Registration No. 33-58028
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ ____
Post-Effective Amendment No. __4_ __X_
and/or
(Check appropriate box or boxes)
Principal Mutual Life Insurance Company Separate Account C
(Exact Name of Registrant)
Principal Mutual Life Insurance Company
(Name of Depositor)
The Principal Financial Group, Des Moines, Iowa 50392
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (515) 248-3842
M. D. Roughton, The Principal Financial Group, Des Moines, Iowa 50392
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate space)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1996 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of the Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on (date) pursuant to paragraph (a)(2) 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>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C
PENSION BUILDER - GROUP VARIABLE ANNUITY CONTRACTS
FOR QUALIFIED PLANS FOR SELF-EMPLOYED INDIVIDUALS
AND THEIR EMPLOYEES
Registration Statement on Form N-4
Cross Reference Sheet
Form N-4 Item Caption in Prospectus
Part A
1. Cover Page Principal Mutual Life Insurance
Company Separate Account C
Pension Builder - Group
Variable Annuity Contracts
For Self-Employed Individuals
and Their Employees
2. Definitions Glossary of Special Terms
3. Synopsis Summary, Expense Table, Example
4. Condensed Financial Information Condensed Financial Information
5. General Description of Summary, Introduction, Description of
Registrant, Depositor, and Principal Mutual Life Insurance
Portfolio Companies Company, Principal Mutual Life
Insurance Company Separate Account
C, Voting Rights
6. Deductions Summary, Deductions Under the Contracts,
Contingent Deferred Sales Charge,
Administration Charge, Separate
Payment of Administration Charge,
Mortality and Expense Risks Charge,
Premium Taxes, Distribution of These
Contracts
7. General Description of Variable Summary, The Contract, Contract Values
Annuity Contracts and Accounting Before Annuity Commence-
ment Date, Annuity Benefits, Payment
on Death of Participant, Withdrawals
and Transfers, Other Contractual
Provisions, Contractowners' Inquiries
8. Annuity Period Annuity Benefits
9. Death Benefit Payment on Death of Participant,
Federal Tax Status
10. Purchases and Contract Value Summary, Introduction, The Contract,
Contract Values and Accounting Before
Annuity Commencement Date, Other
Contractual Provisions, Distribution
of These Contracts
11. Redemptions Summary, Introduction, Annuity Benefits,
Withdrawals, and Transfers
12. Taxes Summary, Introduction, Annuity Benefits,
Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the State- Table of Contents of the Statement
ment of Additional Information of Additional Information
<PAGE>
Part B Statement of Additional Information
Caption**
15. Cover Page Principal Mutual Life Insurance
Company Separate Account C Pension
Builder-Group Variable Annuity
Issued By Principal Mutual Life
Insurance Company
16. Table of Contents Table of Contents
17. General Information and History General Information and History
18. Services Independent Accountants
19. Purchase of Securities Being Deductions Under the Contracts,
Offered Summary, Withdrawals and Transfers,
Distribution of These Contracts
20. Underwriters Summary, Distribution of These Contracts,
Underwriting Commissions
21. Calculation of Performance Data Calculation of Yield and Total Return
22. Annuity Payments Annuity Benefits
23. Financial Statements Financial Statements
** Prospectus caption given where appropriate.
<PAGE>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT C
PENSION BUILDER -- GROUP VARIABLE ANNUITY CONTRACTS
FOR QUALIFIED PLANS FOR SELF-EMPLOYED
INDIVIDUALS AND THEIR EMPLOYEES
Issued by Principal Mutual Life Insurance Company (the "Company")
Prospectus dated May 1, 1996
This Prospectus concisely sets forth information about Principal Mutual
Life Insurance Company Separate Account C, Pension Builder - Group Variable
Annuity Contracts (the "Contract" or the "Contracts") that an investor ought to
know before investing. It should be read and retained for future reference.
Additional information about the Contract, including a Statement of
Additional Information, dated May 1, 1996, has been filed with the Securities
and Exchange Commission. The Statement of Additional Information is incorporated
by reference into this Prospectus. The table of contents of the Statement of
Additional Information appears on page 20 of this Prospectus. A copy of the
Statement of Additional Information can be obtained, free of charge, upon
request by writing or telephoning:
Princor Financial Services Corporation
a Member of
The Principal Financial Group
Des Moines, IA 50392-0200
Telephone: 1-800-247-4123
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus is valid only when accompanied by the current prospectus
for Principal Capital Accumulation Fund, Inc., Principal Government Securities
Fund, Inc. and Principal Money Market Fund, Inc. These prospectuses should be
kept for future reference.
TABLE OF CONTENTS
Page
Glossary of Special Terms ............................................. 3
Expense Table.......................................................... 4
Example .............................................................. 5
Condensed Financial Information ....................................... 6
Summary .............................................................. 6
Introduction .......................................................... 7
Description of Principal Mutual Life Insurance Company ................ 8
Principal Mutual Life Insurance Company Separate Account C ............ 8
Deductions Under the Contracts ........................................ 8
Contingent Deferred Sales Charge ................................. 9
Administration Charge ............................................. 9
Separate Payment of Administration Charge ......................... 10
Mortality and Expense Risks Charge ................................ 10
Premium Taxes ..................................................... 10
Surplus Distribution at Sole Discretion of the Company ................ 10
The Contract........................................................... 10
Contract Values and Accounting Before Annuity Commencement Date ... 11
Participant's Investment Accounts ............................ 11
Unit Value ................................................... 11
Net Investment Factor ........................................ 11
Hypothetical Example of Calculation of Unit Value for the
Common Stock Division and Government Securities Division ... 11
Hypothetical Example of Calculation of Unit Value for
the Money Market Division .................................. 12
Annuity Benefits .................................................. 12
Selecting a Variable Annuity ................................. 12
Forms of Variable Annuities .................................. 12
Basis of Annuity Conversion Rates ............................ 13
Determining the Amount of the First Monthly Annuity Payment .. 14
Determining the Amount of the Second and Subsequent
Monthly Annuity Payments .................................... 14
Hypothetical Example of Calculation of Annuity Payments ...... 14
Payment on Death of Participant ................................... 14
Prior to Annuity Commencement Date ........................... 14
Subsequent to Annuity Commencement Date ...................... 15
Withdrawals and Transfers ......................................... 15
Cash Withdrawals ............................................. 15
Transfers to the Contract .................................... 15
Transfers Between Divisions .................................. 15
Transfers to the Associated Fixed Contract ................... 16
Special Situation Involving Alternate Funding Agents ......... 16
Postponement of Cash Withdrawal or Transfer .................. 16
Other Contractual Provisions ...................................... 16
Contribution Limits .......................................... 16
Assignment ................................................... 16
Cessation of Contributions ................................... 16
Limitation as to Participants ................................ 17
Substitution of Securities ................................... 17
Changes in a Contract ........................................ 17
Statement of Values .......................................... 17
Voting Rights ................................................ 17
Distribution of these Contracts ................................... 17
Federal Tax Status ................................................ 18
State Regulation .................................................. 18
Legal Opinions .................................................... 18
Legal Proceedings ................................................. 18
Registration Statement ............................................ 19
Other Variable Annuity Contracts .................................. 19
Independent Auditors ............................................. 19
Financial Statements............................................... 19
Appendix 1 ........................................................ 19
Appendix 2 ........................................................ 19
Contractholders' Inquiries ........................................ 19
Table of Contents of the Statement of Additional Information ...... 20
This Prospectus does not constitute an offer of, or solicitation of any
offer to acquire, any interest or participation in the Contracts in any
jurisdiction in which such an offer or solicitation may not lawfully be made. No
person is authorized to give any information or to make any representations in
connection with the Contracts other than those contained in this Prospectus.
GLOSSARY OF SPECIAL TERMS
Administration Charge -- A charge deducted once each Contribution Year
prior to the Annuity Commencement Date from the Investment Accounts of each
Participant, either on the last day of the Contribution Year or the date the
Investment Accounts are applied or paid in full (a total redemption).
Annuity Change Factor -- The factor used to determine the change in value
of a Variable Annuity in the course of payment.
Annuity Commencement Date -- The first day of any month on which Annuity
Payments to a Participant begin, as provided by the Retirement Plan.
Annuity Payments -- Periodic payments made to a Participant pursuant to the
annuity certificate issued to the Participant at the commencement of benefits.
Annuity Reserve Account -- The reserve held for Variable Annuities in
course of payment in a Division of Separate Account C for these Contracts.
Associated Fixed Contract -- A fixed-dollar annuity contract issued by the
Company for use in connection with HR-10 retirement plans.
Commuted Value -- The dollar value, as of a given date, of remaining
Annuity Payments. It is determined by the Company using the interest rate
assumed in determining the initial amount of monthly income and assuming no
variation in the amount of monthly payments after the date of determination.
Contingent Deferred Sales Charge -- The charge deducted from certain cash
withdrawals from a Participant's Investment Accounts before the Annuity
Commencement Date.
Contract -- Contract issued by the Company with the following form number:
GP A 5923.
Contractholder -- The entity to which the Contract will be issued, which
will normally be an Employer, an association, or a trust established for the
benefit of Participants and their beneficiaries.
Contribution -- Amounts contributed under the Contracts by or on behalf of
Participants which are permitted or required by the Retirement Plan.
Contribution Year -- The twelve-month period which coincides with the Plan
Year. The first Contribution Year of a Participant will commence on the date the
Company receives an initial Contribution on behalf of the Participant and will
terminate at the end of the Plan Year in which such Contribution is received.
Division -- The part of Separate Account C which is invested in shares of a
single Mutual Fund.
Employer -- The sole proprietorship or partnership which establishes or
adopts a Retirement Plan.
HR-10 -- The Self-Employed Individuals Tax Retirement Act of 1962, as
amended.
Internal Revenue Code -- The Internal Revenue Code of 1954, as amended, and
regulations promulgated thereunder. Reference to the Internal Revenue Code means
such Internal Revenue Code or the corresponding provisions of any subsequent
revenue code and any regulations thereunder.
Investment Account -- An account established under a Contract for a
Participant with respect to a Division of Separate Account C.
Investment Account Value -- The value of an Investment Account on any date
is equal to the number of units then credited to such Investment Account
multiplied by the Unit Value for that Division for the Valuation Period in which
such date occurs.
Mutual Funds -- Principal Capital Accumulation Fund, Inc., Principal Money
Market Fund, Inc., or Principal Government Securities Fund, Inc., or shares of
other registered open-end investment companies substituted therefor.
Net Investment Factor -- The factor used to determine the change in Unit
Value during a Valuation Period.
Normal Income Form -- The form of annuity option provided for in the
Retirement Plan if the Participant has not elected one. If the Retirement Plan
does not so provide, then the Normal Income Form is Variable Life Annuity with
Monthly Payments Certain for Ten Years for an unmarried Participant and is
Variable Life Annuity with One-Half Survivorship for a married Participant.
Participant -- A natural person for whom Contributions have been or are
being made under the Contract.
Plan Year -- The accounting year of the Retirement Plan. If the Retirement
Plan does not have any accounting year, the Company will establish a
twelve-month period as the Plan Year.
Retirement Plan -- A pension or profit-sharing "HR-10" plan which qualifies
under the Self-Employed Individuals Tax Retirement Act of 1962, as amended,
under which all or part of the benefits are to be provided to Participants
pursuant to a Contract described herein.
Separate Account C -- A separate account established by the Company under
Iowa law to receive Contributions under the Contracts offered by this Prospectus
and other contracts issued by the Company. It is divided into a Common Stock
Division (invested in Principal Capital Accumulation Fund, Inc.), a Money Market
Division (invested in Principal Money Market Fund, Inc.) and a Government
Securities Division (invested in Principal Government Securities Fund, Inc.).
Additional Divisions may be added in the future.
Total and Permanent Disability -- The condition of a Participant when, as
the result of sickness or injury, the participant is prevented from engaging in
any substantial gainful activity and is eligible for and receiving a disability
benefit under Title II of the Federal Social Security Act.
Unit Value -- A measure used to determine the value of a Participant's
Investment Accounts.
Valuation Date -- The date as of which the net asset value of a Mutual Fund
is determined.
Valuation Period -- The period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Date and the time as of
which such value is determined on the next following Valuation Date.
Variable Annuity -- A series of periodic payments, the amounts of which
will increase or decrease to reflect the investment experience of a Division of
Separate Account C for the Contract.
Written Notification -- Actual delivery to the Company at its home office
in Des Moines, Iowa of an appropriate writing from the person or persons
specified by the Retirement Plan, on a form supplied or approved by the Company.
EXPENSE TABLE
The following tables depict fees and expenses applicable to a Participant's
account under the Contract. The purpose of the table is to assist the
contractowner in understanding the various costs and expenses that a
contractowner will bear directly or indirectly. The table reflects expenses of
the separate account as well as the expenses of the mutual funds in which the
separate account invests. In certain circumstances, state premium taxes will
also be applicable. The example below should not be considered a representation
of past or future expenses; actual expenses may be greater or lesser than those
shown. See "Deductions under the Contracts."
Contractowner Transaction Expenses
Sales Load Imposed on
Purchases (as a percentage
of purchase payments) None
Deferred Sales Load (as a
percentage of amount
surrendered)
For Withdrawals Occurring During Year:
1 2 3 4 5 6 7 8 9 10 Thereafter
- - - - - - - - - -- ----------
7% 6.3% 5.6% 4.9% 4.2% 3.5% 2.8% 2.1% 1.4% .7% 0%
Surrender Fees None
Exchange Fee None
Annual Contract Fee $25 plus an amount equal to the following:
- ----------------------
.5% of the First
Total Value of All x $50,000 of the Participant's
Investment Accounts Investment Accounts
of Participant _______________________________
Total Value of all Investment
Accounts Under the
Retirement Plan
Separate Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Fees 1.4965%
Account Fees and Expenses None
Total Separate Account Annual Expenses 1.4965%
Annual Expenses of Mutual Funds
(as a percentage of average net
assets of the following
mutual funds)
Principal Capital Principal Government Principal Money
Accumulation Fund Securities Fund Market Fund
Management Fees .49% .50% .50%
Other Expenses .02% .05% .08%
Total Mutual Fund
Annual Expenses .51% .55% .58%
<TABLE>
<CAPTION>
EXAMPLE
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
If you surrender your contract at the Common Stock
end of the applicable time period: Division $95 $132 $171 $272
You would pay the following Government
expenses on a $1,000 investment, Securities
assuming 5% annual return on Division $95 $133 $172 $276
assets:
Money Market
Division $96 $134 $174 $279
If you annuitize at the end of the Common Stock
applicable time period or do not Division $23 $72 $123 $263
surrender your contract:
You would pay the following Government
expenses on a $1,000 investment, Securities
assuming 5% annual return on Division $24 $73 $125 $267
assets:
Money Market
Division $24 $74 $126 $270
</TABLE>
CONDENSED FINANCIAL INFORMATION
Selected data for a Pension Builder accumulation unit outstanding
throughout the period ended December 31:
<TABLE>
<CAPTION>
Common Stock Division
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value:
Beginning of period $2.624 $2.650 $2.495 $2.313 $1.693 $1.907 $1.665 $1.477 $1.409 $1.231
End of period 3.409 2.624 2.650 2.495 2.313 1.693 1.907 1.665 1.477 1.409
Number of accumulation 696 3,570 4,812 4,485 3,880 3,429 3,006 2,521 2,188 1,107
units outstanding at end
of period (in thousands)
</TABLE>
<TABLE>
<CAPTION>
Government Securities Division (1)
1995 1994 1993 1992 1991 1990 1989 1988 1987
---------------------------------------------------------------------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value:
Beginning of period $1.570 $1.669 $1.539 $1.462 $1.269 $1.176 $1.032 $ .967 $1.000
End of period 1.841 1.570 1.669 1.539 1.462 1.269 1.176 1.032 .967
Number of accumulation 453 1,722 2,501 2,178 1,770 1,398 1,072 507 210
units outstanding at end
of period (in thousands)
<FN>
(1) Commenced operations on April 14, 1987.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Money Market Division
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---------------------------------------------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value:
Beginning of period $1.696 $1.659 $1.640 $1.608 $1.541 $1.448 $1.348 $1.276 $1.217 $1.163
End of period 1.764 1.696 1.659 1.640 1.608 1.541 1.448 1.348 1.276 1.217
Number of accumulation 564 1,452 1,694 2,009 2,479 2,626 2,609 1,274 536 172
units outstanding at end
of period (in thousands)
</TABLE>
Financial statements are contained in the Statement of Additional Information.
SUMMARY
How can I invest in a Contract?
The Pension Builder Group variable annuity contracts (the "Contract" or the
"Contracts") described in this Prospectus are designed for use in connection
with pension or profit-sharing plans which qualify under the Self-Employed
Individuals Retirement Act of 1962 ("HR-10") as amended. These Contracts, which
are no longer offered, were sold primarily by insurance agents of or brokers for
Principal Mutual Life Insurance Company. In addition, these persons were usually
registered representatives of Princor Financial Services Corporation, which acts
as distributor for the Contract. See "Distribution of these Contracts."
What is the minimum amount that may be invested?
There is no required minimum. See "Other Contractual Provisions".
Do I get an initial ten-day free look at a newly purchased Contract?
Yes. A Participant may terminate initial participation under the Contract
without penalty by returning the certificate issued when the Contract is first
purchased to the home office of the Company within ten days after the
Participant's initial receipt of the certificate. See "Introduction."
How can I withdraw my investment?
Participant withdrawals are subject to any Retirement Plan limitations or
any reduction for vesting provided for in the Retirement Plan as to amounts
available, and will be subject to any charges that may be applied. See
"Withdrawals and Transfers." However, note that withdrawals before age 59 1/2
may involve an income tax penalty. See "Federal Tax Status."
INTRODUCTION
The Contracts described in this Prospectus are designed for use in
connection with pension or profit-sharing plans which qualify under the
Self-Employed Individuals Tax Retirement Act of 1962, as amended. The Contracts
provide for the accumulation of values and the payment of annuity benefits on a
variable basis. A certificate is issued to each Participant describing the
benefits under the Contract. A Participant may terminate initial participation
under the Contract without penalty by returning the certificate issued when the
Contract is first purchased to the home office of the Company within ten days
after the Participant's initial receipt of the certificate.
All Contributions for Participants are allocated to one or more of the
Divisions of Separate Account C. Currently there are three Divisions: the Common
Stock Division, the Money Market Division and the Government Securities
Division. Additional Divisions may be added in the future. Each Participant
controls the allocation by filing a Written Notification with the Company.
The Common Stock Division invests only in shares of Principal Capital
Accumulation Fund, Inc., the Money Market Division invests only in shares of
Principal Money Market Fund, Inc. and the Government Securities Division invests
only in shares of Principal Government Securities Fund, Inc. These three
corporations are diversified, open-end investment management companies typically
known as Mutual Funds. The Investment Manager for the Mutual Funds is Princor
Management Corporation. Principal Capital Accumulation Fund and Principal Money
Market Fund are also used to fund variable life insurance contracts. See
"Eligible Purchasers and Purchase of Shares" in the Funds' prospectus for a
discussion of the potential risks associated with "mixed funding."
The investment objective of Principal Capital Accumulation Fund, Inc. is
long-term capital appreciation and growth of future investment income. The
assets of this Mutual Fund consist principally of a portfolio of common stocks.
The value of the investments held by this Mutual Fund fluctuates daily and is
subject to the risks of changing economic conditions as well as the risks
inherent in the ability of this Mutual Fund's management to anticipate changes
in such investments necessary to meet changes in economic conditions.
Historically, the value of a diversified portfolio of common stocks such as
invested in by Principal Capital Accumulation Fund, Inc. held for an extended
period of time has tended to rise during periods of inflation. There has,
however, been no exact correlation, and for some periods the values of such
common stocks declined while the rate of inflation increased.
Principal Money Market Fund, Inc. has an investment objective of obtaining
maximum current income available from short-term securities consistent with
preservation of principal and maintenance of liquidity by investing all of its
assets in a portfolio of money market instruments. This Mutual Fund invests in
United States dollar denominated instruments having a maturity of 397 days or
less that the Manager, subject to the oversight of the Fund's board of
directors, determines present minimal credit risks and which at the time of the
acquisition are "eligible securities" as that term is defined in regulations
issued under the Investment Company Act of 1940. See the Fund's prospectus for
details. The value of the investments held by this Mutual Fund may fluctuate,
although the net asset value per share is normally expected to remain at $1.00.
However, its yield will vary with changes in short-term interest rates. Over the
last two decades there has been a general correlation between short-term
interest rates and the cost of living, but there has been no exact correlation
and for some periods such rates have declined while the cost of living has
risen.
Principal Government Securities Fund, Inc. has an investment objective of
a high level of current income, liquidity and safety of principal. The Fund
seeks to achieve this objective through the purchase of obligations issued or
guaranteed by the United States Government or its agencies, with up to 55% of
the Fund's assets invested in Government National Mortgage Association
Certificates ("GNMA Certificates"). Fund shares, however, are not guaranteed by
the United States Government. The value of the Fund's investments fluctuates as
interest rates change. The value rises when rates decline and falls when rates
increase. Expected prepayments of mortgages included in a GNMA certificate can
offset the market value of the certificate, and actual prepayments can effect
the return ultimately received.
Additional information concerning these Mutual Funds, including their
investment policies and restrictions, investment management fees and operating
expenses is given in the prospectus for the Funds. A Prospectus for the Mutual
Funds is attached to and follows this Prospectus. It should be read carefully in
conjunction with this Prospectus before investing.
Each Division purchases shares of the Mutual Funds at net asset value. In
addition, all distributions made by a Mutual Fund with respect to shares held by
Divisions of Separate Account C are reinvested in additional shares of the same
Mutual Fund. Contract benefits are provided and charges are made in effect by
redeeming Mutual Fund shares at net asset value. Values under the Contracts,
both before and after the commencement of Annuity Payments, will increase or
decrease to reflect the investment performance of the Mutual Funds and
Participants assume the risks of such change in values.
From time to time the Separate Account advertises its Money Market
Division's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the division refers to the income generated by an investment in the
division over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the division is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. Neither yield quotation
reflects sales load deducted from purchase payments which, if included, would
reduce the "yield" and "effective yield."
Also, from time to time, the Separate Account will advertise the average
annual total return of its various divisions. The average annual total return
for any of the divisions is computed by calculating the average annual
compounded rate of return over the stated period that would equate an initial
$1,000 investment to the ending redeemable contract value. In this calculation
the ending value is reduced by a contingent deferred sales charge that decreases
from 7% to 0% over a period of 10 years. The Separate Account may also advertise
total return figures of its Divisions for a specified period that do not take
into account the sales charge in order to illustrate the change in the
Division's unit value over time. See "Deductions Under the Contracts" for a
discussion of contingent deferred sales charges.
See the Statement of Additional Information for further information
regarding the computation of yield, effective yield and total return.
DESCRIPTION OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANY (THE "COMPANY")
Principal Mutual Life Insurance Company is a mutual life insurance company
with its home office at The Principal Financial Group, Des Moines, Iowa,
telephone number 515-247-5111. It was originally incorporated under the laws of
the State of Iowa in 1879 as Bankers Life Association, changed its name to
Bankers Life Company in 1911 and changed its name to Principal Mutual Life
Insurance Company in 1986.
Principal Mutual Life Insurance Company is authorized to do business in the
50 states of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and the Canadian Provinces of Alberta, British Columbia, Manitoba,
Ontario and Quebec. The Company sells life, disability, and health insurance,
and annuities written both on an individual and a group basis.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C
Separate Account C was established on April 12, 1971 pursuant to a
resolution (as amended) of the Executive Committee of the Board of Directors of
the Company. Under Iowa insurance laws and regulations the income, gains or
losses, whether or not realized, of Separate Account C are credited to or
charged against the assets of Separate Account C without regard to the other
income, gains or losses of the Company. In addition, all income, gains or
losses, whether or not realized, and expenses with respect to a Division of
Separate Account C for these Contracts shall be credited to or charged against
that Division without regard to income, gains or losses, or expenses of any
other Division of Separate Account C. Furthermore, the assets of each Division
of Separate Account C for these Contracts shall not be charged by the Company
with any liabilities arising from any other contracts issued by the Company or
from any other Division of Separate Account C. These assets are held with
relation to the Contracts described in this Prospectus and such other variable
annuity contracts as may be issued by the Company and designated as
participating in the various Divisions of Separate Account C. Also, although the
assets maintained in Separate Account C attributable to the Contracts will not
be charged with any liabilities arising out of any other business conducted by
the Company, the reverse is not true. Hence, all obligations arising under the
Contracts, including the promise to make Annuity Payments, are general corporate
obligations of the Company.
Pursuant to amendments enacted in 1970 to the Investment Company Act of
1940, Separate Account C is not an investment company for purposes of the Act
and hence certain provisions of the Act do not apply to it.
The Company is taxed as an insurance company under the Internal Revenue
Code. The operations of Separate Account C are part of the total operations of
the Company but are treated separately for accounting and financial statement
purposes and are considered separately in computing the Company's tax liability.
Separate Account C is not affected by federal income taxes paid by the Company
with respect to its other operations, and under existing federal income tax law,
investment income and capital gains attributable to Separate Account C are not
taxed. The Company reserves the right to charge Separate Account C with, and to
create a reserve for, any tax liability which the Company determines may result
from maintenance of Separate Account C. To the best of the Company's knowledge,
there is no current prospect of any such liability.
DEDUCTIONS UNDER THE CONTRACTS
An Administration Charge, a mortality and expense risks charge and, in
certain circumstances, state premium taxes are deducted under the Contract.
Also, in certain circumstances, a Contingent Deferred Sales Charge may be
deducted from certain cash withdrawals from a Participant's Investment
Account(s) before the Annuity Commencement Date. Total expenses of the
Registrant for the fiscal year ended December 31, 1995 were 1.78% of the average
net assets.
There are also deductions from and expenses paid out of the assets of
Principal Money Market Fund, Inc., Principal Capital Accumulation Fund, Inc. and
Principal Government Securities Fund, Inc. These are described in the
prospectus.
A. Contingent Deferred Sales Charge
There is no initial sales charge. However, any cash withdrawal before the
Annuity Commencement Date on behalf of a Participant may be subject to a
Contingent Deferred Sales Charge equal to a percentage of the amount being
withdrawn. The percentage will be determined according to the following
table:
Number of Contribution
Years A Participant Has Been Contingent Deferred
Covered Under the Contract Sales Charge Percentage
-------------------------- -----------------------
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 0.7
10 or more 0.0
The charge will be made by reducing the Investment Account Value from which
the withdrawal is made by an amount equal to the charge (see "Cash
Withdrawals").
The Contingent Deferred Sales Charge does not apply to withdrawals made as
a result of the Participant's death or Total and Permanent Disability. The
charge also does not apply to transfers between Investment Accounts or
transfers to an Associated Fixed Contract or to amounts applied to provide
Variable Annuity payments. The charge may apply to amounts transferred to
an Alternate Funding Agent or Alternate Funding Vehicle, except transfers
to an Alternate Funding Vehicle that is an annuity contract issued by
Principal Mutual Life Insurance Company.
The Contingent Deferred Sales Charge will be waived by the Company for
withdrawals of the entire value of a Participant's Investment Accounts
under the Contract. This waiver will not apply to withdrawals of less than
the entire value of a Participant's Investment Accounts under the Contract.
The amount of any Contingent Deferred Sales Charge will never exceed 9% of
the purchase payments to which the charge relates. For this purpose,
withdrawals will be related to purchase payments on a first-in, first-out
basis and "purchase payments" will include purchase payments made under any
Associated Fixed Contract from which transfers have been made. See
"Transfers to the Contract."
The Contingent Deferred Sales Charge, when applicable, will be applied by
the Company to unamortized expenses relating to the sale of the Contracts
including but not limited to commissions paid to sales personnel, the costs
of preparation of sales literature and other promotional activity. If
revenues from the Contingent Deferred Sales Charge are not sufficient to
cover sales expenses, the short fall could be viewed as being provided for
out of other revenues or the Company's surplus, including revenues
attributable to the mortality and expense risks charge.
B. Administration Charge
An Administration Charge will be deducted once each Contribution Year
proportionately from the Investment Accounts of each Participant and will
be equal to the sum of 1. and 2.:
1. $25.
2. The Participant's proportionate share of an amount equal to a
percentage of the total value of all Investment Accounts under the
Retirement Plan under the Contract. This percentage shall be 0.5% of
the first $50,000 in such accounts divided by the total value of such
accounts. (See Appendix 2 for example of computation of Administration
Charge.)
The Administration Charge applicable to each Participant will be deducted
from the Participant's Investment Accounts on the earlier of (i) the date
such accounts are paid or applied in full (a total redemption) or (ii) the
last day of the Contribution Year. Such deduction will be effected by
cancelling a number of the units in each Investment Account of the
Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Contract for the applicable Division for
the Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant. The Company does not expect to recover
from the charge any amount above its accumulated expenses associated with
the Contracts. However, since a portion of the charge is based on a percent
of a Participant's Investment Account Values, amounts derived from larger
Investment Accounts may to an extent cover expenses associated with smaller
Investment Accounts depending upon the relative degree of Investment
Account activity.
C. Separate Payment of Administration Charge
An Employer may, by a revocable written agreement with the Company, agree
to pay separately all or a portion of the Administration Charge for
Participants who are employees of the Employer.
D. Mortality and Expense Risks Charge
Variable Annuity Payments will not be affected by adverse mortality
experience or by any excess in the actual sales and administrative expenses
over the charges provided for in the Contract. The Company assumes the
risks that (i) Annuity Payments will continue for a longer period than
anticipated and (ii) the deductions under the Contracts will be
insufficient to cover the actual costs. For assuming these risks, the
Company, in determining Unit Values and Variable Annuity Payments, makes a
charge as of the end of each Valuation Period against the assets of
Separate Account C held with respect to the Contract. The charge is
equivalent to a simple annual rate of 1.4965%. The Company does not believe
that it is possible to specifically identify that portion of the 1.4965%
deduction applicable to the separate risks involved, but estimates that a
reasonable approximate allocation would be .2490% for the mortality risks
and 1.2475% for the expense risks. The mortality and expense risks charge
may be changed by the Company at any time at least one year after the
Contract has been issued by giving not less than 60 days prior written
notice to the Contractholder, Employer and Participants. However, during
the first five years following issuance of the Contracts, the charge may
not exceed 2.00% on an annual basis, and further only one change may be
made in any one year period. Any change in the mortality and expense risks
charge will not affect Variable Annuities in the course of payment. If the
charge is insufficient to cover the actual costs of the mortality and
expense risks assumed, the financial loss will fall on the Company;
conversely, if the charge proves more than sufficient, the excess will be a
gain to the Company.
E. Premium Taxes
Certain state and local governments impose a premium tax upon annuity
considerations received by insurance companies. The Company will charge
against the Participant's Investment Account Values the amount of any
premium taxes levied by a state or any other government entity. Premium
taxes currently imposed by states range from 0% (in more than 40 states) to
2.25%. (See Appendix 1 for premium tax rates.) Unless otherwise required by
law, the deduction will be made at the time Investment Account Values are
applied to effect the form of variable annuity selected by the Participant.
The applicable rates imposed by the states and other governmental entities
which impose premium taxes on annuity considerations are subject to being
changed or amended by the respective legislative body or by administrative
interpretations or by judicial acts. IT IS NOT POSSIBLE TO DESCRIBE
PRECISELY THE AMOUNT OF PREMIUM TAX PAYABLE ON ANY TRANSACTION INVOLVING
THE CONTRACTS. Such premium taxes will depend, among other things, on the
state of residence of the Participant and the insurance tax laws of such
states.
SURPLUS DISTRIBUTION AT SOLE DISCRETION OF THE COMPANY
It is not anticipated that any divisible surplus will ever be distributable
to these Contracts in the future because the Contracts are not expected to
result in a contribution to the divisible surplus of the Company. However, if
any distribution of divisible surplus is made, it will be made to Participants'
Investment Accounts in the form of additional units.
THE CONTRACT
The Contract will normally be issued to an Employer or association or a
trust established for the benefit of Participants and their beneficiaries. The
Company will also issue a pre-retirement certificate to each Participant
describing the benefits under the Contract. If the Company Home Office in Des
Moines, Iowa receives and accepts a completed application for a Contract with or
before the initial purchase payment, it will, within two days after receiving
that payment, invest the entire amount in the Division or Divisions that are
chosen. (If no Division is chosen on the completed application for a Contract,
the Company will invest the entire amount in the Money Market Division.) If the
application for the purchase of a Contract is not received and accepted within
five business days after the Company receives the initial purchase payment, the
Company will return the payment. If the application is received and accepted
within the five-day period, that payment will be invested in the Division or
Divisions of choice at the Unit Value or Values next calculated after the
application has been accepted.
A. Contract Values and Accounting Before Annuity Commencement Date
1. Participant's Investment Accounts
During the period of time before the commencement of Annuity Payments,
an Investment Account will be established for each Participant for each
type of Contribution permitted under the Contract for each Division of
Separate Account C. The types of Contributions are: Contributions by
the Employer pursuant to the Retirement Plan, voluntary non-deductible
Participant Contributions, Contributions which represent a transfer
from a prior funding arrangement, or other Contributions that the
Company agrees to accept.
Investment Accounts will be maintained until the Investment Account
Values are either (a) applied to effect Variable Annuity benefits for
the Participant, (b) paid to the Participant or Participant's
beneficiary or (c) transferred in accordance with the provisions of the
Contract.
Each Contribution for a Participant will be allocated to the Division
or Divisions of Separate Account C designated by Written Notification
and will result in a credit of units to the appropriate Investment
Account. The number of units so credited will be determined by dividing
the portion of the Contributions allocated to a Division by the Unit
Value for that Division for the Valuation Period within which the
Contribution was received by the Company at its home office in Des
Moines, Iowa.
2. Unit Value
The Unit Value for a Contract which participates in a Division of
Separate Account C determines a Participant's Investment Account
Values. The Unit Value for each Contract in each Division is determined
on each day on which the net asset value of its underlying Mutual Fund
is determined. The Unit Value for a Valuation Period is determined as
of the end of the period. The investment performance of the underlying
Mutual Fund and deducted expenses affect the Unit Value.
For these Contracts, the Unit Value for each Division was fixed at
$1.00 for the Valuation Period in which the first amount of money was
credited to the Division. A Division's Unit Value for any later
Valuation Period is equal to its Unit Value for the immediately
preceding Valuation Period multiplied by the Net Investment Factor (see
below) for that Division for the later Valuation Period.
3. Net Investment Factor
Each Net Investment Factor is the quantitative measure of the
investment performance of each Division of Separate Account C.
For any specified Valuation period the Net Investment Factor for a
Division for a Contract is equal to
(a) the quotient obtained by dividing (i) the net asset value of a
share of the underlying Mutual Fund as of the end of the Valuation
Period, plus the per share amount of any dividend or other
distribution made by the Mutual Fund during the Valuation Period
(less an adjustment for taxes, if any) by (ii) the net asset value
of a share of the Mutual Fund as of the end of the immediately
preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
interest rate for the number of days within the Valuation Period
at an annual rate of 1.4965%.
The amounts derived from applying the rate specified in subparagraph
(b) above and the amount of any taxes referred to in subparagraph (a)
above will be accrued daily and will be transferred from Separate
Account C at the discretion of the Company.
4. Hypothetical Example of Calculation of Unit Value for the Common Stock
Division and Government Securities Division
The computation of the Unit Value may be illustrated by the following
hypothetical example. Assume that the current net asset value of a
Mutual Fund share is $14.8000; that there were no dividends or other
distributions made by the Mutual Fund and no adjustment for taxes since
the last determination; that the net asset value of a Mutual Fund share
last determined was $14.7800; that the last Unit Value was $1.0185363;
and that the Valuation Period was one day. To determine the current Net
Investment Factor, divide $14.8000 by $14.7800 which produces 1.0013532
and deduct from this amount the mortality and expense risks charge of
0.0000410, which is the rate for one day that is equivalent to a simple
annual rate of 1.4965%. The result, 1.0013122, is the current Net
Investment Factor. The last Unit Value ($1.0185363) is then multiplied
by the current Net Investment Factor (1.0013122) which produces a
current Unit Value of $1.0198728.
5. Hypothetical Example of Calculation of Unit Value for the Money Market
Division
The computation of the Unit Value may be illustrated by the following
hypothetical example. Assume that the current net asset value of a
Mutual Fund share is $1.0000; that a dividend of .0328767 cents per
share was declared by the Mutual Fund prior to calculation of the net
asset value of the Mutual Fund share and that no other distributions
and no adjustment for taxes were made since the last determination;
that the net asset value of a Mutual Fund share last determined was
$1.0000; that the last Unit Value was $1.0162734; and that the
Valuation Period was one day.
To determine the current Net Investment Factor, add the current net
asset value ($1.0000) to the amount of the dividend ($.000328767) and
divide by the last net asset value ($1.0000), which when rounded to
seven places equals 1.0003288. Deduct from this amount the mortality
and expense risks charge of .0000410 (the proportionate rate for one
day based on a simple annual rate of 1.4965%). The result (1.0002878)
is the current Net Investment Factor. The last Unit Value ($1.0162734)
is then multiplied by the current Net Investment Factor (1.0002878),
resulting in a current Unit Value of $1.0165659.
B. Annuity Benefits
1. Selecting a Variable Annuity
Variable Annuity Payments will be made to a Participant beginning on
the Annuity Commencement Date and continuing thereafter on the first
day of each month. A Participant may select an Annuity Commencement
Date by Written Notification to the Company. The date selected may be
the first day of any month the Retirement Plan allows which is at least
one month after the Written Notification.
The Annuity Commencement Date for all Participants cannot be later than
April 1 following the end of the taxable year in which the Participant
attains age 70 1/2. There are certain exceptions for employees who are
not 5% owners and who attain age 70 1/2 by January 1, 1988.
The Annuity Commencement Date cannot be earlier than age 59 1/2 except
in the event of Total and Permanent Disability. Early distribution for
any other reason prior to age 59 1/2 may be subject to certain
penalties (see "Federal Tax Status").
At any time not less than one month preceding the desired Annuity
Commencement Date, a Participant may, by Written Notification, select
one of the annuity options described below (see "Forms of Variable
Annuities"). If no annuity option has been selected at least one month
before the Annuity Commencement Date, the Normal Income Form will be
provided.
2. Forms of Variable Annuities
Because of certain restrictions contained in the Internal Revenue Code
and regulations thereunder, an annuity option is not available unless
(i) no benefits are provided which extend beyond the life of the
Participant or the lives of the Participant and the Participant's
spouse or (ii) no benefits are provided which extend over a period
longer than the life expectancy of the Participant or the life
expectancy of the Participant and spouse.
A Participant may elect to have Investment Account Values applied under
one of the following annuity options. However, if the monthly Annuity
Payment would be less than $20, the Company may, at its sole option,
pay the Investment Account Values in full settlement of all benefits
otherwise available.
Variable Life Annuity with Monthly Payments Certain for Zero, Five,
Ten, Fifteen or Twenty Years or Installment Refund Period -- a Variable
Annuity which provides monthly payments to the Participant during the
Participant's lifetime, and further provides that if, at the death of
the Participant, monthly payments have been made for less than a
minimum period selected by the Participant, any remaining payments for
the balance of such period shall be paid to a designated beneficiary
unless the beneficiary requests in writing that the Commuted Value of
the remaining payments be paid in a single sum. (Designated
beneficiaries entitled to take the remaining payments or the Commuted
Value thereof rather than continuing monthly payments should consult
with their tax advisor to be made aware of the differences in tax
treatment.)
The minimum period may be either zero, five, ten, fifteen or twenty
years or the period (called "installment refund period") consisting of
the number of months determined by dividing the amount applied under
the option by the initial payment. If, for example, a Participant had
$14,400 to apply under a life option with an installment refund period,
and if the first monthly payment provided by that amount, as determined
from the applicable annuity conversion rates, would be $100, the
minimum period would be 144 months ($14,400 divided by $100 per month)
or 12 years. A variable life annuity with an installment refund period
guarantees a minimum number of payments, but not the amount of any
monthly payment or the amount of aggregate monthly payments.
Under the Variable Life Annuity with Zero Years Certain, which provides
monthly payments to the Participant during the Participant's lifetime,
it would be possible for the Participant to receive only one Annuity
Payment if the Participant died prior to the due date of the second
payment since payment is made only during the lifetime of the
Participant.
Joint and Survivor Variable Life Annuity with Monthly Payments Certain
for Ten Years -- a Variable Annuity which provides monthly payments for
a minimum period of ten years and thereafter during the joint lifetimes
of that participant and the joint annuitant named at the time this
option is elected, and continuing after the death of either payee for
the amount that would have been payable to them jointly during the
remaining lifetime of the survivor. In the event the Participant and
the joint annuitant do not survive beyond the minimum ten year period,
any remaining payments for the balance of such period will be paid to a
designated beneficiary unless the beneficiary requests in writing that
the Commuted Value of the remaining payments be paid in a single sum.
(Designated beneficiaries entitled to take the remaining payments or
the Commuted Value thereof rather than continuing monthly payments
should consult with their tax advisor to be made aware of the
differences in tax treatment.)
Joint and Two-Thirds Survivor Variable Life Annuity -- a Variable
Annuity which provides monthly payments during the joint lives of the
Participant and the person designated by the Participant as joint
annuitant with two-thirds of the amount that would have been payable to
them jointly continuing to the survivor upon the death of either.
Variable Life Annuity with One-Half Survivorship -- a Variable Annuity
which provides monthly payments during the life of the Participant with
one-half of the amount otherwise payable continuing to the contingent
annuitant designated by the Participant so long as the contingent
annuitant lives.
Under the Joint and Two-Thirds Survivor Variable Life Annuity and under
the Variable Life Annuity with One-Half Survivorship, it would be
possible for the Participant and/or contingent or joint annuitant to
receive only one annuity payment if both died prior to the due date of
the second payment since payment is made only during their lifetimes.
Other Options -- Other Variable Annuity options permitted under the
applicable Retirement Plan may be arranged by mutual agreement of the
Participant and the Company.
3. Basis of Annuity Conversion Rates
Because women as a class live longer than men, it has been common that
retirement annuities of equal cost for women and men of the same age
will provide women less periodic income at retirement. The Supreme
Court of the United States ruled in Arizona Governing Committee vs.
Norris that sex distinct annuity tables under an employer-sponsored
benefit plan result in discrimination that is prohibited by Title VII
of the Federal Civil Rights Act of 1964. The Court further rules that
sex distinct annuity tables will be deemed discriminatory only when
used with values accumulated from employer contributions made after
August 1, 1983, the date of the ruling.
Title VII applies only to employers with 15 or more employees. However,
certain State Fair Employment Laws and Equal Payment Laws may apply to
employers with less than 15 employees.
The Variable Annuity Contracts described in this Prospectus offer both
sex distinct and (effective August 1, 1983) sex neutral annuity
conversion rates. The annuity rates are used to convert a Participant's
pre-retirement account value to a monthly lifetime income at
retirement. Usage of either sex distinct or sex neutral annuity rates
will be determined by the Employer.
For each form of Variable Annuity, the annuity conversion rates
determine how much the first monthly Annuity Payment will be for each
$1,000 of the Participant's Investment Account Value applied to effect
the Variable Annuity. The conversion rates vary with the form of
annuity, date of birth, and (unless sex neutral rates are used) the sex
of the Participant and the joint or contingent annuitant, if any. The
sex distinct guaranteed annuity conversion rates are based upon (i) an
interest rate of 2.5% per annum and (ii) mortality according to the
"1983 Table A for Individual Annuity Valuation" projected with Scale G
to the year 2020, females set back six years in age. The sex neutral
rates are determined for all Participants in the same way as female
rates, as described above. The guaranteed annuity conversion rates may
be changed, but no change which would provide less initial monthly
Annuity Payment will take effect for a current Participant.
The Contract provides that an interest rate of not less than 2.5% per
annum will represent the assumed investment return. Currently the
assumed investment return used in determining the amount of the first
monthly payment is 4% per annum. This rate may be increased or
decreased by the Company in the future but in no event will it be less
than 2.5% per annum. If, under the Contract, the actual investment
return (as measured by an Annuity Change Factor, defined below) should
always equal the assumed investment return, Variable Annuity Payments
would remain level. If the actual investment return should always
exceed the assumed investment return, Variable Annuity Payments would
increase; conversely, if it should always be less than the assumed
investment return, Variable Annuity Payments would decrease.
The current 4% assumed investment return is higher than the 2.5%
interest rate reflected in the annuity conversion rates contained in
the Contract. With a 4% assumption, Variable Annuity Payments will
commence at a higher level, will increase less rapidly when actual
investment return exceeds 4%, and will decrease more rapidly when
actual investment return is less than 4%, than would occur with a lower
assumption.
4. Determining the Amount of the First Monthly Annuity Payment
For each Investment Account the initial amount of monthly annuity
income provided by each $1,000 applied to effect a Variable Annuity
shall be based on the option selected and the Investment Account Value,
after reduction for any premium tax, determined as of the end of the
Valuation Period one month before the Annuity Commencement Date. The
initial monthly income payment will be determined on the basis of the
annuity conversion rates applicable on such date to such conversions
under all contracts of this class issued by the Company. However, the
basis for the annuity conversion rates will not produce less initial
monthly income than the annuity conversion rate basis described above.
5. Determining the Amount of the Second and Subsequent Monthly Annuity
Payments
The second and subsequent monthly Annuity Payments will be computed
separately for each Division of Separate Account C selected by the
Participant and will increase or decrease in response to the investment
experience of the Mutual Fund underlying the Division. The amount of
each payment will be determined by multiplying the amount of the
monthly Annuity Payment due in the immediately preceding calendar month
by the Annuity Change Factor for the Division for the Contract for the
calendar month in which the Annuity Payment is due.
Each Annuity Change Factor for a Division for a calendar month is the
quotient of (a) divided by (b), below:
(a) The number which results from dividing (i) the Contract's Unit
Value for the Division for the first Valuation Date in the
calendar month beginning one month before the given calendar month
by (ii) the Contract's Unit Value for the Division for the first
Valuation Date in the calendar month beginning two months before
the given calendar month.
(b) An amount equal to one plus the effective interest rate for the
number of days between the two Valuation Dates specified in
subparagraph (a) above at the interest rate assumed to determine
the initial payment of variable benefits to the Participant.
6. Hypothetical Example of Calculation of Annuity Payments
Assume that on the date one month before the Annuity Commencement Date
the Participant has an Investment Account Value of $37,592. Using the
appropriate annuity conversion factor (assuming $5.88 per $1,000
applied) the Investment Account Value provides a first monthly Annuity
Payment of $221.04. To determine the amount of the Participant's second
monthly payment assume that the Unit Value as of the first Valuation
Date in the preceding calendar month was $1.3712044 and the Unit Value
as of the first Valuation Date in the second preceding calendar month
was $1.3273110. The Annuity Change Factor is determined by dividing
$1.3712044 by $1.3273110, which equals 1.0330694, and dividing the
result by an amount corresponding to the amount of one increased by an
assumed investment return of 4% (which for a thirty day period is
1.0032288). 1.0330694 divided by 1.0032288 results in an Annuity Change
Factor for the month of 1.0297446. Applying this factor to the amount
of Annuity Payment for the previous month results in a current monthly
payment of $227.61 ($221.04 multiplied by 1.0297446 equals $227.61).
C. Payment on Death of Participant
1. Prior to Annuity Commencement Date
If a Participant dies prior to the Annuity Commencement Date, the
Company, upon receipt of due proof of death, will, in accordance with
prior instructions from the Participant, either (i) establish
Investment Accounts for the beneficiary to hold the Investment Account
Values of the Participant or (ii) if an Associated Fixed Contract has
been issued, cancel all Investment Account units as of the date of
receipt of proof of death and transfer the Investment Account Values
(determined as of the end of the Valuation Period in which proof of
death was received) to the Associated Fixed Contract. In lieu of the
foregoing, the Company may pay all or part of the Investment Account
values to the beneficiary in a single sum, provided that if the
Participant had elected that the Investment Account Values be
transferred to an Associated Fixed Contract, the beneficiary's written
request for the payment must be given before the date the transfer is
to be effective.
A beneficiary of a Participant may elect to have all or a part of the
amount available under any Associated Fixed Contract transferred to
this Contract to establish Investment Accounts for the beneficiary or
to have all or a part of the amount available under this Contract
transferred to any Associated Fixed Contract. If the value of the
Investment Accounts is less than $3,500, the Company may at its option
pay the beneficiary the value of such accounts in lieu of all other
benefits. A spouse beneficiary may elect to have the Investment Account
Values applied to provide Annuity Payments or paid in a single sum. A
beneficiary other than the Participant's spouse must receive a
distribution of all values within five years of the Participant's
death. An election to receive Annuity Payments must be made prior to
the single sum payment to the beneficiary. Annuity income must be
payable as lifetime annuity income with no benefits beyond the
beneficiary's life or life expectancy. In addition, the amount of the
monthly Annuity Payments must be at least $20, or the Company may at
its option pay the beneficiary the value of the Investment Accounts in
lieu of all other benefits. The first Annuity Payment will be made on
the first day of the calendar month specified in the election, but in
no event prior to the date one month after any transfer from any
Associated Fixed Contract is effective. The amount to be applied will
be determined as of one month prior to the date the first monthly
payment is due. The beneficiary must be a natural person in order to
elect Annuity Payments. The election must be by Written Notification.
The annuity conversion rates applicable to a beneficiary shall be the
annuity conversion rates the Company makes available to all
beneficiaries under contracts of this class. The beneficiary will
receive a written description of the options available.
2. Subsequent to Annuity Commencement Date
Upon the death of a Participant receiving monthly Annuity Payments, no
benefits will be available except as may be provided under the form of
annuity selected. If provided for under such form of annuity, the
beneficiary will continue receiving any remaining payments unless the
beneficiary requests in writing that the Commuted Value of the
remaining payments be paid in a single sum.
D. Withdrawals and Transfers
1. Cash Withdrawals
The Contracts are designed for and intended to be used to fund
Retirement Plans. However, subject to any Retirement Plan limitations
or any reduction for vesting provided for in the Retirement Plan as to
amounts available, the Participant may withdraw cash from the
Investment Accounts at any time prior to the Annuity Commencement Date
subject to any charges that may be applied.
The procedure with respect to cash withdrawals is as follows:
(a) The Participant's Investment Account Values will be determined at
the end of the Valuation Period in which the withdrawal request is
received and will be paid to the Participant within seven days
thereafter. The Company may require that any request be
accompanied by the certificate issued to the Participant.
(b) No more than two partial cash withdrawals can be made in a
twelve-month period without the Company's express consent.
(c) The amount available may be subject to the Contingent Deferred
Sales Charge and, in the case of a total withdrawal, will be
subject to the Administration Charge.
(d) The amount available is also subject to any restriction in the
Participant's Retirement Plan.
Any cash withdrawal made will result in the cancellation of a number of
units in each Investment Account of the Participant from which values
have been withdrawn. The number of units cancelled from the Investment
Account will be equal to the amount withdrawn divided by the Unit Value
for its Division of Separate Account C for the Valuation Period in
which the cancellation is effective. Units will also be cancelled to
cover any charges assessed under (c) above.
2. Transfers to the Contract
If an Associated Fixed Contract has been issued by the Company, and
except as otherwise provided by the applicable Retirement Plan, a
Participant may, by Written Notification, transfer all or a portion of
the proceeds available under the Associated Fixed Contract to the
Investment Account(s) under the Contract at any time at least one month
before Annuity Commencement Date, subject to the terms of the
Associated Fixed Contract.
3. Transfers Between Divisions
Upon Written Notification, all or a portion of the value of an
Investment Account in one Division may be transferred to an Investment
Account in another Division available under the Contract. Transfers may
be made at any time at least one month before the Annuity Commencement
Date. However, only two transfers from any Investment Account may be
made in a twelve-month period without the express consent of the
Company.
A transfer will be effective as of the end of the Valuation Period in
which the request is received. Any amount transferred will result in
the cancellation of units in the Investment Account from which the
transfer is made. The number of units cancelled will be equal to the
amount transferred from that account divided by the Unit Value of the
Division for the Valuation Period in which the transfer is effective.
The transferred amount will result in the crediting of units in the
Investment Account to which the transfer is made. The number of units
credited will be equal to the amount transferred to that account
divided by the Unit Value of the Division for the Valuation Period in
which the transfer is effective.
4. Transfers to the Associated Fixed Contract
Except as otherwise provided by the applicable Retirement Plan, a
Participant may by Written Notification transfer all or a portion of
available Investment Account Values to the Associated Fixed Contract at
any time at least one month before Annuity Commencement Date. Such
transfers are subject to the same provisions regarding frequency of
transfer, effective date of transfer and cancellation of units as
described above in "Transfers Between Divisions".
5. Special Situation Involving Alternate Funding Agents
The Contracts are subject to provisions of the Retirement Plan which
allow the Investment Account Values of all Participants of the
Retirement Plan to be transferred to an Alternate Funding Agent with or
without the consent of the Participants. Transfers to an Alternate
Funding Agent require Written Notification from the person or persons
specified by the Retirement Plan.
The amount to be transferred will be equal to the Investment Account
Values determined as of the end of the Valuation Period in which the
Written Notification is received. Such transfers may be subject to the
Contingent Deferred Sales Charge.
Alternate Funding Agent means an insurance company or custodian
designated by Written Notification and authorized to receive any amount
or amounts transferred from the Contract as to a Participant or
Participants and to apply such amount or amounts for the exclusive
benefit of the Participant or Participants under a retirement plan
which continues to meet the requirements of the Internal Revenue Code,
without any obligation on the part of the Company in regard to the
application.
6. Postponement of Cash Withdrawal or Transfer
Any cash withdrawal or transfer to be made from the Contract or between
Divisions in accordance with the preceding paragraphs will be made
within seven days after Written Notification for such payment or
transfer is received by the Company. However, such withdrawal or
transfer may be deferred during any period when the right to redeem
Mutual Fund shares is suspended as permitted under provisions of the
Investment Company Act of 1940, as amended. The right to redeem shares
may be suspended during any period when (a) trading on the New York
Stock Exchange is restricted as determined by the Securities and
Exchange Commission or such Exchange is closed for other than weekends
and holidays; (b) an emergency exists, as determined by the Securities
and Exchange Commission, as a result of which (i) disposal by the
Mutual Fund of securities owned by it is not reasonably practicable or
(ii) it is not reasonably practicable for the Mutual Fund fairly to
determine the value of its net assets; or (c) the Commission by order
so permits for the protection of security holders. If any deferment of
transfer or withdrawal is in effect and has not been cancelled by
Written Notification to the Company within the period of deferment, the
amount to be transferred or withdrawn shall be determined as of the
first Valuation Date following expiration of the permitted deferment,
and transfer or withdrawal will be made within seven days thereafter.
E. Other Contractual Provisions
1. Contribution Limits
The Contract prescribes no limits on the minimum Contributions which
may be made on behalf of a Participant. Maximum Contributions are
limited to amounts permitted by the Retirement Plan.
2. Assignment
No rights available or benefits payable under the Contract to any
Participant, beneficiary or contingent or joint annuitant are
assignable, transferable or subject to pledge, and all such rights and
benefits shall be exempt from the claims of creditors to the maximum
extent permitted by law.
A Participant's Investment Account Values are non-forfeitable;
provided, however, if the Retirement Plan specifically so provides, a
Participant's Investment Account Values shall be reduced to the extent
required by the vesting provisions of the Retirement Plan as of the
date the Company receives Written Notification of the event requiring
the reduction.
3. Cessation of Contributions
A cessation of Contributions with respect to all Participants under a
Retirement Plan shall occur at the election of the Employer upon
Written Notification to the Company or as of the date on which no
Investment Accounts subject to the Retirement Plan remain under the
Contract. Following a cessation of Contributions all terms of the
Contract will continue to apply except that no further Contributions
may be made.
4. Limitation as to Participants
If at any time Princor Management Corporation is not the investment
manager of the Mutual Funds, the Company may give written notice to the
Contractholder that no additional persons may be covered under the
Contract as Participants.
5. Substitution of Securities
If shares of a Mutual Fund are not available at some time in the
future, or if in the judgment of the Company further investment in such
shares would be no longer appropriate, there may be substituted
therefor, or Contributions received after a date specified by the
Company may be applied to purchase (i) shares of another registered
open-end investment company or (ii) securities or other property as the
Company should in its discretion select.
6. Changes in a Contract
The terms of a Contract may be changed at any time by written agreement
between the Company and the Contractholder without the consent of any
Participant, beneficiary, or joint or contingent annuitant. However,
except as required by law or regulation, no such change shall apply to
Variable Annuities which were in the course of payment prior to the
effective date of the change. If the Contractholder is the trustee of
the trust established to hold a Contract for the benefit of
participating units, the Contractholder may be limited in its exercise
of this amendment right. A majority of the participating units which
are Employers under the Contract may have to agree to the proposed
change in the Contract before the change can be made. The Company will
notify any Participant affected by any change under this paragraph.
The Company may unilaterally change the Contract at any time in order
to meet the requirements of any law or regulation issued by any
governmental agency to which the Company is subject. In addition, the
Company may, on 60 days prior notice to the Contractholder, the
Employer, and each Participant, unilaterally change the basis for
determining Investment Account Values, the Net Investment Factor and
the Annuity Change Factor; the guaranteed annuity conversion rates; and
the provisions with respect to transfers to or from an Associated Fixed
Contract or between Divisions. However, no change in the guaranteed
annuity conversion rates will take effect for a current Participant
which would reduce the amount of the Participant's minimum initial
monthly payment.
Furthermore, the Company may, on 60 days notice to the Contractholder,
the Employer and each Participant affected by the change, unilaterally
change the mortality and expense risks charge. However, such a change
can only be made after the Contract has been in effect for at least one
year and provided that (a) the charge shall in no event exceed 2.00%
within the period of five years from the issuance of the Contract, (b)
the charge shall not be changed more frequently than once in any one
year period and (c) no change shall apply to annuities which were in
the course of payment prior to the effective date of the change.
Finally, the Company reserves the right to limit or refuse further
Contributions under the Contract upon 60 days notice to the
Contractholder, the Employer, and each Participant.
7. Statement of Values
The Company will furnish each Participant at least once during each
year a statement showing the number of units credited to the
Participant's Investment Accounts, Unit Values for the accounts and the
resulting Investment Account Values.
8. Voting Rights
Each Contractholder has one vote in the election of the Board of
Directors at annual meetings and upon other corporate matters, if any,
where a policyowner's vote is taken. An individual Participant
(certificate-holder) does not have a vote.
DISTRIBUTION OF THESE CONTRACTS
These Contracts, which are no longer offered, were sold primarily by
persons who were insurance agents of or brokers for the Company authorized by
applicable law to sell life and other forms of personal insurance and variable
annuities. In addition, these persons were usually registered representatives of
Princor Financial Services Corporation, A Member of The Principal Financial
Group, Des Moines, Iowa, a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. Princor Financial Services Corporation received from the Company
an overwriting and expense fee of 1% of Contributions received under the
Contracts. These Contracts were also sold through other selected broker-dealers
registered under the Securities Exchange Act of 1934. Princor Financial Services
Corporation is the principal underwriter for various registered investment
companies organized by the Company. Princor Financial Services Corporation is a
wholly-owned subsidiary of Principal Financial Group, Inc. Principal Financial
Group, Inc. is a holding company and a wholly-owned subsidiary of the Company.
FEDERAL TAX STATUS
Investment gains of the Mutual Funds credited to Separate Account C are not
taxable to a Participant until received in the form of a cash withdrawal from an
Investment Account or in the form of Variable Annuity Payments. Cash withdrawals
will generally be taxed as ordinary income in the year received, but may be
eligible for the income averaging provisions of the Internal Revenue Code. Each
Variable Annuity Payment will be taxed as ordinary income in accordance with
Section 72 of the Internal Revenue Code. As a general rule, however, a
Participant receiving Variable Annuity Payments at the time of retirement will
be in a lower income tax bracket due to reduced income and larger exemptions.
Adjustments in the tax base are allowed where a portion of the cost of the
benefit being distributed has been paid for by the Participant out of funds not
excludable from the Participant's gross income tax in the year made, rather than
having been paid for by the Employer out of funds that were excludable from the
Participant's gross income tax in the year made.
The Self-Employed Individuals Tax Retirement Act of 1962, as amended,
allows self-employed individuals to establish qualified pension and
profit-sharing plans and annuity plans. The employees of such persons are
treated as described for employees under a qualified pension plan.
The Tax Reform Act of 1986 made certain distributions from qualified plans
subject to special tax treatment. As a general rule, if a taxpayer receives an
early plan distribution, a 10% tax will be assessed against the distribution
unless it is in the form of a life annuity. Early plan distributions are any
plan distributions prior to age 59 1/2 unless the distribution was on account of
death, disability or separation from service after age 55.
The Tax Reform Act also requires distributions for all plan Participants
(with limited exceptions) to begin by April 1 of the calendar year following the
year the Participant turns 70 1/2. The sanction for failure to make a minimum
required distribution is a 50% nondeductible excise tax on the amount which
should have been distributed. This tax is imposed on the Participant.
Another excise tax of 15% is imposed on distributions from the plan that
are greater than $150,000 per year. If a lump sum distribution is made, the tax
is imposed on amounts greater than $750,000.
Special tax treatment, including special income averaging and limited
capital gains treatment may be available to Participants who receive all their
benefits in a single calendar year, if the distribution is made after age 59 1/2
or because of termination of employment, death, or disability. The tax treatment
available depends on the Participant's age, years of plan participation and the
year the distribution is made.
It should be recognized that the descriptions of the federal income tax
status of amounts received under the Contracts are not exhaustive and do not
purport to cover all situations.
A qualified tax advisor should be consulted for complete information. (For
the federal tax status of the Company and Separate Account C, see "Principal
Mutual Life Insurance Company Separate Account C")
STATE REGULATION
The Company is subject to the laws of the State of Iowa governing insurance
companies and to regulation by the Insurance Department of the State of Iowa. An
annual statement in a prescribed form must be filed by March 1 in each year
covering the operations of the Company for the preceding year and its financial
condition on December 31st of such year. Its books and assets are subject to
review or examination by the Commissioner of Insurance of the State of Iowa or
his representatives at all times, and a full examination of its operations is
conducted periodically by the National Association of Insurance Commissioners.
Iowa laws and regulations also prescribe permissible investments, but this does
not involve supervision of the investment management or policy of the Company.
In addition, the Company is subject to the insurance laws and regulations
of other states and jurisdictions in which it is licensed to operate. Generally,
the insurance departments of these states and jurisdictions apply the laws of
the state of domicile in determining the field of permissible investments.
LEGAL OPINIONS
Legal matters applicable to the issue and sale of the Contracts, including
the right of the Company to issue Contracts under Iowa Insurance Law, have been
passed upon by Gregg R. Narber, Senior Vice President and General Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which Separate Account C is a
party or which would materially affect Separate Account C.
REGISTRATION STATEMENT
This Prospectus omits some information contained in the Statement of
Additional Information (or Part B of the Registration Statement) and Part C of
the Registration Statement which the Company has filed with the Securities and
Exchange Commission. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus. A copy of the Statement of
Additional Information can be obtained upon request, free of charge, by writing
or telephoning Princor Financial Services Corporation. You may obtain a copy of
Part C of the Registration Statement filed with the Securities and Exchange
Commission, Washington, D.C. from the Commission upon payment of the prescribed
fees.
OTHER VARIABLE ANNUITY CONTRACTS
The Company currently offers other Variable Annuity Contracts that
participate in Separate Account C. In the future, additional group or individual
variable annuity contracts may be designated by the Company as participating in
Separate Account C. All such contracts will initially meet the requirements of
Section 401 or 403(a) of the Internal Revenue Code.
INDEPENDENT AUDITORS
The financial statements of Principal Mutual Life Insurance Company
Separate Account C and Principal Mutual Life Insurance Company which are
included in the Statement of Additional Information have been audited by Ernst &
Young LLP, independent auditors, for the periods indicated in their reports
thereon which appear in the Statement of Additional Information.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this
Prospectus should be considered only as bearing on the ability of the Company to
meet its obligations under the Policy. They should not be considered as bearing
on the investment performance of the assets held in the Separate Account.
APPENDIX 1
Premium taxes applicable to Contracts described in this Prospectus:
Alabama 1.00%
California 0.50
District of Columbia 2.25
Kentucky 2.00
West Virginia 1.00
All other states ----
APPENDIX 2
Set forth below is an example of the manner in which the Administration
Charge is computed.
The Administration Charge has two components -- a fixed charge of $25 and
the Participant's proportionate share of an amount equal to 0.5% of the first
$50,000 of the value of all Investment Accounts under the Contract of all
Participants under the Retirement Plan. The Participant's proportionate share of
the charge is determined by multiplying the total value of the Participant's
Investment Accounts by a percentage the numerator of which is 0.5% of the first
$50,000 of the Investment Account Values of all Participants under the
Retirement Plan and the denominator of which is all such Investment Account
Values. Assume that the total value of a Participant's Investment Accounts is
$40,000 and that the Investment Account Values of all Accounts, $40,000, is
multiplied by a percentage the numerator of which is $250 (0.5% x $50,000) and
the denominator of which is $200,000, or 0.125%. The Administration Charge to
which the Participant is subject is $75, $25 plus $50 (0.125% x $40,000).
CONTRACTHOLDERS' INQUIRIES
Contractholders' inquiries should be directed to Princor Financial Services
Corporation, A Member of The Principal Financial Group, Des Moines, Iowa
50392-0200, (515) 247-5711. Separate Account C is subject to certain
informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith files reports with the Securities and Exchange Commission.
Reports filed by Separate Account C with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at 450 -
5th Street, N. W., Washington, D.C. Copies of such reports can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The table of contents for the Statement of Additional Information is
provided below.
TABLE OF CONTENTS
Page
General Information and History ................................ 3
Independent Auditors ........................................... 3
Underwriting Commissions ....................................... 3
Calculation of Yield and Total Return .......................... 3
Financial Statements:
Principal Mutual Life Insurance Company Separate Account C 4
Report of Independent Auditors ................... 10
Principal Mutual Life Insurance Company ................... 11
Report of Independent Auditors ................................. 33
To obtain a copy of the Statement of Additional Information, free of charge,
write or telephone:
Princor Financial Services Corporation
A Member of The Principal Financial Group
Des Moines, Iowa 50392-0200
Telephone: 1-800-247-4123
<PAGE>
PART B
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C
PENSION BUILDER - GROUP VARIABLE ANNUITY CONTRACTS
ISSUED BY PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Statement of Additional Information
dated May 1, 1996
This Statement of Additional Information provides information about
Principal Mutual Life Insurance Company Separate Account C Pension Builder -
Group Variable Annuity Contracts (the "Contract" or the "Contracts") in addition
to the information that is contained in the Contract's Prospectus, dated May 1,
1996.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus, a copy of which can be obtained free of
charge by writing or telephoning:
Princor Financial Services Corporation
A Member of
The Principal Financial Group
Des Moines Iowa 50392-0200
Telephone: 1-800-247-4123
<PAGE>
TABLE OF CONTENTS
General Information and History.................................... 3
Independent Auditors ............................................ 3
Underwriting Commissions........................................... 3
Calculation of Yield and Total Return.............................. 3
Financial Statements
Principal Mutual Life Insurance Company Separate Account C.... 4
Report of Independent Auditors............................ 10
Principal Mutual Life Insurance Company....................... 11
Report of Independent Auditors............................ 33
GENERAL INFORMATION AND HISTORY
Principal Mutual Life Insurance Company was formerly known as Bankers Life
Company. The Company's name was changed to Principal Mutual Life Insurance
Company effective July 1, 1986.
INDEPENDENT AUDITORS
Ernst & Young LLP, Des Moines, Iowa, serve as independent auditors for Principal
Mutual Life Insurance Company Separate Account C and Principal Mutual Life
Insurance Company and perform audit and accounting services for Separate Account
C and The Company.
UNDERWRITING COMMISSIONS
Aggregate dollar amount of underwriting commissions paid to and retained by
Princor Financial Services Corporation:
Year Paid To Retained by
---- ---------- -----------
1995 $17,336.43 $6,431.18
1994 $79,118.96 $16,968.36
1993 $98,839.03 $21,771.32
CALCULATION OF YIELD AND TOTAL RETURN
From time to time the Account advertises its Money Market Division's "yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of the division refers
to the income generated by an investment in the division over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the
division is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. Neither yield quotation reflects sales load deducted from purchase
payments which, if included, would reduce the "yield" and "effective yield." For
the period ending December 31, 1995, the 7-day annualized and effective yields
were 3.64% and 3.70%, respectively.
From time to time, the Separate Account will advertise the average annual total
return of its various divisions. The average annual total return for any of the
divisions is computed by calculating the average annual compounded rate of
return over the stated period that would equate an initial $1,000 investment to
the ending redeemable contract value. In this calculation the ending value is
reduced by a contingent deferred sales charge that decreases from 7% to 0% over
a period of 10 years. The average annual total returns of the Common Stock
Division for the one-year, five-year and ten-year periods ending December 31,
1995 were 20.63%, 13.78%, and 10.31%, respectively. The average annual total
return of the Government Securities Division for the one-year and five-year
periods ending December 31, 1995 and for the period beginning April 14, 1987
(inception of Division) and ending December 31, 1995 were, 8.88%, 6.55% and
7.54%, respectively. The Separate Account may also advertise total return
figures of its Divisions for a specified period that does not take into account
the sales charge in order to illustrate the change in the Division's unit value
over time. See "Deductions Under the Contracts" for a discussion of contingent
deferred sales charges.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account C
Statement of Net Assets
December 31, 1995
Assets
Investments (Note 1):
Common Stock Division:
Principal Capital Accumulation Fund, Inc. - 146,582 shares at net asset value of
<S> <C>
$27.80 per share (cost - $3,431,031) $4,074,988
Government Securities Division:
Principal Government Securities Fund, Inc. - 79,117 shares at net asset value of
$10.55 per share (cost - $809,151) 834,687
Money Market Division:
Principal Money Market Fund, Inc. - 993,483 shares at net asset value (cost) of
$1.00 per share 993,483
==================
Net assets $5,903,158
</TABLE>
<TABLE>
<CAPTION>
==================
Unit
Units Value
----------------------------
----------------------------
Net assets are represented by:
Common Stock Division:
Currently payable annuity contracts:
<S> <C> <C> <C>
Bankers Flexible Annuity 11,970 $16.73 $ 200,283
Pension Builder Plus 4,658 3.41 15,880
Contracts in accumulation period:
Bankers Flexible Annuity 88,735 16.73 1,484,660
Pension Builder Plus 696,310 3.41 2,374,165
------------------
------------------
4,074,988
Government Securities Division:
Contracts in accumulation period - Pension Builder
Plus 453,405 1.84 834,687
Money Market Division:
Contracts in accumulation period - Pension Builder
Plus 563,649 1.76 993,483
==================
Net assets $5,903,158
==================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account C
Statement of Operations
Year ended December 31, 1995
Common Government Money
Stock Securities Market
Combined Division Division Division
-------------------------------------------------------------
-------------------------------------------------------------
Investment income
Income:
<S> <C> <C> <C> <C>
Dividends (Note 1) $ 239,554 $ 86,599 $ 64,710 $88,245
Capital gains distributions 437,283 437,283 - -
-------------------------------------------------------------
-------------------------------------------------------------
676,837 523,882 64,710 88,245
Expenses (Note 2):
Mortality and expense risks 129,071 81,313 23,831 23,927
Administration charges 26,151 17,915 3,942 4,294
Contingent sales charges 2,714 1,215 276 1,223
-------------------------------------------------------------
-------------------------------------------------------------
157,936 100,443 28,049 29,444
-------------------------------------------------------------
-------------------------------------------------------------
Net investment income 518,901 423,439 36,661 58,801
Realized and unrealized gains (losses) on
investments (Note 4)
Net realized gains (losses) on investments 566,777 619,160 (52,383) -
Change in net unrealized appreciation/
depreciation of investments 955,515 665,019 290,496 -
-------------------------------------------------------------
=============================================================
Net increase in net assets resulting from
operations $2,041,193 $1,707,618 $274,774 $58,801
=============================================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account C
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
Common Government Money
Stock Securities Market
Combined Division Division Division
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at January 1, 1994 $21,703,996 $14,721,884 $4,173,176 $2,808,936
Increase (decrease) in net assets
Operations:
Net investment income 595,116 414,809 126,297 54,010
Net realized gains (losses) on investments 84,364 133,140 (48,776) -
Change in net unrealized appreciation/
depreciation of investments (1,044,355) (685,613) (358,742) -
-------------------------------------------------------------
-------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (364,875) (137,664) (281,221) 54,010
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 4,965,171 2,906,809 1,131,004 927,358
Contract terminations (3,146,785) (2,313,443) (563,441) (269,901)
Transfer payments to other contracts (6,921,308) (4,103,994) (1,757,872) (1,059,442)
Annuity payments (21,562) (21,562) - -
Mortality guarantee transfer 11,692 11,692 - -
-------------------------------------------------------------
-------------------------------------------------------------
Decrease in net assets from principal (5,112,792) (3,520,498) (1,190,309) (401,985)
transactions
-------------------------------------------------------------
-------------------------------------------------------------
Total decrease (5,477,667) (3,658,162) (1,471,530) (347,975)
-------------------------------------------------------------
Net assets at December 31, 1994 16,226,329 11,063,722 2,701,646 2,460,961
Increase (decrease) in net assets
Operations:
Net investment income 518,901 423,439 36,661 58,801
Net realized gains (losses) on investments 566,777 619,160 (52,383) -
Change in net unrealized appreciation/
depreciation of investments 955,515 665,019 290,496 -
-------------------------------------------------------------
-------------------------------------------------------------
Net increase in net assets resulting from 2,041,193 1,707,618 274,774 58,801
operations
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 3,592,629 1,872,882 801,970 917,777
Contract terminations (5,907,945) (4,319,096) (800,094) (788,755)
Transfer payments to other contracts (10,028,790) (6,229,880) (2,143,609) (1,655,301)
Annuity payments (20,258) (20,258) - -
-------------------------------------------------------------
Decrease in net assets from principal (12,364,364) (8,696,352) (2,141,733) (1,526,279)
transactions
-------------------------------------------------------------
-------------------------------------------------------------
Total decrease (10,323,171) (6,988,734) (1,866,959) (1,467,478)
-------------------------------------------------------------
=============================================================
Net assets at December 31, 1995 $ 5,903,158 $ 4,074,988 $ 834,687 $ 993,483
=============================================================
See accompanying notes.
</TABLE>
<PAGE>
Principal Mutual Life Insurance
Company Separate Account C
Notes to Financial Statements
December 31, 1995
1. Investment and Accounting Policies
Principal Mutual Life Insurance Company Separate Account C was organized by
Principal Mutual Life Insurance Company (Principal Mutual) in accordance with
the provisions of the Iowa Insurance Laws and is a part of the total operations
of Principal Mutual. The assets and liabilities of Separate Account C are
clearly identified and distinguished from the other assets and liabilities of
Principal Mutual, with the remaining aggregate value of units registered with
the Securities and Exchange Commission under the current registration statement
(but not the authorized number of units) limited to $11.1 million. As directed
by eligible contractholders, Separate Account C invests solely in shares of
Principal Capital Accumulation Fund, Inc., Principal Government Securities Fund,
Inc. and Principal Money Market Fund, Inc., diversified open-end management
investment companies organized by Principal Mutual. Investments are stated at
the closing net asset values per share on December 31, 1995.
The average cost method is used to determine realized gains and losses on
investments. Dividends are taken into income on an accrual basis as of the
ex-dividend date.
After September 30, 1995, Principal Mutual no longer accepted contributions for
Pension Builder Plus contracts. Contractholders were given the options of
withdrawing their funds or transferring to another contract. Contingent sales
charges were waived for contracts transferred prior to November 30, 1995.
Contributions for Bankers Flexible Annuity contracts were previously
discontinued.
2. Expenses
Principal Mutual is compensated for the following expenses:
Bankers Flexible Annuity Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate
of 0.48% of the asset value of each contract. An annual administration charge
of $7 for each participant's account is deducted as compensation for
administrative expenses. The mortality and expense risk and annual
administration charges amounted to $9,346 and $224, respectively, during the
year 1995. A sales charge of up to 7% was deducted from each contribution
made on behalf of each participant. The sales charge was deducted from the
contributions by Principal Mutual prior to their transfer to Separate Account
C.
<PAGE>
Principal Mutual Life Insurance
Company Separate Account C
Notes to Financial Statements (continued)
2. Expenses (continued)
Pension Builder Plus Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate
of 1.4965% of the asset value of each contract. A contingent sales charge of
up to 7% may be deducted from withdrawals made during the first 10 years of a
contract, except for death or permanent disability. An annual administration
charge will be deducted ranging from a minimum of $25 to a maximum of $275
depending upon a participant's investment account values and the number of
participants under the retirement plan and their participant investment
account value. The charges for mortality and expense risks, contingent sales
and annual administration amounted to $119,725, $2,714, and $25,927,
respectively, during the year 1995.
3. Federal Income Taxes
Operations of Separate Account C are a part of the operations of Principal
Mutual. Under current practice, no federal income taxes are allocated by
Principal Mutual to the operations of Principal Mutual Life Insurance Company
Separate Account C.
4. Purchases and Sales of Investment Securities
<TABLE>
<CAPTION>
The aggregate units and cost of purchases and proceeds from sales of investments
were as follows:
For the year ended December 31, 1995
------------------------------------------------------------------
Units Purchased Amount Purchased Units Redeemed Amount Redeemed
------------------------------------------------------------------
------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity - $ 167,512 31,593 $ 441,825
Pension Builder Plus 650,439 2,229,252 3,524,489 10,227,852
------------------------------------------------------------------
------------------------------------------------------------------
650,439 2,396,764 3,556,082 10,669,677
Government Securities Division:
Pension Builder Plus 494,421 866,680 1,762,773 2,971,752
Money Market Division:
Pension Builder Plus 535,936 1,006,023 1,424,097 2,473,501
------------------------------------------------------------------
==================================================================
1,680,796 $4,269,467 6,742,952 $16,114,930
==================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account C
Notes to Financial Statements (continued)
4. Purchases and Sales of Investment Securities (continued)
For the year ended December 31, 1994
------------------------------------------------------------------
Units Purchased Amount Purchased Units Redeemed Amount Redeemed
------------------------------------------------------------------
------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity 917 $ 105,888 21,976 $ 287,677
Pension Builder Plus 1,103,649 3,461,092 2,346,403 6,384,992
------------------------------------------------------------------
------------------------------------------------------------------
1,104,566 3,566,980 2,368,379 6,672,669
Government Securities Division:
Pension Builder Plus 694,572 1,331,843 1,473,324 2,395,855
Money Market Division:
Pension Builder Plus 554,953 1,032,529 796,873 1,380,504
------------------------------------------------------------------
==================================================================
2,354,091 $5,931,352 4,638,576 $10,449,028
==================================================================
</TABLE>
Purchases include reinvested dividends and capital gains.
Money Market purchases include transactions where investment allocations are not
known at the time of the deposit. Redemptions reflect subsequent allocations to
directed investment divisions.
5. Net Assets
<TABLE>
<CAPTION>
Net assets at December 31, 1995 consisted of the following:
Net Unrealized
Accumulated Appreciation
Unit Net Investment of Investments
Combined Transactions Income
-------------------------------------------------------------------
-------------------------------------------------------------------
Common Stock Division:
<S> <C> <C> <C> <C>
Bankers Flexible Annuity $1,684,943 $ 295,274 $ 969,242 $420,427
Pension Builder Plus 2,390,045 1,824,492 342,023 223,530
-------------------------------------------------------------------
-------------------------------------------------------------------
4,074,988 2,119,766 1,311,265 643,957
Government Securities Division:
Pension Builder Plus 834,687 723,461 85,690 25,536
Money Market Division:
Pension Builder Plus 993,483 927,106 66,377 -
-------------------------------------------------------------------
===================================================================
$5,903,158 $3,770,333 $1,463,332 $669,493
===================================================================
</TABLE>
<PAGE>
Report of Independent Auditors
Board of Directors and Participants
Principal Mutual Life Insurance Company
We have audited the accompanying statement of net assets of Principal Mutual
Life Insurance Company Separate Account C (comprising, respectively, the Common
Stock, Government Securities, and Money Market Divisions) as of December 31,
1995, and the related statements of operations for the year then ended, and
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the transfer agent. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Principal Mutual Life Insurance
Company Separate Account C at December 31, 1995, and the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
February 7, 1996
<PAGE>
Principal Mutual Life Insurance Company
Statements of Financial Position
December 31
1995 1994
---------------------------
(In Millions)
Assets
Bonds $21,798 $20,626
Preferred stocks 93 69
Common stocks 1,330 914
Investment in subsidiaries 546 501
Commercial mortgage loans 9,794 8,901
Residential mortgage loans 234 287
Investment real estate 1,313 1,155
Properties held for Company use 204 159
Policy loans 711 683
Cash and short-term investments 913 485
Accrued investment income 467 468
Separate account assets 12,957 9,197
Other assets 908 672
---------------------------
Total assets $51,268 $44,117
===========================
Liabilities
Insurance reserves $ 6,297 $ 6,007
Annuity reserves 25,770 24,311
Reserves for policy dividends 578 583
Other policy liabilities 748 618
Investment valuation reserves 1,041 792
Tax liabilities 241 189
Separate account liabilities 12,891 9,099
Other liabilities 1,494 591
---------------------------
Total liabilities 49,060 42,190
Surplus
Surplus notes 298 298
Unassigned and other surplus funds 1,910 1,629
---------------------------
Total surplus 2,208 1,927
---------------------------
Total liabilities and surplus $51,268 $44,117
===========================
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Statements of Operations and Surplus
Year ended December 31
1995 1994 1993
------------------------------------------
(In Millions)
Income
<S> <C> <C> <C>
Premiums and annuity and other considerations $11,940 $10,718 $ 9,983
Net income from investments 2,651 2,520 2,369
Other income 25 505 18
------------------------------------------
Total income 14,616 13,743 12,370
Benefits and expenses
Benefit payments other than dividends 9,268 8,211 6,729
Dividends to policyowners 309 317 410
Additions to policyowner reserves 3,439 3,756 3,890
Insurance expenses and taxes 1,199 1,145 1,029
------------------------------------------
Total benefits and expenses 14,215 13,429 12,058
------------------------------------------
Income before federal income taxes and realized capital gains
(losses) 401 314 312
Federal income taxes 140 130 48
------------------------------------------
Net gain from operations before realized capital gains (losses)
261 184 264
Realized capital gains (losses) 2 (32) (52)
------------------------------------------
Net income $ 263 $ 152 $ 212
==========================================
Surplus
Surplus at beginning of year $ 1,927 $ 1,641 $ 1,440
Net income 263 152 212
Issuance of surplus notes - 298 -
Increase in investment valuation reserves (249) (131) (43)
Increase in non-admitted assets and related items (45) (51) (59)
Net unrealized capital gains 326 47 57
Adjustment for prior years' federal income taxes - (63) -
Net policyowner reserve adjustments 1 31 18
Other adjustments - net (15) 3 16
------------------------------------------
Surplus at end of year $ 2,208 $ 1,927 $ 1,641
==========================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Statements of Cash Flows
Year ended December 31
1995 1994 1993
------------------------------------------
(In Millions)
CASH PROVIDED
Proceeds from operating activities
<S> <C> <C> <C>
Premiums and annuity and other considerations received $11,923 $10,711 $ 9,967
Net investment income received 2,723 2,509 2,421
Benefit payments other than dividends (9,277) (8,186) (6,700)
Dividends paid to policyowners (317) (293) (396)
Insurance expenses and taxes paid (1,198) (1,159) (1,007)
Federal income taxes paid (125) (67) (119)
Transfers for separate account operations (1,549) (1,396) (1,120)
Other (3) 7 (5)
------------------------------------------
Net cash provided from operations 2,177 2,126 3,041
Proceeds from investments sold, matured or repaid
Bonds and stocks 12,028 10,951 20,072
Mortgage loans 1,276 2,043 6,852
Real estate and other invested assets 70 168 37
Tax on capital gains (22) (25) (29)
------------------------------------------
Total cash provided from investments 13,352 13,137 26,932
Issuance of surplus notes - 298 -
Other cash provided 793 - 85
------------------------------------------
Total cash provided 16,322 15,561 30,058
CASH APPLIED
Cost of investments acquired
Bonds and stocks acquired (13,234) (13,709) (22,434)
Mortgage loans acquired or originated (2,265) (1,611) (7,253)
Real estate and other invested assets acquired (195) (91) (132)
------------------------------------------
Total cash applied to investments (15,694) (15,411) (29,819)
Other cash applied (200) (135) (72)
------------------------------------------
Total cash applied (15,894) (15,546) (29,891)
SHORT-TERM BORROWINGS
Proceeds of short-term borrowings 990 3,152 1,743
Repayment of short-term borrowings (990) (3,152) (1,743)
------------------------------------------
Net cash provided by short-term borrowings - - -
------------------------------------------
Net increase in cash and short-term investments 428 15 167
Cash and short-term investments at beginning of year 485 470 303
------------------------------------------
Cash and short-term investments at end of year $ 913 $ 485 $ 470
==========================================
See accompanying notes.
</TABLE>
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements
December 31, 1995
1. Nature of Operations and Significant Accounting Policies
Description of Business
Principal Mutual Life Insurance Company (the Company) is primarily engaged in
the marketing and management of life insurance, annuity, health and pension
products. In addition, the Company provides various other financial services
through its subsidiaries.
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company's financial statements and accompanying notes
requires management to make estimates and assumptions that affect the amounts
reported and disclosed. These estimates and assumptions could change in the
future as more information becomes known, which could impact the amounts
reported and disclosed in the financial statements and accompanying notes.
Basis of Presentation
The Company's financial statements have been prepared on the basis of accounting
practices prescribed or permitted by the Insurance Division of the Department of
Commerce of the State of Iowa (statutory accounting practices), which practices
are currently regarded as generally accepted accounting principles (GAAP) for
mutual life insurance companies.
Beginning in 1996, however, under the requirements of Financial Accounting
Standards Board (FASB) Interpretation No. 40, "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises,"
as amended, financial statements prepared on the basis of statutory accounting
practices will no longer be described as prepared "in conformity with GAAP." The
Accounting Standards Executive Committee of the American Institute of Certified
Public Accountants and the FASB issued authoritative accounting and reporting
pronouncements in January 1995, effective for calendar year 1996, addressing how
mutual life insurance companies should account for certain insurance activities.
Applying the provisions of these authoritative accounting and reporting
pronouncements may result in surplus and net income that differ from the amounts
reported under existing statutory accounting practices. The Company has not yet
determined the impact of these pronouncements on its financial statements. The
Company plans to issue general-purpose financial statements for calendar year
1996 that follow these authoritative pronouncements and will be described as
prepared in conformity with GAAP. These statutory-basis financial statements,
however, will continue to be required by insurance regulatory authorities.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
The National Association of Insurance Commissioners (NAIC) currently is in the
process of recodifying statutory accounting practices, the result of which is
expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project, which is not expected to be completed
before 1997, will likely change, to some extent, prescribed statutory accounting
practices and may result in changes to the accounting practices that the Company
uses to prepare its statutory-basis financial statements.
Subsidiaries
Investment in subsidiaries is reported at equity in net assets determined on a
statutory basis for insurance subsidiaries and on the basis of prescribed
valuation alternatives for non-insurance subsidiaries, resulting in carrying
values periodically approved by the Securities Valuation Office of the NAIC.
Total assets of these unconsolidated subsidiaries amounted to $2.6 billion at
December 31, 1995 and $2.1 billion at December 31, 1994, and total revenues were
$1,190 million in 1995, $911 million in 1994 and $669 million in 1993. During
1995, 1994 and 1993, the Company included $(48) million, $(2) million and $(37)
million, respectively, in net income from investments representing the current
year net losses of its subsidiaries.
Investments
Investments in bonds, short-term investments, and commercial and residential
mortgage loans are reported principally at cost (unpaid principal balance),
adjusted for amortization of premiums and accrual of discounts, both computed
using the interest method; policy loans and investments in preferred stocks
primarily at cost; common stocks at market value based on the latest quoted
market prices; and investments in real estate and properties held for Company
use generally at cost less encumbrances and accumulated depreciation. For the
loan-backed and structured securities included in the bond portfolio, the
Company recognizes income using the prospective method which results in a new
constant effective yield based on currently anticipated prepayments as
determined by broker-dealer surveys or internal estimates. Properties acquired
through loan foreclosures with cumulative carrying values of $946 million at
December 31, 1995, and $830 million at December 31, 1994, are recorded at the
lower of cost (principal balance of the former mortgage loan) or fair market
value at the time of foreclosure or receipt of deed in lieu of foreclosure. This
becomes the new cost basis of the real estate and is subject to further
potential carrying value reductions as a result of depreciation and quarterly
valuation determinations. Depreciation expense is computed primarily on the
basis of accelerated and straight-line methods over the estimated useful lives
of the assets. Other admitted assets are valued as prescribed by the Iowa
Insurance laws. Net realized capital gains and losses on investments are
determined using the specific identification basis.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
The Asset Valuation Reserve (AVR) provides a reserve for losses from investments
in bonds, preferred and common stocks, mortgage loans, real estate, and other
invested assets, with related increases or decreases being recorded directly to
surplus. At December 31, 1995 and 1994, the AVR was $1,041 million and $792
million, respectively. At both December 31, 1995 and 1994, other liabilities
include additional investment reserves of $36 million and $51 million,
respectively, of which $9 million is required by statutory accounting practices
as a provision for potential losses on specific mortgages in default. Unrealized
capital gains and losses on investments, including changes in mortgage and
security reserves, are recorded directly in surplus. Comparable adjustments are
also made to the AVR.
The Interest Maintenance Reserve (IMR) primarily defers certain interest-related
gains and losses (net of tax) on fixed income securities which are amortized
into net income from investments over the estimated remaining lives of the
investments sold. At December 31, 1995 and 1994, the IMR, which is included in
other liabilities, was $109 million and $52 million, respectively.
In connection with preparation of its statement of cash flows, the Company
considers all highly liquid investments with a maturity of one year or less when
purchased to be short-term investments.
Fair Values of Financial Instruments
The Company has accumulated information to disclose the fair values of certain
financial instruments, whether or not recognized in the statement of financial
position, as required by the FASB. The FASB excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
The aggregate fair value asset amounts for investments (including cash and
short-term investments, policy loans and accrued investment income and excluding
investment in subsidiaries and investment real estate) are presented in Note 2
(carrying value: 1995 - $35.3 billion, 1994 - $32.4 billion; fair value: 1995 -
$37.5 billion, 1994 - $31.9 billion). Fair value information for derivatives
held or issued for purposes other than trading is presented in Note 3.
Information for certain of the Company's reserves and liabilities that are
investment-type contracts (insurance, annuity and other policy contracts that do
not involve significant mortality or morbidity risk) is presented in Note 4
(carrying value: 1995 - $21.4 billion, 1994 - $20.0 billion; fair value: 1995 -
$22.0 billion, 1994 - $19.5 billion). Those referenced notes also describe the
methods and assumptions utilized by the Company in estimating its fair value
disclosures for financial instruments. Those techniques utilized in estimating
the fair values of financial instruments are affected by the assumptions used,
including discount rates and estimates of the amount and timing of future cash
flows. Care should be exercised in deriving conclusions about the Company's
business, its value or financial position based on the fair value information of
certain financial instruments presented in the referenced notes.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
Futures and Forward Contracts and Interest Rate and Equity Swaps
The Company uses financial futures contracts, forward purchase commitments and
interest rate swaps to hedge risks associated with interest rate fluctuations
and uses equity swaps to hedge risks associated with market fluctuations of
certain unaffiliated common stocks. Realized capital gains and losses on those
contracts which hedge risks associated with interest rate fluctuations are
amortized over the remaining lives of the underlying assets, primarily by
including them in the IMR. Realized capital gains and losses on equity swaps are
recognized in the period incurred.
Reserves for Insurance, Annuity and Accident and Health Policies
The reserves for life, health and annuity policies, all developed by actuarial
methods, are established and maintained on the basis of mortality and morbidity
tables using assumed interest rates and valuation methods that will provide, in
the aggregate, reserves that are greater than the minimum valuation required by
law or guaranteed policy cash values. The cumulative effects of changes in
valuation bases at the beginning of the year for previously established
policyowner reserves are included as adjustments to surplus. Significant
decreases in valuation bases are approved by the Insurance Division of the
Department of Commerce of the State of Iowa.
The liability for unpaid accident and health claims is determined using
statistical analyses and case basis evaluations. This liability is an estimate
of the ultimate net cost of all reported and unreported losses that are unpaid.
This liability is determined using estimates of future trends in claim severity,
frequency, and other factors that could vary as claims are ultimately settled.
Although considerable variability is inherent in such estimates, the Company
believes that the liability for unpaid claims is adequate. These estimates are
continually reviewed and, as adjustments to this liability become necessary,
such adjustments are reflected in current operations.
Recognition of Premium Revenues and Costs
For life and annuity contracts, premiums are recognized as revenues over the
premium-paying period, whereas commissions and other costs applicable to the
acquisition of new business are charged to operations as incurred.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
Reinsurance
The Company reinsures certain of its risks. Reinsurance premiums, expenses, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms of
the reinsurance contracts. Premiums ceded to other companies (1995 - $27
million, 1994 - $21 million and 1993 - $19 million) are reported as a reduction
of premium income, and insurance reserves applicable to reinsurance ceded have
also been reported as reductions of these items (1995 - $33 million and 1994 -
$24 million). The Company is contingently liable with respect to reinsurance
ceded to other companies in the event the reinsurer is unable to meet the
obligations that it has assumed.
Separate Accounts
The separate accounts presented in the financial statements represent the fair
market value of funds that are separately administered by the Company for
contracts with equity, real estate and fixed-income investments. The separate
account contract owner, rather than the Company, bears the investment risk of
these funds. The Company receives a fee for administrative and investment
advisory services.
Separate account assets and liabilities are disclosed in the aggregate in the
statements of financial position. The statements of operations include the
premiums, increases in reserves, benefits, and other items arising from the
operations of the separate accounts of the Company. The statements of surplus
reflect the gain from operations and surplus of the separate accounts. Such gain
from operations and surplus arises from the transfer by the Company of funds to
the separate accounts to facilitate their operations.
Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform to the 1995 presentation.
2. Investments
Investments in debt securities, preferred stocks, and other fixed maturity
instruments are generally held for investment purposes to maturity, and,
therefore, are carried in the financial statements at amortized cost. The
Company's liabilities, to which such fixed maturity investments are closely
matched, are long-term in nature so the Company does not expect to be required
to sell such securities prior to maturity.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
The carrying values and estimated market values of investments in bonds and
preferred stocks as of December 31, 1995 and 1994, are as follows (in millions):
Gross Gross Estimated
Carrying Value Unrealized Unrealized Market
Gains Losses Value
---------------------------------------------------------------
December 31, 1995
Bonds:
<S> <C> <C> <C> <C>
United States Government and agencies $ 232 $ 4 $ - $ 236
States and political subdivisions 230 21 - 251
Corporate - public 4,374 328 16 4,686
Corporate - private 13,877 1,332 15 15,194
Mortgage-backed securities 3,085 134 4 3,215
---------------------------------------------------------------
21,798 1,819 35 23,582
Preferred stocks 93 12 - 105
---------------------------------------------------------------
$21,891 $1,831 $35 $23,687
===============================================================
December 31, 1994
Bonds:
United States Government and agencies $ 111 $ 1 $ 4 $ 108
States and political subdivisions 198 2 12 188
Corporate - public 3,986 74 142 3,918
Corporate - private 13,678 365 391 13,652
Mortgage-backed securities 2,653 2 166 2,489
---------------------------------------------------------------
20,626 444 715 20,355
Preferred stocks 69 4 2 71
---------------------------------------------------------------
$20,695 $448 $717 $20,426
===============================================================
</TABLE>
Market values of public bonds and preferred stocks have been determined by the
Company from public quotations, when available, or bonds have been assigned a
market rate by the Securities Valuation Office of the NAIC. Private placement
securities are valued by discounting the expected total cash flows. Market rates
used are applicable to the yield, credit quality and average maturity of each
security.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
The carrying values and estimated market values of bonds at December 31, 1995,
by expected maturity, are as follows (in millions):
Carrying Value Estimated Market
Value
------------------------------------
<S> <C> <C>
Due in one year or less $ 747 $ 768
Due after one year through five years 6,878 7,271
Due after five years through ten years 6,189 6,695
Due after ten years 3,176 3,657
------------------------------------
16,990 18,391
Mortgage-backed and other securities without
a single maturity date 4,808 5,191
------------------------------------
Total $21,798 $23,582
====================================
</TABLE>
<TABLE>
<CAPTION>
The carrying value and estimated market value of mortgage loans at December 31,
1995 and 1994, are as follows (in millions):
1995 1994
----------------- -----------------
Estimated Estimated Market
Carrying Value Market Carrying Value Value
Value
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial mortgage loans $9,794 $10,129 $8,901 $8,580
Residential mortgage loans 234 262 287 299
</TABLE>
Market values of commercial mortgage loans are valued by discounting the
expected total cash flows using market rates that are applicable to the yield,
credit quality, and maturity of each loan. Market values of residential mortgage
loans are valued by a pricing and servicing model using market rates that are
applicable to the yield, rate structure, credit quality, size, and maturity of
each loan. The carrying value for policy loans approximates the fair value.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Major categories of income from investments are summarized as follows (in
millions):
Year ended December 31
1995 1994 1993
------------------------------------------
Bonds $1,761 $1,622 $1,549
Preferred stocks 6 3 2
Common stocks 35 22 26
Investment in subsidiaries (48) (2) (37)
Mortgage loans 808 766 811
Investment real estate 211 179 129
Policy loans 48 44 44
Cash and short-term investments 29 20 6
Other 18 48 1
------------------------------------------
2,868 2,702 2,531
Less investment expenses 217 182 162
------------------------------------------
Net income from investments $2,651 $2,520 $2,369
==========================================
<TABLE>
<CAPTION>
The major components of realized capital gains (losses) on investments reflected
in operations, and unrealized capital gains (losses) on investments reflected
directly in surplus, are summarized as follows (in millions):
Realized Unrealized
1995 1994 1993 1995 1994 1993
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Bonds $101 $(133) $150 $ (17) $32 $(32)
Preferred stocks (1) - (11) 1 (7) 11
Common stocks 32 6 29 398 7 23
Mortgage loans (24) (34) (81) 9 3 41
Investment real estate 7 3 1 5 6 (1)
Investment in subsidiaries 1 32 - (6) 6 (5)
Other 4 45 (44) (1) - 20
------------------------------ -----------------------------
Net capital gains (losses) 120 (81) 44 389 47 57
Related federal income taxes (41) 6 (26) (63) - -
Transferred (to) from interest
maintenance reserve (77) 43 (70) - - -
============================== =============================
Total capital gains (losses) $ 2 $ (32) $(52) $326 $47 $57
============================== =============================
</TABLE>
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Proceeds from sales of investments (excluding maturity proceeds) in debt
securities were $6.5 billion in both 1995 and 1994, and $11.9 billion in 1993.
Gross gains of $93 million, $53 million and $173 million and gross losses of $54
million, $213 million and $65 million in 1995, 1994 and 1993, respectively, were
realized on those sales. Of the 1995, 1994 and 1993 proceeds, $6.1 billion, $5.7
billion and $11.5 billion, respectively, relates to sales of mortgage-backed
securities. The Company actively manages its mortgage-backed securities
portfolio to control prepayment risk. Gross gains of $66 million, $19 million
and $152 million and gross losses of $17 million, $139 million and $29 million
in 1995, 1994 and 1993, respectively, were realized on sales of mortgage-backed
securities. At December 31, 1995, the Company had security purchases payable
totaling $426 million relating to the purchases of mortgage-backed securities at
forward dates.
The Company has a revolving credit agreement with Principal Residential
Mortgage, Inc., a wholly-owned subsidiary which conducts the Company's mortgage
banking operations, of up to $800 million, which had a balance of $458 million
outstanding at December 31, 1995.
Commercial mortgage loans and corporate private placement bonds originated or
acquired by the Company represent its primary areas of credit risk exposure. At
December 31, 1995 and 1994, the commercial mortgage portfolio is diversified by
geographic region and specific collateral property type as follows:
<TABLE>
<CAPTION>
Geographic Distribution Property Type Distribution
---------------------------------- --------------------------------------
December 31 December 31
1995 1994 1995 1994
----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
South Atlantic 22% 21% Industrial 43% 47%
Pacific 34 38 Office 26 24
Mid Atlantic 17 17 Retail 26 24
North Central 14 13 Other 5 5
South Central 7 6
New England 4 3
Mountain 2 2
</TABLE>
The corporate private placement bond portfolio is diversified by issuer and
industry. Restrictive bond covenants are monitored by the Company to regulate
the activities of issuers and control their leveraging capabilities. Under the
NAIC bond classification system, 99.8% and 99.7% of the Company's bond portfolio
were carried at amortized cost at December 31, 1995 and 1994, respectively, with
the remainder carried at the lower of amortized cost or market value.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Effective December 29, 1995, the Company entered into short-term equity swap
agreements to mitigate its exposure to declines in the value of about one-half
of its marketable common stock portfolio. Under the agreements, the return on
that portion of the Company's marketable common stock portfolio was swapped for
a fixed short-term interest rate. At December 31, 1995, there was no realized or
unrealized gains or losses recorded on the equity swap agreements and,
accordingly, there was no credit exposure. The unrealized appreciation and
depreciation of marketable common stocks recognized in the Company's statement
of financial position were $814 million and $85 million, respectively, at
December 31, 1995.
Investment real estate includes properties directly owned by the Company and
investments in subsidiaries include properties owned jointly with venture
partners and operated by the partners. Joint ventures in which the Company has
an interest have mortgage loans with the Company of $2.2 billion at both
December 31, 1995 and December 31, 1994. The Company is committed to provide
additional mortgage financing for such joint ventures aggregating $304 million
at December 31, 1995.
3. Derivatives Held or Issued for Purposes Other Than Trading
The Company uses exchange-traded interest rate futures and forward contracts to
hedge against interest rate risks. The Company attempts to match the timing of
when interest rates are committed on insurance products and on new investments.
However, timing differences do occur and can expose the Company to fluctuating
interest rates. Interest rate futures and forward contracts are used to minimize
these risks. In these contracts, the Company is subject to the risk that the
counterparties will fail to perform and to the risks associated with changes in
the value of the underlying securities; however, such changes in value generally
are offset by opposite changes in the value of the hedged items. Futures
contracts are marked to market and settled daily, which minimizes the
counterparty risk. The notional amounts of futures and forward contracts ($303
million at December 31, 1995, and $80 million at December 31, 1994) represent
the extent of the Company's involvement but not the risk of loss.
The Company enters into interest rate swaps to minimize its exposure to
fluctuations in interest rates and to correct duration mismatches. The most
common use is to modify the duration of an asset or portfolio, a less common use
is to convert a floating rate asset into a fixed rate asset. The notional
principal amounts of the swaps outstanding at December 31, 1995 and 1994, were
$599 million and $586 million, respectively, and the credit exposure at December
31, 1995 and December 31, 1994 was $8 million. The Company's current credit
exposure on swaps is limited to the value of interest rate swaps that have
become favorable to the Company. The average unexpired terms of the swaps were
approximately three years at both December 31, 1995 and 1994, respectively. The
net amount payable or receivable from interest rate swaps is accrued as an
adjustment to interest income. The Company's interest rate swap agreements
include cross-default provisions when two or more swaps are transacted with a
given counterparty.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
3. Derivatives Held or Issued for Purposes Other Than Trading (continued)
The Company enters into currency exchange swap agreements to convert certain
foreign denominated fixed rate assets into dollar denominated fixed rate assets
and eliminate the exposure to future currency volatility on those securities. At
December 31, 1995, the Company had various foreign currency exchange agreements
with maturities ranging from 1995 to 2002, with an aggregate notional amount
involved of approximately $312 million and the credit exposure was $4 million.
The average unexpired term of the swaps was approximately five years at December
31, 1995.
4. Insurance, Annuity and Accident and Health Reserves
The carrying values and fair values of the Company's reserves and liabilities
for investment-type insurance contracts (which are only a portion of the
insurance reserves, annuity reserves, and other policy liabilities appearing in
the statement of financial position) at December 31, 1995 and 1994, are
summarized as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------------------------
Carrying Value Fair Carrying Value Fair
Value Value
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insurance reserves $ 30 $ 33 $ 30 $ 30
Annuity reserves 20,989 21,524 19,714 19,168
Other policy liabilities 398 403 270 270
----------------------------------------------------------------------
Total $21,417 $21,960 $20,014 $19,468
======================================================================
</TABLE>
The fair values for the Company's reserves and liabilities under investment-type
contracts (insurance, annuity and other policy contracts that do not involve
significant mortality or morbidity risk) are estimated using discounted cash
flow analyses (based on current interest rates being offered for similar
contracts with maturities consistent with those remaining for the
investment-type contracts being valued) or surrender values.
The fair values for the Company's insurance contracts (insurance, annuity and
other policy contracts that do involve significant mortality or morbidity risk),
other than investment-type contracts, are not required to be disclosed. The
Company does consider, however, the various insurance and investment risks in
choosing investments for both insurance and investment-type contracts.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
4. Insurance, Annuity and Accident and Health Reserves (continued)
Activity in the liability for unpaid accident and health claims, which is
included with insurance reserves in the statement of financial position, is
summarized as follows (in millions):
Year ended December 31
1995 1994 1993
------------------------------------------
Balance at beginning of year $ 844 $ 723 $ 657
Incurred:
Current year 2,665 2,735 2,307
Prior years (24) (105) (37)
------------------------------------------
Total incurred 2,641 2,630 2,270
Payments:
Current year 2,196 2,065 1,814
Prior years 481 444 390
------------------------------------------
Total payments 2,677 2,509 2,204
------------------------------------------
Balance at end of year:
Current year 469 670 493
Prior years 339 174 230
------------------------------------------
Total balance at end of year $ 808 $ 844 $ 723
==========================================
5. Federal Income Taxes
The Company files a consolidated income tax return that includes all of its
qualifying subsidiaries, and has a policy of allocating income tax expenses and
benefits to companies in the group based upon pro rata contribution of taxable
income or operating losses. The Company is taxed at corporate rates on taxable
income based on existing tax laws. Due to the inherent differences between
income for financial reporting purposes and income for tax purposes, the
Company's provision for federal income taxes may not have the customary
relationship of taxes to income.
Deferred income taxes are generally not recognized for the tax effects of
temporary differences between income for financial reporting purposes and income
for tax purposes. In 1993, 1994 and 1995, however, the Company recognized a
deferred tax asset and operating benefit for the tax effect of unamortized
deferred acquisition costs required for tax purposes. This deferred tax asset
was non-admitted in accordance with statutory accounting practices. In 1995, the
Company also recognized a deferred tax liability and surplus charge for the tax
effect of unrealized gains for common stocks identified for sale in 1996.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
5. Federal Income Taxes (continued)
In December 1994, a U. S. Court of Appeals with jurisdiction over the Company
ruled that federal law did not permit mutual life insurance companies to use a
negative recomputed differential earnings rate to compute their equity tax
liability for the preceding year. Accordingly, the Company increased its
liability for federal income taxes attributable to its equity for years prior to
1994 and made a corresponding adjustment to surplus in the amount of $63
million.
6. Short-Term Borrowings
The Company issues commercial paper to meet its short-term financing needs.
There were no outstanding borrowings at December 31, 1995 or 1994. The Company
also maintains credit facilities with various banks for short-term borrowing
purposes.
7. Employee and Agent Benefits
The Company has defined benefit pension plans covering substantially all of its
employees and certain agents. The employees and agents are generally first
eligible for the pension plans when they reach age 21. The pension benefits are
based on the years of service and generally the employee's or agent's average
annual compensation during the last five years of employment. Partial benefit
accrual of pension benefits is recognized from first eligibility until
retirement based on attained service divided by potential service to age 65 with
a minimum of 35 years of potential service.
During 1995, the Company adopted Statement of Financial Standards (SFAS) No. 87,
"Employers' Accounting for Pensions," and accordingly changed its method of
accounting for the costs of defined benefit pension plans to an accrual method.
Prior to this change, the cost of pension benefits was recognized as
contributions were made to the pension trusts. The Company's policy is to fund
the cost of providing pension benefits in the years that the employees and
agents are providing service to the Company. The Company's funding policy is to
deposit the actuarial normal cost and any change in unfunded accrued liability
over a 30-year period as a percentage of compensation.
The pension plans' combined funded status, reconciled to amounts recognized in
the statements of financial position and statements of operations and surplus as
of and for the years ended December 31, 1995 and 1994, is as follows (in
millions):
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
December 31
1995 1994
------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $437 $324
==============================
Accumulated benefit obligation $457 $338
==============================
Plan assets at fair value, primarily affiliated mutual funds
and investment contracts of the Company $719 $581
Projected benefit obligation 661 462
------------------------------
Plan assets in excess of projected benefit obligation 58 119
Unrecognized net (gains) losses and funding different from that assumed
and from changes in assumptions 42 (23)
Unrecognized net transition asset as of January 1, 1994 (72) (83)
------------------------------
Prepaid pension asset (non-admitted) $ 28 $ 13
==============================
Net periodic pension income included the following components (in millions):
Year ended December 31
1995 1994
------------------------------
Service cost $22 $26
Interest cost on projected benefit obligation 39 37
Actual return on plan assets (144) 6
Net amortization and deferral 79 (72)
------------------------------
Total net periodic pension income $ (4) $ (3)
==============================
</TABLE>
During 1994 and 1993, $10 million and $8 million, respectively, was charged to
expense and contributed to the trusts previously established to provide for
future costs of pension benefits. During 1995, $12 million was contributed to
these pension trusts. In addition, to adjust the pension accounting to the new
method required by SFAS No. 87 and to make the change effective as of January 1,
1994, surplus as of January 1, 1995 has been increased by $13 million. According
to the requirements of statutory accounting practices, pension expense for 1994
has not been restated and the 1994 pension amounts shown above are for
comparative purposes only. The pension asset at January 1, 1995 ($13 million)
and December 31, 1995 ($28 million) was non-admitted as prescribed by statutory
accounting practices.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
The weighted-average assumed discount rate used in determining the projected
benefit obligation was 7% and 8.5% at December 31, 1995 and 1994, respectively.
Some of the trusts holding the plan assets are subject to federal income taxes
at a 35% tax rate while others are not subject to federal income taxes. For both
1995 and 1994, the expected long-term rates of return on plan assets were
approximately 6% (after estimated income taxes) for those trusts subject to
federal income taxes and approximately 10% for those trusts not subject to
federal income taxes. The assumed rate of increase in future compensation levels
varies by age for both the qualified and non-qualified pension plans.
In addition, the Company has defined contribution plans that are generally
available to all employees and agents who are age 21 or older and have completed
one year of service. Eligible participants may contribute up to 15% of their
compensation or $9,240 annually to the plans. The Company matches the
participant's contribution with a 50% contribution up to a maximum contribution
of 2% of the participant's compensation. During both 1995 and 1994, the Company
contributed $7 million to the defined contribution plans. During 1993, such
contributions totaled $6 million.
The Company also provides certain health care, life insurance, and long-term
care benefits for retired employees. Substantially all employees are first
eligible for these postretirement benefits when they reach age 57 and have
completed ten years of service with the Company. Partial benefit accrual of
these health, life, and long-term care benefits is recognized from first
eligibility until retirement based on attained service divided by potential
service to age 65 with a minimum of 35 years of potential service. The Company's
policy is to fund the cost of providing retiree benefits in the years that the
employees are providing service to the Company. The Company's funding policy is
to deposit the actuarial normal cost and an accrued liability over a 30-year
period as a percentage of compensation.
The postretirement plans' combined funded status, reconciled to amounts
recognized in the statement of financial position and statement of operations
and surplus as of and for the years ended December 31, 1995 and 1994, is as
follows (in millions):
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
December 31
1995 1994
<S> <C> <C>
-------------------------------
Plan assets at fair value, primarily affiliated mutual funds and
investment contracts of the Company $208 $155
Accumulated postretirement benefit obligation:
Retirees (83) (71)
Eligible employees (40) (31)
--------------------------------
Total accumulated postretirement benefit obligation (123) (102)
-------------------------------
Plan assets in excess of accumulated postretirement benefit obligation
85 53
Unrecognized net losses and funding different from that assumed and
from changes in assumptions 3 29
-------------------------------
Postretirement benefit asset (non-admitted) $ 88 $ 82
===============================
</TABLE>
<TABLE>
<CAPTION>
The net periodic postretirement benefit cost included the following components
(in millions):
Year ended
December 31
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Service cost $ 5 $ 4 $ 3
Interest cost on accumulated postretirement benefit cost 9 7 6
Expected return on plan assets (10) (10) (6)
Net amortization of gains and losses 1 - -
================================
Total net periodic postretirement benefit cost $ 5 $ 1 $ 3
================================
</TABLE>
The weighted-average assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7% and 8.5% at December 31, 1995 and 1994,
respectively. Some of the trusts holding the plan assets are subject to federal
income taxes at a 35% tax rate while others are not subject to federal income
taxes. For both 1995 and 1994, the expected long-term rates of return on plan
assets were approximately 6% (after estimated income taxes) for those trusts
subject to federal income taxes and approximately 9% for those trusts not
subject to federal income taxes. These rates of return on plan assets vary by
benefit type and employee group.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligations starts at 11.5% in 1995, declines to 9.5% in
2001, and then declines to an ultimate rate of 6.5% in 2036. If the health care
cost trend rate assumptions were increased by 1% in each year, the accumulated
postretirement benefits obligation for health plans as of December 31, 1995
would increase by 11.8% ($10 million). The effect of this 1% increase would also
increase the aggregate of the service cost and interest cost components of the
net periodic postretirement benefit cost of health plans for the year ended
December 31, 1995 by 13.5% ($1 million).
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
These statutory accounting provisions are similar to Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," issued by the FASB except that SFAS No. 106
includes ineligible employees in the accumulated postretirement benefit
obligation calculations. The accumulated postretirement benefit obligation for
ineligible employees was $77 million and $48 million at December 31, 1995 and
1994, respectively.
8. Surplus Notes
On March 10, 1994, the Company issued $300 million of surplus notes, including
$200 million due March 1, 2024 at a 7.875% annual interest rate and the
remaining $100 million due March 1, 2044 at an 8% annual interest rate. No
affiliates of the Company hold any portion of the surplus notes. The discount
and direct costs associated with issuing these surplus notes is being amortized
to expense over their respective terms using the interest method. For statutory
accounting purposes, these notes are considered a part of total surplus of the
Company. Each payment of interest and principal on the surplus notes may be made
only with the prior approval of the Commissioner of Insurance of the State of
Iowa (the Commissioner) and only to the extent that the Company has sufficient
surplus earnings to make such payments. For the years ended December 31, 1995
and 1994, interest of $24 million and $11 million, respectively, was approved by
the Commissioner, paid and charged to expense. Had the accrual of interest on
surplus notes not been subject to approval of the Commissioner, accrued interest
payable on surplus notes at both December 31, 1995 and 1994 would have been $8
million.
Subject to Commissioner approval, the surplus notes due March 1, 2024 may be
redeemed at the Company's election on or after March 1, 2004 in whole or in part
at a redemption price of approximately 103.6% of par. The approximate 3.6%
premium is scheduled to gradually diminish over the following ten years. These
surplus notes may then be redeemed on or after March 1, 2014, at a redemption
price of 100% of the principal amount plus interest accrued to the date of
redemption. Non-insurance companies individually held over 10% of these surplus
notes (approximately $50 million and $73 million at December 31, 1995 and 1994,
respectively).
In addition, subject to Commissioner approval, the surplus notes due March 1,
2044 may be redeemed at the Company's election on or after March 1, 2014, in
whole or in part at a redemption price of approximately 102.3% of par. The
approximate 2.3% premium is scheduled to gradually diminish over the following
ten years. These surplus notes may be redeemed on or after March 1, 2024, at a
redemption price of 100% of the principal amount plus interest accrued to the
date of redemption. Non-insurance companies individually held over 10% of these
surplus notes (approximately $43 million and $62 million at December 31, 1995
and 1994, respectively).
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
9. Other Commitments and Contingencies
The Company leases office space and furniture and equipment under various
operating leases. Rental expense for all operating leases totaled $48 million in
1995, $43 million in 1994 and $44 million in 1993. At December 31, 1995, future
minimum rental commitments under noncancelable operating leases for office space
and electronic data processing equipment totaled approximately $97 million.
The Company is a defendant in various legal actions arising in the normal course
of its investment and insurance operations. In the opinion of management, any
losses resulting from such actions would not have a material effect on the
financial statements.
The Company is also subject to insurance guarantee laws in the states in which
it writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. At December 31, 1995 and 1994,
approximately $18 million and $15 million, respectively, of surplus is
appropriated for possible guarantee fund assessments for which notices have not
been received.
In 1995, the Company sold its wholly-owned subsidiary, Principal National Life
Insurance Company (Principal National), at a gain of approximately $1 million.
At December 31, 1994, substantially all the assets ($513 million), liabilities
($470 million), and equity ($43 million) of Principal National were transferred
to and assumed by the Company. This resulted in increases in both other income
and additions to policyowner reserves of $470 million in 1994.
<PAGE>
Report of Independent Auditors
The Board of Directors
Principal Mutual Life Insurance Company
We have audited the accompanying statements of financial position of Principal
Mutual Life Insurance Company (the Company) as of December 31, 1995 and 1994,
and the related statements of operations and surplus and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Principal Mutual Life Insurance
Company at December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles and with reporting
practices prescribed or permitted by the Insurance Division of the Department of
Commerce of the State of Iowa.
Ernst & Young LLP
Des Moines, Iowa
January 31, 1996
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement
(1) Part A:
Separate Account C:
Condensed Financial Information for each of the ten years
ended December 31, 1995.
(2) Part B:
Principal Mutual Life Insurance Company Separate Account C:
Statement of Net Assets, December 31, 1995.
Statement of Operations for the year ended
December 31, 1995.
Statements of Changes in Net Assets for the years ended
December 31, 1995 and 1994.
Notes to Financial Statements.
Report of Independent Auditors.
Principal Mutual Life Insurance Company:
Statements of Financial Position, December 31, 1995 and
1994.
Statements of Operations and Surplus for the years ended
December 31, 1995, 1994 and 1993.
Statements of Cash Flows for the years ended December 31,
1995, 1994, and 1993.
Notes to Financial Statements.
Report of Independent Auditors.
(b) Exhibits
( 1) Board Resolution Authorizing Establishment of Registrant
( 3)(a) Distribution Agreement
( 3)(b) Selling Agreement
( 4)(a) Form of Variable Annuity Contract
( 4)(b) Form of Variable Annuity Certificate
( 5) Form of Application
( 6)(a) Articles of Incorporation of the Depositor
( 6)(b) Bylaws of the Depositor
( 9) Opinion of Counsel
(10)(a) Consent of Ernst & Young LLP
(10)(b) Powers of attorney
(13)(a) Schedules for Computing Annualized Total Returns of
Government Securities and Common Stock Divisions
(13)(b) Schedules for Computing Annualized Yield and Effective
Annualized Yield of the Money Market Division
(27) Financial Data Schedules for Common Stock Division,
Government Securities Division and Money Market Division
<PAGE>
Item 25. Officers and Directors of the Depositor
Principal Mutual Life Insurance Company is managed by a Board of
Directors which is elected by its policyowners. The directors and
executive officers of the Company, their positions with the Company,
including Board Committee memberships, and their principal business
address, are as follows:
DIRECTORS: Principal
Name, Positions and Offices Business Address
MARY VERMEER ANDRINGA Vermeer Manufacturing Company
Director Box 200
Member, Nominating Committee Pella, IA 50219-0200
RUTH M. DAVIS The Pymatuning Group, Inc.
Director Suite 570, 4900 Seminary Road
Member, Nominating Committee Alexandria, VA 22311
DAVID J. DRURY The Principal Financial Group
Director Des Moines, IA 50392
Chairman of the Board
Chief Executive Officer
Chair,Executive Committee
C. DANIEL GELATT, JR. NMT Corporation
Director Post Office Box 2287
Member, Executive and La Crosse, WI 54602-2287
Human Resources Committees
G. DAVID HURD The Principal Financial Group
Director Des Moines, IA 50392
Member, Executive and
Human Resources Committees
THEODORE M. HUTCHISON The Principal Financial Group
Director Des Moines, IA 50392
Vice Chairman
C. S. JOHNSON Pioneer Hi-Bred International, Inc.
Director 400 Locust
Member, Audit Committee Des Moines, IA 50309
WILLIAM T. KERR Meredith Corporation
Director 1716 Locust St.
Member, Nominating Committee Des Moines, IA 50309-3023
LEE LIU IES Industries Inc.
Director Post Office Box 351
Member, Executive and Cedar Rapids, IA 52406
Human Resources Committees
VICTOR. H. LOEWENSTEIN Egon Zehnder International
Director 55 East 59th Street
Member, Audit New York, NY 10022
Committee
JOHN R. PRICE Chemical Banking Corporation
Director 270 Park Avenue - 44th Floor
Chair, Audit Committee New York, NY 10017
BARBARA A. RICE Rice & Associates
Director 712 Germantown Pike
Member, Human Resources Lafayette, PA 19444-1604
Committee
JEAN-PIERRE C. ROSSO Case Corporation
Director 700 State Street
Member, Audit Committee Racine, WI 53404
DONALD M. STEWART The College Board
Director 45 Columbus Avenue
Chair, Nominating New York, NY 10023-6992
Committee
ELIZABETH E. TALLETT Transcell Technologies, Inc.
Director 2000 Cornwall Road
Member, Audit Committee Monmouth Junction, NJ 08852
DEAN D. THORNTON 1602- 34 Court West
Director Seattle, WA 98199
Chair, Human Resources
Committee
FRED W. WEITZ Essex Meadows, Inc.
Director 800 Second Avenue
Member, Executive and Des Moines, IA 50309
Nominating Committees
Executive Officers (Other than Directors):
JOHN E. ASCHENBRENNER Senior Vice President
RAY S. CRABTREE Executive Vice President
THOMAS J. GAARD Senior Vice President
MICHAEL H.GERSIE Senior Vice President
THOMAS J. GRAF Senior Vice President
J. BARRY GRISWELL Executive Vice President
RONALD E. KELLER Executive Vice President
GREGG R. NARBER Senior Vice President and
General Counsel
CHARLES E. ROHM Executive Vice President
Item 26. Persons Controlled by or Under Common Control with Depositor
Principal Mutual Life Insurance Company (incorporated as a mutual life
insurance company under the laws of Iowa);
Sponsored the organization of the following mutual funds, some of
which it controls by virtue of owning voting securities:
Principal Asset Allocation Fund, Inc. (a Maryland
Corporation) 100.0% of shares outstanding owned by Principal
Mutual Life Insurance Company and its separate accounts on
March 21, 1996.
Principal Aggressive Growth Fund, Inc. (a Maryland Corporation)
100.0% of shares outstanding owned by Principal Mutual Life
Insurance Company and its separate accounts on March 21, 1996.
Princor Balanced Fund, Inc. (a Maryland Corporation) 14.10% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal Balanced Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company and its separate accounts on March 21, 1996.
Princor Blue Chip Fund, Inc. (a Maryland Corporation) 12.07% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor Bond Fund, Inc. (a Maryland Corporation) 1.75% of shares
outstanding owned by Principal Mutual Life Insurance Company on
March 21, 1996.
Principal Bond Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company and its separate accounts on March 21, 1996.
Princor Capital Accumulation Fund, Inc. (a Maryland
Corporation) 43.93% of outstanding shares owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Principal Capital Accumulation Fund, Inc. (a Maryland
Corporation)100.0% of outstanding shares owned by Principal
Mutual Life Insurance Company and its Separate Accounts on
March 21, 1996.
Princor Cash Management Fund, Inc. (a Maryland Corporation) 1.28%
of outstanding shares owned by Principal Mutual Life Insurance
Company (including subsidiaries and affiliates) on March 21,
1996.
Princor Emerging Growth Fund, Inc. (a Maryland Corporation) .78%
of shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996
Principal Emerging Growth Fund, Inc. (a Maryland Corporation)
100.0% of shares outstanding owned by Principal Mutual Life
Insurance Company and its Separate Accounts on March 21, 1996.
Princor Government Securities Income Fund, Inc. (a Maryland
Corporation) 0.39% of shares outstanding owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Principal Government Securities Fund, Inc. (a Maryland
Corporation) 100.0% of shares outstanding owned by Principal
Mutual Life Insurance Company and its Separate Accounts on
March 21, 1996.
Princor Growth Fund, Inc. (a Maryland Corporation) 0.68% of
outstanding shares owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal Growth Fund, Inc. (a Maryland Corporation) 100.0% of
outstanding shares are owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Princor High Yield Fund, Inc. (a Maryland Corporation) 34.94% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal High Yield Fund, Inc. (a Maryland Corporation) 100.0%
of shares outstanding owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Princor Limited Term Bond Fund, Inc. (a Maryland Corporation)
98.02% of shares outstanding owned by Principal Mutual Life
Insurance Company on March 21, 1996.
Principal Money Market Fund, Inc. (a Maryland Corporation) 100.0%
of shares outstanding owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Principal Special Markets Fund, Inc. (a Maryland Corporation)
79.25% of the shares outstanding of the International Securities
Portfolio and 82.87% of the shares outstanding of the
Mortgage-Backed Securities Portfolio were owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Princor Tax-Exempt Bond Fund, Inc. (a Maryland Corporation) 0.60%
of shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor Tax-Exempt Cash Management Fund, Inc. (a Maryland
Corporation) 0.90% of shares outstanding owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Princor Utilities Fund, Inc. (a Maryland Corporation) 1.35% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor World Fund, Inc. (a Maryland Corporation) 20.19% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal World Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Subsidiaries organized and wholly-owned by Principal Mutual Life
Insurance Company:
Principal Life Insurance Company (an Iowa Corporation) A general
insurance and annuity company. It is not currently active.
Principal Holding Company (an Iowa Corporation) A holding company
wholly-owned by Principal Mutual Life Insurance Company.
PT Asuransi Jiwa Principal Egalita Indonesia (an Indonesia
Corporation)
Subsidiaries wholly-owned by Principal Holding Company:
a. Petula Associates, Ltd. (an Iowa Corporation) a real
estate development company.
b. Patrician Associates, Inc. (a California Corporation) a real
estate development company.
c. Principal Development Associates, Inc. (a California
Corporation) a real estate development company.
d. Princor Financial Services Corporation (an Iowa
Corporation) a registered broker-dealer.
e. Invista Capital Management, Inc. (an Iowa Corporation) a
registered investment adviser.
f. Principal Marketing Services, Inc. (a Delaware Corporation) a
corporation formed to serve as an interface between marketers
and manufacturers of financial services products.
g. The Principal Financial Group, Inc. (a Delaware corporation)
a general business corporation established in connection with
the new corporate identity. It is not currently active.
h. Delaware Charter Guarantee & Trust Company (a Delaware
Corporation) a nondepository trust company.
i. Principal Securities Holding Corporation (a Delaware
Corporation) a holding company.
j. Principal Health Care, Inc. (an Iowa Corporation) a developer
and administrator of managed care systems.
k. Principal Financial Advisors, Inc. (an Iowa Corporation) a
registered investment advisor.
l. Principal Asset Markets, Inc. (an Iowa Corporation) a
residential mortgage loan broker.
m. Principal Portfolio Services, Inc. (an Iowa Corporation) a
mortgage due diligence company.
n. Principal International, Inc. (an Iowa Corporation) a company
formed for the purpose of international business development.
o. Principal Spectrum Associates, Inc. (a California
Corporation) a real estate development company.
p. Principal Commercial Advisors, Inc. (an Iowa Corporation) a
company that purchases, manages and sells commercial real
estate assets.
q. Principal FC, Ltd. (an Iowa Corporation) a limited purpose
investment corporation.
r. Principal Residential Mortgage, Inc. (an Iowa Corporation) a
residential mortgage loan broker.
s. Equity FC, LTD. (an Iowa Corporation) engaged in investment
transactions including limited partnership and limited
liability companies.
Subsidiaries organized and wholly-owned by Princor Financial Services
Corporation:
a. Princor Management Corporation (an Iowa Corporation) a
registered investment advisor.
b. Principal Investors Corporation (a New Jersey Corporation) a
registered broker-dealer with the Securities Exchange
Commission. It is not currently active.
Subsidiary wholly owned by Principal Securities Holding Corporation:
Principal Financial Securities, Inc. (a Delaware Corporation) an
investment banking and securities brokerage firm.
Subsidiaries organized and wholly-owned by Principal Health Care,
Inc.:
a. America's Health Plan, Inc. (a Maryland Corporation) a
developer of discount provider networks.
b. PHC Merging Company (a Florida Corporation) it is not
currently active.
c. Principal Behavioral Health Care, Inc. (an Iowa Corporation)
a mental and nervous/substance abuse preferred provider
organization.
d. Principal Health Care of Illinois, Inc. (an Illinois
Corporation) a health maintenance organization.
e. Principal Health Care of Nebraska, Inc. (a Nebraska
Corporation) a health maintenance organization.
f. Principal Health Care of Delaware, Inc. (a Delaware
Corporation) a health maintenance organization.
g. Principal Health Care of Georgia, Inc. (a Georgia
Corporation) a health maintenance organization.
h. Principal Health Care of Kansas City, Inc. (a Missouri
Corporation) a health maintenance organization.
i. Principal Health Care of Louisiana, Inc. (a Louisiana
Corporation) a health maintenance organization.
j. Principal Health Care of Florida, Inc. (a Florida
Corporation) a health maintenance organization.
k. United Health Care Services of Iowa, Inc. (an Iowa
Corporation) a health maintenance organization.
l. Principal Health Care of Iowa, Inc. (an Iowa Corporation) a
health maintenance organization.
m. Principal Health Care of Indiana, Inc. (a Delaware
Corporation) a health maintenance organization.
n. Principal Health Care of Pennsylvania, Inc. (a Pennsylvania
Corporation) a health maintenance organization. It is not
currently active.
o. Principal Health Care of Tennessee, Inc. (a Tennessee
Corporation) a health maintenance organization.
p. Principal Health Care of Texas, Inc. (a Texas Corporation) a
health maintenance organization.
q. Principal Health Care of the Carolinas, Inc. (a North
Carolina Corporation) a health maintenance organization.
r. Principal Health Care, of South Carolina, Inc. (a South
Carolina Corporation) a health maintenance organization.
s. MetraHealth Care Plan, Inc. (a Missouri Corporation) a
health maintenance organization.
t. The Admar Group, Inc. (a Florida Corporation) a general
business corporation engaged in the business of managed
healthcare.
Subsidiary owned by Principal Health Care of Delaware, Inc.:
Principal Health Care of the Mid-Atlantic, Inc. (a Virginia
Corporation) a health maintenance organization.
Subsidiaries owned by Principal International, Inc.:
a. Grupo Financiero Principal, S.A. de Seguros de Vida (a
Spanish insurance company).
b. Principal Internacional, S.A. Compania de Seguros (a Mexico
Corporation).
c. Principal International Argentina, S.A. (an Argentina
Corporation).
d. Principal International Asia Limited (formerly known as
Goldchin Champ, Limited) (a Hong Kong Corporation).
e. Principal International de Chile, S.A.
Subsidiary owned by Grupo Financiero Principal, S.A. de Seguros de
Vida:
Grupo Financiero Principal S.A. de Agencia de Seguros (an
insurance agency). It is currently dormant.
Subsidiaries owned by Principal International Argentina, S.A.:
a. Ethika, S.A. Administradora de Fondos de Jubilaciones y
Pensiones (an Argentina Corporation).
b. Princor Compania de Seguros de Retiro, S.A. (an Argentina
Corporation).
c. Prinlife Compania de Seguros de Vida, S.A. (an Argentina
Corporation)
d. Jacaranda Administradora de Fondos de Jubilaciones y
Pensiones, S.A. (an Argentina Corporation)
Subsidiary owned by Principal International de Chile, S.A.:
BanRenta Compania de Seguros de Vida, S.A.
Subsidiaries owned by The Admar Group, Inc.
a. Admar Corporation (a California Corporation)
b. Admar Insurance Marketing, Inc. (a California Corporation)
c. Benefit Plan Administrators, Inc. (a Colorado corporation)
d. Image Financial & Insurance Services, Inc. (a California
Corporation)
e. SelectCare Management Co., Inc. (a California Corporation)
f. Wm. G. Hofgard & Co., Inc. (a Colorado corporation)
Item 27. Number of Contractowners - As of: March 31, 1996
(1) (2) (3)
Number of Number of
Title of Class Contractowners Plan Participants
-------------- -------------- -----------------
BFA Variable Annuity Contracts 79 44
Pension Builder Contracts 144 197
Item 28. Indemnification
None
Item 29. Principal Underwriters
(a) Princor Financial Services Corporation, principal underwriter for
Registrant, acts as principal underwriter for Principal
Aggressive Growth Fund, Inc., Principal Asset Allocation Fund,
Inc., Principal Balanced Fund, Inc., Principal Bond Fund, Inc.,
Principal Capital Accumulation Fund, Inc., Principal Emerging
Growth Fund, Inc., Principal Government Securities Fund, Inc.,
Principal Growth Fund, Inc., Principal High Yield Fund, Inc.,
Principal Money Market Fund, Inc., Principal World Fund, Inc.,
Princor Balanced Fund, Inc., Princor Blue Chip Fund, Inc.,
Princor Bond Fund, Inc., Princor Capital Accumulation Fund, Inc.,
Princor Cash Management Fund, Inc., Princor Emerging Growth Fund,
Inc., Princor Government Securities Income Fund, Inc., Princor
Growth Fund, Inc., Princor High Yield Fund, Inc., Princor Limited
Term Bond Fund, Inc., Princor Tax-Exempt Bond Fund, Inc., Princor
Tax-Exempt Cash Management Fund, Inc., Princor Utilities Fund,
Inc., Princor World Fund, Inc., Principal Special Markets Fund,
Inc. and for variable annuity contracts participating in
Principal Mutual Life Insurance Company Separate Account B, a
registered unit investment trust for retirement plans adopted by
public school systems or certain tax-exempt organizations
pursuant to Section 403(b) of the Internal Revenue Code, Section
457 retirement plans, Section 401(a) retirement plans, certain
non-qualified deferred compensation plans and Individual
Retirement Annuity Plans adopted pursuant to Section 408 of the
Internal Revenue Code, and for variable life insurance contracts
issued by Principal Mutual Life Insurance Company Variable Life
Separate Account, a registered unit investment trust.
(b) (1) (2)
Positions
and offices
Name and principal with principal
business address underwriter
J. Barbara Alvord Marketing Officer
The Principal
Financial Group
Des Moines, IA 50392
Robert W. Baehr Marketing Services Officer
The Principal
Financial Group
Des Moines, IA 50392
Michael J. Beer Vice President and
The Principal Chief Operating Officer
Financial Group
Des Moines, IA 50392
Mary L. Bricker Assistant Corporate
The Principal Secretary
Financial Group
Des Moines, IA 50392
Ray S. Crabtree Director
The Principal
Financial Group
Des Moines, IA 50392
David J. Drury Director
The Principal
Financial Group
Des Moines, IA 50392
Arthur S. Filean Vice President
The Principal
Financial Group
Des Moines, IA 50392
Paul N. Germain Assistant Vice President-
The Principal Operations
Financial Group
Des Moines, IA 50392
Ernest H. Gillum Assistant Vice President-
The Principal Registered Products
Financial Group
Des Moines, IA 50392
Thomas J. Graf Director
The Principal
Financial Group
Des Moines, IA 50392
J. Barry Griswell Director
The Principal
Financial Group
Des Moines, IA 50392
Joyce N. Hoffman Vice President and
The Principal Corporate Secretary
Financial Group
Des Moines, IA 50392
Theodore M. Hutchison Director
The Principal
Financial Group
Des Moines, IA 50392
Stephan L. Jones Director and
The Principal President
Financial Group
Des Moines, IA 50392
Ronald E. Keller Director
The Principal
Financial Group
Des Moines, IA 50392
John R. Lepley Senior Vice
The Principal President
Financial Group Marketing and Distribution
Des Moines, IA 50392
Gregg R. Narber Director
The Principal
Financial Group
Des Moines, IA 50392
Richard H. Neil Director
The Principal
Financial Group
Des Moines, IA 50392
Layne A. Rasmussen Controller
The Principal
Financial Group
Des Moines, IA 50392
Charles E. Rohm Director
The Principal
Financial Group
Des Moines, IA 50392
Michael D. Roughton Counsel
The Principal
Financial Group
Des Moines, IA 50392
Jean B. Schustek Compliance Officer
The Principal
Financial Group
Des Moines, IA 50392
Roger C. Stroud Assistant Director
The Principal
Financial Group
Des Moines, IA 50392
Jerry G. Wisgerhof Vice President and
The Principal Treasurer
Financial Group
Des Moines, IA 50392
Peter D. Zornik Arkansas State Director
2624 North Fillmore
Little Rock, AR 72207
(c) (1) (2)
Net Underwriting
Name of Principal Discounts and
Underwriter Commissions
Princor Financial $17,336.43
Services Corporation
(3) (4) (5)
Compensation on Brokerage
Redemption Commissions Compensation
0 0 0
Item 30. Location of Accounts and Records
All accounts, books or other documents of the Registrant are located
at the offices of the Depositor, The Principal Financial Group, Des
Moines, Iowa 50392, and Mason City Pension Center, 1181 - 15th Street,
S.W., Mason City, Iowa 50401.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
The Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post-card or
similar written communication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information.
The 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Principal Mutual Life Insurance Company Separate Account C, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of the
Registration Statement and has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned thereto duly authorized
in the City of Des Moines and State of Iowa, on the 11th day of
April, 1996.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT C
(Registrant)
By: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
(Depositor)
David J. Drury
By ______________________________________________
David J. Drury
Chairman and Chief Executive Officer
Attest:
Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
D. J. Drury Director, Chairman and April 11, 1996
Chief Executive Officer
D. C. Cunningham Vice President and April 11, 1996
Controller (Principal
Accounting Officer)
C. E. Rohm Executive Vice April 11, 1996
President (Principal
Financial Officer)
(M. V. Andringa)* Director April 11, 1996
M. V. Andringa
(R. M. Davis)* Director April 11, 1996
R. M. Davis
(C. D. Gelatt, Jr.)* Director April 11, 1996
C. D. Gelatt, Jr.
(G. D. Hurd)* Director April 11, 1996
G. D. Hurd
(T. M. Hutchison)* Director April 11, 1996
T. M. Hutchison
(C. S. Johnson)* Director April 11, 1996
C. S. Johnson
(W. T. Kerr)* Director April 11, 1996
W. T. Kerr
(L. Liu)* Director April 11, 1996
L. Liu
(V. H. Loewenstein)* Director April 11, 1996
V. H. Loewenstein
(J. R. Price)* Director April 11, 1996
J. R. Price
(B. A. Rice)* Director April 11, 1996
B. A. Rice
(J-P. C. Rosso)* Director April 11, 1996
J-P. C. Rosso
(D. M. Stewart)* Director April 11, 1996
D. M. Stewart
(E. E. Tallett)* Director April 11, 1996
E. E. Tallett
(D. D. Thornton)* Director April 11, 1996
D. D. Thornton
(F. W. Weitz)* Director April 11, 1996
F. W. Weitz
*By David J. Druy
David J. Drury
Chairman and Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein
BANKERS LIFE COMPANY
BOARD RESOLUTION
No. 11315
Passed 6-24-68
BE IT RESOLVED:
1. That the Chairman of the Board or the President shall designate the
appropriate officers to have the primary responsibility and authority within the
provisions of the Articles of Incorporation of the Bankers Life Company and as
permitted under the applicable law to prepare and issue group and/or individual
variable annuity contracts which would result in tax deferral under the Internal
Revenue Code of 1954, as amended, but which do not provide for participation in
the Separate Account established by the Company on the 8th day of August, 1964.
Such variable annuity contracts may provide for benefits whose dollar amount or
other measure of value may vary during the period subsequent to as well as the
period prior to the maturity dates of such contracts.
2. That the Chairman of the Board or the President shall designate the
same or other officers to have the primary responsibility and authority within
the provisions of the Articles of Incorporation of Bankers Life Company and as
permitted under the applicable law to establish one or more additional Separate
Accounts or funds, each of which shall meet the requirements of a "unit
investment trust" as defined by the Investment Company Act of 1940, as amended.
3. That the officers so designated are hereby authorized and directed
to prepare, execute and file with the Securities and Exchange Commission in
accordance with the provisions of the Securities Act of 1933, as amended, a
registration statement or statements, and such amendments thereto as may be
necessary or appropriate, relating to such variable annuity contracts as
described in this resolution.
4. That the officers so designated are hereby authorized if necessary
to prepare, execute and file with the Securities and Exchange Commission in
accordance with the provisions of the Investment Company Act of 1940, as
amended, a registration statement or statements, and such amendments thereto as
may be necessary or appropriate, relating to such unit investment trust or
trusts.
5. That the officers so designated are hereby authorized to take such
further action as may in their judgment be necessary or desirable to effect the
registration of such variable annuity contracts and of such unit investment
trust or trusts.
This is to certify that the above is a true copy of Board Resolution
No. 11315 as it appears on the minute book of the Corporation.
R. E. Cassell
------------------------------------------
R. E. Cassell
Senior Vice-President and Secretary
<PAGE>
EXECUTIVE COMMITTEE RESOLUTION
RESOLUTION NO. 2116
PASSED 4-12-71
"RESOLVED, That in furtherance of Resolution No. 11315 of the Board of Directors
enacted on the 24th day of June 1968, a separate account to be known as Separate
Account C be and hereby is established for the purpose of issuing variable
annuity contracts to self-employed individuals entitled to special tax treatment
under Section 401 of the Internal Revenue Code 1954, as amended."
<PAGE>
Executive Committe Resolution 2928, dated May 17, 1982
On motion duly made and seconded, the following Resolution was unanimously
adopted:
WHEREAS, Board Resolution No. 11315, June 24, 1968, authorized the
establishment and operation of one or more separate accounts for the
purpose of issuing variable annuity contracts entitled to special tax
treatment under the Internal Revenue Code of 1954 as amended, and, pursuant
thereto the establishment of Separate Account C was authorized by Executive
Committee Resolution No. 2116, April 12, 1971;
WHEREAS, the Plan of Operations for Separate Account C provides for
alternative funding for variable annuity contracts participating in
Separate Account C;
NOW, THEREFORE, BE IT RESOLVED, that there are hereby established, for the
purpose of providing alternative funding methods for variable annuity
contracts entitled to special tax treatment under the Internal Revenue Code
of 1954, as amended, two separate divisions within Separate Account C, a
Common Stock Division and a Money Market Division. All income and expenses
and all gains or losses, whether or not realized, experienced with respect
to assets for a series of contracts participating in a Division of Separate
Account C shall be credited to or charged against those assets, unaffected
by income and expenses or gains or losses experienced with respect to
assets for any other series of contracts participating in the same or any
other Division of Separate Account C, or constituting any other Separate
Account, or constituting the general account of the Company.
FURTHERMORE, the assets for a series of contracts participating in a
Division of Separate Account C shall not be charged by Bankers Life Company
with any liabilities arising from any other series of contracts issued by
the company participating in the same or from any other Division of
Separate Account C.
<PAGE>
Board Resolution #12435 (passed February 23-24, 1987)
WHEREAS, Board Resolution No. 11315, June 24, 1968, authorized the
establishment and operation of one or more separate accounts for the purpose of
issuing variable annuity contracts entitled to special tax treatment under the
Internal Revenue Code of 1954 as amended, and, pursuant thereto the
establishment of Separate Account C was authorized by Executive Committee
Resolution No. 2116, April 12, 1971, and Executive Committee Resolution No.
2928, May 17, 1982;
WHEREAS, the Plan of Operations for Separate Account C provides for
alternative funding for variable annuity contracts participating in Separate
Account C;
NOW, THEREFORE, BE IT RESOLVED, that there are hereby established, for the
purpose of providing alternative funding methods for variable annuity contracts
entitled to special tax treatment under the Internal Revenue Code of 1954, as
amended, three separate divisions within Separate Account C, a Common Stock
Division, a Money Market Division and a Government Securities Division. All
income and expenses and all gains or losses, whether or not realized,
experienced with respect to assets for a series of contracts participating in a
Division of Separate Account C shall be credited to or charged against those
assets, unaffected by the income and expenses or gains or losses experienced
with respect to assets for any other series of contracts participating in the
same or any other Division of Separate Account C, or constituting any other
Separate Account, or constituting the general account of the Company.
FURTHERMORE, the assets for a series of contracts participating in a
Division of Separate Account C shall not be charged by Principal Mutual Life
Insurance Company with any liabilities arising from any other series of
contracts issued by the Company participating in the same or from any other
Division of Separate Account C.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT effective January 1, 1982 between Bankers Life
Company ("The Bankers Life"), a mutual life insurance company organized under
the laws of the State of Iowa, and BLC Equity Services Corporation ("BLESCO"), a
subsidiary of The Bankers Life organized under the laws of the State of Iowa.
This Distribution Agreement replaces the Distribution Agreement dated September
13, 1971, as amended.
W I T N E S S E T H
WHEREAS, The Bankers Life has established a separate account for variable
annuity contracts ("Contracts") designated Bankers Life Company Separate Account
C (the "Account"):
WHEREAS, BLESCO is registered with the Securities and Exchange Commission
as a broker- dealer under the Securities Exchange Act of 1934 ("1934 Act") and
is a member of the National Association of Securities Dealers, Inc.; and
WHEREAS, The Bankers Life desires to have certain variable annuity
contracts issued with respect to the Account sold and distributed by and through
BLESCO, and BLESCO is willing to sell and distribute such contracts under the
terms and conditions stated herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Bankers Life hereby designates BLESCO as the principal underwriter
of the Contracts issued with respect to the Account, and BLESCO agrees to use
its best efforts to sell and distribute the Contracts through its registered
representatives or through other broker-dealers registered under the 1934 Act
whose registered representatives are authorized by applicable law to sell
variable annuity contracts.
2. With the consent of the Bankers Life, BLESCO may enter into agreements
with other broker-dealers duly licensed under applicable Federal and state laws
for the sale and distribution of the Contracts and may pay such compensation and
perform such other duties as may be provided for in such agreements.
3. All payments and any other monies payable upon the sale, distribution,
renewal or other transaction involving the Contracts shall be the property of
and be paid or remitted directly to The Bankers Life, which will retain all such
payments and monies for its own account except to the extent such payments and
monies are allocated to the Account.
4. The Bankers Life will pay to the registered representatives of BLESCO
the salaries or commissions to which such representatives are entitled as a
result of the sale, distribution, renewal or other transaction involving the
Contracts, and BLESCO shall not have or be deemed to have any interest in such
payments.
5. The Bankers Life will pay to BLESCO the following:
(a) An overwriting and operating expense fee of 14% of the sales
charge attributable to the sale and distribution of Contracts for
which a sales charge of 7% (or such lessor amount as may be
offered by The Bankers Life) of Contributions or Payments is
applicable.
(b) An overwriting and operating expense fee of 1.00% of
Contributions or Payments received by The Bankers Life for
Contracts on which there is no sales charge applied at the time
such Contributions or Payments are received.
(c) Upon receipt of proper evidence of expenditures, will reimburse
BLESCO for compensation paid by BLESCO to other broker-dealers in
accordance with paragraph 2 hereof.
6. The Bankers Life is responsible, including the costs thereof, for
contract development, filing and compliance with state insurance laws and
regulations applicable to the Account and said Contracts. BLESCO is responsible,
including the costs thereof, for registration, filing and compliance with
federal and state securities laws and regulations applicable to the Account and
said Contracts. This includes not only the preparation, printing and filing of
the registration material, but also the preparation, printing and filing of
prospectuses, sales literature and reports as required. In addition, BLESCO is
responsible, including the costs thereof, for the following:
(a) The supply of prospectuses and sales literature to be used in the
sale of said Contracts.
(b) General sales promotion activity, including television, radio and
newspaper advertising.
(c) Special training of both BLESCO field personnel and home office
personnel due to the variable benefits nature of the Contracts.
(d) Preparation and distribution of confirmations, reports and
correspondence to persons participating under such Contracts.
(e) Other sales and administrative services related to the Contracts
as required by the regulatory authorities or deemed desirable by
BLESCO.
7. BLESCO will be responsible for supervising and controlling the conduct
and activities of its registered representatives with regard to the sale and
distribution of the Contracts.
8. BLESCO may request that some or all of the books and records relating to
the sale of the Contracts which are maintained by it pursuant to Rules 17a-3 and
17a-4 under the 1934 Act be prepared and maintained by The Bankers Life. The
Bankers Life agrees to maintain and preserve any such books and records for
BLESCO in conformity with the requirements of the 1934 Act, to the extent
applicable to variable annuity operations, and further agrees that for purposes
of this Agreement such books and records shall be deemed the property of BLESCO
and shall be surrendered promptly upon BLESCO's request. With respect to any
books and record maintained or preserved on behalf of BLESCO, The Bankers Life
agrees to permit examination of such books and records at any time or from time
to time during business hours by representatives or designees of the Securities
and Exchange Commission, and to promptly furnish to said Commission or its
designee true, correct, complete and current hard copy of any or all of any part
of such books and records.
9. This Agreement may at any time be terminated by either party hereto on
60 days written notice. BLESCO shall promptly notify the Securities and Exchange
Commission of any such termination.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the address of The Bankers Life and that
of BLESCO for this purpose shall be 711 High Street, Des Moines, Iowa 50307.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on June 14, 1982.
BANKERS LIFE COMPANY
Attest:
T. M. HUTCHISON By R. N. HOUSER
_______________________________ _______________________________
Chairman and Chief Executive Officer
BLC EQUITY SERVICES CORPORATION
Attest:
Wm. P. Kovacs A. S. FILEAN
_______________________________ ________________________________
President
<PAGE>
COMMISSION SCHEDULE
A. An overwriting fee is paid to BLC Equity Services Corporation ("BLESCO").
BLESCO is also reimbursed by Bankers Life Company for compensation paid by
BLESCO to other broker- dealers. Bankers Life will pay Registered
Representatives of BLESCO directly.
Both other broker-dealers and Registered Representatives of BLESCO will be
compensated within the following maximum commission schedules.
B. (1) Basic Commissions: (For certificates issued prior to January 1, 1982)
Age of Participant on Percentage of Payments
Certificate Date 1st Certifi- 2nd through 10th
At Least But Not Over cate Year Certificate Years
15 45 12.0% 2.0%
46 54 9.0 1.5
55 59 6.0 1.0
60 63 3.5 1.0
64 -- 2.0 1.0
(2) Basic Commissions: (For certificates issued January 1, 1982 and later)
Payment Level Rate
The first $50,000 3.0
The next 50,000 2.0
The next 400,000 1.0
Over 500,000 0.5
(3) Maximum Additional Commission:
If Basic Commissions from payments for first certificate year are at
least $2,000 for the current calendar year or average $2,000 for the
current and immediately preceding calendar year.
Accumulated Commissions for
Given Calendar Year Percentage of Accumulated
At Least Less Than _ Basic Commissions
$ 0 $2,000 0%
2,000 2,500 15
2,500 3,000 17
3,000 3,500 19
3,500 4,000 21
4,000 4,500 23
4,500 5,000 25
5,000 5,500 27
5,500 6,000 29
6,000 6,500 30
6,500 7,000 31
7,000 8,000 32
8,000 9,000 33
9,000 10,000 34
10,000 11,000 35
11,000 12,000 36
etc. to etc. to
25,000 & over 50
BROKER-DEALER
MARKETING AND COMPENSATION AGREEMENT
FOR
PENSION BUILDER PLUS
AGREEMENT made this ______ day of ____________________, 19____, by and between
Princor Financial Services Corporation (hereinafter called Distributor),
__________________________________ (hereinafter called Broker) and Principal
Mutual Life Insurance Company (hereinafter called Issuer).
MARKETING
In consideration of the mutual agreements herein contained, the Parties hereto
agree as follows:
1. The Distributor hereby appoints the Broker to sell Pension Builder Plus
Variable Contracts and Associated Fixed Annuity Contracts (hereinafter
called Contracts) issued by the Issuer to provide annuity benefits
individuals and groups who adopt retirement plans qualified under Section
401, Section 403(b), and Section 408 of the Internal Revenue Code. This
Agreement is a selling agreement between broker-dealers. It does not
constitute any Party as the broker, agent or employee of any other Party.
Words and phrases in this Agreement given special meaning in the any
Contracts shall have that same special meaning in this Agreement unless
specifically defined otherwise herein.
2. With respect to Payments received under Contracts by the Distributor, the
Broker shall receive compensation at rates to be determined by the
Distributor and set forth in this Agreement.
3. The Broker hereby agrees to direct its best efforts to find purchasers for
Contracts issued by the Issuer. The Broker does not undertake hereby to
sell any specific number of Contracts issued by the Issuer.
4. The Distributor shall provide the Broker with a reasonable number of
current prospectuses and such other material as the Distributor determines
to be desirable for use in connection with the sale of Contracts or the
solicitation of applications for participation thereunder.
5. The Broker warrants that the Broker and any person associated with or
action for the Broker in the solicitation of applications for Contracts or
for participation thereunder shall be qualified pursuant to the
requirements of the National Association of Securities Dealers, Inc. And
appropriate federal and state agencies regulating securities, insurance,
any other aspect of the Contracts or the sale of them. The Broker shall be
responsible for seeing to such qualifications, and will indemnify and hold
the Distributor and the Issuer harmless for any failure to have all persons
engaged in solicitation properly licensed, registered, and appointed for
securities and insurance sales.
6. The Broker shall be responsible for supervising and controlling the conduct
and activities of its Registered Representatives with regard to the sale
and distribution of the Contracts and applications for participation
thereunder. The Broker agrees to indemnify and hold the Distributor and the
Issuer harmless for claims and actions of any sort which arise from the
conduct and activities of the persons involved in the sale and distribution
of Contracts.
7. The Broker shall act only in its own behalf in making agreements with
Registered Representatives or other persons in connection with the
solicitation or sales of Contracts.
8. The Broker agrees to maintain all books and records relating to the sale of
Contracts or interests therein required to be maintained by the Broker
pursuant to the Securities Exchange Act of 1934, in conformity with the
requirements of Rules 17a-3 and 17a-4 under such Act, or to the applicable
securities or insurance laws of any state.
9. The Broker shall transmit promptly and directly to the Distributor all
Contributions collected by or paid to the Broker. All Certificates are to
be delivered promptly, and any undelivered Certificates are to be returned
within the time allowed or on demand.
10. The Broker shall provide disclosure information required by Prohibited
Transaction Class Exemption 77-9.
COMPENSATION
With respect to Certificates under applicable Contracts issued by the Issuer and
distributed by the Distributor, it is agreed that subject to all provisions of
this Agreement, the Broker shall receive Compensation in the form of a dealer
concession as provided herein.
1. Certificate shall mean a Certificate (the application for which was
secured by a Registered Representative of the Broker) issued under the
Contracts during a period in which this Agreement has not been
terminated. Determination of Certificates applicable to this Agreement
shall be by the Issuer.
2. Transfer Contributions for an Eligible Certificate, as defined in a
Contract, shall mean those Contributions transferred to the Issuer from a
non-Issuer Plan as determined by the Issuer and excludes any assets
transferred within the Issuer.
3. First Year and Renewal Compensation
Percentage of Premium Received
In Each Policy Year
------------------------------------------------------------
Pension Builder Plus
Flexible Premium
Retirement Annuity
(Annual Participant or Case Premium)
First $ 50,000 ...................4.5%
Next $ 50,000 ...................3.5
Next $400,000 ...................2.5
Over $500,000 ...................2.0
Single Premium
Retirement Annuity, Roll-Over IRA, or Transfer Contributions
First $ 250,000 ...................4.5%
Next $ 250,000 ...................4.0
Next $ 500,000 ...................3.5
Over $1,000,000 ...................2.5
Note:
a. Policy Year means the Contribution year as defined int he
Contract.
b. For Flexible Premium Retirement Annuities, the compensation is
payable only on the premium in excess of withdrawals, during the
current annuity Contract Year and the three prior full Policy
Years.
c. If the source of the proceeds placed under an annuity benefit
option is a deferred annuity, the commission rate is graded
according to the Policy Year of the Contract in which
annuitization occurs:
Policy Years Commission
----------------------------------------------------------
1 - 4........................................... 0%
5 - 7........................................... 2.5
8 - 10.......................................... 3.5
11 and later ................................... 4.5
The total proceeds eligible for the annuitization commission will
not include certain premiums placed under the Contract during its
last full Policy Year and any partial year immediately prior to
annuitization. Premiums contributed during this period in excess
of the average accumulated value of the Contract prior to this
period will not be included. The average accumulated value is
accumulated value divided by the number of Policy Years. Both
premium and average accumulated value amounts will be adjusted to
a comparable basis to account for any partial year.
4. Service Fees of one tenth of one percent (.1%) of the accumulated value of
each Contract identified to the Broker will be paid to the Broker each year
on the anniversary date of that Contract. The anniversary date is the first
day of the Contribution Year. The Service Fee will be based on the
accumulated value of the Contract one day before that date. Service Fees
will be terminated by the Distributor and the Issuer if the Contractholder
or Certificateholder requests a change in the servicing broker-dealer, or
if the Distributor and the Issuer decide that a change would be in the best
interests of the Contractholder or Certificateholder.
5. The Distributor may, at any time, upon written notice to the Broker, change
any and all of the rates of Compensation set out herein.
6. If the Issuer, for any reason, refunds any Contributions, or any part
thereof, on any Certificate, any Compensation paid on the amount refunded
shall be repaid to the Issuer by the Broker promptly and on demand.
7. If Contracts or the Plan of any participating Employer thereunder are
amended resulting in increased or additional Contributions, the Distributor
will determine what Compensation, if any, shall be paid to the Broker
because of such amendment.
8. Any indebtedness of any kind due to the Distributor or Issuer from the
Broker may be offset against any amount due the Broker.
9. No assignment of the Compensation payable pursuant to this Agreement shall
be valid unless it is accepted in writing by the Issuer and Distributor.
10. Upon notice from a participating Employer or Contractholder that no
additional purchases are to be made through the Broker or a Registered
Representative of the Broker, no further Compensation under this Agreement
shall be due and payable to the Broker as to said participating Employer or
Contractholder. Such notice shall constitute a termination of this
Agreement as to such participating Employer or such Contractholder.
However, the Issuer or the Distributor reserves the right to change or stop
payment of any Compensation as a result of any failure of the Broker to
comply with federal or stat requirements, or with the terms of this
Agreement.
GENERAL
1. The Broker shall have no authority to incur any liability or debt against
the Distributor or the Issuer; accept risks or contracts of any kind; make,
alter, authorize or discharge any contract; extend the time of payment of
any Contributions; waive payments; fail to transmit any Contributions
collected promptly to the Distributor; use any advertising or sales
material which has not first been submitted to and approved by the
Distributor and the Issuer; no bind the Distributor or the Issuer in any
way.
2. Any modifications of this Agreement must be in writing and signed by an
authorized offer of the Distributor and the Issuer.
3. This Agreement may be terminated by either the Distributor, the Broker or
the Issuer upon written notice to the last known address of the other
parties.
4. This Agreement supersedes and replaces any and all prior agreements of the
Distributor or the Issuer with the Broker on the subject of Contracts or
other sale of them.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in triplicate on the date first above written.
__________________________________________________ ("Broker")
By ___________________________________________________
PRINCOR FINANCIAL SERVICES CORPORATION
By ___________________________________________________
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By ___________________________________________________
GROUP ANNUITY CONTRACT
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50309
In consideration of the application for this contract made by
the Contractholder)
and in consideration of payment of all Contributions provided for in this
contract, agrees to make payments to the person or persons entitled thereto
subject to the provisions of this contract.
This contract is delivered in _____________________________________.
Contributions are directed into Separate Account C and are not guaranteed as to
fixed dollar amount but will increase or decrease in dollar amount, depending on
theinvestment performance of Separate Account C, as set out in this contract.
This contract is issued and accepted subject to all the terms set forth in it.
This contract is executed by Principal Mutual Life Insurance Company at its Home
Office to take effect as of the _____________day of ________________,
19________, which is the contract date.
T. M Hutchison G. David Hurd
Senior Vice-President, President
General Counsel and Secretary
_______________________________
Registrar
Date _____________________________________
GROUP CONTRACT NO. ___________
Group Annuity Contract - Pension Builder
With Pooled Separate Account
Variable Benefits
Participating
For HR-10 Plans
GP A 5923
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----- Parties to this Contract
Section 2 ----- Other Defined Terms
ARTICLE II CONTRIBUTIONS
Section 1 ----- Contributions
Section 2 ----- Types of Contributions
Section 3 ----- Investment Direction
Section 4 ----- Cessation of Contributions
ARTICLE III BEFORE RETIREMENT VALUES AND ACCOUNTING
Section 1 ----- Separate Account C
Section 2 ----- Unit Value
Section 3 ----- Net Investment Factor
Section 4 ----- Investment Accounts
Section 5 ----- Administration Charge
Section 6 ----- Separate Payment of Certain Charges
Section 7 ----- Holding Accounts
ARTICLE IV ANNUITY BENEFITS
Section 1 ----- Annuity Benefits
Section 2 ----- Amount of Monthly Annuity Income
Section 3 ----- Mortality and Expense Guarantees
Section 4 ----- Additional Amounts of Monthly Annuity
Section 5 ----- Cancellation of Annuity
ARTICLE V SUPPLEMENTARY BENEFITS
Section 1 ----- Benefits Payable at Death
Section 2 ----- Options for Benefits Payable at Death
Section 3 ----- Proof of Death
Section 4 ----- Cash Withdrawal Benefit
Section 5 ----- Contingent Deferred Sales Charge
Tc;V-HR;8204
ARTICLE VI TRANSFERS AND LIMITATIONS
Section 1 ----- Transfer to and from Associated Fixed Contract
Section 2 ----- Transfers between Divisions
Section 3 ----- Limitation on Payment or Transfer
Section 4 ----- Limitation as to Participants
Section 5 ----- Transfer to an Alternative Funding Agent
ARTICLE VII GENERAL PROVISIONS
Section 1 ----- Certificates
Section 2 ----- Beneficiary
Section 3 ----- Dividends
Section 4 ----- Contract
Section 5 ----- Plan and Plan Amendments
Section 6 ----- Alteration of Contract
Section 7 ----- Amendments
Section 8 ----- Contributions
Section 9 ----- Misstatements
Section 10 ----- Information, Proofs and Determination of Facts
Section 11 ----- Modification in Mode of Payment of Annuity
Section 12 ----- Commutation of Payments
Section 13 ----- Facility of Payment
Section 14 ----- Pronouns
Section 15 ----- Assignment
Section 16 ----- Basis of Reserve
Section 17 ----- Substituted Securities
Section 18 ----- Ownership
Tc(2);V-HR;8204
ARTICLE I
DEFINITIONS
SECTION 1--PARTIES TO THIS CONTRACT. This contract is between the
Contractholder and Principal Mutual Life Insurance Company.
Contractholder means the holder of this contract named on the face page.
Principal Mutual Life Insurance Company will be referred to in this contract
as we, us, and our.
SECTION 2--OTHER DEFINED TERMS.
Administration Charge means the charge described in Article III, Section 5.
Annuity Change Factor means the factor described in Article IV, Section 2.
Annuity Commencement Date means the date annuity income payments to a
Participant begin.
Annuity Reserve Account means the reserves held for annuities in course of
payment in a Division of Separate Account C for a Series of Contracts.
Associated Fixed Contract means Group Contract No. issued by us to the
Contractholder.
Code means the Internal Revenue Code of 1954 as amended and the regulations
thereunder. Reference to the Internal Revenue Code means such Code or the
corresponding provisions of any subsequent revenue code and any regulations
thereunder.
Contingent Deferred Sales Charge means the charge described in Article V,
Section 5.
Contract Date means the date this contract is effective as shown on the face
page.
Contribution Year means the twelve-month period which coincides with the Plan
Year.
Contributions means contributions for a Participant under this contract as
described in Article II, Section 1.
Division means the part of Separate Account C which is invested in shares of a
single Mutual Fund.
Employer means
1--1,2;V-HR;8708
Investment Account means each account established for a Participant as
described in Article III, Section 4.
Investment Account Value means the value of an Investment Account for a
Division which on any date will be equal to the number of units then credited to
such account multiplied by the Unit Value of this Series of Contracts for that
Division for the Valuation Period.
Mutual Fund means a registered investment company in which Separate Account C
invests.
Net Investment Factor means, for a Division, the factor described in Article
III, Section 3.
Normal Income Form means the form of annuity benefit which the Plan provides
if the Participant has not elected another form of benefit. If the Plan does not
specify a Normal Income Form, this form will be Option D with a minimum period
of 10 years for an unmarried Participant, and Option G, with the spouse as
contingent annuitant, for a married Participant.
Normal Retirement Date means the Participant's normal retirement date under
the Plan, as reported to us by the Plan administrator. If normal retirement date
is not specified in the Plan, a Participant's Normal Retirement Date will be the
first day of the month following his 65th birthday.
Participant means a person who is a participant under the Plan and for whom an
Investment Account has been established under this contract.
Plan means
Plan Year means the accounting year of the Plan.
Series of Contracts means
Separate Account C means Bankers Life Company Separate Account C as described
in Article III, Section 1.
Termination of Employment means a Participant's termination of employment with
the Employer.
Total and Permanent Disability means that a Participant is disabled, as the
result of sickness or injury, so as to be prevented from engaging in any
substantial gainful activity, and such total disability has been continuous for
a period of at least six months. The Participant must submit due proof thereof
which is acceptable to us.
1--2(2);V-HR;8708
Trust means
Unit Value means the value of a unit credited to an Investment Account held
under this Series of Contracts for a Division as described in Article III,
Section 2.
Valuation Date means the date on which the net asset value of a Mutual Fund is
determined.
Valuation Period means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Date and the time as of
which such value is determined on the next following Valuation Date.
Written Notification means actual delivery to us at our home office in Des
Moines, Iowa of an appropriate writing from the person or persons specified by
the Plan, on a form supplied or approved by us.
1--2(3);V-HR;8204
ARTICLE II
CONTRIBUTIONS
SECTION 1--CONTRIBUTIONS. A Contribution for a Participant is all or any
part of the amount determined or allowed by the Plan to be paid to us for that
Participant. Contributions may be paid to us on any date on or after the
Contract Date.
Contributions in excess of those determined or allowed by the Plan for the
current Plan Year can be paid to us only with our consent.
All Contributions are payable directly to us at our home office in Des Moines,
Iowa and funds will not be treated as Contributions until so received by us.
Contributions will be reduced by the amount of any premium taxes due on
such Contributions before being credited in accordance with Article III,
Section 4.
SECTION 2--TYPES OF CONTRIBUTIONS. The following types of Contributions for a
Participant are acceptable under this contract, if permitted by the Plan:
(a) Required employee contributions. This includes all contributions from
the Participant which the Plan requires in order for him to
participate or which are matched by the Employer contributions.
(b) Voluntary employee contributions. This includes all contributions from
the Participant allowed by the Plan and not included in (a) above.
(c) Employer contributions. This includes all Employer contributions
permitted or required by the Plan.
(d) Transfer and/or rollover contributions. This includes those
contributions not described in either (a), (b) or (c) above which the
Plan permits or which it requires to be held separately for a
Participant.
SECTION 3--INVESTMENT DIRECTION. Each type of Contribution for a
Participant may be directed to any number of Investment Accounts available as
described in Article III, Section 4, as designated in Written Notification to
us. Contributions will be added to each Investment Account in the amount or
percentage specified in the Written Notification on file with us. Such
direction may be changed at any time by filing a new Written Notification.
SECTION 4--CESSATION OF CONTRIBUTIONS. For any Plan, cessation of
Contributions shall be effective as of any of the following dates:
2--1,2,3,4;V-HR;8708
(a) On the date we receive Written Notification that cessation of
Contributions is to occur.
(b) On the date the Plan terminates.
(c) On the date the Plan fails to meet the requirements of Code Section
401(a) for employees and owner-employees of the Employer.
(d) On the date no Investment Accounts subject to the Plan remain under
this contract.
Upon cessation of Contributions, no other Plan participants will become
Participants under this contract, and no further Plan Contributions will be
accepted by us.
All provisions of this contract will remain effective as to any Investment
Accounts which have not been paid or applied in full.
Once all Investment Accounts have been paid or applied in full, we will have
no further obligation in regard to such accounts.
2--4(2);V-HR;8204
ARTICLE III
BEFORE RETIREMENT VALUES AND ACCOUNTING
SECTION 1--SEPARATE ACCOUNT C. We have established and will maintain a
separate account called Principal Mutual Life Insurance Company Separate Account
C (Separate Account C). All amounts credited to Separate Account C will be used
to purchase shares, at net asset value, of such Mutual Fund or Mutual Funds as
directed by Written Notification. Any and all distributions made by a Mutual
Fund in respect of its shares held by Separate Account C will be reinvested in
additional shares of such Mutual Fund, at net asset value. Payments and
transfers from Separate Account C may be effected by redeeming all or a part of
the shares of a Mutual Fund or Mutual Funds, at net asset value, equal in total
value to the amount to be paid or transferred. We expect to invest all the
amounts credited to Separate Account C in shares of the Mutual Funds available
as directed by Written Notification. However, we reserve the right to change
investments as provided in Article VII, Section 17.
Amounts which will be credited to Separate Account C include amounts held in
connection with this contract and other contracts we designate as participating
in Separate Account C, and amounts which are credited to it by us for the
purpose of maintaining reserves for variable annuity benefits.
All income, gains and losses, whether or not realized, and expenses with
respect to the assets of Separate Account C shall be credited to or charged
`against Separate Account C without regard to any other income, gains or losses
or expenses. The assets of Separate Account C shall not be charged with any
liabilities arising out of any other business conducted by us.
Any taxes or reserves for taxes we determine to be attributable to Separate
Account C will be charged against Separate Account C by us.
In addition, all income, gains and losses, whether or not realized, and
expenses with respect to a Division of Separate Account C for a Series of
Contracts shall be credited to or charged against such Division of Separate
Account C for that Series of Contracts without regard to income, gains or
losses, or expenses of any other Division of Separate Account C. The assets of a
Division of Separate Account C for a Series of Contracts shall not be charged
with any liabilities arising out of any other Division of Separate Account C.
We shall be the sole owner of all funds received under this contract.
SECTION 2--UNIT VALUE. The Unit Value for a Series of Contracts which
invests in a Division of Separate Account C is the basis of determining the
value of that portion of the interest of each person having an interest in
Separate Account C. The Unit Value for each Series of Contracts in each Division
is determined on each date on which the net asset value of its underlying Mutual
Fund is determined.
3--1,2;V-HR;8204
The Unit Value for a Series of Contracts which invests in a Division for a
Valuation Period is the value determined as of the end of such period. The Unit
Value for a Series of Contracts for each Division was fixed at $1.00 for the
Valuation Period in which the first amount of money was credited to that
Division of Separate Account C for that Series of Contracts. The Unit Value for
any later Valuation Period for a Division is equal to its Unit Value for the
immediately preceding Valuation Period multiplied by the Net Investment Factor
for such Division for such later Valuation Period.
SECTION 3--NET INVESTMENT FACTOR. The Net Investment Factor for a Division
for this Series of Contracts for any specified Valuation Period is equal to
(a) the quotient obtained by dividing (i) the net asset value of a share
of its Mutual Fund as of the end of such Valuation Period, plus the
per share amount of any dividend or other distribution made by such
Mutual Fund during such Valuation Period, (less an adjustment for
taxes, if any, referred to in Section 1 of this Article) by (ii) the
net asset value of a share of such Mutual Fund as of the end of the
immediately preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
interest rate for the number of days within such Valuation Period at
an annual rate of 1.4965%.
The amounts derived from applying the rate specified in subparagraph (b)
above and the amount of any taxes referred to in subparagraph (a) above will be
accrued daily and will from time to time be transferred from Separate Account C
at our discretion.
The net asset value of a share of a Mutual Fund is determined and reported
by such Mutual Fund or its agent.
SECTION 4--INVESTMENT ACCOUNTS. An Investment Account will be established
for each Participant for each type of Contribution to each Division of Separate
Account C under this contract. We will maintain each of these Investment
Accounts for each Participant until the Investment Account Value is either
applied to effect variable annuity benefits for the Participant, or paid to the
Participant or his beneficiary or transferred in accordance with the provisions
of this contract.
Each Contribution of each type for a Participant shall be allocated to the
Division or Divisions of Separate Account C in accordance with the Written
Notification on file with us and shall result in a credit of units for the
appropriate Investment Account of the Participant. The number of units so
credited shall be determined by dividing the portion of the Contribution
allocated to a Division by the Unit Value for such Division for the Valuation
Period within which the Contribution was received by us.
3--3,4;V-HR;8301
Units shall remain credited to each Investment Account of a Participant
until cancelled for one of the following:
(a) Application to effect a variable annuity for the Participant.
(b) Payment of a single sum cash benefit to the Participant or his
beneficiary.
(c) Transfer or adjustment of the value of such account, according to the
terms of this contract.
(d) Payment of the Contingent Deferred Sales Charge described in Article
V, Section 5.
(e) Payment of the Administration Charge described in Section 5 of this
Article.
SECTION 5--ADMINISTRATION CHARGE. An Administration Charge will be deducted
once each Contribution Year proportionately from the Investment Accounts of each
Participant and will be equal to the sum of (a) and (b):
(a) $25.
(b) The Participant's proportionate share of an amount equal to a
percentage of the total value of all Investment Accounts of all
Participants in the Plan under this contract equal to 1/2% of the
first $50,000 in such accounts.
If accounts are established for a Participant under both this contract and
the Associated Fixed Contract, the charges determined above will be apportioned
among such Participant's accounts under both contracts based on the values of
such accounts thereunder.
The Administration Charge applicable to each Participant will be deducted
from his Investment Accounts on the earlier of (i) the date such account is paid
or applied in full or (ii) the last day of the Contribution Year. Such deduction
will be effected by cancelling a number of units in each Investment Account of
the Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Series of Contracts for the Division for the
Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant.
SECTION 6--SEPARATE PAYMENT OF CERTAIN CHARGES. An Employer may, by written
agreement with us, agree to pay separately the Administration Charge set out in
Section 5 of this Article for Participants who are employees of such Employer.
3--5,6;V-HR;8204
We shall notify the Employer in writing of the amount of such charges when
due. Such charges shall be payable within 30 days after such notice at our home
office in Des Moines, Iowa. Failure of an Employer to pay these charges
separately shall result in deduction of such charges from the Investment
Accounts of such Participants as outlined in Section 5 of this Article.
An Employer may revoke his written agreement with us by Written
Notification. Such notice will be effective on the later of the date we receive
it or the date specified in such written notice.
SECTION 7--HOLDING ACCOUNTS. When we receive Written Notification that an
event has occurred which requires that an Investment Account of a Participant be
reduced by the vesting provisions of the Plan, we will reduce the account or
accounts affected to the amounts specified. The amounts deducted from the
Participant's account(s) will be held in a Holding Account until such amounts
become forfeitures under the Plan. A Holding Account will be held in the same
Division of Separate Account C as the Participant's Investment Account was.
As forfeitures, Holding Account values will be allocated to those
Participants entitled to them under the Plan. Any amounts allocated to a
Participant will be considered a Contribution for him on the date allocated. If
the Plan is a pension plan, amounts allocated under this Section will be an
offset to the earliest Employer Contribution made under the Plan on or after
such date.
3--7;V-HR;8204
ARTICLE IV
ANNUITY BENEFITS
SECTION 1--ANNUITY BENEFITS. Each of a Participant's Investment Accounts
will be applied to provide annuity income for him under any option of this
Section as long as the annuity to be provided conforms to Plan provisions and
complies with the following:
(a) The amount available to provide an annuity income may be all or a
portion of the amount available under the Plan, as reported to us by
the Employer or trustee of the Plan. The vested Investment Account
Value of each Investment Account, determined as of the end of the
Valuation Period one month before the Participant's Annuity
Commencement Date, will be applied to effect a variable annuity for
him. Each such amount will be transferred on the date such value was
determined to the Annuity Reserve Account for the Division of Separate
Account C in which the Investment Account was maintained.
(b) We must receive Written Notification to provide annuity income for a
Participant before his Annuity Commencement Date can occur.
(c) However, if no Written Notification has been received by us after a
Participant's Termination of Employment and before his Normal
Retirement Date, we will convert his Investment Accounts to provide
annuity income starting on his Normal Retirement Date. The form of
annuity will be the option elected by the Participant.
(d) The Annuity Commencement Date for a Participant shall be the April 1
following the end of the calendar year in which he attains age 70 1/2,
unless some earlier Annuity Commencement Date has been selected.
(e) If no optional form of income is elected before a Participant's
Annuity Commencement Date, the Normal Income Form will be provided.
(f) The amount applied for the Participant must be at least $1,750.
(g) The form of annuity and the person named as contingent or joint
annuitant (if any) cannot be changed after the Participant's Annuity
Commencement Date.
In lieu of any annuity benefits under this Article, a Participant may, if
not restricted by the Plan, elect a cash benefit in accordance with Article V,
Section 4.
Any of the options described below may be chosen as the form of income for
annuity benefits, provided it meets either one of the following tests:
4--1;V-HR;8708
(a) No benefits are provided which extend beyond the life of the
Participant or the lives of the Participant and his spouse.
(b) No benefits are provided which extend over a period longer than the
life expectancy of the Participant or the life expectancy of the
Participant and his spouse.
Option D--Life Annuity with Minimum Period. This provides monthly annuity
income to the Participant, starting on his Annuity Commencement Date, for the
minimum period elected and continuing for the lifetime of the Participant. The
minimum period may be 0, 5, 10, 15 or 20 years or the period (called
installment refund period) required for the sum of all income payments to
equal the amount applied, assuming all payments are in the same amount as the
initial payment. In choosing this option, we must have Written Notification of
the length of the minimum period and the beneficiary designated by the
Participant.
Option E--Joint and Survivor Annuity with Minimum Period. This provides
monthly annuity payments starting on the Participant's Annuity Commencement
Date, for a minimum period of 10 years, and continuing for the joint lifetimes
of the Participant and the joint annuitant named in the election, and
continuing after the death of either payee, in the amount that would have been
payable to them jointly, for the lifetime of the survivor. If both payees die
before the end of the minimum period, the remaining payments for the minimum
period will be paid to the Participant's beneficiary. In choosing this option,
we must have Written Notification of the name, date of birth, and sex of the
joint annuitant and the beneficiary designated by the Participant.
Option F--Joint and Two-Thirds Survivor Life Annuity. This provides monthly
annuity payments, starting on the Participant's Annuity Commencement Date, for
the joint lifetimes of the Participant and the joint annuitant named in the
election. At the death of either payee, two-thirds of the amount that would
have been payable had both survived will be continued to the survivor for his
lifetime. In choosing this option, we must have Written Notification of the
name, date of birth, and sex of the joint annuitant.
Option G--Life Annuity with One-Half Survivorship. This provides monthly
annuity payments to the Participant, starting on his Annuity Commencement Date
and continuing for his lifetime. If the Participant dies on or after his
Annuity Commencement Date, one-half of the monthly annuity will be continued
to the contingent annuitant for the lifetime of the contingent annuitant. In
choosing this option, we must have Written Notification of the name, date of
birth, and sex of the contingent annuitant.
Options other than those set out above may be made available by written
agreement between the Participant and us.
4--1(2);V-HR;8204
SECTION 2--AMOUNT OF MONTHLY ANNUITY INCOME. For each Investment Account of
a Participant, the initial amount of monthly annuity income provided by each
$1,000 applied under Section 1 of this Article, after reduction for any
applicable premium tax, shall be determined by us based on the option selected
and on the sex and age of the Participant and his joint or contingent annuitant,
if any, on his Annuity Commencement Date. The initial monthly annuity income
payment will be determined on the basis of the annuity conversion rates
applicable on such date to such conversions under all contracts of this class
issued by us. However, the annuity conversion rates will not provide less
initial monthly annuity income than the conversion rates shown on Table 1. The
amount of each subsequent monthly annuity income payment shall be determined by
multiplying the payment for the preceding calendar month by the Annuity Change
Factor for such month for the Division of Separate Account C for this Series of
Contracts in which the Annuity Reserve Account is maintained.
Annuity Change Factor for any Division for a Series of Contracts for any given
calendar month is the quotient of (a) divided by (b) below:
(a) The number which results from dividing (i) the Unit Value for such
Division for the first Valuation Date in the calendar month beginning
one month before such given calendar month by (ii) the Unit Value for
such Division for the first Valuation Date in the calendar month
beginning two months before such given calendar month.
(b) An amount equal to one plus the effective interest rate for the number
of days between the two Valuation Dates specified in subparagraph (a)
above at the interest rate assumed to determine the initial payment of
variable benefits to such Participant.
The amount of each monthly payment to a beneficiary (entitled to monthly
payments for the remainder of the minimum period after the death of the
Participant), to the survivor payee after the death of one payee under Option E
or F, or the contingent annuitant under Option G shall be the same as would have
been payable to the Participant or joint payees, if living, with monthly changes
based on the Annuity Change Factors applicable, except that any payment to the
survivor payee under Option F will be two-thirds of the payment that would have
been payable if both payees were living and any payment to the contingent
annuitant under Option G will be one-half of the payment that would have been
made to the Participant, if living.
SECTION 3--MORTALITY AND EXPENSE GUARANTEES. The mortality table and the
expense margins which are factors in determining the amounts of the periodic
payments of annuity benefits in course of payment are guaranteed. Variations in
the dollar amount of such payments are entirely dependent upon the investment
performance of the Division of Separate Account C in which the Annuity Reserve
Account is maintained.
We will, at least once each year, make any transfer of funds from our
general account to the Annuity Reserve Account of each Division of Separate
Account C, or from the Annuity Reserve Account of each Division of such Separate
Account to our general account,
4--2,3;V-HR;8205
so that the assets of the Annuity Reserve Account of each Division of Separate
Account C shall be equal to the total of our liabilities for annuity income
benefits payable from each Division of Separate Account C, all as we determine.
The effect of such transfer is to adjust the Annuity Reserve Account of each
Division of such Separate Account for the difference between the actual
mortality and expense experience since the last such transfer and the mortality
and expense assumptions used in the conversion rates for annuity income payments
from such Division.
SECTION 4--ADDITIONAL AMOUNTS OF MONTHLY ANNUITY. If the Plan requires that
Contributions are to be made for a Participant after his Annuity Commencement
Date, each such Contribution will be applied to provide additional monthly
annuity income for such Participant.
SECTION 5--CANCELLATION OF ANNUITY. If we receive a Written Notification
which reports that the monthly income payments to a Participant are to be
reduced pursuant to the provisions of the Plan in effect on the Participant's
Annuity Commencement Date, then the portion of such Participant's monthly
annuity income specified will be cancelled.
The reserve for any annuity cancelled in accordance with this Section will
be treated as a forfeiture and allocated in accordance with Article III, Section
7.
4--4,5;V-HR;8204
ARTICLE V
SUPPLEMENTARY BENEFITS
SECTION 1--BENEFITS PAYABLE AT DEATH. If the death of a Participant occurs
prior to his Annuity Commencement Date, we will, upon receipt of due proof of
death, treat such Participant's Investment Account Values as provided in his
Written Notification. The Participant may choose one of the following methods:
(a) We will cancel all units in the Investment Accounts of the Participant
and transfer the value to the Associated Fixed Contract. The amount
transferred from each such account will be equal to the number of
units cancelled multiplied by the Unit Value for its Division of
Separate Account B for the Valuation Period in which the cancellation
is effective.
(b) We will establish Investment Accounts for the beneficiary of the
Participant to hold the Investment Account Values of the Participant.
The provisions of this Section are subject to the provisions of Section 2
of this Article.
SECTION 2--OPTIONS FOR BENEFITS PAYABLE AT DEATH. In lieu of treating the
Participant's Investment Account Values as shown in Section 1 of this Article,
we may pay all or part of such Investment Account Values to the beneficiary in a
single sum. If (a) of Section 1 of this Article is the method chosen by the
Participant, the Written Notification from the beneficiary must be given before
the date such transfer is to be effective. Such payment will be made within
seven days after we receive such Written Notification.
By Written Notification to us, a beneficiary may:
(a) Elect to have all or a portion of the amount available to him under
the Associated Fixed Contract transferred to this contract. This
amount transferred will establish Investment Accounts for such
beneficiary.
(b) Elect to have all or a portion of the amount available to him under
this contract (if (b) of Section 1 of this Article is in effect for
him) transferred to the Associated Fixed Contract.
If the beneficiary chooses to transfer all or a portion of the amount
available to him under this contract to the Associated Fixed Contract, we will
treat such beneficiary as if he were a Participant and the provisions of Article
VI, Section 1, Subsection (a) will apply.
5--1,2;V-HR;8301
If Investment Accounts are established for a beneficiary, the following
will apply:
(c) The value of the Investment Accounts established must be at least
$1,750 or or we may, at our option, pay the beneficiary the value of
such accounts in lieu of all other benefits as to such accounts.
(d) Any annuity income payable will be in the form of a lifetime annuity
income which does not provide benefits beyond the life or life
expectancy of the beneficiary. The beneficiary must be a natural
person if a lifetime income is elected.
(e) The beneficiary must begin to receive annuity income payments in the
form of an immediate annuity immediately distributed, or must receive
a single sum payment not later than five years after the Participant's
death.
(f) The amount of monthly annuity income payments must be at least $20 for
a beneficiary to choose to receive annuity income payments. If the
Investment Accounts would provide less, we may, at our option pay the
beneficiary the value of such accounts in lieu of all other benefits
as to such accounts.
If Investment Accounts are established for a beneficiary, we will furnish
the beneficiary with a writing explaining the details.
SECTION 3--PROOF OF DEATH. We will accept as proof of death a certified
copy of a death certificate, a certified copy of a decree of a court of
competent jurisdiction as to the finding of death, a written statement by a
medical doctor who attended the deceased during his last illness, or any other
proof that is satisfactory to us.
SECTION 4--CASH WITHDRAWAL BENEFIT. By Written Notification and if
permitted by the Plan, we will pay to a Participant all or a portion of the
vested portion of his Investment Accounts under this contract, subject to the
following:
(a) The Participant's vested Investment Account Values will be determined
at the end of the Valuation Period in which we receive the request and
will be paid to the Participant within seven days after the request is
received. We may require that any request be accompanied by the
certificate issued to the Participant under Article VII, Section 1.
(b) Any payment shall be subject to the limitations contained in Article
VI. In addition, no more than two partial payments shall be made in a
twelve month period without our express consent.
(c) The amount available will be subject to the Administration Charge
contained in Article III, Section 5.
(d) The amount available may be subject to the Contingent Deferred Sales
Charge, as described in Section 5 of this Article.
5--3,4;V-HR;8301
Any payment made under this Section will result in the cancellation of a
number of units in each Investment Account of the Participant from which payment
is made. The number of units cancelled from such account will be equal to the
amount paid from it divided by the Unit Value for its Division of Separate
Account C for the Valuation Period in which the cancellation is effective. Units
shall also be cancelled to cover any charges assessed under (c) and (d) above.
SECTION 5--CONTINGENT DEFERRED SALES CHARGE. Any payment to or on behalf of
a Participant under Section 4 of this Article, or Article VI, Section 5,
except on account of the Participant's Total and Permanent Disability, shall be
subject to a Contingent Deferred Sales Charge equal to a percentage of the
amount being paid or transferred. Such percentage will be determined according
to the following table:
Number of Contribution Years
a Participant has been Contingent Deferred Sales
covered under the contract Charge Percentage
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 .7
10 or more 0
The amount of any Contingent Deferred Sales Charge will be an application
from the Investment Account of a Participant at the end of the Valuation Period
in which the transfer or withdrawal is effective. Such application will be
effected by a cancellation of a number of units in such account. If the sum of
the amount to be paid out or transferred and the Contingent Deferred Sales
Charge would be greater than the Participant's Investment Account, we will apply
all of the Investment Account and the amount paid out or transferred will
reflect such charge.
For a Participant, the amount of Contingent Deferred Sales Charge deducted
will be limited, however, so that the amount of such charge shall never exceed
9% of the Contribution to which the charge relates. For this purpose, any
payments under Section 4 of this Article or under Article VI, Section 5 will be
related to Contributions on a first in, first out basis.
5--5;V-HR;8301
ARTICLE VI
TRANSFERS AND LIMITATIONS
SECTION 1--TRANSFER TO AND FROM ASSOCIATED FIXED CONTRACT.
Subsection (a)--Transfer to Associated Fixed Contract. All or a portion of
the value of any of a Participant's Investment Accounts may be transferred to
the Associated Fixed Contract at any time at least one month before his Annuity
Commencement Date by Written Notification to us. Transfer will be effective as
of the end of the Valuation Period in which such Written Notification is
received and will be made within seven days after such request is received. Any
amount transferred pursuant to this subsection (a) will result in the
cancellation of units in such account or accounts of the Participant as of the
effective date of transfer. The number of units cancelled from an Investment
Account will be equal to the amount transferred from such account divided by the
appropriate Unit Value for the Division for this Series of Contracts for the
Valuation Period in which the transfer is effective. The amount transferred will
be credited to the Participant under the Associated Fixed Contract in accordance
with the provisions of such contract.
Transfer under this subsection (a) is subject to any limitation in Section
3 of this Article. In addition, no more than two such transfers may be made in a
twelve-month period without our express consent.
Subsection (b)--Transfer from Associated Fixed Contract. All or a portion
of the proceeds available to a Participant under the Associated Fixed Contract
may be transferred to one or more of his Investment Accounts under this
contract at any time at least one month before his Annuity Commencement Date by
Written Notification to us. The amount and date of any such transfer will be
determined in accordance with the provisions of the Associated Fixed Contract.
Transferred amounts will be treated as a Contribution for such Participant on
the date of transfer and credited in accordance with his investment direction,
as described in Article II, Section 3.
SECTION 2--TRANSFERS BETWEEN DIVISIONS. By Written Notification to us, all
or a portion of the value of one of a Participant's Investment Accounts may be
transferred to any other of his Investment Accounts for the same type of
Contribution at any time at least one month before his Annuity Commencement
Date, but no more than two transfers out of any one Investment Account may be
made in a twelve month period without our express consent. The transfer will be
effective as of the end of the Valuation Period in which such request is
received and will be made within seven days after such request is received. Any
amount transferred under this Section will result in the cancellation of units
in the Investment Account from which transfer occurs as of the effective date of
transfer. The number of units cancelled from such Investment Account will be
equal to the amount transferred from such account divided by the Unit Value of
such Division
6--1,2;V-HR;8204
for a Series of Contracts for the Valuation Period in which the transfer is
effective. The transferred amount will be treated as a Contribution for such
Participant to the Investment Account specified in the Written Notification on
the date of transfer.
Transfer under this Section is subject to any limitation in Section 3 of
this Article.
SECTION 3--LIMITATION ON PAYMENT OR TRANSFER. The date on which any amount
is to be paid or transferred under this contract may be deferred by us during
any period that the right to redeem Mutual Fund shares is suspended as permitted
under the provisions of the Investment Company Act of 1940 which may be in
effect from time to time. If any deferment of payment or transfer is effective,
and if said payment or transfer has not been cancelled by Written Notification
to us within the period of deferment, the amount to be paid or transferred shall
be determined as of the first Valuation Date following the expiration of the
permitted deferment, and the payment or transfer will be made within seven days
thereafter. We will notify the Employer and Participant in event of any
deferment under the provisions of this Section.
SECTION 4--LIMITATION AS TO PARTICIPANTS. If at any time BLC Equity
Management Company is not the investment manager of the Mutual Fund or Mutual
Funds in which Separate Account C is invested, we may give written notice to the
Contractholder that no further persons may become covered as Participants under
this contract.
SECTION 5--TRANSFER TO ALTERNATE FUNDING AGENT. By Written Notification to
us, the value of all of the Investment Accounts of the Participants of a Plan
may be transferred to an Alternate Funding Agent. Subject to any limitations in
this Article, the value of such Investment Accounts will be determined as of the
end of the Valuation Period in which we receive such Written Notification and
will be transferred within seven days of the date of receipt.
Any amounts transferred under this Section will be subject to the charges
contained in Article V, Section 5. Any such transfer shall be an application of
the amounts transferred and shall be in lieu of any other benefits payable from
such accounts.
Alternate Funding Agent means an insurance company or trustee designated by
the Written Notification and authorized to receive any amount or amounts
transferred under this Section as to a Participant or Participants and to apply
such amount or amounts for the exclusive benefit of such Participant or
Participants under a plan which continues to meet the requirements of the Code,
without any obligation on our part as to such application.
6--3,4,5;V-HR;8204
ARTICLE VII
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. We will issue to each Plan administrator for
delivery to each Participant an individual certificate setting forth a statement
as to the benefits to which such Participant is entitled and to whom such
benefits are payable. If benefits become payable to a Participant under one of
the options of Article IV, Section 1, we shall issue a superseding individual
certificate setting forth the amount, form and period of payment of the monthly
annuity benefits.
SECTION 2--BENEFICIARY. The beneficiary is the person or persons to whom
proceeds (other than any monthly annuity payable to a joint or contingent
annuitant under provisions of Article IV, Section 1) are payable upon the
death of the Participant, subject to the provisions of Section 13 of this
Article. A Participant shall name such beneficiary, or may change a named
beneficiary, by executing and filing a written designation to that effect with
us, but such designation will not be effective until we receive it. The
designation, when received, will be effective as of the date it was executed,
but any payment made by us prior to receipt of such designation shall fully
discharge us to the extent of such payment. We reserve the right to require the
Participant's certificate for endorsement of any change of beneficiary.
If annuity benefits become payable to any Participant under Option D and if
the death of the Participant occurs before he has received all of the payments
for the minimum period provided for under Option D, any remaining payments for
the balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
If annuity benefits become payable to any Participant under Option E and if
the death of both the Participant and the joint annuitant occur before payments
have been made for the minimum period of ten years, any remaining payments for
the balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
Unless otherwise specified by the Participant with our written consent,
(a) if any beneficiary dies before the Participant, any monthly payment
which would have become payable to such beneficiary, if living, will
be payable when due to the beneficiary or beneficiaries surviving the
Participant in the order provided.
7--1,2;V-HR;8204
(b) if any beneficiary survives the Participant but dies before receiving
all of the monthly payments which would have become payable to such
beneficiary, if living, payments will be paid when due to the
surviving beneficiary or beneficiaries of such Participant in the
order provided.
(c) if the last survivor of all designated beneficiaries dies following
the death of the Participant (and the joint or contingent annuitant,
if any) and before all payments due the beneficiary have been made,
the remaining payments will be commuted and the commuted value paid to
the executor or administrator of the estate of the last survivor.
If no designated beneficiary shall survive the Participant (and the joint
or contingent annuitant, if any), then any amounts which would have become
payable to a designated beneficiary shall be commuted and the commuted value
shall be paid to the executor or administrator of the estate of the Participant
(the executor or administrator of the estate of any joint or contingent
annuitant, if he survives the Participant).
SECTION 3--DIVIDENDS. The proportion of the divisible surplus, if any,
which we determine to accrue on this contract for each Participant shall be
ascertained annually by us and shall be apportioned by addition (prior to the
close of the calendar year in which the dividend is declared) to the Investment
Accounts of the Participants as a Contribution. NOTE: Due to the direct
crediting of investment results, it is not anticipated that any dividends will
ever be paid under this contract.
SECTION 4--CONTRACT. This contract and the application of the
Contractholder, a copy of which is attached to and made a part of this contract,
shall constitute the entire contract between the parties. Except to the extent
specified in this contract, we are not a party to nor bound by any trust or
plan.
SECTION 5--PLAN AND PLAN AMENDMENTS. The Employer or trustee of the Plan
agrees to furnish us with a copy of the Plan in effect on the date this contract
is effective for such Employer and any subsequent amendments to it. No amendment
to the Plan which affects our duties and obligations will be effective under
this contract if we notify the Employer or trustee of the Plan in writing that
such change is unacceptable to us. We will notify an Employer or trustee of the
Plan within 60 days after we receive an amendment if it is unacceptable.
SECTION 6--ALTERATION OF CONTRACT. Only our corporate officers have
authority to alter this contract or to waive any of its provisions or
requirements.
SECTION 7--AMENDMENTS. We reserve the right to amend or change this
contract as follows:
(a) Any or all of the contract provisions may be changed at any time,
including retroactive changes, to the extent necessary to meet the
requirements of any law or regulation issued by any governmental
agency to which we are subject.
7--3,4,5,6,7;V-HR;8301
(b) We may, as of any date after the Contract Date, amend or change (i)
the basis for determining Investment Account Values, Net Investment
Factors, and Annuity Change Factors; (ii) Table 1; and (iii) the
provisions as to transfers contained in Article VI.
(c) The percentage stated in Article III, Section 3(b), may be changed at
any time at least one year after the Contract Date; provided, however,
that such rate will in no event exceed 2.00% within the period of five
years from the Contract Date and will not be changed more frequently
than once in any one-year period.
We will give written notice to the Contractholder of any change made in
accordance with subparagraph (a) above and to each Participant, Employer or
trustee of the Plan affected by the change. In order for any amendment or change
in accordance with subparagraph (b) or (c) above to become effective, we must
give written notice to the Contractholder and each Employer or trustee of the
Plan whose Participants are affected by the change not less than 60 days prior
to the date the amendment or change is to take effect.
This contract may also be amended or changed at any time as to any of its
provisions, including those in regard to coverage, benefits and participation
privileges, by written agreement between the Contractholder (or any other person
or persons designated by the Contractholder) and us. Such amendment or change
may be made without the consent of any Participant, beneficiary or joint or
contingent annuitant.
Any amendment or change in accordance with this Section shall be binding
and conclusive on each Participant, beneficiary or joint or contingent
annuitant, subject to the following limitations:
(i) No amendment or change shall apply to annuities which were in the
course of payment prior to the effective date of the amendment or
change except to the extent necessary in making changes pursuant to
subparagraph (a) above.
(ii) No change in Table 1 which would provide less initial monthly annuity
income will take effect for a current Participant.
SECTION 8--CONTRIBUTIONS. We reserve the right to limit or refuse further
Contributions under this contract. We will give to the Contractholder and each
Participant written notice at least 60 days before the date after which further
Contributions will be limited or refused by us.
7--8;V-HR;8301
SECTION 9--MISSTATEMENTS. If the age or sex of any Participant or joint or
contingent annuitant is found to have been misstated,
(a) the amount of annuity payable by us will be that provided by the
amount applied to provide such annuity, determined as of the date
established by the misstated information and on the basis of the
correct age and sex.
(b) the value of any overpayment by us resulting from any misstatements
will be deducted from amounts thereafter payable to the Participant,
his joint or contingent annuitant or his beneficiary.
(c) the value of any underpayment by us resulting from any misstatements
will be paid in full with the next payment due the Participant, his
joint or contingent annuitant or his beneficiary.
SECTION 10--INFORMATION, PROOFS AND DETERMINATION OF FACTS. We may require
evidence of a Participant's age and the age of his joint or contingent
annuitant, if any, on or prior to his Annuity Commencement Date and any other
records, data, proofs or additional information which, in our opinion, is
necessary for the administration of this contract.
SECTION 11--MODIFICATION IN MODE OF PAYMENT OF ANNUITY. If the monthly
amount of the annuity payable at Annuity Commencement Date to a Participant
under this contract would be less than $20, we may, at our option, pay in cash
the value of his Investment Accounts in full settlement of all benefits
otherwise payable.
SECTION 12--COMMUTATION OF PAYMENTS. If any monthly payments are to be
commuted, the commuted value of such payments shall be determined by us using
the interest rate which was used as a basis for calculating the amount of the
monthly payment at the time the annuity payments began, assuming level monthly
payments.
SECTION 13--FACILITY OF PAYMENT. If any Participant, joint or contingent
annuitant or beneficiary is physically or mentally incapable of giving a valid
receipt for any payment due him and no legal representative has been appointed
for him, we may, at our option, make such payment to the person or persons as
have, in our opinion, assumed the care and principal support of such
Participant, joint or contingent annuitant or beneficiary, except that any
payment due a minor shall be paid at a rate not exceeding $100.00 per month.
However, in no event will any such payment exceed the maximum amount allowed
under applicable law of the state in which this contract is delivered. Any such
payment made by us shall fully discharge us to the extent of such payment.
7--9,10,11,12,13;V-HR;8301
SECTION 14--PRONOUNS. Masculine pronouns used in this contract include both
masculine and feminine gender unless the context indicates otherwise.
SECTION 15--ASSIGNMENT. The Investment Accounts of a Participant under this
contract and any benefits payable under this contract to any Participant,
beneficiary or joint or contingent annuitant are not assignable nor may they be
pledged as security for any loan. All such accounts and benefits shall be exempt
from claims of creditors to the maximum extent permitted by law.
SECTION 16--BASIS OF RESERVE. The reserve of any annuity income under this
contract shall be determined by us on the same interest and mortality
assumptions as were used to calculate the amount of each payment.
SECTION 17--SUBSTITUTED SECURITIES. If shares of the Mutual Funds should
not be available or if, in our judgment, investment in such shares is no longer
appropriate, we may substitute for such shares or apply Contributions received
after a date specified by us to the purchase of (i) shares of another registered
open-end investment company or (ii) securities or other property as we in our
discretion shall select. In the event of any investment pursuant to clause (ii)
above, we may make such changes as in our judgment are necessary or appropriate
in the frequency and methods of determination of Unit Values, Net Investment
Factors, Annuity Change Factors, and Investment Account Values, including any
changes in the foregoing which will provide for the payment of an investment
advisory fee to us; provided, however, that any such changes shall be made only
after approval by the Insurance Department of the State of Iowa. We will give
written notice to each Participant of any substitution or change pursuant to
this Section.
Any substitution under this Section 17 is subject to the rules and
regulations of the Securities and Exchange Commission.
SECTION 18--OWNERSHIP. The Contractholder is owner of this contract;
provided however, that if the Plan is trusteed, the trustee(s) of the Plan is
sole owner of all the payments, rights, options, and privileges herein granted
or made payable to any Participant, beneficiary, or joint or contingent
annuitant under this contract before such Participant's Annuity Commencement
Date. This includes, without limitation, the right to distribute all or a
portion of the Participant's Investment Accounts, or ownership of these rights
in respect of such accounts, on or after the Participant's Termination of
Employment; but this does not include the right to designate a Participant's
beneficiary unless such right has been granted to the trustee by the Plan or
trust. The trustee(s) of the Plan is entitled to exercise all such rights,
options, and privileges and to receive all such payments at the time or times
specified in this contract that such payments, rights, options, and privileges
are available to a Participant. Such exercise by the trustee(s) may be made
without the consent or participation of any Participant, beneficiary, or joint
or contingent annuitant.
7--14,15,16,17,18;V-HR;8204
<PAGE>
Option D -- MONTHLY LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS -- AMOUNT OF INITIAL MONTHLY PAYMENT
AGE OF PAYEE MINIMUM PERIOD
- ------------ --------------------------------------------------------
5 10 15 20 INST
MALE FEMALE NONE YEARS YEARS YEARS YEARS REFUND
- ---- ------ ---- ----- ----- ----- ----- ------
30 36 2.82 2.82 2.82 2.81 2.81 2.79
31 37 2.84 2.84 2.84 2.84 2.83 2.82
32 38 2.87 2.87 2.87 2.86 2.86 2.84
33 39 2.90 2.89 2.89 2.89 2.88 2.87
34 40 2.92 2.92 2.92 2.92 2.91 2.89
35 41 2.95 2.95 2.95 2.95 2.94 2.92
36 42 2.98 2.98 2.98 2.98 2.97 2.95
37 43 3.02 3.02 3.01 3.01 3.00 2.98
38 44 3.05 3.05 3.05 3.04 3.03 3.01
39 45 3.09 3.09 3.08 3.08 3.07 3.04
40 46 3.12 3.12 3.12 3.11 3.10 3.07
41 47 3.16 3.16 3.16 3.15 3.14 3.11
42 48 3.20 3.20 3.20 3.19 3.17 3.14
43 49 3.25 3.25 3.24 3.23 3.21 3.18
44 50 3.29 3.29 3.28 3.27 3.25 3.22
45 51 3.34 3.34 3.33 3.31 3.29 3.26
46 52 3.39 3.38 3.38 3.36 3.34 3.30
47 53 3.44 3.44 3.43 3.41 3.38 3.34
48 54 3.49 3.49 3.48 3.46 3.43 3.39
49 55 3.55 3.54 3.53 3.51 3.48 3.43
50 56 3.61 3.60 3.59 3.56 3.52 3.48
51 57 3.67 3.66 3.65 3.62 3.58 3.53
52 58 3.73 3.73 3.71 3.68 3.63 3.59
53 59 3.80 3.79 3.77 3.74 3.68 3.64
54 60 3.87 3.86 3.84 3.80 3.74 3.70
55 61 3.95 3.94 3.91 3.87 3.80 3.76
56 62 4.02 4.02 3.99 3.94 3.86 3.82
57 63 4.11 4.10 4.07 4.01 3.92 3.89
58 64 4.20 4.19 4.15 4.09 3.98 3.96
59 65 4.29 4.28 4.24 4.17 4.05 4.03
60 66 4.39 4.38 4.33 4.25 4.11 4.10
61 78 4.50 4.48 4.43 4.33 4.18 4.18
62 68 4.61 4.59 4.53 4.42 4.25 4.27
63 69 4.73 4.71 4.64 4.51 4.32 4.35
64 70 4.86 4.84 4.75 4.60 4.38 4.44
65 71 5.00 4.97 4.87 4.70 4.45 4.54
66 72 5.14 5.11 5.00 4.80 4.52 4.64
67 73 5.30 5.26 5.13 4.90 4.58 4.74
68 74 5.46 5.42 5.26 5.00 4.65 4.86
69 75 5.64 5.59 5.40 5.10 4.71 4.97
70 76 5.83 5.76 5.55 5.21 4.77 5.09
71 77 6.03 5.95 5.70 5.31 4.83 5.22
72 78 6.24 6.14 5.86 5.41 4.88 5.35
73 79 6.46 6.35 6.02 5.51 4.93 5.49
74 80 6.70 6.57 6.18 5.61 4.98 5.64
75 81 6.95 6.80 6.35 5.71 5.02 5.79
76 82 7.22 7.04 6.52 5.80 5.06 5.95
77 83 7.51 7.30 6.70 5.89 5.09 6.12
78 84 7.82 7.57 6.87 5.98 5.13 6.30
79 85 8.15 7.85 7.05 6.06 5.15 6.49
80 86 8.51 8.15 7.23 6.13 5.18 6.68
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020, FEMALE SET BACK 6 YEARS IN
AGE, RATES FOR OTHER AGES WILL BE DETERMINED BY BANKERS LIFE COMPANY ON THE SAME
ACTUARIAL BASIS AS THE ABOVE RATES.
<PAGE>
<TABLE>
<CAPTION>
OPTION E - MONTHLY JOINT AND SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.29 3.31 3.32 3.34 3.36 3.37 3.39 3.40 3.41 3.43 3.44 3.45 3.46 3.48 3.49 3.50
51 57 3.32 3.34 3.35 3.37 3.39 3.41 3.42 3.44 3.45 3.47 3.48 3.49 3.51 3.52 3.53 3.54
52 58 3.34 3.36 3.38 3.40 3.42 3.44 3.46 3.47 3.49 3.51 3.52 3.54 3.55 3.57 3.58 3.59
53 59 3.37 3.39 3.41 3.43 3.45 3.47 3.49 3.51 3.53 3.55 3.57 3.58 3.60 3.62 3.63 3.65
54 60 3.40 3.42 3.44 3.47 3.49 3.51 3.53 3.55 3.57 3.59 3.61 3.63 3.65 3.66 3.68 3.70
55 61 3.42 3.45 3.47 3.50 3.52 3.54 3.57 3.59 3.61 3.63 3.65 3.67 3.69 3.71 3.73 3.75
56 62 3.45 3.48 3.50 3.53 3.55 3.58 3.60 3.63 3.65 3.68 3.70 3.72 3.74 3.77 3.79 3.81
57 63 3.47 3.50 3.53 3.56 3.59 3.61 3.64 3.67 3.69 3.72 3.74 3.77 3.79 3.82 3.84 3.86
58 64 3.50 3.53 3.56 3.59 3.62 3.65 3.68 3.71 3.73 3.76 3.79 3.82 3.84 3.87 3.90 3.92
59 65 3.52 3.55 3.59 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.87 3.90 3.93 3.95 3.98
60 66 3.54 3.58 3.61 3.65 3.68 3.72 3.75 3.78 3.82 3.85 3.88 3.92 3.95 3.98 4.01 4.04
61 67 3.57 3.60 3.64 3.68 3.71 3.75 3.79 3.82 3.86 3.90 3.93 3.97 4.00 4.04 4.07 4.10
62 68 3.59 3.63 3.67 3.71 3.75 3.78 3.82 3.86 3.90 3.94 3.98 4.02 4.06 4.10 4.13 4.17
63 69 3.61 3.65 3.69 3.73 3.78 3.82 3.86 3.90 3.95 3.99 4.03 4.07 4.11 4.16 4.20 4.23
64 70 3.63 3.68 3.72 3.76 3.81 3.85 3.90 3.94 3.99 4.03 4.08 4.13 4.17 4.22 4.26 4.30
65 71 3.65 3.70 3.74 3.79 3.84 3.88 3.93 3.98 4.03 4.08 4.13 4.18 4.23 4.28 4.32 4.37
66 72 3.67 3.72 3.77 3.82 3.87 3.92 3.97 4.02 4.07 4.13 4.18 4.23 4.28 4.34 4.39 4.44
67 73 3.69 3.74 3.79 3.84 3.90 3.95 4.00 4.06 4.11 4.17 4.23 4.28 4.34 4.40 4.45 4.51
68 74 3.71 3.77 3.82 3.87 3.93 3.98 4.04 4.10 4.16 4.22 4.28 4.34 4.40 4.46 4.52 4.58
69 75 3.73 3.79 3.84 3.90 3.95 4.01 4.07 4.13 4.20 4.26 4.32 4.39 4.45 4.52 4.58 4.65
70 76 3.75 3.81 3.86 3.92 3.98 4.04 4.10 4.17 4.23 4.30 4.37 4.44 4.51 4.58 4.65 4.71
71 77 3.77 3.82 3.88 3.94 4.00 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.56 4.63 4.71 4.78
72 78 3.78 3.84 3.90 3.96 4.03 4.09 4.16 4.23 4.31 4.38 4.45 4.53 4.61 4.69 4.77 4.85
73 79 3.80 3.86 3.92 3.98 4.05 4.12 4.19 4.26 4.34 4.41 4.49 4.58 4.66 4.74 4.83 4.91
74 80 3.81 3.87 3.94 4.00 4.07 4.14 4.21 4.29 4.37 4.45 4.53 4.62 4.70 4.79 4.88 4.97
75 81 3.82 3.89 3.95 4.02 4.09 4.16 4.24 4.32 4.40 4.48 4.57 4.66 4.75 4.84 4.94 5.03
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION F - MONTHLY JOINT AND TWO-THIRDS SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.62 3.65 3.68 3.71 3.74 3.77 3.80 3.84 3.87 3.90 3.94 3.97 4.01 4.05 4.08
51 57 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.88 3.91 3.95 3.98 4.02 4.06 4.09 4.13
52 58 3.66 3.69 3.72 3.75 3.78 3.81 3.85 3.88 3.92 3.95 3.99 4.03 4.06 4.10 4.14 4.18
53 59 3.69 3.72 3.75 3.78 3.82 3.85 3.89 3.92 3.96 4.00 4.03 4.07 4.11 4.15 4.19 4.23
54 60 3.72 3.75 3.79 3.82 3.86 3.89 3.93 3.96 4.00 4.04 4.08 4.12 4.16 4.20 4.24 4.28
55 61 3.75 3.79 3.82 3.86 3.89 3.93 3.97 4.01 4.04 4.08 4.13 4.17 4.21 4.25 4.29 4.34
56 62 3.79 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.17 4.22 4.26 4.30 4.35 4.39
57 63 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.18 4.22 4.27 4.31 4.36 4.41 4.45
58 64 3.86 3.90 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.27 4.32 4.37 4.41 4.46 4.51
59 65 3.89 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.28 4.32 4.37 4.42 4.47 4.52 4.57
60 66 3.93 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.64
61 67 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.49 4.54 4.59 4.65 4.71
62 68 4.01 4.05 4.09 4.14 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.54 4.60 4.66 4.72 4.77
63 69 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.66 4.72 4.78 4.85
64 70 4.08 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.67 4.73 4.79 4.86 4.92
65 71 4.13 4.17 4.22 4.27 4.32 4.38 4.43 4.49 4.55 4.61 4.67 4.73 4.80 4.86 4.93 5.00
66 72 4.17 4.22 4.27 4.32 4.37 4.43 4.49 4.54 4.61 4.67 4.73 4.80 4.87 4.93 5.00 5.07
67 73 4.21 4.26 4.31 4.37 4.42 4.48 4.54 4.60 4.66 4.73 4.80 4.87 4.94 5.01 5.08 5.15
68 74 4.25 4.30 4.36 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.01 5.08 5.16 5.24
69 75 4.29 4.35 4.41 4.46 4.52 4.59 4.65 4.72 4.78 4.86 4.93 5.00 5.08 5.16 5.24 5.32
70 76 4.34 4.39 4.45 4.51 4.57 4.64 4.71 4.77 4.85 4.92 5.00 5.07 5.15 5.24 5.32 5.40
71 77 4.38 4.44 4.50 4.56 4.62 4.69 4.76 4.83 4.91 4.98 5.06 5.14 5.23 5.31 5.40 5.49
72 78 4.42 4.48 4.55 4.61 4.68 4.74 4.82 4.89 4.97 5.05 5.13 5.21 5.30 5.39 5.48 5.57
73 79 4.47 4.53 4.59 4.66 4.73 4.80 4.87 4.95 5.03 5.11 5.20 5.28 5.37 5.47 5.56 5.66
74 80 4.51 4.57 4.64 4.71 4.78 4.85 4.93 5.01 5.09 5.17 5.26 5.35 5.45 5.55 5.65 5.75
75 81 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06 5.15 5.24 5.33 5.42 5.52 5.62 5.73 5.83
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION G - LIFE ANNUITY WITH 1/2 SURVIVORSHIP PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE PARTICIPANT - MALE
AGE OF 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
CONTINGENT _____________________________________________________________________________________________
ANNUITANT AGE OF PARTICIPANT - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.63 3.67 3.72 3.77 3.81 3.86 3.91 3.97 4.02 4.07 4.13 4.19 4.25 4.31 4.37
51 57 3.60 3.65 3.69 3.74 3.79 3.84 3.89 3.94 3.99 4.05 4.10 4.16 4.22 4.28 4.35 4.41
52 58 3.62 3.66 3.71 3.76 3.81 3.86 3.91 3.96 4.02 4.07 4.13 4.19 4.25 4.32 4.38 4.45
53 59 3.64 3.68 3.73 3.78 3.83 3.88 3.93 3.99 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49
54 60 3.65 3.70 3.75 3.80 3.85 3.90 3.96 4.01 4.07 4.13 4.19 4.25 4.32 4.39 4.46 4.52
55 61 3.67 3.71 3.76 3.82 3.87 3.92 3.98 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49 4.56
56 62 3.68 3.73 3.78 3.83 3.89 3.94 4.00 4.06 4.12 4.19 4.25 4.32 4.39 4.46 4.53 4.61
57 63 3.69 3.75 3.80 3.85 3.91 3.96 4.02 4.09 4.15 4.21 4.28 4.35 4.42 4.50 4.57 4.65
58 64 3.71 3.76 3.81 3.87 3.93 3.98 4.05 4.11 4.17 4.24 4.31 4.38 4.46 4.53 4.61 4.69
59 65 3.72 3.77 3.83 3.89 3.94 4.01 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.57 4.65 4.73
60 66 3.73 3.79 3.85 3.90 3.96 4.03 4.09 4.16 4.23 4.30 4.37 4.45 4.53 4.61 4.69 4.77
61 67 3.75 3.80 3.86 3.92 3.98 4.05 4.11 4.18 4.25 4.32 4.40 4.48 4.56 4.64 4.73 4.82
62 68 3.76 3.82 3.88 3.94 4.00 4.06 4.13 4.20 4.28 4.35 4.43 4.51 4.60 4.68 4.77 4.86
63 69 3.77 3.83 3.89 3.95 4.02 4.08 4.15 4.23 4.30 4.38 4.46 4.55 4.63 4.72 4.81 4.91
64 70 3.78 3.84 3.90 3.97 4.03 4.10 4.18 4.25 4.33 4.41 4.49 4.58 4.67 4.76 4.85 4.95
65 71 3.79 3.86 3.92 3.98 4.05 4.12 4.20 4.27 4.35 4.44 4.52 4.61 4.70 4.80 4.90 4.99
66 72 3.81 3.87 3.93 4.00 4.07 4.14 4.22 4.29 4.38 4.46 4.55 4.64 4.74 4.84 4.94 5.04
67 73 3.82 3.88 3.94 4.01 4.08 4.16 4.24 4.32 4.40 4.49 4.58 4.67 4.77 4.87 4.98 5.08
68 74 3.83 3.89 3.96 4.03 4.10 4.18 4.26 4.34 4.42 4.51 4.61 4.71 4.81 4.91 5.02 5.13
69 75 3.84 3.90 3.97 4.04 4.12 4.19 4.27 4.36 4.45 4.54 4.64 4.74 4.84 4.95 5.06 5.17
70 76 3.85 3.91 3.98 4.05 4.13 4.21 4.29 4.38 4.47 4.56 4.66 4.76 4.87 4.98 5.10 5.21
71 77 3.85 3.92 3.99 4.07 4.14 4.22 4.31 4.40 4.49 4.59 4.69 4.79 4.90 5.02 5.13 5.25
72 78 3.86 3.93 4.00 4.08 4.16 4.24 4.32 4.41 4.51 4.61 4.71 4.82 4.93 5.05 5.17 5.29
73 79 3.87 3.94 4.01 4.09 4.17 4.25 4.34 4.43 4.53 4.63 4.73 4.84 4.96 5.08 5.20 5.33
74 80 3.88 3.95 4.02 4.10 4.18 4.26 4.35 4.44 4.54 4.65 4.75 4.87 4.98 5.11 5.23 5.37
75 81 3.88 3.95 4.03 4.11 4.19 4.27 4.36 4.46 4.56 4.66 4.77 4.89 5.01 5.13 5.27 5.40
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
HR-10
Group Annuity Certificate
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50309
Certifies that you are a Participant under the Contract. In consideration of the
Contributions made on your behalf under the Contract, we agree to make payments
to you on your Annuity Commencement Date or to your beneficiary upon your death
prior to your Annuity Commencement Date, subject to the provisions of the
Contract.
Your beneficiary is as specified on your enrollment form, unless changed as
stated in this certificate.
This certificate is a summary of the Contract provisions which affect you. It is
not a contract. The Contract is the only contract. All rights and benefits are
determined solely by it. A copy of the Contract is on file with the
Contractholder and with us. You may ask to see it at any reasonable time. The
Contractholder is as shown inside this certificate.
G. David Hurd
President
IN THIS CERTIFICATE
You, your . . . . . . means the Participant; the person for whom an account has
been established under the Contract.
We, Our, Us . . . . means Principal Mutual Life Insurance Company
Contract . . . . . . . Means the group annuity contract issued to the
Contractholder by us.
This certificate supersedes any certificate previously issued to you under the
contract.
Fixed Dollar Benefits Keep this Certificate Companion
The following terms have the meaning shown where used in this certificate:
DEFINITIONS
Annuity Commencement Date is the date you specify in writing to us for
the beginning of monthly income for you. Annuity payments will begin on this
date unless you have selected a delayed start date.
This date cannot be earlier than the date we receive your request at
our home office. It cannot be later than the April 1 following the calendar year
in which you attain age 70 1/2 unless the Minimum Distribution rules have been
met. See Page 5.
Contribution Year means the twelve month period coinciding with the
accounting year of the Plan.
Crediting Rate means the annual rates of interest we determine and
declare from time to time for contracts of this class.
Duration Period means the maximum period for which a Contribution Year
Account exists. The Duration Period or Periods for your Contribution Year
Accounts is shown on the declarations page of this certificate.
We may offer Duration Periods with lengths varying from one
Contribution Year to 10 Contribution Years. We reserve the right, in our sole
discretion, to change at any time the Duration Periods available for new
Contributions, Rollforward Amounts, and Special Contributions. Your application
shows what Duration Periods are available when you first participate. We will
notify you if we change the Duration Periods available.
Guaranteed Interest Rate means the annual rate of interest of 4 1/2%
for each of the first ten Contribution Years under this Contract and 3% for each
Contribution Year thereafter.
The Crediting Rates and Renewal Crediting Rates applicable to your
Contributions or Special Contributions or to your accounts will never ben less
than our Guaranteed Interest Rate.
Normal Retirement Date means your normal retirement date under the
Plan. If your normal retirement date is not specified in the Plan, it will be
the first day of the month following your 65th birthday.
Plan means the retirement plan of your employer.
Renewal Crediting Rate means, for each Contribution Year Account, the
annual rate of interest determined at the end of its first Contribution Year for
that account for the rest of its Duration Period.
We guarantee not to reduce a Renewal Crediting Rate for an account.
Total and Permanent Disability means that you are disabled, as a result
of sickness or injury, so as to be prevented from engaging in any substantial
gainful activity. This total disability must be continuous for a period of at
least six months. You must submit proof of disability which is acceptable to us.
Variable Contract means the group annuity contract, issued to the
Contractholder by us, which provides benefits which are not guaranteed as to
dollar amounts but which vary with the investment performance of the funds held
under the contract.
CONTRIBUTIONS AND SPECIAL CONTRIBUTIONS
Contributions. Contributions may be made for you as permitted by the Plan.
All Contributions are payable directly to us at our home office in Des Moines,
Iowa.
Special Contributions. In addition to the Contributions described above,
you may give us Special Contributions. Special Contributions are limited to
amounts you have already accumulated.
Your Special Contributions will receive a higher Crediting Rate than other
Contributions received on the same day. This higher Crediting Rate will remain
in effect for the first Duration Period. As Rollforward Amounts, Special
Contributions will be treated like all other Contributions.
YOUR ACCOUNTS
A contribution Year Account will be opened for you for your
Contributions in each Contribution Year for the Duration Period chosen. Your
Special Contributions will also go into this account. We may allow more than one
Duration Period to be used at a time. If you then choose to do so, you will have
a Contribution Year Account opened for each Duration Period chosen each
Contribution Year.
The aggregate of all of your Contribution Year Accounts is your
Accumulation Account.
Your Contributions or Special Contributions during a Contribution Year
are added to the Contribution Year Account or Accounts for the Duration
Period(s) you chose.
Each Contribution or Special Contribution will be credited with its
Crediting Rate from the day we receive it to the end of the Duration Period or
to the date of payment or application, if earlier. The Crediting Rate can be
changed by us for new Contributions or Special Contributions. We cannot change a
Crediting Rate for a Contribution or Special Contribution already received,
however.
For reporting purposes, the Renewal Crediting Rate will be determined
by averaging the Crediting Rates for each Contribution and Special Contribution
made, weighted by the amount of each.
ADMINISTRATION CHARGE
At the end of the year, we determine our Administration Charge and
deduct it from your accounts. This charge is $25 plus 1/2% of your Accumulation
Account values up to $50,000. This charge may be less if Contributions on your
behalf are made as a part of your Employer's retirement plan.
In addition, we will reduce the Administration Charge for a
Contribution Year if the effective annual interest rate for your Accumulation
Accounts would be less than 3% for the Contribution Year with the full
Administration Charge.
No new Contributions or Special Contributions will be added to an
existing Contribution Year Account after the end of its first Contribution Year.
All amounts contributed and the interest will be kept in your
Contribution Year Account until the end of its Duration Period (the date of
withdrawal, if earlier) if you chose an account without Rollforward Amounts. At
the end of its Duration Period, all of the Contribution Year Account will be
treated as a Rollforward Amount.
ROLLFORWARD AMOUNT
If you have chosen an account with Rollforward Amount provisions, the
Rollforward Amount is determined at the end of the Contribution Year. This
amount is equal to all of the interest credited to this account plus a fraction
of the principal (your Contributions and Special Contributions to it, less any
withdrawals). This fraction is determined by the number of years remaining in
the Duration period, including the year just ending. For example:
If the initial Duration Period is 5 years, at the end of the first year
1/5 of the principal rolls forward. At the end of the second year 1/4
of the principal rolls forward. At the end of the third year 1/3 of the
principal rolls forward, etc. At the end of the Duration Period all of
the principal and interest has been rolled forward out f the account.
Then that Contribution Year Account disappears.
Your Rollforward Amount becomes a Contribution to your new Contribution
Year Account for the next Contribution Year. It is credited with the Crediting
Rate available to new Contributions for that Contribution Year.
This process continues each year for all of your Contribution Year
Accounts with Rollforward Amount provisions.
TRANSFER PROVISIONS
If we are offering more than one Duration Period, you have 30 days
after the end of a Contribution Year to transfer your Rollforward Amount to the
Variable Contract or to a Contribution Year Account with a different Duration
Period. There is no charge for this transfer.
You may transfer all or part of your Accumulation Account(s) to the
Variable Contract by written request to us at our home office in Des Moines,
Iowa. The request must be received and the requested date of transfer must be
one month or more before your Annuity Commencement Date. Your Contribution Year
Account or Accounts will be reduced by the amount transferred. See the Order of
Withdrawal for how this is handled. The amount transferred will be applied to
your account under the Variable Contract. The transfer may be subject to the
Withdrawal Charge.
No more than two such transfer may be made in a twelve month period
without our written consent, however.
You may transfer all or part of the amount available to you under the
Variable Contract to this Contract. Your request must be in writing to our home
office in Des Moines, Iowa. The requested transfer must occur more than one
month before your Annuity Commencement Date.
The Variable Contract provisions will determine the amount and date of
any transfer from that contract. Any amount transferred to this Contract will be
added to your current Contribution Year Account for that type of Contribution on
the date of transfer.
CASH WITHDRAWAL BENEFITS
You may transfer or withdraw all or part of your Accumulation Account
at any time. If you do, however, the amount paid to you will be subject to one
or both of the following charges:
1. Contingent Deferred Sales Charge.
Number of Years of Percentage
Participation Charge
------------------ ----------
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 .7
10 or more 0
The Contingent Deferred Sales Charge deducted, however, will never
exceed 9% of the Contribution or Special Contribution to which the charge
relates.
2. Withdrawal Charge.
7% of the amount paid to you, reduced by any Contingent Deferred Sales
Charge.
We may not always charge the full Withdrawal Charge, however. If taking
the full amount of this charge would reduce your Accumulation Account to less
than its Minimum Value, we will only take a reduced charge.
The minimum Value of your Accumulation Account is:
(a) The sum of your Contributions and Special Contributions (if any) plus
interest at the Guaranteed Interest Rate;
(b) reduced by any transfers, withdrawals, or Contingent Deferred Sales
Charges taken.
Any cash withdrawal during your first 10 years of participation will
have the Contingent Deferred Sales Charge deducted unless your request is
because of your Total and Permanent Disability.
You may request a transfer or a cash payment of your Rollforward
Amounts within 30 days after the end of your Contribution Year without a
Withdrawal Charge. If you request cash at any other time (except for your Total
and Permanent Disability), we will make a Withdrawal Charge.
You cannot make more than two partial withdrawals in a twelve-month
period without our written consent.
ORDER OF WITHDRAWAL
If you transfer or withdraw only part of your Accumulation Account,
withdrawals will be made from your Contribution Year Account in the following
order:
1. If your request is made within 30 days after the end of your
Contribution Year, we will withdraw from your Rollforward Amounts.
If the amount requested is more than the total of your Rollforward
Amounts combined, we will withdraw from your Contribution Year Accounts next.
2. If your request is made more than 30 days after the end of your
Contribution Year, we will withdraw from your Contribution Year Accounts, using
the account established most recently first.
EARLY DISTRIBUTIONS
There may be a tax penalty for cash withdrawals before age 59 1/2 for a
reason other than disability. Consult your tax counsel as to the tax
consequences for withdrawal.
MINIMUM DISTRIBUTIONS
There may be a tax penalty if you do not start receiving benefits by
the April 1 following the calendar year in which you attain age 70 1/2. You must
start receiving benefits so that your account will be paid out over your life or
life expectancy or over the joint lifetime or life expectancy of you and your
designated beneficiary.
The tax penalties can be severe if you do not start receiving benefits
on time or in too small an amount. Consult your tax advisor.
FLEXIBLE PAYMENT OPTION
When we make the Flexible Payment Option available, you may choose to
have your Accumulation Account paid to you under this option. We will give you a
description of the Flexible Payment Option at that time.
RETIREMENT BENEFITS
Monthly Income. On your Annuity Commencement Date, your Accumulation
Accounts will be applied to provide an annuity income for you unless you elect
the Cash Withdrawal Benefit described above.
You may elect the option (form of annuity) you want to receive. Your
election must be in writing on a form we give you. If you do not elect an option
before your Annuity Commencement Date, payment will be made automatically under
Option D with a minimum period of 10 years, unless you have a spouse. If you
have a spouse, payment will be made under Option G with your spouse as
contingent annuitant.
Amount if Income. The amount of your monthly annuity income depends on the
option chosen and on your age and the age of your contingent or joint annuitant,
if any, on your Annuity Commencement Date. All payments of annuity income will
be in level amounts, except for adjustment due to death under Option F or Option
G.
The conversion rates in effect on your Annuity Commencement Date also help
determine the amount of your income. These rates will be the rates we use for
all similar contracts. They will not be less favorable to you than the rates
shown in Table 1.
Income Options. You may chose to receive your monthly annuity income under
any of the options described below.
Option C - Income for a Period Elected. Monthly annuity income is payable
for the period you elect. The amount payable is the result of the length of the
period elected and the value of your account. If our death occurs before the end
of the period you elected, the remaining payments will be paid to your
beneficiary.
Option D - Lifetime Income with a Minimum Period. Monthly annuity income is
payable for at least the minimum period elected and thereafter for your
lifetime. The minimum period may be 0, 5, 1-, 15 or 20 years or the repayment
period (when the total monthly income received equals the amount applied to
provide the income).
If your death occurs before the end of the minimum period, the payments for
the remainder of the minimum period will be paid to your beneficiary.
Option E - Joint Lifetime with a Minimum Period. Monthly annuity income is
payable for at least 10 years and thereafter for the lifetime of you and a
person you have chosen at retirement (joint annuitant). You cannot change the
person selected. The same amount is payable to the survivor after the death of
either payee.
If both you and the joint annuitant die before the end of the minimum
period, the payments for the remainder of the 10 years will be paid to your
beneficiary.
Option F - Joint Lifetime Income with 2/3 Survivor Income. Lifetime monthly
annuity income is payable to you and a person you have chosen at retirement
(joint annuitant). You cannot change the person selected. The amount payable to
the survivor for life after the death of either payee is 2/3 of the original
amount payable.
Option G - Lifetime Income with 1/2 Survivor Income. Lifetime monthly
annuity income is payable to you. Upon your death, 1/2 of the monthly amount you
receive will be payable for the life of a person you have chosen at retirement
(contingent annuitant). You cannot change the person chosen.
Delayed Start Date - Monthly annuity income is payable for the minimum
period you choose. The annuity must start within 12 months of your Annuity
Commencement Date and will continue for the period you elect. You may select a
minimum period only or you may select a lifetime income with a minimum period
guaranteed. The amount payable is the result of the period selected and the
value of your account. If your death occurs before the end of the period you
elected, the remaining payments will be paid to your beneficiary.
Other options may be arranged by mutual agreement between you and us. Some
options may not be available to you. You cannon choose an option unless it meets
either one of these tests:
-- Benefits provided must not extend beyond your life or beyond
the lives of you and the person you designate as your
beneficiary.
-- Benefits provided must not be payable for a period longer
than your life expectancy or the combined life expectancy of
you and your designated beneficiary.
BENEFITS PAYABLE AT DEATH
Amount of Benefits Payable at Death. If your death occurs before your
Annuity Commencement Date, your beneficiary will be entitled to the value of
your Accumulation Account. This value will include amounts transferred to this
account from the Variable Contract at your death. If you chose to have such
transfer made. We must receive due proof of your death before benefits will be
paid.
We will accept as proof of death a certified copy of a death certificate, a
certified copy of a decree of a court competent jurisdiction as to the finding
of death, a written statement by the attending medical doctor, or any other
proof that is satisfactory to us.
Options for Benefits Payable at Death. You may elect a single sum payment
to your beneficiary, or you may elect to provide payments under Option C or
Option D for a beneficiary who is a natural person. In addition, you may elect
to provide payments under Option C for the benefit of a natural person, if your
beneficiary is not a natural person. Any election must be written on a form
provided by us. It must be delivered to us and approved by us at our home
office, together with this certificate for endorsement.
If your beneficiary is your spouse, your spouse may choose to continue
coverage under this contract, to receive a single sum, or to receive an annuity
option. If your spouse does not choose some other option, coverage will
continue. Any single sum payment to your spouse more than 12 months after your
death will be in accordance with Cash Withdrawal Benefits. See page 4.
If your beneficiary is other than your spouse, and you have not elected a
benefit option before the time of your death, the following will apply:
If no election of a single sum or an annuity is received with proof of
death, we continue to credit the interest your Accumulation Account would have
received for your beneficiary. Any Rollforward Amount will be transferred to a
current Contribution Year Account for the shortest Duration Period available.
The beneficiary must elect a single sum payment, Option C, or Option D
within one year after your death, with the first payment to the beneficiary not
more than one year after your death. If we have not received an election when
the one year period is over, we will pay the account values to your beneficiary
in a single sum.
If your beneficiary becomes entitled to payments under an option election,
the amount of the payments will be determined using the rates then available to
beneficiaries under contracts of this class.
If no payment of a single sum if made upon receipt of acceptable proof of
death, we will furnish your beneficiary an explanation of those provisions in
writing.
GENERAL INFORMATION
Beneficiary. Your beneficiary is the person or persons to whom amounts are
payable upon your death. A joint annuitant under Options E and F or a contingent
annuitant under Option G is not a beneficiary, however. You may name your
beneficiary and you may change your beneficiary. A request to name or change a
beneficiary must be in writing. It must be delivered to use at our home office
before we will give it effect. Once received, it will be effective as of the
date you signed it. We will be released, however, from any obligation for
payments made before we receive your request. We may require you to send us your
certificate for endorsement to record the change. This will not delay the
effectiveness of the change.
If a beneficiary dies before your death, any amount that would have been
payable to that beneficiary will be paid to the beneficiaries surviving. If no
beneficiary survives you, then amounts which would have become payable to a
designated beneficiary will be commuted and the commuted value paid to the
executor or administrator of your estate.
Alterations. Only our corporate officers may modify or waive anything in,
or approve adjustments to, the Contract. We are not bound by promises or
representations made by anyone else.
Assignment. Your accounts in the Contract and any benefit payable under the
Contract are not assignable. They may not be pledged as security for a loan.
They are exempt from claims of creditors to the maximum extent allowed by law.
Nonforfeiture. Your accounts and annuity payable are owned by you and are
nonforfeitable.
Information and Misstatements. We reserve the right to require certain
information necessary for the administration of the Contract. Evidence of your
age and the age of your contingent annuitant may be required.
If any relevant fact is found to have been misstated, annuity income will
be adjusted to the amount that should have been provided based on the correct
information. Any previous overpayments we made will be deducted from amounts
thereafter payable. Any previous underpayments we made will be paid in full with
the next payment.
Limitation on Payments and Accounts. If the monthly amount payable to your,
your beneficiary, or joint or contingent annuitant is less than $20, we have the
right to pay in cash the reserve value of the annuity in full settlement of all
benefits.
Pronouns. The use of masculine pronouns in this certificate includes both
masculine and feminine gender.
Amendments. We reserve the right to change the Contract from time to time
without approval by you, but some of your benefits are protected from changes to
the Contract:
-- No change will apply to annuity incomes started before the date of
change, unless the change is a result of a law or governmental
regulation.
-- No change in the Guaranteed Interest Rate will apply to you.
-- No adverse change in Table 1 will apply to you.
-- No adverse change in the charges used to determine your accounts will
apply to your Contributions and Special Contributions received
before the effective date of the change.
Deferment. We reserve the right to delay cash withdrawal payments described
on page 4 for up to 180 days.
<PAGE>
TABLE 1
OPTION C - Monthly Annuity Per $1,000 Applied
Fixed Benefits - Amount of Payment Each Month
-------------------------------------------------------------
Monthly Monthly
Years Annuity Years Annuity
-------------------------------------------------------------
16 $6.53
17 6.23
18 5.96
19 5.73
20 5.51
6 $15.14 21 5.32
7 13.16 22 5.15
8 11.68 23 4.99
9 10.53 24 4.84
10 9.61 25 4.71
11 8.86 26 4.59
12 8.24 27 4.47
13 7.71 28 4.37
14 7.26 29 4.27
15 6.87 30 4.18
<PAGE>
OPTION D - Monthly Life Annuity Per $1,000 Applied
Fixed Benefits - Amount of Payment Each Month
--------------------------------------------------
|
| Minimum Period
| --------------------------------------------------------------
Age of| 5 10 15 20 Inst.
Payee | None Years Years Years Years Refund
- -----------------------------------------------------------------------
15* $2.93 $2.92 $2.91 $2.90 $2.89 $2.88
16 2.94 2.93 2.92 2.91 2.90 2.89
17 2.96 2.95 2.94 2.93 2.92 2.91
18 2.97 2.96 2.95 2.94 2.93 2.92
19 2.99 2.98 2.97 2.96 2.95 2.94
20 3.01 3.00 2.99 2.98 2.97 2.96
21 3.03 3.02 3.01 3.00 2.99 2.98
22 3.04 3.03 3.02 3.01 3.00 2.99
23 3.06 3.05 3.04 3.03 3.02 3.01
24 3.08 3.07 3.06 3.05 3.04 3.03
25 3.11 3.10 3.09 3.08 3.07 3.06
26 3.13 3.12 3.11 3.10 3.09 3.08
27 3.15 3.14 3.13 3.12 3.11 3.10
28 3.18 3.17 3.16 3.15 3.14 3.13
29 3.20 3.19 3.18 3.17 3.16 3.15
30 3.23 3.22 3.21 3.20 3.19 3.18
31 3.25 3.24 3.23 3.22 3.21 3.20
32 3.28 3.27 3.26 3.25 3.24 3.23
33 3.31 3.30 3.29 3.28 3.27 3.26
34 3.35 3.34 3.33 3.32 3.31 3.29
35 3.38 3.37 3.36 3.35 3.34 3.32
36 3.41 3.40 3.39 3.38 3.37 3.35
37 3.45 3.44 3.43 3.42 3.41 3.39
38 3.49 3.48 3.47 3.46 3.44 3.42
39 3.53 3.52 3.51 3.50 3.48 3.46
40 3.57 3.56 3.55 3.54 3.51 3.49
41 3.61 3.60 3.59 3.58 3.55 3.53
42 3.66 3.65 3.64 3.62 3.59 3.57
43 3.70 3.69 3.68 3.67 3.64 3.61
44 3.75 3.74 3.73 3.71 3.68 3.65
45 3.81 3.80 3.79 3.76 3.72 3.70
46 3.86 3.85 3.84 3.81 3.77 3.75
47 3.92 3.91 3.90 3.87 3.82 3.79
48 3.99 3.98 3.96 3.92 3.87 3.84
49 4.05 4.04 4.02 3.98 3.92 3.90
50 4.12 4.11 4.08 4.04 3.97 3.95
51 4.19 4.18 4.15 4.10 4.03 4.01
52 4.27 4.26 4.22 4.17 4.08 4.07
53 4.35 4.33 4.30 4.23 4.14 4.13
54 4.43 4.42 4.37 4.30 4.19 4.20
55 4.52 4.50 4.46 4.37 4.26 4.27
56 4.61 4.59 4.54 4.45 4.32 4.34
57 4.71 4.69 4.63 4.52 4.38 4.42
58 4.81 4.79 4.72 4.60 4.44 4.50
59 4.92 4.89 4.82 4.69 4.51 4.58
60 5.03 5.01 4.92 4.77 4.58 4.67
61 5.15 5.12 5.02 4.86 4.64 4.76
62 5.28 5.25 5.13 4.95 4.71 4.85
63 5.42 5.38 5.25 5.05 4.77 4.96
64 5.56 5.52 5.37 5.14 4.84 5.06
65 5.72 5.67 5.50 5.24 4.90 5.18
66 5.89 5.82 5.64 5.35 4.96 5.29
67 6.06 5.99 5.78 5.45 5.02 5.42
68 6.25 6.17 5.93 5.55 5.08 5.54
69 6.46 6.36 6.09 5.66 5.14 5.69
70 6.68 6.57 6.25 5.76 5.19 5.84
71 6.91 6.79 6.42 5.86 5.23 6.00
72 7.17 7.02 6.59 5.96 5.28 6.16
73 7.44 7.27 6.77 6.06 5.31 6.34
74 7.74 7.54 6.96 6.15 5.35 6.52
75 8.07 7.82 7.14 6.24 5.38 6.72
76 8.42 8.13 7.33 6.32 5.40 6.93
77 8.80 8.45 7.52 6.40 5.43 7.14
78 9.21 8.78 7.70 6.47 5.45 7.37
79 9.65 9.11 7.88 6.53 5.46 7.62
80t 10.13 9.51 8.06 6.59 5.47 7.87
10.64 9.89 8.22 6.64 5.48 8.14
* and 11.19 10.28 8.38 6.68 5.49 8.42
under 11.77 10.68 8.53 6.72 5.50 8.71
12.39 11.08 8.67 6.75 5.50 9.02
t and
over 13.04 11.48 8.80 6.78 5.51 9.35
<PAGE>
TABLE 1
OPTION E - Monthly Joint and Survivor Life Annuity Per $1,000 Applied
Fixed Benefits - Amount of Payment Each Month
- ------------------------------------------------------------------------------
Age of | Age of Younger Payee
Older |----------------------------------------------------------------------
Payee | 55 56 57 58 59 60 61 62 63 64
- ------------------------------------------------------------------------------
60 $4.04 $4.08 $4.13 $4.17 $4.21 $4.25 $4.29 $4.33 $4.37 $4.41
61 4.07 4.11 4.16 4.20 4.25 4.29 4.33 4.37 4.42 4.46
62 4.09 4.14 4.19 4.23 4.28 4.33 4.37 4.42 4.47 4.51
63 4.11 4.16 4.22 4.27 4.32 4.37 4.42 4.47 4.51 4.56
64 4.14 4.19 4.25 4.30 4.35 4.41 4.46 4.51 4.56 4.61
65 4.16 4.22 4.27 4.33 4.39 4.44 4.50 4.56 4.61 4.67
66 4.18 4.24 4.30 4.36 4.42 4.48 4.54 4.60 4.65 4.71
67 4.20 4.26 4.32 4.39 4.45 4.51 4.57 4.63 4.70 4.76
68 4.22 4.29 4.35 4.41 4.48 4.54 4.61 4.68 4.74 4.81
69 4.24 4.31 4.37 4.44 4.51 4.57 4.64 4.71 4.79 4.86
70 4.26 4.33 4.40 4.47 4.54 4.61 4.68 4.75 4.83 4.90
71 4.28 4.35 4.42 4.49 4.56 4.63 4.71 4.79 4.86 4.94
72 4.29 4.36 4.43 4.51 4.58 4.65 4.73 4.82 4.90 4.98
73 4.30 4.38 4.45 4.53 4.60 4.68 4.76 4.85 4.93 5.02
74 4.32 4.39 4.47 4.55 4.62 4.70 4.79 4.88 4.97 5.05
75 4.33 4.41 4.49 4.57 4.65 4.73 4.82 4.91 5.00 5.09
76 4.34 4.42 4.50 4.58 4.66 4.74 4.83 4.93 5.02 5.12
77 4.35 4.43 4.51 4.59 4.67 4.75 4.85 4.95 5.04 5.14
78 4.35 4.44 4.52 4.60 4.68 4.77 4.86 4.96 5.06 5.16
79 4.36 4.44 4.53 4.61 4.70 4.78 4.88 4.98 5.08 5.18
80 4.37 4.45 4.54 4.62 4.71 4.79 4.90 5.00 5.10 5.21
OPTION E (con't)
- -------------------------------------------------------------------------------
Age of| Age of Younger Payee
Older |------------------------------------------------------------------------
Payee |65 66 67 68 69 70 71 72 73 74 75
- -------------------------------------------------------------------------------
60 $4.44
61 4.50 $4.54
62 4.56 4.60 $4.64
63 4.61 4.65 4.70 $4.74
64 4.67 4.71 4.76 4.81 $4.86
65 4.72 4.77 4.83 4.88 4.93 $4.98
66 4.77 4.83 4.89 4.94 5.00 5.05 $5.10
67 4.83 4.89 4.95 5.01 5.07 5.13 5.18 $5.23
68 4.88 4.94 5.01 5.07 5.14 5.21 5.26 5.32 $5.37
69 4.93 5.00 5.07 5.14 5.21 5.28 5.34 5.40 5.47 $5.53
70 4.98 5.05 5.13 5.20 5.28 5.36 5.42 5.49 5.56 5.62 $5.69
71 5.02 5.10 5.18 5.26 5.34 5.42 5.50 5.57 5.65 5.72 5.79
72 5.06 5.15 5.23 5.32 5.40 5.49 5.57 5.65 5.73 5.81 5.90
73 5.10 5.19 5.28 5.38 5.47 5.56 5.65 5.73 5.82 5.91 6.00
74 5.14 5.24 5.34 5.43 5.53 5.63 5.72 5.81 5.91 6.00 6.10
75 5.18 5.28 5.39 5.49 5.59 5.69 5.79 5.89 6.00 6.10 6.20
76 5.21 5.32 5.42 5.53 5.63 5.74 5.85 5.96 6.06 6.17 6.28
77 5.24 5.35 5.46 5.57 5.68 5.79 5.90 6.02 6.13 6.25 6.36
78 5.26 5.38 5.49 5.61 5.72 5.84 5.96 6.08 6.20 6.32 6.45
79 5.29 5.41 5.53 5.64 5.76 5.88 6.01 6.14 6.27 6.40 6.53
80 5.31 5.44 5.56 5.68 5.81 5.93 6.07 6.20 6.34 6.47 6.61
<PAGE>
OPTION F - Monthly Join and Two-Thirds Survivor Life Annuity Per $1,000 Applied
Fixed Benefits - Amount of Payment Each Month
- ------------------------------------------------------------------------------
Age of | Age of Younger Payee
Older |----------------------------------------------------------------------
Payee | 55 56 57 58 59 60 61 62 63 64
- ------------------------------------------------------------------------------
60 $4.50 $4.55 $4.60 $4.65 $4.70 $4.75 $4.80 $4.85 $4.91 $4.96
61 4.54 4.59 4.64 4.70 4.75 4.80 4.86 4.91 4.97 5.03
62 4.58 4.64 4.69 4.75 4.80 4.85 4.91 4.97 5.03 5.09
63 4.63 4.68 4.74 4.79 4.85 4.91 4.97 5.03 5.09 5.15
64 4.67 4.73 4.79 4.84 4.90 4.96 5.03 5.09 5.15 5.22
65 4.71 4.77 4.83 4.89 4.95 5.02 5.08 5.15 5.22 5.28
66 4.76 4.82 4.89 4.95 5.01 5.07 5.14 5.21 5.28 5.35
67 4.81 4.87 4.94 5.00 5.07 5.13 5.21 5.28 5.35 5.43
68 4.86 4.92 4.99 5.06 5.12 5.19 5.27 5.34 5.42 5.50
69 4.90 4.97 5.04 5.11 5.18 5.25 5.33 5.41 5.49 5.57
70 4.95 5.02 5.09 5.17 5.24 5.31 5.39 5.47 5.56 5.64
71 5.00 5.08 5.15 5.23 5.30 5.37 5.46 5.54 5.63 5.71
72 5.06 5.13 5.21 5.28 5.36 5.44 5.52 5.61 5.70 5.79
73 5.11 5.18 5.26 5.34 5.42 5.50 5.59 5.68 5.78 5.87
74 5.16 5.24 5.32 5.40 5.48 5.56 5.66 5.75 5.85 5.95
75 5.21 5.29 5.38 5.46 5.54 5.63 5.73 5.83 5.92 6.02
76 5.26 5.35 5.43 5.52 5.61 5.69 5.79 5.90 6.00 6.10
77 5.32 5.40 5.49 5.58 5.67 5.76 5.86 5.97 6.07 6.18
78 5.37 5.46 5.55 5.64 5.73 5.82 5.93 6.04 6.15 6.26
79 5.42 5.51 5.61 5.70 5.79 5.89 6.00 6.11 6.22 6.34
80 5.47 5.57 5.66 5.76 5.85 5.95 6.07 6.18 6.30 6.42
OPTION F (con't)
- -------------------------------------------------------------------------------
Age of| Age of Younger Payee
Older |------------------------------------------------------------------------
Payee |65 66 67 68 69 70 71 72 73 74 75
- -------------------------------------------------------------------------------
60 $5.02
61 5.08 $5.14
62 5.15 5.21 $5.28
63 5.22 5.28 5.35 $5.42
64 5.28 5.35 5.42 5.50 $5.57
65 5.35 5.42 5.50 5.57 5.65 $5.72
66 5.42 5.50 5.58 5.66 5.74 5.81 $5.90
67 5.50 5.58 5.66 5.74 5.83 5.91 6.00 $6.09
68 5.57 5.66 5.74 5.83 5.91 6.00 6.10 6.19 $6.29
69 5.65 5.73 5.82 5.91 6.00 6.09 6.19 6.29 6.39 $6.49
70 5.72 5.81 5.91 6.00 6.09 6.19 6.29 6.40 6.50 6.61 $6.71
71 5.80 5.90 6.00 6.10 6.19 6.29 6.40 6.52 6.63 6.74 6.85
72 5.88 5.98 6.09 6.19 6.29 6.40 6.52 6.63 6.75 6.87 6.99
73 5.96 6.07 6.18 6.29 6.39 6.50 6.63 6.75 6.88 7.00 7.12
74 6.04 6.15 6.27 6.38 6.49 6.61 6.74 6.87 7.00 7.13 7.26
75 6.12 6.24 6.36 6.48 6.59 6.71 6.85 6.99 7.12 7.26 7.40
76 6.20 6.33 6.45 6.57 6.70 6.82 6.97 7.11 7.26 7.40 7.55
77 6.29 6.41 6.54 6.67 6.80 6.93 7.08 7.24 7.39 7.54 7.70
78 6.37 6.50 6.64 6.77 6.90 7.04 7.20 7.36 7.52 7.68 7.85
79 6.45 6.59 6.73 6.87 7.01 7.15 7.32 7.49 7.66 7.83 8.00
80 6.53 6.68 6.82 6.97 7.11 7.26 7.43 7.61 7.79 7.97 8.14
<PAGE>
TABLE 1
- -------------------------------------------------------------------------------
OPTION G - Life Annuity with 1/2 Survivorship Per $1,000 Applied
Fixed Benefits - Amount of Payment Each Month
- -------------------------------------------------------------------------------
Age of | Age of Participant
Contingent|--------------------------------------------------------------------
Annuitant | 55 56 57 58 59 60 61
- --------------------------------------------------------------------------------
55 $4.19 $4.25 $4.31 $4.37 $4.43 $4.49 %4.55
56 4.20 4.27 4.33 4.39 4.45 4.51 4.58
57 4.22 4.28 4.35 4.41 4.47 4.54 4.61
58 4.24 4.30 4.37 4.43 4.50 4.56 4.64
59 4.25 4.32 4.39 4.45 4.52 4.59 4.66
60 4.27 4.34 4.41 4.48 4.55 4.61 4.69
61 4.28 4.35 4.42 4.49 4.57 4.64 4.72
62 4.29 4.37 4.44 4.51 4.59 4.66 4.74
63 4.31 4.38 4.46 4.53 4.61 4.68 4.77
64 4.32 4.40 4.47 4.55 4.63 4.70 4.79
65 4.33 4.41 4.49 4.57 4.65 4.72 4.82
66 4.34 4.42 4.50 4.58 4.66 4.74 4.84
67 4.35 4.43 4.52 4.60 4.68 4.76 4.86
68 4.36 4.45 4.53 4.61 4.70 4.78 4.88
69 4.37 4.46 4.54 4.63 4.71 4.80 4.90
70 4.38 4.47 4.56 4.64 4.73 4.82 4.92
71 4.39 4.48 4.57 4.66 4.74 4.83 4.94
72 4.40 4.49 4.58 4.67 4.76 4.84 4.95
73 4.41 4.50 4.59 4.68 4.77 4.86 4.97
74 4.42 4.51 4.60 4.69 4.78 4.87 4.99
75 4.43 4.52 4.61 4.70 4.80 4.89 5.00
76 4.43 4.52 4.62 4.71 4.80 4.90 5.01
77 4.44 4.53 4.62 4.72 4.81 4.91 5.02
78 4.44 4.54 4.63 4.73 4.82 4.92 5.03
79 4.45 4.54 4.64 4.73 4.83 4.92 5.04
80 4.45 4.55 4.64 4.74 4.84 4.93 5.05
- --------------------------------------------------------------------------------
OPTION G (con't)
- --------------------------------------------------------------------------------
Age of | Age of Participant
Contingent|---------------------------------------------------------------------
Annuitant | 62 63 64 65 66 67 68
- --------------------------------------------------------------------------------
55 $4.62 $4.68 $4.75 $4.82 $4.89 $4.97 $5.05
56 4.65 4.72 4.79 4.85 4.93 5.01 5.09
57 4.68 4.75 4.82 4.89 4.97 5.06 5.14
58 4.71 4.78 4.86 4.93 5.02 5.10 5.19
59 4.74 4.82 4.89 4.97 5.06 5.14 5.23
60 4.77 4.85 4.93 5.01 5.10 5.19 5.28
61 4.80 4.88 4.96 5.04 5.13 5.23 5.32
62 4.83 4.91 4.99 5.08 5.17 5.27 5.37
63 4.85 4.94 5.03 5.11 5.21 5.31 5.41
64 4.88 4.97 5.06 5.15 5.25 5.36 5.46
65 4.91 5.00 5.09 5.18 5.29 5.40 5.51
66 4.93 5.02 5.12 5.21 5.32 5.44 5.55
67 4.95 5.05 5.15 5.24 5.36 5.47 5.59
68 4.98 5.08 5.18 5.27 5.39 5.51 5.63
69 5.00 5.10 5.20 5.31 5.43 5.55 5.67
70 5.02 5.13 5.23 5.34 5.46 5.59 5.72
71 5.04 5.15 5.26 5.36 5.49 5.62 5.75
72 5.06 5.17 5.28 5.39 5.52 5.66 5.79
73 5.08 5.19 5.30 5.41 5.55 5.69 5.83
74 5.10 5.21 5.32 5.44 5.58 5.72 5.86
75 5.12 5.23 5.35 5.46 5.61 5.75 5.90
76 5.13 5.25 5.36 5.48 5.63 5.78 5.93
77 5.14 5.26 5.38 5.50 5.65 5.80 5.95
78 5.15 5.27 5.40 5.52 5.67 5.82 5.98
79 5.17 5.29 5.41 5.53 5.69 5.84 6.00
80 5.18 5.30 5.42 5.55 5.71 5.87 6.03
<PAGE>
- --------------------------------------------------------------------------------
OPTION G (con't)
- --------------------------------------------------------------------------------
Age of | Age of Participant
Contingent|---------------------------------------------------------------------
Annuitant | 69 70 71 72 73 74 75
- --------------------------------------------------------------------------------
55 $5.12 $5.20 $5.28 $5.38 $5.47 $5.55 $5.64
56 5.17 5.25 5.34 5.43 5.52 5.61 5.71
57 5.22 5.30 5.39 5.48 5.58 5.67 5.78
58 5.27 5.35 5.43 5.53 5.63 5.73 5.84
59 5.32 5.41 5.48 5.58 5.69 5.79 5.91
60 5.37 5.46 5.53 5.64 5.74 5.85 5.98
61 5.42 5.51 5.59 5.70 5.81 5.92 6.05
62 5.47 5.56 5.66 5.77 5.88 6.00 6.13
63 5.51 5.61 5.72 5.84 5.95 6.07 6.20
64 5.56 5.67 5.78 5.90 6.02 6.15 6.27
65 5.61 5.72 5.84 5.97 6.10 6.22 6.35
66 5.66 5.77 5.90 6.03 6.16 6.29 6.42
67 5.70 5.82 5.96 6.09 6.23 6.36 6.50
68 5.75 5.87 6.01 6.15 6.29 6.43 6.58
69 5.80 5.92 6.07 6.21 6.36 6.51 6.65
70 5.84 5.97 6.12 6.28 6.43 6.58 6.73
71 5.88 6.01 6.17 6.33 6.49 6.65 6.80
72 5.92 6.06 6.22 6.39 6.55 6.72 6.88
73 5.96 6.10 6.27 6.44 6.61 6.78 6.95
74 6.00 6.15 6.32 6.50 6.68 6.85 7.03
75 6.05 6.19 6.37 6.56 6.74 6.92 7.10
76 6.08 6.22 6.41 6.60 6.79 6.98 7.17
77 6.11 6.26 6.45 6.65 6.84 7.03 7.23
78 6.14 6.29 6.49 6.69 6.89 7.09 7.29
79 6.16 6.32 6.53 6.74 6.94 7.15 7.36
80 6.19 6.36 6.57 6.78 6.99 7.21 7.42
The monthly annuity under Option G for any combination of ages not shown will be
furnished by us on request.
<PAGE>
INDEX
Administration Charge 2
Alternations 8
Amendments 9
Amount of Benefits Payable at Death 7
Amount of income 5
Assignment 8
Beneficiary 8
Benefits Payable at Death 7
Cash Withdrawal Benefits 4
Contingent Deferred Sales Charge 4
Contributions 2
Delayed Start Date 6
Deferment 9
Definitions 1
Early Distributions 5
Flexible Payment Option 5
General Information 8
Income Options 6
Information and Misstatements 8
Limitation on Payments and Accounts 9
Minimum Distributions 5
Monthly Income 5
Nonforfeiture 8
Options for Benefits Payable at Death 7
Order of Withdrawal 5
Pronouns 9
Retirement Benefits 5
Rollforward Amount 3
Special Contributions 2
Tables 10-12
Transfer Provisions 3
Withdrawal Charge 4
Your Accounts 2
HR-10 Application for Certificates
Group Annuity Contract No. GA ___________________ and/or VA ____________________
(Home Office Use Only) (Home Office Use Only)
Issued to the Trustee of Principal Mutual Annuity Trust II (III-Texas) for Self-
Employed, Contractholder, unless another Contractholder is specified here:
A. Personal Data (Please Print)
________________________________________________________________________________
Name: First Middle Last Social Security No. Date of Birth
- - / /
________________________________________________________________________________
Address: Street City State Zip
__ Male __ Married
__ Female __ Single
________________________________________________________________________________
Employer:
________________________________________________________________________________
Employer Address: Street City State Zip
________________________________________________________________________________
Are you an Owner-employee? __Yes __No
Annual Compensation from the Employer $____________________
For purposes of complying with Federal Income Tax requirements, I hereby
certify, under penalties of perjury, that the Social Security Number shown on
this form is my correct Social Security Number.
________________________________________________________________________________
I understand my sales representative is required to secure information needed to
determine the suitability of this sale.
________________________________________________________________________________
Self Life insurance owned Spouse
$ $
Personal residence market value Mortgage balance
$ $
________________________________________________________________________________
Estimated family income: __$7,500-$14,999 __$15,000-$24,999 __$25,000-$49,000
__$50,000 and over
________________________________________________________________________________
Occupation(s):
________________________________________________________________________________
Checking and savings Market value stocks, bonds
account balance and other securities
$ $
Market value investment Market value other
real estate investments
$ $
________________________________________________________________________________
B. Contributions
________________________________________________________________________________
Variable Contract Allocation%
_____________________________________________
Contributed Expected Common Stock Money Market Gov't Sec.
From Annual Amount Division Division Division
________________________________________________________________________________
Employer $ % % %
________________________________________________________________________________
Voluntary
Non-Deductible $ % % %
________________________________________________________________________________
HR-10 Transfer Not Applicable % % %
Fixed
Contract
Allocation*
Employer %
________________________________________________________________________________
Voluntary
Non-Deductible %
________________________________________________________________________________
HR-10 Transfer %
________________________________________________________________________________
<PAGE>
Amount of Contribution Enclosed From:
________________________________________________________________________________
Volunatry
Type Employer Non-Deductible Deductible
________________________________________________________________________________
Current Plan Year
Contribution $ $ $
________________________________________________________________________________
HR-10 Transfer $ $ $
________________________________________________________________________________
C. Guaranteed Interest Period
________________________________________________________________________________
I elect one of the following guaranteed interest periods (Duration Periods) for
all contributions, transfers and rollforward amounts made during this and future
Contribution Years. This Election will remain in effect until I notify The
Principal in writing of a change. I understand that The Principal reserves the
right to change the Duration Period for future contribution year accounts and
applicable rollforward amounts at any time.
__5 Year Duration Period __5 Year Duration with 5 Annual Rollforward Amounts
________________________________________________________________________________
D. Beneficiary Designation
My Spouse:
________________________________________________________________________________
First Middle Last
________________________________________________________________________________
Street City State Zip
Other:
________________________________________________________________________________
First Middle Last (relationship)
________________________________________________________________________________
Street City State Zip
If you are married and do not name your spouse as beneficiary, your spouse must
sign the consent below. The signature must be witnessed by a Plan
Representative or Notary Public.
If you have been married for at least one year, federal law requires that death
benefits from the plan to be paid to your spouse. This ensures that your spouse
receives income from the plan even if you die before you retire. If you are age
35 or older, the law does allow payment of death benefits to someone else if
your spouse consents.
SPOUSE'S CONSENT: I consent to this designation. I understand it eliminates
death benefits otherwise payable to me if my spouse dies.
Spouse's Signature ___________________________________________
Witnessed before me this ____ day of ______________________ 19____
_______________________________________
(Notary Public term expires)
Plan Representative or
Notary Public Signature __________________________________________
I understand I have the right to make future changes. Unless I have indicated
otherwise on an attachment to this application, if two or more beneficiaries are
named, the proceeds shall be paid in equal shares to my named suriving
beneficiaries.
E. Authorization/Signature
________________________________________________________________________________
Unless otherwise elected below, I understand that upon receipt of due proof of
death, The Principal will transfer the value under the Variable Contract to the
Fixed Contract, if I am participating under the Associated Variable and Fixed
Contracts.
__ I elect that death benefits not be automatically transferred from the
Variable Contract to the Fixed Contract.
I have received the prospectuses for Separate Account C, Princor Fund, Inc.,
Princor Money Market Fund, Inc. and Princor Federal Government Securities Fund,
Inc.
______________________________________ _______________________________________
Signature Date Representative's Name (Print)
______________________________________ _______________________________________
Signed at City and State Representative's Signature
__ Check here to request a copy of the Statement of Additional Information for
Separate Account C.
Accepted by Princor Financial Services Corporation
__________________________________________________
By Acceptance Date
<PAGE>
HR-10 APPLICATION FOR CERTIFICATE(S) UNDER GROUP ANNUITY CONTRACT(S)
NO. VA _________________________ AND/OR NO. GA _________________________
HOME OFFICE USE ONLY HOME OFFICE USE ONLY
Issued to the Trustee of the Principal Mutual Annuity Trust II (III - Texas)
for Self-Employed. Contractholder, unless another Contractholder is specified
here:
________________________________________________________________________________
________________________________________________________________________________
__ Male __ Married
1. Name of Participant _____________________________ __ Female __ Single
(PRINT FULL NAME)
2. Residence Address __________________________________________________________
STREET OR R.F.D. CITY OR TOWN STATE ZIP CODE
3. Born: Month ___________ Day ____ Year _____
4. Place of birth _____________________________________________________________
(City or Town and State)
5. Social Security Number _________________________________
6. Date Employed: Month ____________ Day _____ Year _______
7. Employer ___________________________________________________________________
Address ____________________________________________________________________
STREET OR R.F.D. CITY OR TOWN STATE ZIP CODE
8. Are you an Owner-employee? ________________________________
9. Occupation? _______________________________________________
10. Annual Compensation from the Employer $___________________
11. CONTRIBUTIONS EXPECTED BILLING MODE
ANNUAL
AMOUNT A SA Q M PD PAC*
________________________________________________________________________________
Employer Contributions $ na
________________________________________________________________________________
Employee Deductible
Voluntary Contribution $
________________________________________________________________________________
Employee Nondeductible
Voluntary Contribution $
________________________________________________________________________________
HR-10 Tranfer $ not applicable
________________________________________________________________________________
VARIABLE CONTRACT ALLOCATION% FIXED
Common Stock Money Market CONTRACT
Division Division ALLOCATION%
________________________________________________________________________________
Employer Contributions % % %
________________________________________________________________________________
Employee Deductible
Voluntary Contribution % % %
________________________________________________________________________________
Employee Nondeductible
Voluntary Contribution % % %
________________________________________________________________________________
HR-10 Transfer % % %
________________________________________________________________________________
*PAC only available if for all Contributions under this Plan.
12.Print full name and relationship of Beneficiary to Participant:
________________________________________________________________________________
UNLESS OTHERWISE INDICATED, IF TWO OR MORE BENEFICIARIES ARE NAMED, THE PROCEEDS
SHALL BE PAID IN EQUAL SHARES TO THE NAMED BENEFICIARIES SURVIVING THE
PARTICIPANT. THE RIGHT TO MAKE FUTURE CHANGES IS RESERVED BY THE PARTICIPANT.
13. Unless otherwise elected below, upon receipt of due proof of death, we will
transfer the value under the Variable Contribution to the Fixed Contract, if you
are participating under the Associated Variable and Fixed Contracts.
__ I elect that death benefits not be automatically transferred from the
Variable Contract to the Fixed Contract.
14. Contributions directed to the Fixed Contract begin an annual rollforward
process which allows for gradual adjustment to changing interest rates.
Currently the Duration Period of this rollforward process is five years.
Principal Mutual Life Insurance Company reserves the right to change this
Duration Period at any time.
________________________________________________________________________________
Amount of Contribution enclosed:
Deductible Nondeductible
Employer Voluntary Voluntary HR-10
Contribution Contribution Contribution Transfer Amount
$___________ $___________ $____________ $______________
________________________________________________________________________________
I represent that these statements and answers are true, complete and correctly
recorded.
I agree to give Written Notification to Principal Mutual Life Insurance Company
if I submit this Application under only the Variable Group Annuity Contract.
I have received a copy of the prospectuses for Separate Account C, Princor Fund,
Inc. and Princor Money Market Fund, Inc.
Dated at _________________________________ this _____ day of __________________,
19____
______________________________________ ______________________________________
AGENT PLEASE SIGN AND PRINT SIGNATURE OF PARTICIPANT
<PAGE>
PRINCOR FINANCIAL SERVICES CORPORATION
NEW ACCOUNT APPLICATION
In connection with my Application for an annuity to be funded by a Principal
Mutual Life Insurance Variable Annuity Contract, Princor Fund, Inc., and Princor
Money Market Fud, Inc. and in accordance with the current prospectuses of such
Contract and Funds which I have received, I am making this Application for a
New Account with Princor Financial Services Corporation.
1. Face amount of life insurance owned
Applicant $____________ Spouse $____________ Dependants $_____________
2. Value of home $____________ Mortgage balance $____________
3. Current balance checking and savings accounts $____________
4. Current market value of other investments $_____________
5. Applicant's estimated net earnings: Current year $____________
Average three prior years $____________
6. Annual family income from all sources
__Under $7,500 __$7,500 - $14,999 __$15,000 - $24,999 __$25,000 and over
7. Occupation _________________________________________________________________
8. __Single __Married __Widowed __Divorced
9. Number of dependents: Children ________ Relatives ________ Other ________
If you do not wish to provide some parts of this information, we assume you have
carefully considered the investment objectives of this coverage, have decided it
is suitable for your financial situation, and understand a variable annuity
should be considered a long-term invstment. __ I decline to furnish the
information left blank.
__ Check here if incidental life insurance applied for ($____________
annual premium)
(CAUTION: A minimal amount of information should be provided in order to
determine the suitability of this investment for the individual.)
_________________________________________________
(Signature of Applicant)
_________________________________________________
(Date of Application)
_________________________________________________
(Signature of Registered Representative)
ACCEPTED BY PRINCOR FINANCIAL SERVICES CORPORATION
By ______________________________________________
Date ____________________________________________
ARTICLES OF INCORPORATION
Principal Mutual Life Insurance Company
711 High Street DES MOINES, IOWA 50392
AMENDED AND SUBSTITUTED ARTICLES OF INCORPORATION
AS AMENDED
Effective July 1, 1991
ARTICLE I.
The name of the corporation shall be Principal Mutual Life Insurance Company, by
which name (or by the names Bankers Life Company and Princor Mutual Life
Insurance Company which it may use in its discretion and where permitted
continue to use or adopt) it shall do business and shall have and retain all its
property, rights and privileges.
ARTICLE II.
The corporation shall be located and have its principal place of business in the
city of Des Moines, Polk County, lowa. The principal office of the corporation
is the registered office, and the President is the registered agent of the
company.
ARTICLE III.
The purpose of this corporation are and it shall have full power to engage in,
pursue, maintain and transact a general life, health and accident insurance and
annuity business, and to insure other risks, perform other services and engage
in other businesses allowed by law. It may issue participating or
nonparticipating contracts. It shall further have the power to enter into
contracts with respect to proceeds of such insurance, to accept and reinsure
risks, to enter into coinsurance agreements, to issue and perform policies and
contracts of all types, including but not limited to individual and group, to
act as trustee or advisor in any capacity, and to offer all services, including
those of a financial accounting or data processing nature, to all persons,
partnerships, corporations and other business organizations, directly or
indirectly incidental to its business. It shall have all the rights, powers and
privileges granted or permitted by the Constitution and laws of the state of
Iowa governing the conduct of insurance companies and by Titles XIX and XX of
the Code of Iowa 1966 and all acts amendatory thereof or additional thereto.
The corporation shall be empowered: To sue and be sued, complain and defend, in
its corporate or assumed name, to have a corporate seal which may be altered at
pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced; to purchase, take,
receive, lease, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with, real or tangible or intangible personal property, or any interest
therein, wherever situated; to sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and assets; to
lend money to, and otherwise assist its employees, agents, officers and
directors unless prohibited by law; to purchase, take, receive, subscribe for,
or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with, shares,
options, warrants or other interests in, or obligations of, other domestic or
foreign corporations, associations, partnerships or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality
thereof unless prohibited by law; to make contracts and guaranties and incur
liabilities; to lend and borrow money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as security for
the payment of funds so loaned or invested; to acquire or organize subsidiaries;
to conduct its business, carry on its operations, and have offices and exercise
the powers granted in any state, territory, district, or possession of the
United States, or in any foreign country; to make donations for the public
welfare, and for religious, charitable, scientific or educational purposes; to
pay pensions and establish pension plans, pension trusts, profit-sharing plans
and other incentive, insurance and welfare plans for any or all of its
directors, officers, agents and employees; to enter into general partnerships,
limited partnerships, whether the corporation be a limited or general partner,
joint ventures, syndicates, pools, associations and other arrangements for
carrying on any or all of the purposes for which the corporation is organized,
jointly or in common with others; to indemnify officers, directors, employees
and agents, as allowed by law, subject to such limitations as may be established
by the Board of Directors; and to have and exercise all powers necessary or
convenient to effect any or all of the purposes for which the corporation is
organized.
ARTICLE IV.
The corporation shall have perpetual existence and succession.
ARTICLE V.
The private property of the members, directors and other officers and managers
of this corporation shall in no case be liable for the corporate debts, but
shall be exempt therefrom.
ARTICLE VI.
The corporate powers of the corporation shall be exercised by the Board of
Directors, and by such officers and agents as the Board may authorize, elect or
appoint. The Board of Directors shall consist of not less than nine (9) nor more
than twenty-one (21) directors, the number to be determined from time to time by
a majority of the entire Board of Directors. The directors shall be divided into
three classes, as nearly equal numerically as possible, determined by terms
expiring in successive years. Each director shall serve a term of approximately
three years except as otherwise provided or where it is necessary to fix a
shorter term in order to preserve classification. No decrease in the number of
directors shall shorten the term of any incumbent director. Each director shall
serve until a successor is elected and shall be eligible for re-election. The
Board of Directors shall have the power to fill any vacancy in their number. The
term of office of each director shall begin at the annual meeting at which such
director is elected by the members or at the time elected by the Board of
Directors. The term of office of each director shall not extend beyond the
annual meeting next following the date such director attains age 70, or such
younger age as may be established for all directors by the Board of Directors,
except that the terms of directors holding office prior to the annual meeting in
1984 may extend to the annual meeting next following the date such director
attains age 72 and except that for officer-directors, other than one who is or
has been Chief Executive Officer, the term as a director shall not extend beyond
the annual meeting next following the date such director retires as an active
officer of this corporation. Directors need not be members.
The Board of Directors shall have the power to adopt such By-Laws and rules and
regulations for the transaction of the business of the corporation not
inconsistent with these Amended and Substituted Articles or the laws of the
state of Iowa, and to amend or repeal such By-Laws, rules and regulations. The
By-Laws shall provide procedures for the nomination and election of directors.
The Board of Directors may fix reasonable compensation of the directors for
their services. The Board of Directors shall elect from their number at the
first board meeting after the annual meeting of the corporation a President, and
shall authorize, elect or appoint at such first meeting or at any meeting
thereafter such other officers, agents or committees as in their judgment may be
necessary or advisable.
A director of this corporation shall not be personally liable to the corporation
or its members for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for a breach of the director's duty of loyalty to the
corporation or its members, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, or (iii)
for a transaction from which the director derives an improper personal benefit.
The liability of directors shall be deemed further limited or eliminated to the
fullest extent permitted by changes in the law governing this corporation and
approved by a majority of the entire Board of Directors. Any repeal or
modification of the provisions of this paragraph shall not adversely affect the
duty, liability, rights or protection of a director existing at the time of such
repeal or modification.
ARTICLE VII.
The annual meeting of this corporation shall be held at the Home Office in Des
Moines, lowa, on the third Monday in May of each year for the election of a
director or directors and the transaction of any other business properly coming
before the annual meeting.
Special meetings of the corporation may be called by the directors at any time
and shall be so called upon the written request of five per cent (5%) of the
members, which request shall specify the matters proposed to be acted upon.
Notice of the time and place of each annual and each special meeting shall be
published at least one time in a newspaper of general circulation in the city
where the meeting is to be held not less than 30 nor more than 90 days prior to
the date of the meeting. No person shall be elected a director by the members at
any meeting except an annual meeting and then only if duly nominated in
accordance with the requirements of the By-Laws and named in the notice of the
annual meeting as a nominee for the class of director to be so elected. Each
notice of a meeting shall state the purpose of the meeting. These Amended and
Substituted Articles may be amended at any meeting only if the notice of the
meeting describes or sets out the proposed amendment.
At every annual or special meeting each member shall be entitled to one vote, to
be cast by ballot signed by such member and mailed or personally delivered by
such member to the Home Office. The Secretary of the corporation will, during
any 60 consecutive regular business days immediately preceding the date of the
annual or any special meeting, give or mail to each member making a request
therefor a ballot, and shall if the Board of Directors so direct mail a ballot
to each member. No ballot received in any manner after the adjournment of any
such meeting, or which in not signed by a member, shall be counted upon matters
acted upon at the meeting. There will be no cumulative voting by proxy,
ARTICLE VIII.
This corporation shall have no capital stock, but shall be purely mutual as a
legal reserve company.
ARTICLE IX.
Except as otherwise provided in this Article, each person who, and each entity
which, is regarded as present owner under the provisions of an original contract
of insurance or annuity issued by this corporation, or, absent determination by
such provisions, under the By-Laws or rules of the corporation, shall be a
member of this corporation and entitled to the privileges of such member as
defined herein, in the By-Laws or in the contract of insurance or annuity, but
so long only as the said original contract of insurance or annuity has not
matured or been surrendered and remains in force. The membership privileges of
those issued an original contract of insurance or annuity on or before April 8,
1980, but not the owner on that date, shall be preserved.
ARTICLE X.
These Articles of Incorporation may be amended at any annual meeting, or any
special meeting called for that purpose, upon notice given as required by
Article VII, upon a majority vote in favor of the amendment cast by the members
voting at such meeting by ballot or in person. The amendment shall be binding
upon all members of the corporation. Any amendment will not affect contracts of
the members nor terminate rights, powers, privileges, and franchises of the
corporation existing as of the time of amendment.
BY-LAWS
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 HIGH STREET DES MOINES, IOWA 50392
Adopted and Effective April 8, 1969
As Amended through August 15, 1994
ARTICLE I
MEETINGS OF THE COMPANY, ELECTION OF
DIRECTORS AT ANNUAL MEETING
SECTION 1. Meetings of the Company. The annual meeting of the Company shall be
held in accordance with the provisions of the Articles at the hour of 9:00
o'clock A.M.., Des Moines time. Any special meeting of the Company shall be held
at the time and place specified in the notice of such special meeting. The
Chairman of the Board or the acting Chairman of the Board shall preside at
meetings of the Company. The Secretary of the Corporation shall act as the
Secretary of the meeting. If either person is unable to act in the designated
capacity, the members present shall elect a member to serve as chairman pro tem
or secretary pro tem.
SECTION 2. Notices and Ballots. The Secretary of the Corporation shall cause
notice of each meeting to be published and shall mail or make ballots available
to members as required by the Articles and shall if so directed by the Board
mail a ballot to each member. No name of a candidate for election to the Board
shall be included in the ballot unless the candidate has been nominated as
provided in these By-Laws.
SECTION 3. Election of Directors and Voting on Propositions; Failure of
Election. At each annual meeting the ballots cast for candidates for election to
the Board, and at each annual meeting or special meeting the ballots cast
concerning any proposition, shall be referred to the Board for canvass at the
first meeting of the Board following such meeting of the Company. In the event a
candidate for election to the Board, who is included in a class for which the
number of candidates nominated for election is greater than the number to be
elected, dies or withdraws before election, then there shall be no election of
Directors in that class and the vacancy or vacancies created may be filled by
the Board, to serve until the next following annual meeting of the Company, when
a new election shall be held for the unexpired term of such vacancy or
vacancies.
The candidate or candidates receiving the highest number of votes in each class
shall be declared elected Director or Directors, and any proposition or any
other matter submitted shall be declared carried or lost in accordance with the
majority of votes cast for or against it. No person other than a candidate may
be elected a Director.
ARTICLE II
NOMINATION OF DIRECTORS AND
ELECTION BY BOARD
SECTION 1. Nomination by Board. The Board shall each year nominate candidates
for election as Directors to succeed those whose terms are expiring.
SECTION 2. Nomination by Members. Members of the Company may nominate candidates
for election as Directors to succeed those whose terms are expiring, upon
delivery to the Secretary of the Corporation a certificate or certificates of
nomination signed by members residing in at least five states and numbering in
each such state not less than 1/25 of 1% of the total membership of the entire
Company as of a date one hundred eighty days prior to the date of the annual
meeting and including the address and policy or contract number of each member
so signing.
SECTION 3. Qualification of Candidates. To qualify as a candidate, whether
nominated by the Board or by members, written certificate or certificates of
nomination shall be filed with the Secretary of the Corporation not more than
one hundred eighty days nor less than ninety days before the date of the annual
meeting of the Company and shall be accompanied by a written statement of the
nominee of his willingness to serve.
SECTION 4. Assignment to Class. Each nomination of a candidate shall be to a
class to which one or more Directors are to be elected at the next annual
meeting of the Company. If any nomination made by the members of the Company
fails to assign the candidate to any class, the Board shall make such
assignment.
SECTION 5. Filling Vacancies. Any vacancy upon the Board (except vacancies
resulting from failure of election as provided in Article I, Section 3), whether
resulting from death or resignation of a Director, increase in number of
Directors, or for any other reason, may be filled by the Board at any regular or
special meeting, and each such newly elected Director shall be assigned by the
Board to a class.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Number of Directors. The Board shall consist of thirteen Directors or
such larger or smaller number, within the limits specified by the Articles, as a
majority of the entire Board may determine at any regular or special meeting of
the Board.
SECTION 2. Meetings. Regular meetings of the Board shall be held without notice
once in each calendar quarter on such date and at such hour and place as may be
fixed by the Board, except that the meeting in the second quarter shall be held
in the Home Office of the Company in Des Moines on the date of the annual
meeting. The date, hour and place of any regular meeting other than the meeting
in the second quarter may be changed by the Chairman of the Board, if any, or
the President, by written notice to all Directors at least thirty days before
the regular meeting date, provided that the date to which any meeting is changed
shall not be more than fifteen days earlier or later than the date fixed by the
Board. Special meetings of the Board may be called at any time upon five days'
written notice given by the Chairman of the Board, if any, the President or any
two Directors. In the alternative, upon oral or written notice received prior to
the time of the meeting by at least two-thirds of the Directors, the Chairman of
the Board, or acting Chairman of the Board, may call a special meeting of the
Board to be held through communications equipment which permits all participants
to communicate with each other, with such participation constituting attendance
at such meeting. Any Director may waive call or notice required to be given
either before or after the time stated therein. Any meeting may be continued to
the succeeding day if the Board does not complete the business coming before it
on the meeting date.
At all meetings of the Board, regular or special, a majority of its number shall
constitute a quorum for the transaction of business. If at any meeting less than
a quorum is present, the meeting may be adjourned from time to time to a
subsequent date, at which date the meeting may be held without notice if a
quorum is then present.
SECTION 3. Officers of the Board; Duties. The Board shall elect from its number
a Chairman of the Board to serve at the pleasure of the Board. The Chairman of
the Board shall, if present, preside at each meeting of the Board and shall have
such powers and shall perform such duties as may be assigned to him by these
By-Laws or by or pursuant to authorization of the Board or, if the Chairman of
the Board is not the chief executive officer of the Company, by the chief
executive officer.
The Board may at any meeting of the Board elect a Secretary of the Board and
such other officers, assistants and committees of the Board as the Board may
deem necessary to serve during the pleasure of the Board, each of whom shall
have and perform such duties as may be assigned to him by the Board or by the
Chairman of the Board. The Secretary of the Board shall keep a record of all
proceedings of the Board.
The Board shall by resolution establish a procedure to provide for an acting
Chairman of the Board in the event the current Chairman of the Board is unable
to serve or act in that capacity.
SECTION 4. Compensation of Directors. Directors who are not officers of the
Company shall be entitled to an annual retainer and an additional amount for
attendance at each regular or special meeting of the Board or meetings of
committees of the Company, plus expense of attending such meetings, if any, as
may be fixed by the Board.
ARTICLE IV
OFFICERS OF THE COMPANY
SECTION 1. President. The Board shall, at the first meeting of the Board
following the annual meeting of the Company, or at any meeting thereafter to
fill a vacancy in the office, elect from its number a President of the Company
to serve for one year or until his successor is elected.
SECTION 2. Chief Executive Officer. The Board shall empower either the Chairman
of the Board, if one is elected, or the President to serve as the chief
executive officer of the Company.
SECTION 3. Other Officers Elected by Board. At any meeting of the Board it may
elect such officers of the Company, in addition to a President, as the Board may
deem necessary, to serve at the pleasure of the Board.
SECTION 4. Other Officers. The Board may authorize the Company to elect or
appoint other officers, each of whom shall serve at the pleasure of the Company.
SECTION 5. Duties of Officers. The chief executive officer shall supervise the
carrying out of policies adopted or approved by the Board, shall exercise a
general supervision and superintendence over all the business and affairs of the
Company, and shall possess such other powers and perform such other duties as
may be incident to his function.
The President, if not the chief executive officer, shall have such powers and
perform such duties as may be assigned to him by these By-Laws or by or pursuant
to authorization of the Board or by the chief executive officer.
Other officers elected by the Board shall have such powers and perform such
duties as may be assigned to them by or pursuant to authorization of the Board
or by the chief executive officer.
Officers elected or appointed by the Company shall have such powers and perform
such duties as may be assigned to them by the Company.
SECTION 6. Compensation of Officers. The compensation of all officers elected by
the Board shall be fixed by the Board. The compensation of officers elected or
appointed by the Company shall be fixed as provided by resolution of the Board
of Directors.
ARTICLE V
COMMITTEES
SECTION 1. Executive Committee. An Executive Committee is hereby created
composed of five Directors and shall include the Chairman of the Board and the
chief executive officer if other than the Chairman of the Board. Members of the
Executive Committee shall be appointed by and serve at the pleasure of the
Board. If the Board has elected a Chairman of the Board he shall, if present,
preside at each meeting of the Executive Committee. In the absence or vacancy in
the office of the Chairman of the Board, the chief executive officer shall
preside. If the Chairman of the Board is also the chief executive officer, any
other member of the Executive Committee, as determined by the members of the
Executive Committee present, shall preside at a meeting of the Committee in the
absence of the Chairman of the Board. The Secretary of the Board shall act as
secretary of the Executive Committee and shall keep a record of all proceedings.
A majority of the members of the Executive Committee shall constitute a quorum.
SECTION 2. Powers of Executive Committee. The Executive Committee shall have and
may exercise the powers of the Board in the management and affairs of the
Company except when the Board is in session and except the power to make, alter
or repeal By-Laws or to nominate candidates for election to, fill vacancies in
or change the number of members of the Board. Actions of the Executive
Committee, except when the rights or acts of third parties would be adversely
affected, shall be subject to the approval of the Board, which approval shall be
implied unless contrary action is taken by the Board.
SECTION 3. Other Committees. Other committees composed of members or directors,
officers, agents, or employees of the Company or of any subsidiary or affiliate
of the Company may be appointed and their respective functions, terms and duties
prescribed from time to time by the Board of Directors, by the chief executive
officer subject to the approval of the Board, or by the chief executive officer.
ARTICLE VI
EXECUTION AND SIGNING OF INSTRUMENTS
AND CHECKS: FACSIMILE SIGNATURES
SECTION 1. Execution of Instruments. Instruments affecting or relating to real
estate or the investment of funds of the Company may be executed as authorized
by resolution of the Board or as may be authorized by such officers of the
Company as the Board designates.
SECTION 2. Disposition of Funds. The funds of the Company shall be paid out,
transferred or otherwise disposed of only in such manner and under such controls
as may be authorized by resolution of the Board or as may be authorized by such
officers of the Company as the Board designates.
SECTION 3. Survival of Validity of Instrument Bearing Facsimile signature. If
any officer whose facsimile signature has been placed upon any form of
instrument shall have ceased to be such officer before an instrument in such
form is issued, such instrument may be issued with the same effect as if he had
been such officer at the time of its issue.
ARTICLE VII
INDEMNITY
The Board shall have the power to indemnify, or authorize the officers of the
Company to indemnify, directly and through insurance coverage, each person now
or hereafter a Director, officer, employee or other representative of the
Company, and that person's heirs and legal representatives, against all damages,
awards, costs and expenses, including counsel fees, reasonably incurred or
imposed in connection with or resulting from any action, suit or proceeding, or
the settlement thereof prior to final adjudication, to which such person is or
may be made a party by reason of being or having been a Director, officer,
employee or other representative of the Company or by reason of service at the
request of the Company in any capacity with another entity or organization. Such
rights or indemnification shall be in addition to any rights to which any
Director, officer, employee or other representative of the Company, former,
present or future, may otherwise be entitled as a matter of law and subject to
such limitations permitted by law as may be established by the Board.
ARTICLE VIII
AMENDMENT OF BY-LAWS
These By-Laws may be amended, altered or repealed by the Board at any regular or
special meeting of the Board, provided written notice expressing in substance
the proposed change shall have been given to each Director at least five days
prior to the date of such regular or special meeting to each Director who does
not waive notice. Notice may be waived by any Director by filing a written
waiver of notice with the Secretary of Board before, on or after the meeting
date.
ARTICLE IX
MEANINGS OF WORDS AND TERMS
When used in these By-Laws, the following words and terms shall have the meaning
assigned to them in this Article.
Company - Principal Mutual Life Insurance Company (which also may be
known as Bankers Life Company and Princor Mutual Life
Insurance Company)
Board - Board of Directors of the Company
By-Laws - these By-Laws of the Board, as from time to time amended
Articles - Articles of Incorporation of the Company, as from time to
time amended
member - a member of the Company, as defined in the Articles
Director - a person duly elected to the Board of the Company
class - that group of Directors whose terms expire on the date of the
same annual meeting of the Company.
candidate- a person duly nominated for election to the Board pursuant to the
provisions of the Articles and By-Laws
February 8, 1993
Board of Directors
Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392
Re Separate Account C
Gentlemen
The establishment of Separate Account C by the Board of Directors of
Principal Mutual Life Insurance Company as a separate account for assets
applicable to variable annuity contracts, pursuant to the then existing
provisions of the Code of Iowa applicable to the establishment of
separate accounts by Iowa domiciled life insurance companies, was
supervised by the office of General Counsel of the Company. I have
supervised the preparation of the Registration Statement on Form N-4 to
be filed by Principal Mutual Life Insurance Company with the Securities
and Exchange Commission under the Securities Act of 1933 with respect to
the Pension Builder Group Variable Annuity Contracts.
It is my opinion that:
1. Separate Account C is a separate account of the Company duly
created and validly existing pursuant to Iowa law, currently
consisting of three distinct Divisions.
2. The Pension Builder Group Variable Annuity contracts, when issued
in accordance with the Prospectuses contained or referred to in the
Registration Statement and upon compliance with applicable local
law, will be legal and binding obligations of the Company
enforceable in accordance with their terms.
3. All income and expenses and all gains and losses, whether or not
realized, of Separate Account C, shall be credited to or charged
against those assets, without regard to income and expenses or
gains and losses of the Company.
4. The assets of Separate Account C, equal to the reserves and other
liabilities arising under the contracts, shall not be charged with
any liabilities arising from any other business conducted by the
Company.
In arriving at the foregoing opinion, I have made such examination of
law and examined such records and other documents as in my judgment are
necessary or appropriate.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption
"Legal Opinions" in the prospectus contained in the Registration
Statement.
Very truly yours
G. R. Narber
Senior Vice President
and General Counsel
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Independent
Auditors" in Part A and Part B, and to the use of our reports dated February 7,
1996 (with respect to Principal Mutual Life Insurance Company Separate Account
C) and January 31, 1996 (with respect to Principal Mutual Life Insurance
Company), in Post-Effective Amendment No. 4 to the Registration Statement (Form
N-4 No. 33-58028) and related Prospectus of Principal Mutual Life Insurance
Company Separate Account C Pension Builder - Group Variable Annuity Contracts.
ERNST & YOUNG LLP
Des Moines, Iowa
April 11, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
M. Vermeer Andringa
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
R. M. Davis
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
D. J. Drury
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
C. D. Gelatt, Jr.
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
G. D. Hurd
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
T. M. Hutchison
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
C. S. Johnson
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
W. T. Kerr
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
L. Liu
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Life
Separate Account C on Form N-4 or other forms under the Securities Act of 1933,
and any and all amendments thereto and reports thereunder with all exhibits and
all instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
V. H. Loewenstein
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
J. R. Price
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
B. A. Rice
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
J-P. C. Rosso
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
D. M. Stewart
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
E. E. Tallett
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
D. D. Thornton
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Variable
Life Separate Account on Form N-4 or other forms under the Securities Act of
1933, and any and all amendments thereto and reports thereunder with all
exhibits and all instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their substitutes being
empowered to act with or without the others or other, and to have full power and
authority to do or cause to be done in the name and on behalf of the undersigned
each and every act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to effectuate the same, as
fully to all intents and purposes as the undersigned might or could do in
person; hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 3rd
day of January, 1996.
F. W. Weitz
_____________________________________________
SCHEDULE FOR COMPUTING TOTAL RETURN
HR-10 CAPITAL ACCUMULATION DIVISION
The hypothetical average annual total return quotations for 1, 5 and 10 years
ending on December 31, 1995 are computed by finding the average annual
compounded rates of return over the 1, 5 and 10 years that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1, 5
and 10 years ending December 31, 1995 are calculated as
follows:
1 YEAR
1000(1 + T)1 = 1,206.30
Solve for T
T = 20.63%
5 YEARS
1000 (1 + T)5 = 1,906.91
Solve for T
T = 13.78%
10 YEARS
1000 (1 + T)10 = 2,667.77
Solve for T
T = 10.31%
<PAGE>
SCHEDULE FOR COMPUTING TOTAL RETURN
HR-10 GOVERNMENT SECURITIES DIVISION
The hypothetical average annual total return quotations for 1 and 5 years ending
on December 31, 1995 and from April 14, 1987 (inception of the Division) to
December 31, 1995 are computed by finding the average annual compounded rates of
return over the 1 and 5 years and period that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1 and 5
years ending December 31, 1995 and period April 14, 1987 to
December 31, 1995 are calculated as follows:
1 YEAR
1000(1 + T)1 = 1,088.80
Solve for T
T = 8.88%
5 YEARS
1000(1 + T)5 = 1,373.31
Solve for T
T = 6.55%
Period of April 14, 1987 -
December 31, 1995
1000(1 + T)3183/365 = 1,884.99
Solve for T
T = 7.54%
SCHEDULE FOR COMPUTING ANNUALIZED ANNUALIZED YIELD
FOR SEPARATE ACCOUNT C HR-10
MONEY MARKET DIVISION
The yield quotation based on the seven day period of 12/22/95 through
12/29/95 is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the sub-account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from contractowner
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and multiplying
the base period return by (365/7) according to the following formula:
a - b - c 365
EFFECTIVE YIELD = (-------------) x -----------
b 7
Where:
a = ending unit value
b = beginning unit value
c = expense factor for 7-day period
Separate Account B IRA/TSA's Annualized Yield is as follows:
ANNUALIZED YIELD =
1.7641630 - 1.7628807 - 0.0000530160 365
(((-------------------------------------------) x ------- = 3.636002141
1.7628807 7
ANNUALIZED YIELD = 3.64%
<PAGE>
SCHEDULE FOR COMPUTING EFFECTIVE EFFECTIVE YIELD
FOR SEPARATE ACCOUNT C HR-10
MONEY MARKET DIVISION
The effective yield quotation based on the seven day period of 12/22/95
through 12/29/95 is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the sub-account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from result, according
to the following formula:
a - b - c
EFFECTIVE YIELD = (----------------------+1) ^ 365/7 -1
b
Where:
a = ending unit value
b = beginning unit value
c = expense factor for 7-day period
Separate Account B IRA/TSA's Effective Yield is as follows:
EFFECTIVE YIELD =
1.7641630 - 1.7628807 - 0.0000530160
(((-------------------------------------------) + 1) ^ 365/7) - 1 = 3.701599155
1.7628807
EFFECTIVE YIELD = 3.70%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 3,431,031
<INVESTMENTS-AT-VALUE> 4,074,988
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,074,988
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 146,582
<SHARES-COMMON-PRIOR> 472,002
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,074,988
<DIVIDEND-INCOME> 86,599
<INTEREST-INCOME> 0
<OTHER-INCOME> 437,283
<EXPENSES-NET> (100,443)
<NET-INVESTMENT-INCOME> 423,439
<REALIZED-GAINS-CURRENT> 619,160
<APPREC-INCREASE-CURRENT> 665,019
<NET-CHANGE-FROM-OPS> 1,707,618
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (8,696,352)
<NUMBER-OF-SHARES-SOLD> 650,439
<NUMBER-OF-SHARES-REDEEMED> (3,556,082)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (6,988,734)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 100,443
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 809,151
<INVESTMENTS-AT-VALUE> 834,687
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 834,687
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 79,117
<SHARES-COMMON-PRIOR> 288,022
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 834,687
<DIVIDEND-INCOME> 64,710
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (28,049)
<NET-INVESTMENT-INCOME> 36,661
<REALIZED-GAINS-CURRENT> (52,383)
<APPREC-INCREASE-CURRENT> 290,496
<NET-CHANGE-FROM-OPS> 274,774
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2,141,733)
<NUMBER-OF-SHARES-SOLD> 494,421
<NUMBER-OF-SHARES-REDEEMED> (1,762,773)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,866,959)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 28,049
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 993,483
<INVESTMENTS-AT-VALUE> 993,483
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 993,483
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 993,483
<SHARES-COMMON-PRIOR> 2,460,961
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 993,483
<DIVIDEND-INCOME> 88,245
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (29,444)
<NET-INVESTMENT-INCOME> 58,801
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 58,801
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (1,526,279)
<NUMBER-OF-SHARES-SOLD> 535,936
<NUMBER-OF-SHARES-REDEEMED> (1,424,097)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,467,478)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29,444
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
