelity Distributors
Corporation, and PFL Life Insurance Company./8/
(9) Opinion and Consent of Counsel./6/
(10) (a) Consent of Independent Auditors./8/
(10) (b) Opinion and Consent of Actuary./7/
(11) Not applicable.
(12) Not applicable.
(13) Performance Data Calculations./8/
(14) Powers of Attorney. (Patrick S. Baird, Craig D. Vermie,
William L. Busler, Douglas C. Kolsrud, Robert J. Kontz)/1/
(Brenda K. Clancy)/2/ (Larry N. Norman)/5/
/1/ Incorporated herein by reference to the Initial filing of Registrants
Form N-4 Registration Statement (File No. 333-7509) on July 3, 1996.
/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.
/3/ Incorporated herein by reference to the Registrant's filing of Post-
Effective Amendment No. 1 to Form N-4 Registration Statement (File No.
333-7509) on April 29, 1997.
/4/ 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.
/5/ 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.
/6/ Filed with the initial Form N-4 Registration Statement (File No. 333-
61063) on August 10, 1998.
/7/ Filed with Pre-Effective Amendment No. 1 to Form N-4 Registration
Statement (File No. 333-61063) on December 11, 1998.
/8/ 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
4333 Edgewood Road, N.E. President
Cedar Rapids, Iowa 52499-0001
Patrick S. Baird Director, Senior Vice President and Chief
4333 Edgewood Road, N.E. Operating Officer
Cedar Rapids, Iowa 52499-0001
Craig D. Vermie Director, Vice President, Secretary and
4333 Edgewood Road, N.E. General Counsel
Cedar Rapids, Iowa 52499-0001
Douglas C. Kolsrud Director, Senior Vice President, Chief
4333 Edgewood Road, N.E. Investment Officer 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
4333 Edgewood Road, N.E. Officer
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
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
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
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 Kansas 100% Monumental General Sale/admin. of travel
Agency, Inc. 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
advisor
Advisors, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Diversified Investors Delaware 100% Diversified Broker-Dealer
Securities Corp. Investment Advisors, Inc.
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
Supplemental Ins. Tennessee 100% AUSA Holding Co. Insurance
Division, Inc.
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Insurance agency
Canadian Dealer Network Inc. Resources, 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 Delaware 100% Quantra Corporation Manufacture and sell
Corporation 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 Iowa 100% AEGON USA Realty Information Systems for
Systems, Inc. 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 Iowa 21.89% First AUSA Real estate investment
Life Ins. Co. trust
Trust 13.11% PFL Life 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.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
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
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
advisor
Services, Inc.
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.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
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
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 Delaware 100% LIICA Purchases, own, and hold
Alliance, LLC 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 Marketing
Group, Inc. Co.
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, Inc. 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
Aegon Equity Florida 100% Western Reserve Life Insurance Agency
Group, Inc. Assurance Co. of Ohio
ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency
Assurance Co. of Ohio
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ISI Insurance Agency Ohio 100% ISI Insurance Insurance agency
of Ohio, Inc. Agency Inc.
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 Maryland 100% First AUSA Life Insurance
Co. Ins. Co.
AEGON Special Markets Maryland 100% Monumental Life Marketing
Group, Inc. Ins. Co.
Monumental General Maryland 100% First AUSA Life Insurance
Casualty Co. Ins. Co.
United Financial Services, Maryland 100% First AUSA Life General agency
Inc. Ins. Co.
Bankers Financial Life Arizona 100% First AUSA Life Insurance
Ins. Co. 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, Kentucky 100% CGC Provider of srvcs. to ins.
Inc. cos.
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security
Life Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, General agent
Inc.
Commonwealth General Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements
AFSG Securities Pennsylvania 100% CGC Broker-Dealer
Corporation
PB Investment Advisors, Delaware 100% CGC Registered investment
Inc. advisor
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Diversified Financial Delaware 100% CGC Provider of investment,
Products Inc. marketing and admin.
services to ins. cos.
AEGON USA Real Estate Delaware 100% Diversified Real estate and mortgage
Services, Inc. Financial holding company
Products Inc.
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 Special purpose
Life Insurance Company subsidiary
JMH Operating Company, Inc. Mississippi 100% Peoples Security Real estate holdings
Life 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 Delaware 100% CGC Real estate holdings
Corporation
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Capital Broadway Kentucky 100% CGC Real estate holdings
Corporation
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
Ampac Insurance Agency, Pennsylvania 100% CGC Provider of management
Inc. (EIN 23-1720755) support services
National Home Life Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Frazer Association Illinois 100% Ampac Insurance TPA license-holder
Consultants, Inc. Agency, Inc.
Valley Forge Associates, Pennsylvania 100% Ampac Insurance Furniture & equipment
Inc. Agency, Inc. lessor
Veterans Benefits Plans, Pennsylvania 100% Ampac Insurance Administrator of group
Inc. Agency, Inc. insurance programs
Veterans Insurance Delaware 100% Ampac Insurance Special-purpose subsidiary
Services, Inc. Agency, Inc.
Financial Planning Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Services, Inc. Agency, Inc.
Academy Insurance Group, Delaware 100% CGC Holding company
Inc.
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.
Ammest Development Corp. Kansas 100% Academy Insurance Special-purpose subsidiary
Inc. Group, Inc.
Ammest Insurance Agency, California 100% Academy Insurance General agent
Inc. Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
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, Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Inc. (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, Massachusetts 100% Force Fin. Group, Special-purpose subsidiary
Inc. Inc.
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
Services, Inc. Group, Inc.
Unicom Administrative Germany 100% Unicom Provider of admin. services
Services, GmbH Administrative Services,
Inc.
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
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20% Capital Liberty, L.P.
76.3% Monumental
Life Insurance Co.
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company
Life Insurance Company
Peoples Benefit Services, Pennsylvania 100% Veterans Life Ins. Special-purpose subsidiary
Inc. Co.
</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
<PAGE>
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 Chief Compliance Officer Treasurer/Controller
Debra C. Cubero Priscilla Hechler
Vice President Assistant Secretary and Assistant Vice President
Emily Bates Thomas Pierpan
Assistant Treasurer Assistant Secretary and Assistant Vice President
Clifton Flenniken Darin D. Smith
Assistant Treasurer Assistant Secretary and Assistant Vice President
</TABLE>
The principal business address of each person listed is AFSG Securities
Corporation, 4333 Edgewood Road, N.E., Cedar Rapids, IA 52499-0001.
Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------
AFSG Securities Corporation, the broker/dealer, received $0 from the Registrant
from May 1, 1998 through December 31, 1998, for its services in distributing the
Policies. AEGON USA Securities, Inc., its predecessor, received $0 from the
Registrant from January 1, 1998 through April 30, 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.
<PAGE>
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 22nd day of
February, 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.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
* Director February __, 1999
- ----------------------
Patrick S. Baird
/s/ Craig D. Vermie Director February 22, 1999
- ----------------------
Craig D. Vermie
* Director February __, 1999
- ---------------------- (Principal Executive Officer)
William L. Busler
* Director February __, 1999
- ----------------------
Larry N. Norman
* Director February __, 1999
- ----------------------
Douglas C. Kolsrud
* Vice President and February __, 1999
- ---------------------- Corporate Controller
Robert J. Kontz
* Treasurer February __, 1999
- ----------------------
Brenda K. Clancy
</TABLE>
* By Craig D. Vermie, attorney in-fact.
