IDS LIFE ACCOUNT F
485BPOS, 1999-04-28
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No.  9   (File No. 33-47302)                        [X]
                             ---

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No.  11  (File No. 811-3217)                                       [X]
              ----

                               IDS LIFE ACCOUNT F
                               IDS LIFE ACCOUNT IZ
                               IDS LIFE ACCOUNT JZ
                               IDS LIFE ACCOUNT G
                               IDS LIFE ACCOUNT H
                               IDS LIFE ACCOUNT N
                               IDS LIFE ACCOUNT KZ
                               IDS LIFE ACCOUNT LZ
                               IDS LIFE ACCOUNT MZ
- --------------------------------------------------------------------------------
                           (Exact Name of Registrant)

                           IDS Life Insurance Company
- --------------------------------------------------------------------------------
                               (Name of Depositor)

                    IDS Tower 10, Minneapolis, MN 55440-0010
- --------------------------------------------------------------------------------
         (Address of Depositor's Principal Executive Offices) (Zip Code)

        Depositor's Telephone Number, including Area Code (612) 671-3678
- --------------------------------------------------------------------------------

          Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
- --------------------------------------------------------------------------------
                     (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately  upon filing  pursuant to paragraph  (b) of Rule 485 
[X] on April 30,  1999,  pursuant  to  paragraph  (b) of Rule 485 
[ ] 60 days after filing  pursuant to paragraph  (a)(i) of Rule 485 
[ ] on (date)  pursuant to paragraph (a)(i) of Rule 485

If appropriate, check the following box:
[ ] this  post-effective  amendment  designates a new effective  date for
    previously filed post-effective amendment.

<PAGE>

<PAGE>
IDS LIFE GROUP
VARIABLE ANNUITY
CONTRACT
 
PROSPECTUS
APRIL 30, 1999
 
Group, unallocated deferred combination fixed/variable annuity.
 
NEW GROUP VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
 
IDS LIFE ACCOUNTS F, IZ, JZ, G, H, N, KZ, LZ AND MZ
 
Issued by:
IDS Life Insurance Company (IDS Life)
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: 800-437-0602
 
This prospectus contains information that you should know before investing. You
also will receive the IDS Life Retirement Annuity Mutual Funds prospectus.
Please read the prospectuses carefully and keep them for future reference. This
contract is designed to fund employer group retirement plans that qualify as
retirement programs under Sections 401 (including 401(k)) and 457 of the
Internal Revenue Code of 1986, as amended (the Code).
 
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
 
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
 
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the Securities and Exchange Commission (SEC), and is available without charge by
contacting IDS Life at the telephone number above or by completing and sending
the order form on page 63 of this prospectus. The table of contents of the SAI
is on page 61 of this prospectus.
<PAGE>
 
     TABLE OF CONTENTS
     KEY TERMS                                        3
     THE CONTRACT IN BRIEF                            5
     EXPENSE SUMMARY                                  7
     CONDENSED FINANCIAL INFORMATION (UNAUDITED)      9
     FINANCIAL STATEMENTS                            12
     PERFORMANCE INFORMATION                         12
     THE VARIABLE ACCOUNTS                           14
     THE FUNDS                                       16
     THE FIXED ACCOUNT                               18
     BUYING THE CONTRACT                             19
     CHARGES                                         20
     VALUING THE INVESTMENT                          23
     WITHDRAWALS, LOANS AND CONVERSIONS              25
     CONTRACT TRANSFER, MARKET VALUE ADJUSTMENT
      AND CONTRACT TERMINATION                       28
     CHANGING OWNERSHIP                              34
     THE ANNUITY PAYOUT PERIOD                       35
     TAXES                                           37
     VOTING RIGHTS                                   40
     OTHER CONTRACTUAL PROVISIONS                    41
     RECORDKEEPING SERVICES                          42
     ABOUT THE SERVICE PROVIDERS                     43
     ADDITIONAL INFORMATION ABOUT IDS LIFE           45
     DIRECTORS AND EXECUTIVE OFFICERS                57
     EXPERTS                                         60
     IDS LIFE FINANCIAL INFORMATION                 F-1
     TABLE OF CONTENTS OF THE STATEMENT OF
      ADDITIONAL INFORMATION                         61
 
2
<PAGE>
- ----------------------------------------------
                        KEY TERMS
                        THESE TERMS CAN HELP YOU UNDERSTAND DETAILS
                        ABOUT YOUR CONTRACT.
 
ACCUMULATION UNIT -- A measure of the value of each variable account before
annuity payouts begin.
 
ANNUITY PAYOUTS -- A fixed amount paid at regular intervals.
 
CLOSE OF BUSINESS -- When the New York Stock Exchange (NYSE) closes, normally
4:00 p.m. Eastern time.
 
CONTRACT ANNIVERSARY -- An anniversary of the effective date of this contract.
 
CONTRACT VALUE -- The total value of your contract before we deduct any
applicable charges.
 
CONTRACT YEAR -- A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
 
FIXED ACCOUNT -- An account to which you may allocate purchase payments. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
 
FUNDS -- Mutual funds and/or portfolios, that are investment options under your
contract, each with a different investment objective. You may allocate your
purchase payments into variable accounts investing in shares of any or all of
these funds.
 
OWNER (YOU, YOUR) -- The plan sponsor or trustee of the Plan.
 
                                                                               3
<PAGE>
                        KEY TERMS
 
PARTICIPANT -- An eligible employee or other person who is entitled to benefits
under the Plan.
 
PLAN -- The retirement Plan under which the contract is issued and which meets
the requirements of Code Sections 401 (including 401(k)) or 457.
 
RETIREMENT DATE -- The date when annuity payouts are scheduled to begin.
 
VALUATION DATE -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each variable account at the close of business on each valuation date.
 
VARIABLE ACCOUNTS -- Separate accounts to which you may allocate purchase
payments; each invests in shares of one fund. The value of your investment in
each variable account changes with the performance of the particular fund.
 
WITHDRAWAL CHARGE -- A deferred sales charge that we may apply if the you take a
total or partial withdrawal or you transfer or terminate the contract.
 
4
<PAGE>
- ----------------------------------------------
                        THE CONTRACT IN BRIEF
 
PURPOSE:                The contract is designed to fund employer group
                        retirement plans that meet the requirements of Code
                        sections 401 (including 401(k)) and 457. The contract
                        provides for the accumulation of values on a fixed
                        and/or variable basis. The contract also provides
                        lifetime or other forms of payout on a fixed basis
                        beginning at a specified date (the retirement date).
ACCOUNTS:               Currently, you can elect to accumulate contract
                        values in any or all of:
 
                        - the variable accounts, each of which invests in a fund
                         with a particular investment objective. The value of
                         each variable account varies with the performance of
                         the particular fund in which it invests. We cannot
                         guarantee that the value at the retirement date will
                         equal or exceed the total of purchase payments
                         allocated to the variable accounts. (p. 14)
 
                        - the fixed account, which earns interest at a rate that
                         we adjust periodically. (p. 18)
BUYING THE CONTRACT:    A financial advisor will help you complete and submit
                        an application. Applications are subject to acceptance
                        at our office. Generally, purchase payments may be made
                        annually, semiannually, quarterly or monthly or any
                        other frequency we accept. (p. 19)
WITHDRAWALS,
LOANS AND
CONVERSIONS:            You may withdraw all or part of the contract's value
                        at any time. Withdrawals may be subject to charges and
                        IRS penalty taxes and may have tax consequences. Total
                        withdrawals may be subject to a market value adjustment.
                        (p. 25)
 
                        You also may request a withdrawal for the purpose of
                        funding loans for participants. A withdrawal for a loan
                        is not subject to withdrawal charges. However, we
                        reserve the right to deduct withdrawal charges from the
                        remaining contract value if there are any unpaid loans
                        at the time of a total withdrawal, contract transfer or
                        termination. (p. 26)
 
                        If a participant terminates employment, you may direct
                        us to withdraw a part of the contract value so that the
                        participant can purchase an individual deferred annuity
                        from us. Withdrawal charges will not apply at the time
                        of withdrawal for this conversion. (p. 27)
 
                                                                               5
<PAGE>
                        THE CONTRACT IN BRIEF
 
CONTRACT TRANSFER,
MARKET VALUE ADJUSTMENT
AND CONTRACT TERMINATION:
                        Subject to certain restrictions, you currently may
                        redistribute money among accounts without charge at any
                        time while the contract is in force. (p. 28)
                        You may direct us to withdraw the total contract value
                        and transfer that value to another funding agent. (p.
                        28)
 
                        If the value of the fixed account is canceled due to
                        total withdrawal, contract transfer or contract
                        termination, we may impose a market value adjustment in
                        addition to applicable contract charges. The amount of
                        the market value adjustment approximates the gain or
                        loss resulting from our sale of assets we purchased with
                        the purchase payments. (p. 30)
 
                        Under certain circumstances, we may terminate the
                        contract. (p. 32)
 
                        Prohibited investments: You will not offer under the
                        plan any of the following funding vehicles to which
                        future contributions may be made:
 
                        - guaranteed investment contracts;
 
                        - bank investment contracts;
 
                        - annuity contracts with fixed and/or variable accounts;
                         or
 
                        - funding vehicles providing a guarantee of principal.
                         (p. 32)
ANNUITY PAYOUTS:        You can direct us to begin retirement payouts to a
                        payee under an annuity payout plan that begins on the
                        participant's retirement date. You may choose from a
                        variety of plans, or we may agree to other payout
                        arrangements. The annuity payout plan you select must
                        meet the requirements of the plan. Payouts will be made
                        on a fixed basis. (p. 35)
TAXES:                  Generally there is no federal income tax to
                        participants on contributions made to the contract or on
                        increases in the contract's value until distributions
                        are made (under certain circumstances, IRS penalty taxes
                        and other tax consequences may apply). (p. 37)
CHARGES:
 
                        - $125 quarterly ($500 annual) contract administrative
                         charge;
 
                        - 1.00% mortality and expense risk fee;
 
                        - withdrawal charge; and
 
                        - the operating expenses of the funds.
CHANGING OWNERSHIP:     In general, ownership of the contract may not be
                        transferred. (p. 34)
RECORDKEEPER:           We must approve any person or entity authorized by
                        you to administer recordkeeping services for the plan
                        and participants. (p. 42)
 
6
<PAGE>
- ------------------------------------------------
                              EXPENSE SUMMARY
 
                               The purpose of this table is to help you
                               understand the various costs and expenses
                               associated with your contract.
 
                               You pay no sales charge when you purchase your
                               contract. We show all costs that you bear
                               directly or indirectly for the variable accounts
                               and funds below. Some expenses may vary as we
                               explain under "Charges."
 
           ANNUAL CONTRACT OWNER EXPENSES:
 
<TABLE>
<CAPTION>
            WITHDRAWAL CHARGE (contingent deferred sales charge)
 
<S>         <C>            <C>                                <C>
                                 Withdrawal charge as a
            Contract year    percentage of amount withdrawn
            -------------  ----------------------------------
                  1                        6%
                  2                        6
                  3                        5
                  4                        4
                  5                        3
                  6                        2
                  7                        1
             8 and later                   0
            CONTRACT ADMINISTRATIVE CHARGE $500 ($125 per quarter)
</TABLE>
 
           ANNUAL VARIABLE ACCOUNT EXPENSES (as a percentage of average daily
           net assets of the variable accounts):
 
                       MORTALITY AND EXPENSE RISK FEE 1%
 
           ANNUAL OPERATING EXPENSES OF THE FUNDS (as a percentage of average
           daily net assets):
<TABLE>
<CAPTION>
                            IDS LIFE    IDS LIFE   IDS LIFE    IDS LIFE    IDS LIFE      IDS LIFE        IDS
                           AGGRESSIVE   CAPITAL     GLOBAL      GROWTH      INCOME     INTERNATIONAL    LIFE      IDS LIFE
                             GROWTH     RESOURCE    YIELD     DIMENSIONS   ADVANTAGE      EQUITY       MANAGED   MONEYSHARE
                              FUND        FUND       FUND        FUND        FUND          FUND         FUND        FUND
<S>                        <C>          <C>        <C>        <C>          <C>         <C>             <C>       <C>
 Management fees               .59%        .59%       .83%        .61%        .62%          .83%         .59%        .50%
 
 Other expenses                .09         .07        .13         .06         .09           .15          .04         .06
 
 Total(1)                      .68%        .66%       .96%        .67%        .71%          .98%         .63%        .56%
 
<CAPTION>
                           IDS LIFE
                           SPECIAL
                            INCOME
                             FUND
<S>                        <C>
 Management fees              .60%
 Other expenses               .07
 Total(1)                     .67%
</TABLE>
 
(1) Annualized operating expenses of funds at Dec. 31, 1998.
 
                                                                               7
<PAGE>
                              EXPENSE SUMMARY
 
EXAMPLE:*
 
<TABLE>
<CAPTION>
             IDS LIFE    IDS LIFE   IDS LIFE    IDS LIFE     IDS LIFE     IDS LIFE                              IDS LIFE
            AGGRESSIVE    CAPITAL    GLOBAL      GROWTH       INCOME    INTERNATIONAL  IDS LIFE    IDS LIFE     SPECIAL
              GROWTH     RESOURCE     YIELD    DIMENSIONS   ADVANTAGE      EQUITY      MANAGED    MONEYSHARE     INCOME
               FUND        FUND       FUND        FUND         FUND         FUND         FUND        FUND         FUND
<S>        <C>           <C>        <C>        <C>          <C>         <C>           <C>         <C>          <C>
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return and full withdrawal at the end
of each time period:
 
 1 Year    $     80.29   $  80.09   $  82.98   $    80.19   $   80.57   $    83.18    $   79.80   $   79.13    $   80.19
 
 3 Years        111.82     111.23     120.06       111.53      112.71       120.65       110.34      108.27       111.53
 
 5 Years        132.99     131.98     147.15       132.48      134.52       148.15       130.45      126.88       132.48
 
 10 Years       212.37     210.21     242.30       211.29      215.62       244.40       206.94      199.30       211.29
</TABLE>
 
You would pay the following expenses on the same investment assuming no
withdrawal or selection of an annuity payout plan at the end of each time
period:
 
<TABLE>
<S>             <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
 1 Year         $ 18.39   $ 18.18   $ 21.26   $ 18.29   $ 18.70   $21.46    $ 17.88   $17.16    $ 18.29
 
 3 Years          56.93     56.30     65.63     56.62     57.86    66.25      55.37    53.18      56.62
 
 5 Years          97.94     96.89    112.58     97.42     99.52   113.62      95.31    91.62      97.42
 
 10 Years        212.37    210.21    242.30    211.29    215.62   244.40     206.94   199.30     211.29
</TABLE>
 
* In this example, the $500 contract administrative charge is approximated as a
  0.114% charge based on the average contract size.
 
YOU SHOULD NOT CONSIDER THIS EXAMPLE AS A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
 
8
<PAGE>
- ----------------------------------------------
                        CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each account.
 
<TABLE>
<CAPTION>
                                                           YEAR ENDED DEC. 31,
                             1998        1997        1996        1995       1994     1993     1992     1991     1990     1989
<S>                       <C>         <C>         <C>         <C>         <C>      <C>      <C>      <C>      <C>      <C>
                     ACCOUNT JZ(1) (INVESTING IN SHARES OF IDS LIFE AGGRESSIVE GROWTH FUND)
 
 Accumulation unit              $1.88       $1.68       $1.46       $1.12    $1.21    $1.08    $1.00       --       --       --
 value at beginning
 of period
 Accumulation unit value        $1.91       $1.88       $1.68       $1.46    $1.12    $1.21    $1.08       --       --       --
 at end of period
 Number of accumulation     1,087,314   1,168,829   1,172,793   1,007,976  780,423  347,336  115,574       --       --       --
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%       --       --       --
 expense to average
 net assets
 
                     ACCOUNT F (INVESTING IN SHARES OF IDS LIFE CAPITAL RESOURCE FUND)
 
 Accumulation unit              $8.21       $6.67       $6.25       $4.94    $4.93    $4.82    $4.67    $3.22    $3.23    $2.57
 value at beginning
 of period
 Accumulation unit value       $10.09       $8.21       $6.67       $6.25    $4.94    $4.93    $4.82    $4.67    $3.22    $3.23
 at end of period
 Number of accumulation       507,310     556,866     628,555     641,903  576,724  488,632  402,977  309,984  242,767  204,645
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%    1.00%    1.00%    1.00%
 expense to average
 net assets
 
                     ACCOUNT KZ(2) (INVESTING IN SHARES OF IDS LIFE GLOBAL YIELD FUND)
 
 Accumulation unit              $1.10       $1.07       $1.00          --       --       --       --       --       --       --
 value at beginning
 of period
 Accumulation unit value        $1.18       $1.10       $1.07          --       --       --       --       --       --       --
 at end of period
 Number of accumulation        78,150      65,609      24,878          --       --       --       --       --       --       --
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%          --       --       --       --       --       --       --
 expense to average
 net assets
</TABLE>
 
                                                                               9
<PAGE>
                        CONDENSED FINANCIAL INFORMATION (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                           YEAR ENDED DEC. 31,
                             1998        1997        1996        1995       1994     1993     1992    1991   1990   1989
<S>                       <C>         <C>         <C>         <C>         <C>      <C>      <C>      <C>    <C>    <C>
                     ACCOUNT MZ(2) (INVESTING IN SHARES OF IDS LIFE GROWTH DIMENSIONS FUND)
 
 Accumulation unit              $1.37       $1.11       $1.00          --       --       --       --     --     --     --
 value at beginning
 of period
 Accumulation unit value        $1.74       $1.37       $1.11          --       --       --       --     --     --     --
 at end of period
 Number of accumulation     1,001,826     831,259     350,598          --       --       --       --     --     --     --
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%          --       --       --       --     --     --     --
 expense to average
 net assets
 
                     ACCOUNT LZ(2) (INVESTING IN SHARES OF IDS LIFE INCOME ADVANTAGE FUND)
 
 Accumulation unit              $1.18       $1.05       $1.00          --       --       --       --     --     --     --
 value at beginning
 of period
 Accumulation unit value        $1.12       $1.18       $1.05          --       --       --       --     --     --     --
 at end of period
 Number of accumulation       228,165     175,024      59,939          --       --       --       --     --     --     --
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%          --       --       --       --     --     --     --
 expense to average
 net assets
                     ACCOUNT IZ(1) (INVESTING IN SHARES OF IDS LIFE INTERNATIONAL EQUITY FUND)
 
 Accumulation unit              $1.52       $1.49       $1.38       $1.25    $1.29    $0.98    $1.00     --     --     --
 value at beginning
 of period
 Accumulation unit value        $1.74       $1.52       $1.49       $1.38    $1.25    $1.29    $0.98     --     --     --
 at end of period
 Number of accumulation     1,042,405   1,168,353   1,220,486   1,088,874  913,364  405,536   69,874     --     --     --
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%     --     --     --
 expense to average
 net assets
</TABLE>
 
10
<PAGE>
 
<TABLE>
<CAPTION>
                                                             YEAR ENDED DEC. 31,
                             1998        1997        1996        1995        1994       1993     1992     1991     1990     1989
<S>                       <C>         <C>         <C>         <C>         <C>         <C>      <C>      <C>      <C>      <C>
                     ACCOUNT N (INVESTING IN SHARES OF IDS LIFE MANAGED FUND)
 
 Accumulation unit              $3.51       $2.97       $2.56       $2.09       $2.21    $1.98    $1.86    $1.45    $1.42    $1.14
 value at beginning
 of period
 Accumulation unit value        $4.03       $3.51       $2.97       $2.56       $2.09    $2.21    $1.98    $1.86    $1.45    $1.42
 at end of period
 Number of accumulation     1,100,357   1,178,735   1,197,162   1,212,021   1,127,834  910,254  650,797  496,554  400,961  331,315
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%    1.00%    1.00%
 expense to average
 net assets
 
                     ACCOUNT H (INVESTING IN SHARES OF IDS LIFE MONEYSHARE FUND)
 
 Accumulation unit              $2.46       $2.36       $2.27       $2.18       $2.12    $2.09    $2.04    $1.95    $1.82    $1.69
 value at beginning
 of period
 Accumulation unit value        $2.56       $2.46       $2.36       $2.27       $2.18    $2.12    $2.09    $2.04    $1.95    $1.82
 at end of period
 Number of accumulation        98,897      87,255      89,644     102,568      84,475   74,935  102,277  126,489  139,005  108,690
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%    1.00%    1.00%
 expense to average
 net assets
 Simple yield(3)                3.71%       4.10%       3.77%       3.97%       4.16%    1.89%    1.76%    3.26%    6.25%    6.81%
 
 Compound yield(3)              3.78%       4.18%       3.84%       4.05%       4.24%    1.90%    1.77%    3.31%    6.44%    7.04%
 
                     ACCOUNT G (INVESTING IN SHARES OF IDS LIFE SPECIAL INCOME FUND)
 
 Accumulation unit              $5.25       $4.86       $4.59       $3.80       $3.99    $3.48    $3.21    $2.76    $2.67    $2.48
 value at beginning
 of period
 Accumulation unit value        $5.27       $5.25       $4.86       $4.59       $3.80    $3.99    $3.48    $3.21    $2.76    $2.67
 at end of period
 Number of accumulation       287,881     316,789     362,167     393,697     361,640  405,429  330,000  270,858  236,926  222,248
 units outstanding at end
 of period (000 omitted)
 Ratio of operating             1.00%       1.00%       1.00%       1.00%       1.00%    1.00%    1.00%    1.00%    1.00%    1.00%
 expense to average
 net assets
</TABLE>
 
(1)  Accounts IZ and JZ commenced operations on Jan. 13, 1992.
(2)  Accounts KZ, LZ and MZ commenced operations on April 30, 1996.
(3)  Net of annual contract administrative charge and mortality and expense risk
     fee.
 
                                                                              11
<PAGE>
- ----------------------------------------------
                        FINANCIAL STATEMENTS
 
You can find the audited financial statements of the variable accounts in the
SAI. You can find our audited financial statements later in this prospectus.
 
  PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
 
Performance information for the variable accounts may appear from time to time
in advertisements or sales literature. This information reflects the performance
of a hypothetical investment in a particular variable account during a specified
time period. Although we base performance figures on historical earnings, past
performance does not guarantee future results.
 
We include non-recurring charges (such as withdrawal charges) in total return
figures, but not in yield quotations. Excluding non-recurring charges in yield
calculations increases the reported value.
 
Total return figures reflect deduction of all applicable charges, including:
 
- -the contract administrative charge,
 
- -mortality and expense risk fee, and
 
- -withdrawal charge (assuming a full withdrawal at the end of the illustrated
 period).
 
We also may make optional total return quotations that do not reflect a
withdrawal charge deduction (assuming no withdrawal). Total return quotations
may be shown by means of schedules, charts or graphs.
 
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and 10 years (or up to the life of the
variable account if it is less than ten years old).
 
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return will be higher than average annual total
return because it is not averaged.
 
ANNUALIZED SIMPLE YIELD (FOR VARIABLE ACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
 
ANNUALIZED COMPOUND YIELD (FOR VARIABLE ACCOUNTS INVESTING IN MONEY MARKET
FUNDS) is calculated like simple yield except that we assume the income is
reinvested when we annualize it. Compound yield will be higher than the simple
yield because of the compounding effect of the assumed reinvestment.
 
12
<PAGE>
 
ANNUALIZED YIELD (FOR VARIABLE ACCOUNTS INVESTING IN INCOME FUNDS) divides the
net investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
 
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
variable account invests and the market conditions during the specified time
period. Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare variable account
performance to that of mutual funds that sell their shares directly to the
public. (See the SAI for a further description of methods used to determine
total return and yield.)
 
If you would like additional information about actual performance, please
contact your financial advisor.
 
                                                                              13
<PAGE>
- ----------------------------------------------
                        THE VARIABLE ACCOUNTS
 
You may allocate payments to any or all the variable accounts that invest in
shares of the following funds:
 
<TABLE>
<CAPTION>
FUNDS OFFERED THROUGH VARIABLE
ACCOUNTS                                  IDS LIFE ACCOUNT        ESTABLISHED
<S>                                       <C>                <C>
 IDS Life Aggressive Growth Fund                 JZ                 Sept. 20, 1991
 
 IDS Life Capital Resource Fund                   F                   May 13, 1981
 
 IDS Life Global Yield Fund                      KZ                  April 2, 1996
 
 IDS Life Growth Dimensions Fund                 MZ                  April 2, 1996
 
 IDS Life Income Advantage Fund                  LZ                  April 2, 1996
 
 IDS Life International Equity Fund              IZ                 Sept. 20, 1991
 
 IDS Life Managed Fund                            N                 April 17, 1985
 
 IDS Life Moneyshare Fund                         H                   May 13, 1981
 
 IDS Life Special Income Fund                     G                   May 13, 1981
</TABLE>
 
Each variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each variable account only to that variable account. State insurance law
prohibits us from charging a variable account with liabilities of any other
variable account or of our general business. Each variable account's net assets
are held in relation to the contracts described in this prospectus as well as
other contracts that we issue that are not described in this prospectus.
 
The U.S. Treasury and the Internal Revenue Service (IRS) indicated that they may
provide additional guidance on investment control. This concerns how many
variable accounts an insurance company may offer and how many exchanges among
variable accounts it may allow before the contract owner would be currently
taxed on income earned within variable account assets. At this time, we do not
know what the additional guidance will be or when action will be taken. We
reserve the right to modify the contract, as necessary, to ensure that the owner
will not be subject to current taxation as the owner of the variable account
assets.
 
We intend to comply with all federal tax laws to ensure that the contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify the contract as necessary to comply with any new tax laws.
 
All variable accounts were established under Minnesota law and are registered
together as a
 
14
<PAGE>
 
single unit investment trust under the Investment Company Act of 1940 (the 1940
Act). This registration does not involve any supervision of our management or
investment practices and policies by the SEC. All obligations arising under the
contracts are general obligations of IDS Life.
 
                                                                              15
<PAGE>
- ----------------------------------------------
                        THE FUNDS
 
IDS LIFE AGGRESSIVE GROWTH FUND
 
Objective: capital appreciation. Invests primarily in common stocks of
small- and medium-size companies.
 
IDS LIFE CAPITAL RESOURCE FUND
 
Objective: capital appreciation. Invests primarily in U.S. common stocks.
 
IDS LIFE GLOBAL YIELD FUND
 
Objective: high total return through income and growth of capital. Invests
primarily in debt securities of U.S. and foreign issuers.
 
IDS LIFE GROWTH DIMENSIONS FUND
 
Objective: long-term growth of capital. Invests primarily in common stocks of
U.S. and foreign companies showing potential for significant growth.
 
IDS LIFE INCOME ADVANTAGE FUND
 
Objective: high current income, with capital growth as a secondary objective.
Invests primarily in long-term, high-yielding, high-risk debt securities below
investment grade issued by U.S. and foreign corporations.
 
IDS LIFE INTERNATIONAL EQUITY FUND
 
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers.
 
IDS LIFE MANAGED FUND
 
Objective: maximum total investment return through a combination of capital
growth and current income. Invests primarily in stocks, convertible securities,
bonds and money market instruments.
 
16
<PAGE>
 
IDS LIFE MONEYSHARE FUND
 
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in money market securities.
 
IDS LIFE SPECIAL INCOME FUND
 
Objective: to provide a high level of current income while conserving the value
of the investment for the longest time period. Invests primarily in investment-
grade bonds.
 
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that the investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results.
 
The IRS issued final regulations relating to the diversification requirements
under Section 817(h) of the Code. Each fund intends to comply with these
requirements.
 
IDS Life is the investment manager and AEFC is the investment advisor for each
of the funds. American Express Asset Management International Inc., a wholly
owned subsidiary of AEFC, is the sub-investment advisor for IDS Life
International Equity Fund. The investment manager and advisor cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectus for facts you should know before investing. This prospectus is
available by contacting us at the address or telephone number on the front of
this prospectus, or from your financial advisor.
 
                                                                              17
<PAGE>
- ----------------------------------------------
                        THE FIXED ACCOUNT
 
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We will change the interest
rates from time to time at our discretion.
 
In addition, a market value adjustment is imposed on the fixed account if you
cancel the value of the fixed account due to total withdrawal, contract transfer
or contract termination. The amount of the market value adjustment approximates
the gain or loss resulting from our sale of assets purchased with purchase
payments. (See "Contract Transfer, Market Value Adjustment and Contract
Termination -- Market value adjustment.")
 
18
<PAGE>
- ----------------------------------------------
                        BUYING THE CONTRACT
 
Your financial advisor will help you prepare and submit an application and send
it along with the initial purchase payment to our office.
 
When applying, you may select:
 
- -the accounts in which to invest, and
 
- -how to make purchase payments
 
If your application is complete, we will process it and apply the purchase
payment to the accounts you selected within two business days after we receive
it at our office. If we accept your application, we will send you a contract. If
we cannot accept your application within five business days, we will decline it
and return payment. We will credit additional purchase payments to the accounts
on the valuation date we receive them. We will value the additional payments at
the next accumulation unit value calculated after we receive the payments at our
office.
 
HOW TO MAKE PURCHASE PAYMENTS
 
<TABLE>
<S>                  <C>
- -------------------------------------------------------------------
                      Send your check along with your name and
1                     contract number to:
BY LETTER
 
                      REGULAR MAIL:
                      IDS Life Insurance Company
                      P.O. Box 74
                      Minneapolis, MN 55440-0074
                      EXPRESS MAIL:
                      IDS Life Insurance Company
                      733 Marquette Avenue
                      Minneapolis, MN 55402
- -------------------------------------------------------------------
                      A financial advisor can help set up:
2                    - participant salary reduction
BY SCHEDULED
PAYMENT PLAN
</TABLE>
 
                                                                              19
<PAGE>
- ----------------------------------------------
                        CHARGES
 
CONTRACT ADMINISTRATIVE CHARGE
 
We charge this fee for establishing and maintaining your records. We deduct $125
from the contract value at the end of each contract quarter (each three-month
period measured from the effective date of your contract). This equates to an
annual charge of $500. We prorate this charge among the variable accounts and
the fixed account in the same proportion your interest in each account bears to
your total contract value. We reserve the right to increase the contract
administrative charge in the future, but we guarantee that it will never exceed
$250 per quarter ($1,000 per year).
 
MORTALITY AND EXPENSE RISK FEE
 
This fee is to cover the mortality risk and expense risk. We charge this fee
daily to your variable accounts. The unit values of your variable accounts
reflect this fee and it totals 1% of the variable accounts' average daily net
assets on an annual basis. Approximately two-thirds of this amount is for our
assumption of mortality risk, and one-third is for our assumption of expense
risk. This fee does not apply to the fixed account.
 
Mortality risk arises because of our guarantee to make annuity payouts according
to the terms of the contract, no matter how long a specific participant lives
and no matter how long our entire group of annuitants live. If, as a group,
annuitants outlive the life expectancy we assumed in our actuarial tables, then
we must take money from our general assets to meet our obligations. If, as a
group, annuitants do not live as long as expected, we could profit from the
mortality risk fee.
 
Expense risk arises because we cannot increase the contract administrative
charge above $1,000 per year and this charge may not cover our expenses. We
would have to make up any deficit from our general assets.
 
The variable accounts pay us the mortality and expense risk fee they accrued as
follows:
 
- -first, to the extent possible, the variable accounts pay this fee from any
 dividends distributed from the funds in which they invest;
 
- -then, if necessary, the funds redeem shares to cover any remaining fees
 payable.
 
20
<PAGE>
 
We may use any profits we realize from the variable accounts' payment to us of
the mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge, discussed in the following paragraphs, will cover sales
and distribution expenses.
 
WITHDRAWAL CHARGE
 
If you withdraw part or all of the contract, a withdrawal charge may apply. This
withdrawal charge represents a percentage of the amount withdrawn as follows:
 
<TABLE>
<CAPTION>
                Withdrawal charge as a
  Contract          percentage of
    year           amount withdrawn
- ------------  --------------------------
<S>           <C>
     1                        6%
     2                        6
     3                        5
     4                        4
     5                        3
     6                        2
     7                        1
8 and later                   0
</TABLE>
 
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually withdraw from the contract will be the amount the owner requests plus
any applicable withdrawal charge. We apply the withdrawal charge to this total
amount. We pay the owner the amount requested.
 
Example of withdrawal charge:
 
You request a $1,000 partial withdrawal, and the withdrawal charge is 5%:
 
<TABLE>
<S>                                       <C>
1,000 partial withdrawal      =           $1,052.63
- ---------------------------
            .95
Total amount withdrawn..................  $1,052.63
                                            X  0.05
                                          ---------
Total withdrawal charge.................  $   52.63
                                          ---------
                                          ---------
</TABLE>
 
                                                                              21
<PAGE>
                        CHARGES
 
There are no withdrawal charges for withdrawals on behalf of a participant if
the participant:
 
- -attains age 59 1/2;
 
- -purchases an immediate annuity under the annuity payout plans of this contract
 after separation from service;
 
- -retires under the plan after age 55;
 
- -becomes disabled (as defined by the Code);
 
- -dies;
 
- -encounters financial hardship as permitted under the plan and the Code;
 
- -receives a loan as requested by you; or
 
- -converts contract value to an individual retirement annuity or other qualified
 annuity offered by us as requested by you.
 
Under no circumstance will withdrawal charges exceed 8.5% of aggregate purchase
payments made.
 
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses or we may perform fewer services. In such cases, we may
be able to reduce or eliminate certain contract charges. However, we expect this
to occur infrequently.
 
PREMIUM TAXES: Currently, there are no premium taxes under this contract.
However, a charge will be made by us against the contract value for any state
and local premium taxes to the extent the taxes are payable in connection with
the purchase of a contract under the annuity payout plans.
 
22
<PAGE>
- ----------------------------------------------
                        VALUING THE INVESTMENT
 
We value your accounts as follows:
 
FIXED ACCOUNT: We value the amounts allocated to the fixed account directly in
dollars. The fixed account value equals:
 
- -the sum of your purchase payments and transfer amounts allocated to the fixed
 account;
 
- -plus interest credited;
 
- -minus the sum of amounts withdrawn (including any applicable withdrawal
 charges) and amounts transferred out; and
 
- -minus any prorated contract administrative charge.
 
VARIABLE ACCOUNTS: We convert amounts allocated to the variable accounts into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the variable accounts, we credit a certain number of accumulation
units to the contract for that account. Conversely, each time you take a partial
withdrawal, transfer amounts out of a variable account or we assess a contract
administrative charge, we subtract a certain number of accumulation units from
the contract.
 
The accumulation units are the true measure of investment value in each account
during the accumulation period. They are related to, but not the same as, the
net asset value of the fund in which the account invests.
 
The dollar value of each accumulation unit can rise or fall daily depending on
the variable account expenses, performance of the fund and on certain fund
expenses. Here is how we calculate accumulation unit values:
 
NUMBER OF UNITS
 
To calculate the number of accumulation units for a particular account, we
divide the investment by the current accumulation unit value.
 
ACCUMULATION UNIT VALUE
 
The current accumulation unit value for each variable account equals the last
value times the account's current net investment factor.
 
                                                                              23
<PAGE>
                        VALUING THE INVESTMENT
 
NET INVESTMENT FACTOR
 
We determine the net investment factor by:
 
- -adding the fund's current net asset value per share, plus the per share amount
 of any accrued income or capital gain dividends to obtain a current adjusted
 net asset value per share; then
 
- -dividing that sum by the previous adjusted net asset value per share; and
 
- -subtracting the percentage factor representing the mortality and expense risk
 fee from the result.
 
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a variable
account.
 
FACTORS THAT AFFECT VARIABLE ACCOUNT ACCUMULATION UNITS
 
Accumulation units may change in two ways: in number and in value. Here are the
factors that influence those changes:
 
The number of accumulation units owned may fluctuate due to:
 
- -additional purchase payments allocated to the variable accounts;
 
- -transfers into or out of the variable accounts;
 
- -partial withdrawals;
 
- -withdrawal charges; and/or
 
- -prorated portions of the contract administrative charge.
 
Accumulation unit values may fluctuate due to:
 
- -changes in funds' net asset value;
 
- -dividends distributed to the variable accounts;
 
- -capital gains or losses of funds;
 
- -fund operating expenses; and/or
 
- -mortality and expense risk fees.
 
24
<PAGE>
- ----------------------------------------------
                        WITHDRAWALS, LOANS AND CONVERSIONS
 
WITHDRAWAL POLICIES
 
- -If you request a total withdrawal, payment will equal the total contract value
 less the contract administrative charge, any applicable premium tax and
 withdrawal charge.
 
- -You or the recordkeeper must state the reason for a partial withdrawal.
 
- -If the contract has a balance in more than one account and you request a
 partial withdrawal, we will withdraw money from all your accounts in the same
 proportion as your value in each account correlates to your total contract
 value, unless requested otherwise.
 
- -A market value adjustment may apply to total withdrawals from the fixed
 account. (See "Contract Transfer, Market Value Adjustment and Contract
 Termination").
 
SPECIAL WITHDRAWAL PROVISIONS
 
- -The rights of any person to benefits under the plans in which these contracts
 are issued will be subject to the terms and conditions of the plans themselves,
 regardless of the terms and conditions of the contract.
 
- -We reserve the right to defer withdrawal payments from the fixed account for a
 period not to exceed six months from the date we receive the withdrawal
 request.
 
- -Since contracts offered will be issued in connection with retirement plans you
 should refer to the terms of the particular plan for any further limitations or
 restrictions on withdrawals.
 
- -You may pay withdrawal charges (see "Charges") and IRS taxes and penalties (see
 "Taxes").
 
                                                                              25
<PAGE>
                        WITHDRAWALS, LOANS AND CONVERSIONS
 
RECEIVING WITHDRAWAL PAYMENTS
 
By regular or express mail:
 
- -payable to you.
 
- -mailed to address of record within seven days after receiving your request.
 
However, we may postpone the payment if:
 
- -- the withdrawal amount includes a purchase payment check that has not cleared;
 
- -- the NYSE is closed, except for normal holiday and weekend closings;
 
- -- trading on the NYSE is restricted, according to SEC rules;
 
- -- an emergency, as defined by SEC rules, makes it impractical to sell
   securities or value the net assets of the accounts; or
 
- -- the SEC permits us to delay payment for the protection of security holders.
 
NOTE: We will charge you a fee if you request express mail delivery.
 
LOANS
 
You may request withdrawals to fund loans for participants. You must specify
from which accounts to make withdrawals at the time of the loan request. Loan
amounts and terms must comply with the applicable requirements of the plan and
Code. We assume no responsibility for the validity or compliance of the loan.
 
Withdrawals to fund loans under the plan will not be subject to withdrawal
charges when the loan is made. However, we reserve the right to deduct
withdrawal charges from the remaining contract value if there is an unpaid loan
balance at the time of a total withdrawal, contract transfer or termination (see
"Charges").
 
26
<PAGE>
 
CONVERSION
 
You may transfer on the participant's behalf part of the contract value to an
individual deferred annuity contract offered by us in the event of:
 
- -the termination of participant's employment, or
 
- -other reasons which are acceptable to us and meet the requirements of the plan
 and the Code.
 
This individual contract will qualify as an individual retirement annuity under
Section 408 or another applicable section of the Code. Withdrawal charges will
not apply at the time of conversion.
 
                                                                              27
<PAGE>
- ----------------------------------------------
                        CONTRACT TRANSFER, MARKET VALUE ADJUSTMENT AND CONTRACT
TERMINATION
 
TRANSFERRING MONEY BETWEEN ACCOUNTS
 
You may transfer money from any one variable account, or the fixed account, to
another variable account before annuity payouts begin. We will process your
transfer request on the valuation date we receive your request. We will value
your transfer at the next accumulation unit value calculated after we receive
your request. There is no charge for transfers. Before making a transfer, you
should consider the risks involved in switching investments.
 
We may suspend or modify transfer privileges
at any time. Any restrictions imposed by the plan will apply.
 
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
 
You can request a transfer or withdrawal by letter or any other method we agree
to. Send the plan name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or withdrawal to:
 
REGULAR MAIL:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
 
EXPRESS MAIL:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
 
You may withdraw all or part of the contract value at any time. We will process
your withdrawal request on the valuation date we receive it. For total
withdrawal, we will compute the value of the contract at the next accumulation
unit value calculated after we receive the request. We may ask you to return the
contract. You may have to pay withdrawal charges (see "Charges") and IRS taxes
and penalties (see "Taxes").
 
WITHDRAWALS BY OWNER FOR TRANSFER OF FUNDS
You may direct us to withdraw the total contract value and transfer that value
to another funding agent. You will pay all applicable contract charges including
withdrawal charges, and we will deduct them from the first payout unless you
transfer the total contract value to a plan offered by us or our affiliates.
(See "Charges.")
 
28
<PAGE>
 
You must provide us with a written request to make such a withdrawal. This
written request must be sent to our office and must specify the initial
withdrawal date and payee to whom the payouts are to be made.
 
At your option, we will pay the contract value, less any applicable charges, in
annual installments or in a lump sum as follows:
 
1. We may pay the contract value in five annual installments beginning on the
initial withdrawal date and then on each of the next four anniversaries of such
date as follows:
 
<TABLE>
<CAPTION>
                                                    PERCENTAGE OF THEN REMAINING
               INSTALLMENT PAYMENT                     CONTRACT VALUE BALANCE
<S>                                                 <C>
                        1                                         20%
                        2                                         25
                        3                                         33
                        4                                         50
                        5                                        100
</TABLE>
 
We will not allow additional withdrawals for benefits or other transfers of
contract values and we will not accept additional purchase payments after we
make the first withdrawal payment. We will continue to credit interest to any
contract value balance remaining after an installment payment at the interest
rate then in effect for the fixed account.
 
                                                                              29
<PAGE>
                        CONTRACT TRANSFER, MARKET VALUE ADJUSTMENT AND CONTRACT
TERMINATION
 
2. We may pay the contract value in a lump sum. We will base any contract value
attributable to the fixed account on market value. We will determine the market
value by applying the formula described below under "Market value adjustment."
We will make lump sum payments according to the withdrawal provisions (see
"Withdrawals, Loans and Conversions--Receiving withdrawal payments").
 
MARKET VALUE ADJUSTMENT -- A market value adjustment (MVA) applies only when we
pay out the fixed account value in a lump sum when:
 
- -you withdraw the total contract value to transfer that value to another funding
 vehicle;
 
- -you make a total withdrawal of the fixed account contract value; or
 
- -we terminate the contract as described below. (See "Contract termination.")
 
We will apply the MVA to the contract value withdrawn from the fixed account
after deducting any applicable contract administrative charge and withdrawal
charge. (See "Charges.")
 
The MVA will reflect the relationship between the current interest rate credited
to new purchase payments allocated to the fixed account and the rate credited to
all prior purchase payments. We calculate the MVA as follows:
 
MVA = fixed account value X (A - B) X C
 
Where:
 
A = the weighted average interest rate (in decimal form) credited to all fixed
    account purchase payments made by you at the time of termination, rounded to
    4 decimal places;
 
B = the interest rate (in decimal form) credited to new purchase payments to the
    contract at the time of termination or total withdrawal, rounded to 4
    decimal places; and
 
30
<PAGE>
 
C = the annuity factor, which represents the relationship between the contract
    year and the average duration of underlying investments from the following
    table:
 
<TABLE>
<CAPTION>
                  CONTRACT YEAR                                       ANNUITY FACTOR
<S>                                                 <C>
                       1-3                                                 6.0
                       4-6                                                 5.0
                        7+                                                 4.0
</TABLE>
 
The following example shows a downward and upward MVA.
 
1. Assume: contract effective date of October 1, 1993
          contract termination date of July 1, 1998
          contract year at termination is 5
 
<TABLE>
<CAPTION>
                                PURCHASE    INITIAL   CURRENT    ACCUMULATION
             YEAR               PAYMENTS     RATE      RATE     ACCOUNT VALUE
<S>                             <C>         <C>       <C>       <C>
              1                  $10,000      6.50%     6.25%       $12,560
              2                    8,000      6.00      6.25          9,870
              3                   12,000      6.25      6.25         13,960
              4                   15,000      7.50      6.75         16,660
              5                   20,000      6.50      6.50         20,640
</TABLE>
 
<TABLE>
<S>                                       <C>
 Total accumulation account value         =  $   73,690
 Withdrawal charge = .03 X 73,690         =       2,211
 Fixed account value = 73,690 - 2,211     =      71,479
 Weighted average interest rate           =      6.433%
 Interest rate on new purchase payments   =       6.750
 MVA = $71,479 X (.06433 - .06750) X 5.0  =  $(1,132.94)
 Market value = 71,479 - 1,132.94         =   70,346.06
</TABLE>
 
2. Assume: contract effective date of January 15, 1994
          contract termination date of September 20, 1996
          contract year at termination is 3
 
<TABLE>
<CAPTION>
                                PURCHASE    INITIAL   CURRENT    ACCUMULATION
             YEAR               PAYMENTS     RATE      RATE     ACCOUNT VALUE
<S>                             <C>         <C>       <C>       <C>
              1                  $15,000      7.00%     6.25%       $17,710
              2                   20,000      6.50      6.00         22,140
              3                   25,000      5.50      5.50         25,910
</TABLE>
 
<TABLE>
<S>                                       <C>
 Total accumulation account value         =  $   65,760
 Withdrawal charge = .05 X 65,760         =       3,288
 Fixed account value = 65,760 - 3,288     =      62,472
 Weighted average interest rate           =      5.870%
 Interest rate on new purchase payments   =       5.250
 MVA = $62,472 X (.05870 - .05250) X 6    =  $ 2,323.96
 Market value = 62,472 + 2,323.96         =   64,795.96
</TABLE>
 
                                                                              31
<PAGE>
                        CONTRACT TRANSFER, MARKET VALUE ADJUSTMENT AND CONTRACT
TERMINATION
 
No MVA applies if:
 
- -you make a partial withdrawal of the fixed account contract value;
 
- -we pay you installment payments when you withdraw the total contract value and
 transfer that value to another funding vehicle or we terminate the contract; or
 
- -you transfer contract values from the fixed account to the variable accounts
 "Transferring money between accounts."
 
CONTRACT TERMINATION
We reserve the right, upon at least 30 days' written notice, to declare a
contract termination date.
 
We may declare a contract termination date if:
 
- -you adopt an amendment to the plan that causes the plan to be materially
 different from the original plan. (to be "materially different," the amendment
 must cause a substantial change in the level of the dollar amounts of purchase
 payments or contract benefits paid by us);
 
- -the plan fails to qualify or becomes disqualified under the appropriate
 sections of the Code;
 
- -while the contract is in force, and prior to any withdrawal or contract
 termination, you offer under the plan a prohibited investment as a funding
 vehicle to which future contributions may be made (prohibited investments
 include: guaranteed investment contracts, bank investment contracts, annuity
 contracts with fixed and/or variable accounts, and funding vehicles providing a
 guarantee of principal); or
 
- -you change to a recordkeeper not approved by us.
 
If we waive our rights to terminate the contract under any provision of this
section at any time, such waiver will not be considered a precedent and will not
prohibit us from exercising the right to terminate this contract, for the
reasons noted above, at any future time.
 
PROCEDURES AT CONTRACT TERMINATION
On the contract termination date, we will withdraw any outstanding charges,
including any contract administrative charges, from the contract value. A
withdrawal charge may apply on account of any termination under this provision.
We will deduct it from the first termination payment. (See "Charges.")
 
32
<PAGE>
 
At your option, we will pay the contract value in a lump sum or in annual
installment payouts according to the table under "Withdrawals by owner for
transfer of funds" above. A lump sum payout will be subject to an applicable MVA
to the fixed account value. If you do not select an option, we will pay the
contract value to you under the installment option.
 
                                                                              33
<PAGE>
- ----------------------------------------------
                        CHANGING OWNERSHIP
 
You may not transfer ownership of the contract except to:
 
- -a trustee or successor trustee of a pension or profit sharing trust qualified
 under the Code; or
 
- -as otherwise permitted by laws and regulations governing the plans under which
 the contract is issued.
 
Subject to the provisions above, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code.
 
34
<PAGE>
- ----------------------------------------------
                        THE ANNUITY PAYOUT PERIOD
 
When a plan participant reaches his or her retirement date, you may select one
of the annuity payout plans outlined below or we may mutually agree on other
payout arrangements. We do not deduct any withdrawal charges under the payout
plans listed below.
 
We will make retirement payouts on a fixed basis under a supplemental fixed
immediate annuity in the form customarily offered by us at the time of purchase.
 
ANNUITY PAYOUT PLANS
 
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
 
- -PLAN A -- LIFE ANNUITY - NO REFUND: We make monthly payouts until the
 annuitant's death. Payouts end with the last payout before the annuitant's
 death. We will not make any further payouts. This means that if the annuitant
 dies after we have made only one monthly payout, we will not make any more
 payouts.
 
- -PLAN B -- LIFE ANNUITY WITH FIVE, 10 OR 15 YEARS CERTAIN: We make monthly
 payouts for a guaranteed payout period of five, 10 or 15 years that you elect.
 This election will determine the length of the payout period to the beneficiary
 if the annuitant should die before the elected period expires. We calculate the
 guaranteed payout period from the retirement date. If the annuitant outlives
 the elected guaranteed payout period, we will continue to make payouts until
 the annuitant's death.
 
- -PLAN C -- LIFE ANNUITY - INSTALLMENT REFUND: We make monthly payouts until the
 annuitant's death, with our guarantee that payouts will continue for some
 period of time. We will make payouts for at least the number of months
 determined by dividing the amount applied under this option by the first
 monthly payout, whether or not the annuitant is living.
 
                                                                              35
<PAGE>
                        THE ANNUITY PAYOUT PERIOD
 
- -PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND: We make monthly
 payouts while both the annuitant and a joint annuitant are living. If either
 annuitant dies, we will continue to make monthly payouts at the full amount
 until the death of the surviving annuitant. Payouts end with the death of the
 second annuitant.
 
- -PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
 specific payout period of 10 to 30 years that you elect. We will make payouts
 only for the number of years specified whether the annuitant is living or not.
 Depending on the selected time period, it is foreseeable that an annuitant can
 outlive the payout period selected. In addition, a 10% IRS penalty tax could
 apply under this payout plan. (See "Taxes.")
 
RESTRICTIONS ON PAYOUT OPTIONS: Since the contract is issued in connection with
plans that meet the requirements of code section 401 (including 401(k)) and 457,
the payout schedule must meet the applicable requirements of the particular plan
and of the Code, including the distribution and incidental death benefit
requirements. In general, the plan must provide for retirement payouts:
 
- -over the life of the participant;
 
- -over the joint lives of the participant and a designated beneficiary;
 
- -for a period not exceeding the life expectancy of the participant; or
 
- -for a period not exceeding the joint life expectancies of the participant and a
 designated beneficiary.
 
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20:
We will calculate the amount of monthly payouts at the time the immediate
annuity is purchased to provide retirement payouts. If the calculations show
that monthly payouts would be less than $20, we have the right to pay the
contract value to you in a lump sum.
 
36
<PAGE>
- ----------------------------------------------
                        TAXES
 
TAX TREATMENT OF IDS LIFE AND THE VARIABLE ACCOUNTS: We are taxed as a life
insurance company under the Code. Although the operations of the variable
accounts are accounted for separately from our other operations for purposes of
federal income taxation, the variable accounts are not taxable as entities
separate from us. Under existing federal income tax laws, the income and capital
gains of the variable accounts, to the extent applied to increase reserves under
the contracts, are not taxable to us.
 
TAXATION OF ANNUITIES IN GENERAL: Generally, there is no tax to a participant on
contributions made to the contract or on any increases in the value of the
contract. However, when distribution to a participant occurs, the distribution
will be subject to taxation (except contributions that were made with after-tax
dollars).
 
PENALTIES: If participants receive amounts from the contract before reaching age
59 1/2, they may have to pay a 10% IRS penalty on the amount includable in their
ordinary income. However, this penalty will not apply to any amount received by
the participant or designated beneficiary:
 
- -because of the participant's death;
 
- -because the participant becomes disabled (as defined in the Code);
 
- -if the distribution is part of a series of substantially equal periodic
 payments, made at least annually, over the participant's life or life
 expectancy (or joint lives or life expectancies of the participant and
 designated beneficiary);
 
- -if the participant retires under the plan during or after the year he or she
 attains age 55; or
 
- -if the payout is a 457 plan distribution.
 
Other penalties or exceptions may apply if you withdraw from the contract before
your plan specifies that payouts can be made.
 
MANDATORY WITHHOLDING: If the participant receives a distribution, mandatory 20%
federal income tax withholding (and possibly state income tax withholding)
generally will be imposed at the time we make the payout. Any withholding that
is done represents a prepayment of the participant's tax due
 
                                                                              37
<PAGE>
                        TAXES
 
for the year and the participant will take credit for such amounts when filing
an annual tax return. This mandatory withholding will not be imposed if:
 
- -instead of receiving the distribution check, the participant elects to roll the
 distribution over directly to an IRA or another eligible plan;
 
- -the payout is one in a series of substantially equal periodic payouts, made at
 least annually, over the participant's life or life expectancy (or the joint
 lives or life expectancies of the participant and designated beneficiary) or
 over a specified period of 10 years or more;
 
- -the payout is a minimum distribution required under the Code; or
 
- -the payout is a 457 plan distribution.
 
Payouts made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to 20% income tax withholding.
 
If a distribution is made to the participant from a contract offered under a
Section 457 plan (deferred compensation plan of state and local governments and
tax-exempt organizations), withholding is computed using payroll methods,
depending upon the type of payment.
 
ELECTIVE WITHHOLDING: If the distribution is not subject to mandatory
withholding as described above, the participant can elect not to have any
withholding occur. To do this the participant must provide us with a valid
Social Security Number or Taxpayer Identification Number.
 
If the participant does not make this election and if the payout is part of an
annuity payout plan, the amount of withholding generally is computed using
payroll tables. Please provide us with a statement of how many exemptions to use
in calculating the withholding. If the distribution is any other type of payment
(such as a partial or full withdrawal), withholding is computed using 10% of the
taxable portion.
 
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
 
38
<PAGE>
 
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of the contract.
 
TAX QUALIFICATION: We intend that the contract qualify as an annuity for Federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions to the contrary. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendment.
 
                                                                              39
<PAGE>
- ----------------------------------------------
                        VOTING RIGHTS
 
You or another authorized party with investments in the variable accounts may
vote on important fund policies. We will vote fund shares according to the
instructions we receive.
 
The number of votes is determined by applying the percentage interest in each
variable account to the total number of votes allowed to the account.
 
We calculate votes separately for each account. We will send notice of these
meetings, proxy materials and a statement of the number of votes to which the
voter is entitled.
 
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
 
40
<PAGE>
- ----------------------------------------------
                        OTHER CONTRACTUAL PROVISIONS
 
MODIFICATION
We may modify the contract upon notice to you, if such modification:
 
- -is necessary to make the contract or the variable accounts comply with any law
 or regulation issued by a governmental agency to which we or the variable
 accounts are subject;
 
- -is necessary to assure continued qualification of the contract under the Code
 or other federal or state laws relating to retirement annuities or annuity
 contracts;
 
- -is necessary to reflect a change in the variable accounts; or
 
- -provides additional accumulation options for the variable accounts.
 
In the event of any such modification, we may make appropriate endorsement to
the contract to reflect such modification.
 
PROOF OF CONDITION OR EVENT
Where any payments under the contract depend on the recipient being alive and/or
being a certain age on a given date, or depend on the occurrence of a specific
event, we may require proof satisfactory to it that such a condition has been
met prior to making the payment.
 
                                                                              41
<PAGE>
- ----------------------------------------------
                        RECORDKEEPING SERVICES
 
We provide a contract to fund plans that meet the requirements of Code Sections
401 (including 401(k)) and 457. We do not provide any administrative or
recordkeeping services in connection with the Plan. We will rely on information
and/or instructions provided by the Plan administrator and/or recordkeeper in
order to properly administer the contract. For this reason, any person or entity
authorized by you to administer recordkeeping services for the Plan and we must
approve participants.
 
42
<PAGE>
- ----------------------------------------------
                        ABOUT THE SERVICE PROVIDERS
 
ISSUER AND PRINCIPAL UNDERWRITER
IDS Life issues and is the principal underwriter for the contracts. IDS Life is
a stock life insurance company organized in 1957 under the laws of the State of
Minnesota and is located at IDS Tower 10, Minneapolis, MN 55440-0010. IDS Life
conducts a conventional life insurance business.
 
IDS Life is a wholly-owned subsidiary of AEFC, which itself is a wholly-owned
subsidiary of American Express Company, a financial services company
headquartered in New York City. The AEFC family of companies offers not only
insurance and annuities, but also mutual funds, investment certificates and a
broad range of financial management services. American Express Financial
Advisors Inc. (AEFA) serves individuals and businesses through its nationwide
network of more than 180 offices and 9200 advisors.
 
IDS Life pays total commissions of up to 7% of the total purchase payments it
receives on the contracts. We pay a portion of this total commission to district
managers and field vice presidents of the selling representatives.
 
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. On December 13, 1996, an action
entitled Lesa Benacquisto and Daniel Benacquisto vs. IDS Life Insurance Company
and American Express Financial Corporation was commenced in Minnesota state
court. The action was brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint puts at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled Arnold Mork, Isabella Mork, Ronald Melchart and Susan
Melchart vs. IDS Life Insurance Company and
 
                                                                              43
<PAGE>
                        ABOUT THE SERVICE PROVIDERS
 
American Express Financial Corporation was commenced in the same court on March
21, 1997. In addition to claims that are included in the Benacquisto lawsuit,
the second action includes an allegation of improper replacement of an existing
IDS Life annuity contract. A subsequent class action, Richard Thoresen and
Elizabeth Thoresen vs. AEFC, American Partners Life Insurance Company, American
Enterprise Life Insurance Company, American Centurion Life Assurance Company,
IDS Life Insurance Company and IDS Life Insurance Company of New York, was filed
in the same court on October 13, 1998 alleging that the sale of annuities in
tax-deferred contributory retirement investment plans (e.g. IRAs) was done
through deceptive marketing practices, which IDS Life denies. Plaintiffs in each
of the above actions seeks damages in an unspecified amount and also seek to
establish a claims resolution facility for the determination of individual
issues.
 
IDS Life and AEFC believe they have meritorious defenses to the claims raised in
the lawsuits. The outcome of any litigation cannot be predicted with certainty.
In the opinion of management, however, the ultimate resolution of the above
lawsuits and others filed against IDS Life should not have a material adverse
effect on IDS Life's consolidated financial position.
 
44
<PAGE>
- ------------------------------------------
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
SELECTED FINANCIAL DATA
The following selected financial data for IDS Life and its subsidiaries should
be read in conjunction with the consolidated financial statements and notes.
 
<TABLE>
<CAPTION>
                                          YEARS ENDED DEC. 31, (THOUSANDS)
                              1998         1997         1996         1995         1994
<S>                        <C>          <C>          <C>          <C>          <C>
 Premiums                  $   229,430  $   206,494  $   182,921  $   161,530  $   144,640
 
 Net investment income       1,986,485    1,988,389    1,965,362    1,907,309    1,781,873
 
 Net gain (loss) on
 investments                     6,902          860         (159)      (4,898)      (4,282)
 
 Other                         785,022      682,618      574,341      472,035      384,105
                           -----------  -----------  -----------  -----------  -----------
 
 Total revenues            $ 3,007,839  $ 2,878,361  $ 2,722,465  $ 2,535,976  $ 2,306,336
                           -----------  -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------  -----------
 
 Income before income
 taxes                     $   775,792  $   680,911  $   621,714  $   560,782  $   512,512
                           -----------  -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------  -----------
 
 Net income                $   540,111  $   474,247  $   414,576  $   364,940  $   336,169
                           -----------  -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------  -----------
 
 Total assets              $56,550,563  $52,974,124  $47,305,981  $42,900,078  $35,747,543
                           -----------  -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------  -----------
</TABLE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
1998 COMPARED TO 1997:
Consolidated net income increased 14 percent to $540 million in 1998, compared
to $474 million in 1997. Earnings growth resulted primarily from increases in
management fees and policyholder and contractholder charges. These increases
reflect higher average insurance and annuities in force during 1998.
 
Consolidated income before income taxes totaled $776 million in 1998, compared
with $681 million in 1997.
 
Total premiums and investment contract deposits received decreased to $4.4
billion in 1998, compared with $5.2 billion in 1997. This decrease is primarily
due to a decrease in sales of fixed annuities in 1998, reflecting the low
interest rate environment.
 
Total revenues increased to $3.0 billion in 1998, compared with $2.9 billion in
1997. The increase is primarily due to increased policyholder and contractholder
charges and management fees. Net investment income, the largest component of
revenues, decreased slightly from the prior year, reflecting slight decreases in
investments owned and investment yields.
 
Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type policies, increased 12 percent to $384
million in
 
                                                                              45
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
1998, compared with $342 million in 1997. This increase reflects increased total
life insurance in force, which grew 8 percent to $81 billion at December 31,
1998.
 
Management and other fees increased 18 percent to $401 million in 1998, compared
with $341 million in 1997. This is primarily due to an increase in separate
account assets, which grew 18 percent to $27.3 billion at December 31, 1998, due
to market appreciation and sales. The Company provides investment management
services for the mutual funds used as investment options for variable annuities
and variable life insurance. The Company also receives a mortality and expense
risk fee from the separate accounts.
 
Total benefits and expenses increased slightly to $2.2 billion in 1998. The
largest component of expenses, interest credited to policyholder accounts for
universal life-type insurance and investment contracts, decreased to $1.3
billion, reflecting a decrease in fixed annuities in force and lower interest
rates. Amortization of deferred policy acquisition costs increased to $383
million, compared to $323 million in 1997. This increase was due primarily to
increased aggregate amounts in force, as well as accelerating amortization to
reflect actual lapse experience on certain fixed annuities.
 
1997 COMPARED TO 1996:
Consolidated net income increased 14 percent to $474 million in 1997, compared
to $415 million in 1996. Earnings growth resulted primarily from increases in
management fees and policyholder and contractholder charges. These increases
reflect higher average insurance and annuities in force during 1997.
 
Consolidated income before income taxes totaled $681 million in 1997, compared
with $622 million in 1996. In 1997, $179 million was from the life, disability
income and long-term care insurance segment, compared with $161 million in 1996
and $502 million was from the annuity segment, compared with $461 million in
1996.
 
Total premiums received decreased to $5.2 billion in 1997, compared with $6.1
billion in 1996. This decrease is primarily due to a decrease in sales of fixed
annuities in 1997.
 
Total revenues increased to $2.9 billion in 1997, compared with $2.7 billion in
1996. The increase is primarily due to increases in net investment income,
policyholder and contractholder charges, and management fees. Net investment
income, the largest
 
46
<PAGE>
 
component of revenues, increased slightly from the prior year, reflecting slight
increases in investments owned and investment yields.
 
Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type policies, increased 13 percent to $342
million in 1997, compared with $303 million in 1996. This increase reflects
increased total life insurance in force which grew 12 percent to $75 billion at
December 31, 1997.
 
Management and other fees increased 26 percent to $341 million in 1997, compared
with $271 million in 1996. This is primarily due to an increase in separate
account assets, which grew 25 percent to $23 billion at December 31, 1997, due
to market appreciation and sales. The Company provides investment management
services for the mutual funds used as investment options for variable annuities
and variable life insurance. The Company also receives a mortality and expense
risk fee from the separate accounts.
 
Total benefits and expenses increased slightly to $2.2 billion in 1997. The
largest component of expenses, interest credited to policyholder accounts for
universal life-type insurance and investment contracts, remained steady at $1.4
billion. Amortization of deferred policy acquisition costs increased to $323
million compared to $279 million in 1996. These increases were due primarily to
increased aggregate amounts in force.
 
RISK MANAGEMENT
The sensitivity analysis of two different tests of market risk discussed below
estimates the effects of hypothetical sudden and sustained changes in the
applicable market conditions on the ensuing year's earnings based on year-end
positions. The market changes, assumed to occur as of year-end, are a 100 basis
point increase in market interest rates and a 10% decline in equity prices.
Computations of the prospective effects of hypothetical interest rate and equity
price changes are based on numerous assumptions, including relative levels of
market interest rates and equity prices, as well as the levels of assets and
liabilities. The hypothetical changes and assumptions will be different from
what actually occurs in the future. Furthermore, the computations do not
anticipate actions that may be taken by management if the hypothetical market
changes actually occurred over time. As a result, actual earnings effects in the
future will differ from those quantified below.
 
The Company primarily invests in fixed income securities over a broad range of
maturities for the purpose of
 
                                                                              47
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
providing fixed annuity clients with a competitive rate of return on their
investments while minimizing risk, and to provide a dependable and targeted
spread between the interest rate earned on investments and the interest rate
credited to contractholders' accounts. The Company does not invest in securities
to generate trading profits.
 
The Company has an investment committee that holds regularly scheduled meetings
and, when necessary, special meetings. At these meetings, the committee reviews
models projecting different interest rate scenarios and their impact on
profitability. The objective of the committee is to structure the investment
security portfolio based upon the type and behavior of products in the liability
portfolio so as to achieve targeted levels of profitability.
 
Rates credited to contractholders' accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, margins may be
negatively impacted by increases in the general level of interest rates. Part of
the committee's strategy includes the purchase of some types of derivatives,
such as interest rate caps, swaps and floors, for hedging purposes. These
derivatives protect margins by increasing investment returns if there is a
sudden and severe rise in interest rates, thereby mitigating the impact of an
increase in rates credited to contractholders' accounts.
 
The fees earned by the Company for managing fixed income securities in mutual
funds are generally based on the value of the portfolios. To manage the level of
1999 fee income, the committee's strategy is to enter into a series of swaps
designed to mitigate the negative effect on fees that would result from an
increase in interest rates.
 
The negative effect on the Company's pretax earnings of a 100 basis point
increase in interest rates, which assumes repricings and customer behavior based
on the application of proprietary models to the book of business at December 31,
1998, would be approximately $34 million.
 
On a certain annuity product, the interest is credited to contractholders'
accounts based upon the relative change in a major stock market index between
the beginning and end of the product's term. As a means of hedging the Company's
obligation under the provisions of this product, the committee's strategy is to
purchase and write options on the major stock market index.
 
The amount of the fee income the Company receives is based upon the daily market
value of the separate
 
48
<PAGE>
 
account assets. As a result, the Company's fee income would be negatively
impacted by a decline in the equity markets. Another part of the committee's
strategy is to enter into index option collars (combination of puts and calls)
for hedging purposes. These derivatives protect fee income by providing option
income when there is a significant decline in the equity markets. The Company
finances the cost of this protection through selling a portion of the upside
potential from an increasing market through written options.
 
The negative effect on the Company's pretax earnings of the 10% decline in
equity prices would be approximately $32 million based on assets under
management and the index options as of December 31, 1998.
 
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of the Company are met by funds provided by premiums,
investment income, proceeds from sales of investments as well as maturities and
periodic repayments of investment principal.
 
The primary uses of funds are policy benefits, commissions and operating
expenses, policy loans, dividends and investment purchases.
 
The Company has an available line of credit with its parent aggregating $100
million. The line of credit is used strictly as short-term sources of funds. No
borrowings were outstanding under the agreement at December 31, 1998. At
December 31, 1998, outstanding reverse repurchase agreements totaled $187
million.
 
At December 31, 1998, investments in fixed maturities comprised 83 percent of
the Company's total invested assets. Of the fixed maturity portfolio,
approximately 33 percent is invested in GNMA, FNMA and FHLMC mortgage-backed
securities which are considered AAA/Aaa quality.
 
At December 31, 1998, approximately 13 percent of the Company's investments in
fixed maturities were below investment grade bonds. These investments may be
subject to a higher degree of risk than the investment grade issues because of
the borrower's generally greater sensitivity to adverse economic conditions,
such as recession or increasing interest rates, and in certain instances, the
lack of an active secondary market. Expected returns on below investment grade
bonds reflect consideration of such factors. The Company has identified those
fixed maturities for which a decline in
 
                                                                              49
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
fair value is determined to be other than temporary, and has written them down
to fair value with a charge to earnings.
 
At December 31, 1998, net unrealized appreciation on fixed maturities held to
maturity included $483 million of gross unrealized appreciation and $27 million
of gross unrealized depreciation. Net unrealized appreciation on fixed
maturities available for sale included $427 million of gross unrealized
appreciation and $159 million of gross unrealized depreciation.
 
At December 31, 1998, the Company had an allowance for losses for mortgage loans
totaling $40 million and for real estate investments totaling $6 million.
 
The economy and other factors have caused a number of insurance companies to go
under regulatory supervision. This circumstance has resulted in assessments by
state guaranty associations to cover losses to policyholders of insolvent or
rehabilitated companies. Some assessments can be partially recovered through a
reduction in future premium taxes in certain states. The Company established an
asset for guaranty association assessments paid to those states allowing a
reduction in future premium taxes over a reasonable period of time. The asset is
being amortized as premium taxes are reduced. The Company has also estimated the
potential effect of future assessments on the Company's financial position and
results of operations and has established a reserve for such potential
assessments. The Company has not adopted Statement of Position 97-3 providing
guidance when an insurer should recognize a liability for guaranty fund
assessments. The SOP is effective for fiscal years beginning after December 15,
1998. Adoption will not have a material impact on the Company's results of
operations or financial condition.
 
In the first quarter of 1999, the Company paid a $70 million dividend to its
parent. In 1998, dividends paid to its parent were $240 million.
 
The National Association of Insurance Commissioners has established risk-based
capital standards to determine the capital requirements of a life insurance
company based upon the risks inherent in its operations. These standards require
the computation of a risk-based capital amount which is then compared to a
company's actual total adjusted capital. The computation involves applying
factors to various statutory financial data to address four primary risks: asset
default, adverse insurance experience, interest rate risk and external events.
These standards provide for regulatory attention when the
 
50
<PAGE>
 
percentage of total adjusted capital to authorized control level risk-based
capital is below certain levels. As of December 31, 1998, the Company's total
adjusted capital was well in excess of the levels requiring regulatory
attention.
 
YEAR 2000 ISSUE
The Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American Express
Company (American Express). All of the major systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and affiliates of
AEFC. American Express is coordinating Year 2000 (Y2K) efforts on behalf of all
of its businesses and subsidiaries. Representatives of AEFC are participating in
these efforts. The Y2K issue is the result of computer programs having been
written using two digits rather than four to define a year. Some programs may
recognize a date using "00" as the year 1900 rather than 2000. This
misinterpretation could result in the failure of major systems or
miscalculations, which could have a material impact on American Express and its
businesses or subsidiaries through business interruption or shutdown, financial
loss, reputation damage and legal liability to third parties. American Express
and AEFC began addressing the Y2K issue in 1995 and have established a plan for
resolution, which involves the remediation, decommissioning and replacement of
relevant systems, including mainframe, mid-range and desktop computers,
application software, operating systems, systems software, date back-up archival
and retrieval services, telephone and other communications systems, and hardware
peripherals and facilities dependent on embedded technology. As a part of their
plan, American Express has generally followed and utilized the specific policies
and guidelines established by the Federal Financial Institutions Examination
Council, as well as other U.S. and international regulatory agencies.
Additionally, American Express continues to participate in Y2K related industry
consortia sponsored by various partners and suppliers. Progress is reviewed
regularly with the Company's senior management and American Express's senior
management and Board of Directors.
 
American Express' and AEFC's Y2K compliance effort related to information
technology (IT) systems is divided into two initiatives. The first, which is the
much larger initiative, is known internally as "Millenniax," and relates to
mainframe and other technological systems maintained by the American Express
Technologies organization. The second, known as "Business T," relates
 
                                                                              51
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
to the technological assets that are owned, managed or maintained by American
Express' individual business units, including AEFC. Business T also encompasses
the remediation of non-IT systems. These initiatives involve a substantial
number of employees and external consultants. This multiple sourcing approach is
intended to mitigate the risk of becoming dependent on any one vendor or
resource. While the vast majority of American Express' and AEFC's systems that
require modification are being remediated, in some cases they have chosen to
migrate to new applications that are already Y2K compliant.
 
American Express' and AEFC's plans for remediation with respect to Millenniax
and Business T include the following program phases: (i) employee awareness and
mobilization, (ii) inventory collection and assessment, (iii) impact analysis,
(iv) remediation/decommission, (v) testing and (vi) implementation. As part of
the first three phases, American Express and AEFC have identified their
mission-critical systems for purposes of prioritization. American Express and
AEFC targeted substantial testing of critical systems for completion early in
1999 and have a goal to continue compliance efforts, including but not limited
to the testing of systems on an integrated basis and independent validation of
such testing, through 1999.** American Express and AEFC currently are on track
with this schedule. With respect to systems maintained by American Express and
AEFC, the first three phases referred to above have been substantially completed
for both Millenniax and Business T. In addition, remediation of critical systems
is substantially complete. As of December 31, 1998, for Millenniax for American
Express, the remediation/decommission, testing and implementation phases for
critical and non-critical systems in total are 82%, 75% and 60% complete,
respectively. For Millenniax for AEFC, such phases are 99%, 97% and 97%
complete, respectively. For Business T for American Express, such phases are
85%, 70% and 69% complete, respectively. For Business T for AEFC, such phases
are 74%, 62% and 62% complete, respectively.
 
American Express' most commonly used methodology for remediation is the sliding
window. Once an application/system has been remediated, American Express applies
specific types of tests, such as stress, regression, unit, future date and
baseline to ensure that the remediation process has achieved Y2K compliance
while maintaining the fundamental data processing integrity of the
 
52
<PAGE>
 
particular system. To assist with remediation and testing, American Express is
using various standardized tools obtained from a variety of vendors.
 
American Express' cumulative costs since inception of the Y2K initiatives were
$383 million through December 31, 1998 and are estimated to be in the range of
$135-$160 million for the remainder through 2000.** AEFC's cumulative costs
since inception of the Y2K initiative were $56 million through December 31, 1998
and are estimated to be in the range of $13-$19 million for the remainder
through 2000.** These include both remediation costs and costs related to
replacements that were or will be required as a result of Y2K. These costs,
which are expensed as incurred, relate to both Millenniax and Business T, and
have not had, nor are they expected to have, a material adverse impact on
American Express', AEFC's, or the Company's results of operations or financial
condition.** Costs related to Milleniax, which represent most of the total Y2K
costs of American Express, are managed by and included in the American Express
corporate level financial results; costs related to Business T are included in
American Express' individual business segment's financial results, including
AEFC's. American Express and AEFC have not deferred other critical technology
projects or investment spending as a result of Y2K. However, because American
Express and AEFC must continually prioritize the allocation of finite financial
and human resources, certain non-critical spending initiatives have been
deferred.
 
American Express' and AEFC's major businesses are heavily dependent upon
internal computer systems, and all have significant interaction with systems of
third parties, both domestically and internationally. American Express and AEFC
are working with key external parties, including merchants, clients,
counterparties, vendors, exchanges, utilities, suppliers, agents and regulatory
agencies to mitigate the potential risks to American Express and AEFC of Y2K.
The failure of external parties to resolve their own Y2K issues in a timely
manner could result in a material financial risk to American Express or AEFC. As
part of their overall compliance program, American Express and AEFC are actively
communicating with third parties through face-to-face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness.
Although numerous third parties have indicated to American Express and AEFC in
writing that they are addressing their Y2K issues on a timely basis, the
readiness of third parties overall varies across the spectrum. Because American
Express' and AEFC's Y2K compliance is dependent on key third parties being
 
                                                                              53
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
compliant on a timely basis, there can be no assurances that American Express'
and AEFC's efforts alone will resolve all Y2K issues.
 
At this point, American Express and AEFC are in the process of performing an
assessment of reasonably likely Y2K systems failures and related consequences.
American Express is also preparing specific Y2K contingency plans for all key
American Express business units, including AEFC, to mitigate the potential
impact of such failures. This effort is a full-scale initiative that includes
both internal and external experts under the guidance of an American
Express-wide steering committee. The contingency plans, which will be based in
part on an assessment of the magnitude and probability of potential risks, will
primarily focus on proactive steps to prevent Y2K failures from occurring, or if
they should occur, to detect them quickly, minimize their impact and expedite
their repair. The Y2K contingency plans will supplement disaster recovery and
business continuity plans already in place, and are expected to include measures
such as selecting alternative suppliers and channels of distribution, and
developing American Express' and AEFC's own technology infrastructure in lieu of
those provided by third parties. The contingency plans are being amended to
include specific Year 2000 considerations, and will continue to be refined
throughout 1999 as additional information related to American Express' and
AEFC's potential Year 2000 exposure is gathered.**
 
** Statements in this Y2K discussion marked with two asterisks are
   forward-looking statements which are subject to risks and uncertainties.
   Important factors that could cause results to differ materially from these
   forward-looking statements include, among other things, the ability of
   American Express or AEFC to successfully identify systems containing
   two-digit codes, the nature and amount of programming required to fix the
   affected systems, the costs of labor and consultants related to such efforts,
   the continued availability of such resources, and the ability of third
   parties that interface with American Express or AEFC to successfully address
   their Y2K issues.
 
REINSURANCE
Reinsurance arrangements are used to reduce exposure to large losses. The
maximum amount of risk retained by IDS Life on any one life is $750,000 of life
and waiver of premium benefits plus $50,000 of accidental death benefits. The
excesses are reinsured with other life insurance companies. At Dec. 31, 1998,
traditional life and universal life-type insurance in force aggregated $80.8
billion, of which $4.7 billion was reinsured.
 
RESERVES
In accordance with the insurance laws and regulations under which IDS Life
operates, it is obligated to carry
 
54
<PAGE>
 
on its books, as liabilities, actuarially determined reserves to meet its
obligations on its outstanding life and health insurance policies and annuity
contracts. Reserves for policies and contracts are based on mortality and
morbidity tables in general use in the United States. These reserves are
computed amounts that, with additions from premiums to be received, and with
interest on such reserves compounded annually at assumed rates, will be
sufficient to meet IDS Life's policy obligations at their maturities or in the
event of an insured's death. In the accompanying financial statements, these
reserves are determined in accordance with generally accepted accounting
principles. (See Note 1, "Liabilities for future policy benefits," in the "Notes
to Consolidated Financial Statements.")
 
INVESTMENTS
Of IDS Life's consolidated total investments of $26 billion at Dec. 31, 1998,
30% was invested in mortgage-backed securities, 53% in corporate and other
bonds, 13% in primary mortgage loans on real estate, 2% in policy loans and the
remaining 2% in other investments.
 
COMPETITION
IDS Life is engaged in a business that is highly competitive due to the large
number of stock and mutual life insurance companies and other entities marketing
insurance products. There are over 1,600 stock, mutual and other types of
insurers in the life insurance business. BEST'S INSURANCE REPORTS, Life-Health
edition, 1998, assigned IDS Life one of its highest classifications, A+
(Superior).
 
EMPLOYEES
As of Dec. 31, 1998, IDS Life and its subsidiaries had 282 employees; including
227 employed at the corporate office in Minneapolis, MN, 8 employed at the
American Centurion Life Assurance Company, located in Albany, NY and 47 employed
at IDS Life Insurance Company of New York, located in Albany, NY.
 
PROPERTIES
IDS Life occupies office space in Minneapolis, MN, which is rented by its
parent, AEFC. IDS Life reimburses AEFC for rent based on direct and indirect
allocation methods. Facilities occupied by IDS Life and our subsidiaries are
believed to be adequate for the purposes for which they are used and are well
maintained.
 
STATE REGULATION
IDS Life is subject to the laws of the State of Minnesota governing insurance
companies and to the regulations of
 
                                                                              55
<PAGE>
                    ADDITIONAL INFORMATION ABOUT IDS LIFE
 
the Minnesota Department of Commerce. An annual statement in the prescribed form
is filed with the Minnesota Department of Commerce each year covering our
operation for the preceding year and its financial condition at the end of such
year. Regulation by the Minnesota Department of Commerce includes periodic
examination to determine IDS Life's contract liabilities and reserves so that
the Minnesota Department of Commerce may certify that these items are correct.
The Company's books and accounts are subject to review by the Minnesota
Department of Commerce at all times. Such regulation does not, however, involve
any supervision of the account's management or the company's investment
practices or policies. In addition, IDS Life is subject to regulation under the
insurance laws of other jurisdictions in which it operates. A full examination
of IDS Life's operations is conducted periodically by the National Association
of Insurance Commissioners.
 
Under insurance guaranty fund laws, in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. Most of these laws do provide however, that an
assessment may be excused or deferred if it would threaten an insurer's own
financial strength.
 
56
<PAGE>
- ----------------------------------------------
                        DIRECTORS AND EXECUTIVE OFFICERS*
 
The directors and principal executive officers of IDS Life and the principal
occupation of each during the last five years is as follows:
 
DIRECTORS
 
DAVID R. HUBERS
Born in 1943
 
Director since September 1989; president and chief executive officer, AEFC,
since August 1993, and director since January 1984. Senior vice president,
Finance and chief financial officer, AEFC, from January 1984 to August 1993.
 
RICHARD W. KLING
Born in 1940
 
Director since February 1984; president since March 1994. Executive vice
president, Marketing and Products from January 1988 to March 1994. Senior vice
president, AEFC, since May 1994. Director of IDS Life Series Fund, Inc. and
member of the board of managers and president of IDS Life Variable Annuity Funds
A and B.
 
PAUL F. KOLKMAN
Born in 1946
 
Director since May 1984; executive vice president since March 1994; vice
president, Finance from May 1984 to March 1994; vice president, AEFC, since
January 1987. Vice president and chief actuary of IDS Life Series Fund, Inc.
 
PAULA R. MEYER
Born in 1954
 
Director and executive vice president since 1998; vice president, AEFC since
1998; Piper Capital Management (PCM) President from October 1997 to May 1998;
PCM Director of Marketing from June 1995 to October 1997; PCM Director of Retail
Marketing from December 1993 to June 1995.
 
JAMES A. MITCHELL
Born in 1941
 
Chairman of the board since March 1994; director since July 1984; chief
executive officer from November 1986 to March 1999; president from July 1984 to
March 1994; executive vice president, AEFC, since March 1994; director, AEFC,
since July 1984; senior vice president, AEFC, from July 1984 to March 1994.
 
BARRY J. MURPHY
Born in 1951
 
Director and executive vice president, Client Service, since March 1994; senior
vice president, AEFC, since May 1994; senior vice president, Travel Related
Services (TRS), a subsidiary of American Express Company, from July 1992 to
April 1994; vice president, TRS, from November 1989 to July 1992.
 
                                                                              57
<PAGE>
                        DIRECTORS AND EXECUTIVE OFFICERS*
 
STUART A. SEDLACEK
Born in 1957
 
Director since 1994, executive vice president since 1998; executive vice
president, Assured Assets from March 1994 to 1998; senior vice president and
chief financial officer, AEFC, since 1998; vice president, AEFC, from September
1988 to 1998.
 
OFFICERS OTHER THAN DIRECTORS
 
TIMOTHY V. BECHTOLD
Born in 1953
 
Executive vice president, Risk Management Products since 1995; vice president,
Risk Management, AEFC since 1995; and vice president, Insurance Product
Development from 1989 to 1995.
 
MARK W. CARTER
Born in 1954
 
Executive vice president, Marketing since 1997; senior vice president and chief
marketing officer, AEFC since 1997; vice president of TVSM Inc. from 1996 to
1997; and regional vice president and general manager of ADVO Inc. from 1991 to
1996.
 
LORRAINE R. HART
Born in 1951
 
Vice president, Investments since 1992; vice president, Insurance Investments,
AEFC since 1998; and vice president, Investments, IDS Certificate Company since
1994.
 
JEFFREY S. HORTON
Born in 1961
 
Vice president and treasurer since December 1997; vice president and corporate
treasurer, AEFC, since December 1997; controller, American Express Technologies
- -- Financial Services, AEFC, from July 1997 to December 1997; controller, Risk
Management Products, AEFC, from May 1994 to July 1997; director of finance and
analysis, Corporate Treasury, AEFC, from June 1990 to May 1994.
 
PAMELA J. MORET
Born in 1956
 
Executive vice president, Variable Assets since 1997; vice president, Variable
Assets, AEFC since 1997; vice president, Retail Service Group of AEFC from 1996
to 1997; and vice president, Communications, AEFC from 1993 to 1996.
 
WILLIAM A. STOLTZMANN
Born in 1948
 
Vice president, general counsel and secretary since 1989; vice president and
assistant general counsel, AEFC, since November 1985.
 
PHILIP C. WENTZEL
Born in 1961
 
Vice president and controller since 1998; vice president -- Finance, Risk
Management Products, AEFC since 1997; and director of financial reporting and
analysis from 1992 to 1997.
 
* The address for all of the directors and principal officers is: IDS Tower 10,
  Minneapolis, MN 55440-0010.
 
58
<PAGE>
 
EXECUTIVE COMPENSATION
Executive officers of IDS Life also may serve one or more affiliated companies.
The following table reflects cash compensation paid to the five most highly
compensated executive officers as a group for services rendered in the most
recent year to IDS Life and its affiliates. The table also shows the total cash
compensation paid to all executive officers of IDS Life, as a group, who were
executive officers at any time during the most recent year.
 
<TABLE>
<CAPTION>
           NAME OF INDIVIDUAL                                          CASH
           OR NUMBER IN GROUP                  POSITION HELD       COMPENSATION
 
<S>                                       <C>                      <C>
 Five most highly compensated executive
 officers as a group:                                              $6,640,964
 James A. Mitchell                        Chairman of the Board
                                          and Chief Exec. Officer
 Stuart A. Sedlacek                       Exec. Vice President
 Pamela J. Moret                          Exec. Vice President,
                                          Variable Assets
 Barry J. Murphy                          Exec. Vice President,
                                          Client Service
 Lorraine R. Hart                         Vice president,
                                          Investments
 All executive officers as a group (10)                            $9,938,094
</TABLE>
 
SECURITY OWNERSHIP OF MANAGEMENT
IDS Life's directors and officers do not beneficially own any outstanding shares
of stock of the company. All of the outstanding shares of stock of IDS Life are
beneficially owned by its parent, AEFC. The percentage of shares of AEFC owned
by any director, and by all directors and officers of IDS Life as a group, does
not exceed 1% of the class outstanding.
 
                                                                              59
<PAGE>
- ----------------------------------------------
                        EXPERTS
 
Ernst & Young LLP, independent auditors, have audited the consolidated financial
statements of IDS Life Insurance Company at Dec. 31, 1998 and 1997, and for each
of the three years in the period ended Dec. 31, 1998, as set forth in their
report. We've included our consolidated financial statements in the prospectus
and elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
 
60
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
IDS LIFE FINANCIAL INFORMATION
- -----------------------------------------------------------------
 
The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing the
investor as to the financial condition of the insurance company and its ability
to carry out its obligations under its variable contracts.
 
IDS LIFE INSURANCE COMPANY
- -----------------------------------------------------------------
 
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS                                        DEC. 31, 1998    DEC. 31, 1997
ASSETS                                                        ($ thousands, except share amounts)
<S>                                                                <C>              <C>
- -------------------------------------------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost (fair value: 1998,
$8,420,035; 1997, $9,743,410)....................................  $  7,964,114     $  9,315,450
Available for sale, at fair value (amortized cost: 1998,
$13,344,949; 1997, $12,515,030)..................................    13,613,139       12,876,694
Mortgage loans on real estate....................................     3,505,458        3,618,647
Policy loans.....................................................       525,431          498,874
Other investments................................................       366,604          318,591
- -------------------------------------------------------------------------------------------------
Total investments................................................    25,974,746       26,628,256
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents........................................        22,453           19,686
Amounts recoverable from reinsurers..............................       262,260          205,716
Amounts due from brokers.........................................           327            8,400
Other accounts receivable........................................        47,963           37,895
Accrued investment income........................................       366,574          357,390
Deferred policy acquisition costs................................     2,496,352        2,479,577
Other assets.....................................................        30,487           22,700
Separate account assets..........................................    27,349,401       23,214,504
- -------------------------------------------------------------------------------------------------
Total assets.....................................................  $ 56,550,563     $ 52,974,124
- -------------------------------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S>                                                                <C>              <C>
- -------------------------------------------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities..................................................  $  21,172,303    $  22,009,747
Universal life-type insurance....................................      3,343,671        3,280,489
Traditional life insurance.......................................        225,306          213,676
Disability income and long-term care insurance...................        660,320          533,124
Policy claims and other policyholders' funds.....................         70,309           68,345
Deferred income taxes, net.......................................         16,930           61,582
Amounts due to brokers...........................................        195,406          381,458
Other liabilities................................................        410,285          345,383
Separate account liabilities.....................................     27,349,401       23,214,504
- -------------------------------------------------------------------------------------------------
Total liabilities................................................     53,443,931       50,108,308
- -------------------------------------------------------------------------------------------------
Stockholder's equity:
Capital stock, $30 par value per share; 100,000 shares
authorized, issued and outstanding...............................          3,000            3,000
Additional paid-in capital.......................................        288,327          290,847
Accumulated other comprehensive income, net of tax:
Net unrealized securities gains..................................        169,584          226,359
Retained earnings................................................      2,645,721        2,345,610
- -------------------------------------------------------------------------------------------------
Total stockholder's equity.......................................      3,106,632        2,865,816
- -------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity.......................  $  56,550,563    $  52,974,124
- -------------------------------------------------------------------------------------------------
</TABLE>
 
See accompanying notes.
 
                                                                             F-1
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                             YEARS ENDED DEC. 31,
                                                                      1998           1997            1996
CONSOLIDATED STATEMENTS OF INCOME                                               ($ thousands)
<S>                                                                <C>         <C>                <C>
- ------------------------------------------------------------------------------------------------------------
Revenues:
Premiums:
Traditional life insurance.......................................  $   53,132       $   52,473    $   51,403
Disability income and long-term care insurance...................     176,298          154,021       131,518
- ------------------------------------------------------------------------------------------------------------
Total premiums...................................................     229,430          206,494       182,921
- ------------------------------------------------------------------------------------------------------------
Policyholder and contractholder charges..........................     383,965          341,726       302,999
Management and other fees........................................     401,057          340,892       271,342
Net investment income............................................   1,986,485        1,988,389     1,965,362
Net realized gain (loss) on investments..........................       6,902              860          (159)
- ------------------------------------------------------------------------------------------------------------
Total revenues...................................................   3,007,839        2,878,361     2,722,465
- ------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Death and other benefits:
Traditional life insurance.......................................      29,835           28,951        26,919
Universal life-type insurance and investment contracts...........     108,349           92,814        85,017
Disability income and long-term care insurance...................      27,414           22,333        19,185
Increase in liabilities for future policy benefits:
Traditional life insurance.......................................       6,052            3,946         1,859
Disability income and long-term care insurance...................      73,305           63,631        57,230
Interest credited on universal life-type insurance and investment
contracts........................................................   1,317,124        1,386,448     1,370,468
Amortization of deferred policy acquisition costs................     382,642          322,731       278,605
Other insurance and operating expenses...........................     287,326          276,596       261,468
- ------------------------------------------------------------------------------------------------------------
Total benefits and expenses......................................   2,232,047        2,197,450     2,100,751
- ------------------------------------------------------------------------------------------------------------
Income before income taxes.......................................     775,792          680,911       621,714
Income taxes.....................................................     235,681          206,664       207,138
- ------------------------------------------------------------------------------------------------------------
Net income.......................................................  $  540,111       $  474,247    $  414,576
- ------------------------------------------------------------------------------------------------------------
</TABLE>
 
See accompanying notes.
 
F-2
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY                                                       OTHER
                                                               TOTAL                  ADDITIONAL    COMPREHENSIVE
                                                            STOCKHOLDER'S CAPITAL      PAID-IN       INCOME,      RETAINED
THREE YEARS ENDED DEC. 31, 1998 ($ thousands)                 EQUITY       STOCK       CAPITAL      NET OF TAX    EARNINGS
<S>                                                         <C>           <C>        <C>            <C>          <C>
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995................................  $2,331,708     $3,000       $278,814    $ 230,129    $1,819,765
Comprehensive income:
Net income................................................     414,576         --             --           --       414,576
Unrealized holding losses arising during the year, net of
deferred policy acquisition costs of $10,325 and taxes of
$82,982...................................................    (154,111)        --             --     (154,111)           --
Reclassification adjustment for losses included in net
income, net of tax of $(5,429)............................      10,084         --             --       10,084            --
                                                            -----------                             ----------
Other comprehensive loss..................................    (144,027)        --             --     (144,027)           --
                                                            -----------
Comprehensive income......................................     270,549         --             --           --            --
Capital contribution from parent..........................       4,801         --          4,801           --            --
Other changes.............................................       2,022         --             --           --         2,022
Cash dividends to parent..................................    (165,000)        --             --           --      (165,000)
                                                            ---------------------------------------------------------------
Balance, December 31, 1996................................   2,444,080      3,000        283,615       86,102     2,071,363
Comprehensive income:
Net income................................................     474,247         --             --           --       474,247
Unrealized holding gains arising during the year, net of
effect on deferred policy acquisition costs of $(7,714)
and taxes of $(75,215)....................................     139,686         --             --      139,686            --
Reclassification adjustment for losses included in net
income, net of tax of $(308)..............................         571         --             --          571            --
                                                            -----------                             ----------
Other comprehensive income................................     140,257         --             --      140,257            --
                                                            -----------
Comprehensive income......................................     614,504         --             --           --            --
Capital contribution from parent..........................       7,232         --          7,232           --            --
Cash dividends to parent..................................    (200,000)        --             --           --      (200,000)
                                                            ---------------------------------------------------------------
Balance, December 31, 1997................................   2,865,816      3,000        290,847      226,359     2,345,610
Comprehensive income:
Net income................................................     540,111         --             --           --       540,111
Unrealized holding losses arising during the year, net of
effect on deferred policy acquisition costs of $6,333 and
taxes of $32,826..........................................     (60,964)        --             --      (60,964)           --
Reclassification adjustment for losses included in net
income, net of tax of $(2,254)............................       4,189         --             --        4,189            --
                                                            -----------                             ----------
Other comprehensive loss..................................     (56,775)        --             --      (56,775)           --
                                                            -----------
Comprehensive income......................................     483,336         --             --           --            --
Other changes.............................................      (2,520)        --         (2,520)          --            --
Cash dividends to parent..................................    (240,000)        --             --           --      (240,000)
                                                            ---------------------------------------------------------------
Balance, December 31, 1998................................  $3,106,632     $3,000       $288,327    $ 169,584    $2,645,721
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
 
See accompanying notes.
 
                                                                             F-3
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                             YEARS ENDED DEC. 31,
                                                                      1998           1997           1996
CONSOLIDATED STATEMENTS OF CASH FLOWS                                             (thousands)
<S>                                                                <C>           <C>             <C>
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................  $   540,111    $   474,247    $   414,576
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Policy loan issuance, excluding universal life-type insurance....      (53,883)       (54,665)       (49,314)
Policy loan repayment, excluding universal life-type insurance...       57,902         46,015         41,179
Change in amounts recoverable from reinsurers....................      (56,544)       (47,994)       (43,335)
Change in other accounts receivable..............................      (10,068)         6,194         (4,981)
Change in accrued investment income..............................       (9,184)       (14,077)         4,695
Change in deferred policy acquisition costs, net.................      (10,443)      (156,486)      (294,755)
Change in liabilities for future policy benefits for traditional
life, disability income and long-term care insurance.............      138,826        112,915         97,479
Change in policy claims and other policyholders' funds...........        1,964        (15,289)        27,311
Change in deferred income tax provision (benefit)................      (19,122)        19,982        (65,609)
Change in other liabilities......................................       64,902         13,305         46,724
Amortization of premium (accretion of discount), net.............        9,170         (5,649)       (23,032)
Net realized (gain) loss on investments..........................       (6,902)          (860)           159
Policyholder and contractholder charges, non-cash................     (172,396)      (160,885)      (154,286)
Other, net.......................................................       10,786          7,161        (10,816)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities..............  $   485,119    $   223,914    $   (14,005)
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed maturities held to maturity:
Purchases........................................................  $    (1,020)   $    (1,996)   $   (43,751)
Maturities, sinking fund payments and calls......................    1,162,731        686,503        759,248
Sales............................................................      236,963        236,761        279,506
Fixed maturities available for sale:
Purchases........................................................   (4,100,238)    (3,160,133)    (2,299,198)
Maturities, sinking fund payments and calls......................    2,967,311      1,206,213      1,270,240
Sales............................................................      278,955        457,585        238,905
Other investments, excluding policy loans:
Purchases........................................................     (555,647)      (524,521)      (904,536)
Sales............................................................      579,038        335,765        236,912
Change in amounts due from brokers...............................        8,073          2,647        (11,047)
Change in amounts due to brokers.................................     (186,052)       119,471        140,369
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities..............      390,114       (641,705)      (333,352)
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Activity related to universal life-type insurance and
investment contracts:
Considerations received..........................................    1,873,624      2,785,758      3,567,586
Surrenders and death benefits....................................   (3,792,612)    (3,736,242)    (4,250,294)
Interest credited to account balances............................    1,317,124      1,386,448      1,370,468
Universal life-type insurance policy loans:
Issuance.........................................................      (97,602)       (84,835)       (86,501)
Repayment........................................................       67,000         54,513         58,753
Capital transaction with parent..................................           --          7,232          4,801
Dividends paid...................................................     (240,000)      (200,000)      (165,000)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities........................     (872,466)       212,874        499,813
- ------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents.............        2,767       (204,917)       152,456
Cash and cash equivalents at beginning of year...................       19,686        224,603         72,147
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year.........................  $    22,453    $    19,686    $   224,603
- ------------------------------------------------------------------------------------------------------------
</TABLE>
 
See accompanying notes.
 
F-4
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS)
- -----------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
NATURE OF BUSINESS
IDS Life Insurance Company (the Company) is a stock life insurance company
organized under the laws of the State of Minnesota. The Company is a wholly
owned subsidiary of American Express Financial Corporation (AEFC), which is a
wholly owned subsidiary of American Express Company. The Company serves
residents of all states except New York. IDS Life Insurance Company of New York
is a wholly owned subsidiary of the Company and serves New York State residents.
The Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company, American Partners Life Insurance
Company and American Express Corporation.
 
The Company's principal products are deferred annuities and universal life
insurance, which are issued primarily to individuals. It offers single premium
and flexible premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well. The Company's insurance products
include universal life (fixed and variable), whole life, single premium life and
term products (including waiver of premium and accidental death benefits). The
Company also markets disability income and long-term care insurance.
 
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.
 
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which vary in certain
respects from reporting practices prescribed or permitted by state insurance
regulatory authorities (see Note 4).
 
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
INVESTMENTS
Fixed maturities that the Company has both the positive intent and the ability
to hold to maturity are classified as held to maturity and carried at amortized
cost. All other fixed maturities and all marketable equity securities are
classified as available for sale and carried at fair value. Unrealized gains and
losses on securities classified as available for sale are reported as a separate
component of other comprehensive income, net of deferred policy acquisition
costs and deferred taxes.
 
Realized investment gain or loss is determined on an identified cost basis.
 
Prepayments are anticipated on certain investments in mortgage-backed securities
in determining the constant effective yield used to recognize interest income.
Prepayment estimates are based on information received from brokers who deal in
mortgage-backed securities.
 
Mortgage loans on real estate are carried at amortized cost less reserves for
mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
 
Impairment of mortgage loans is measured as the excess of a loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for mortgage
loan losses. The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the portfolio. The
level of the reserve account is determined based on several factors, including
historical
 
                                                                             F-5
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve for
mortgage loan losses.
 
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
 
The cost of interest rate caps and floors is amortized to investment income over
the life of the contracts and payments received as a result of these agreements
are recorded as investment income when realized. The amortized cost of interest
rate caps and floors is included in other investments. Amounts paid or received
under interest rate swap agreements are recognized as an adjustment to
investment income.
 
The Company purchases and writes index options to hedge the fee income earned on
the management of equity securities in separate accounts and the underlying
mutual funds. These index options are carried at market value and are included
in other investments or other liabilities, as appropriate. Gains or losses on
index options that qualify as hedges are deferred and recognized in management
and other fees in the same period as the hedged fee income. Gains or losses on
index options that do not qualify as hedges are marked to market through the
income statement.
 
The Company also uses index options to manage the risks related to a certain
annuity product that pays interest based upon the relative change in a major
stock market index between the beginning and end of the product's term.
Purchased options used in conjunction with this product are reported in other
investments and written options are included in other liabilities. The
amortization of the cost of purchased options, the proceeds of written options
and the changes in intrinsic value of the contracts are included in net
investment income.
 
Policy loans are carried at the aggregate of the unpaid loan balances which do
not exceed the cash surrender values of the related policies.
 
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
 
STATEMENTS OF CASH FLOWS
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost, which approximates fair value.
 
Supplementary information to the consolidated statements of cash flows for the
years ended December 31 is summarized as follows:
 
<TABLE>
<CAPTION>
                                       1998      1997      1996
<S>                                  <C>       <C>       <C>
- -----------------------------------------------------------------
CASH PAID DURING THE YEAR FOR:
Income taxes.......................  $215,003  $174,472  $317,283
Interest on borrowings.............    14,529     8,213     4,119
- -----------------------------------------------------------------
</TABLE>
 
RECOGNITION OF PROFITS ON ANNUITY CONTRACTS AND INSURANCE POLICIES
Profits on fixed deferred annuities are recognized by the Company over the lives
of the contracts, using primarily the interest method. Profits represent the
excess of investment income earned from investment of contract considerations
over interest credited to contract owners and other expenses.
 
F-6
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The retrospective deposit method is used in accounting for universal life-type
insurance. Under this method, profits are recognized over the lives of the
policies in proportion to the estimated gross profits expected to be realized.
 
Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and expenses
are associated with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association is
accomplished by means of the provision for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.
 
Policyholder and contractholder charges include the monthly cost of insurance
charges, issue and administrative fees and surrender charges. These charges also
include the minimum death benefit guarantee fees received from the variable life
insurance separate accounts. Management and other fees include investment
management fees from underlying proprietary mutual funds and mortality and
expense risk fees received from the variable annuity and variable life insurance
separate accounts.
 
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally sales compensation, policy
issue costs, underwriting and certain sales expenses, have been deferred on
insurance and annuity contracts. The deferred acquisition costs for most single
premium deferred annuities and installment annuities are amortized using
primarily the interest method. The costs for universal life-type insurance and
certain installment annuities are amortized as a percentage of the estimated
gross profits expected to be realized on the policies. For traditional life,
disability income and long-term care insurance policies, the costs are amortized
over an appropriate period in proportion to premium revenue.
 
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal life-type insurance and deferred annuities are
accumulation values.
 
Liabilities for fixed annuities in a benefit status are based on established
industry mortality tables and interest rates ranging from 5% to 9.5%, depending
on year of issue.
 
Liabilities for future benefits on traditional life insurance are based on the
net level premium method, using anticipated mortality, policy persistency and
interest earning rates. Anticipated mortality rates are based on established
industry mortality tables. Anticipated policy persistency rates vary by policy
form, issue age and policy duration with persistency on cash value plans
generally anticipated to be better than persistency on term insurance plans.
Anticipated interest rates range from 4% to 10%, depending on policy form, issue
year and policy duration.
 
Liabilities for future disability income and long-term care policy benefits
include both policy reserves and claim reserves. Policy reserves are based on
the net level premium method, using anticipated morbidity, mortality, policy
persistency and interest earning rates. Anticipated morbidity and mortality
rates are based on established industry morbidity and mortality tables.
Anticipated policy persistency rates vary by policy form, issue age, policy
duration and, for disability income policies, occupation class. Anticipated
interest rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 7% over 5 to 10
years.
 
Claim reserves are calculated based on claim continuance tables and anticipated
interest earnings. Anticipated claim continuance rates are based on established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 6% to 8%.
 
REINSURANCE
The maximum amount of life insurance risk retained by the Company on any one
life is $750 of life benefit plus $50 of accidental death benefits. The maximum
amount of life insurance risk retained on any joint-life
 
                                                                             F-7
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
combination is $1,500. The excesses are reinsured with other life insurance
companies, primarily on a yearly renewable term basis. Long-term care policies
are primarily reinsured on a coinsurance basis. Beginning in 1998, the Company
retains all disability income and waiver of premium risk.
 
FEDERAL INCOME TAXES
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.
 
Included in other liabilities at December 31, 1998 and 1997 are $26,291 payable
to and $12,061, receivable from, respectively, AEFC for federal income taxes.
 
SEPARATE ACCOUNT BUSINESS
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance contract
owners. The Company receives investment management fees from the proprietary
mutual funds used as investment options for variable annuities and variable life
insurance. The Company receives mortality and expense risk fees from the
separate accounts.
 
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
 
For variable life insurance, the Company guarantees that the rates at which
insurance charges and administrative fees are deducted from contract funds will
not exceed contractual maximums. The Company also guarantees that the death
benefit will continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
 
ACCOUNTING CHANGES
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires the reporting and display of
comprehensive income and its components. Comprehensive income is defined as the
aggregate change in stockholder's equity excluding changes in ownership
interests. For the Company, it is net income and the unrealized gains or losses
on available-for-sale securities, net of the effect on deferred policy
acquisition costs, taxes and reclassification adjustment.
 
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use." The SOP, which is effective
January 1, 1999, requires the capitalization of certain costs incurred after the
date of adoption to develop or obtain software for internal use. Software
utilized by the Company is owned by AEFC and will be capitalized by AEFC. As a
result, the new rule will not have a material impact on the Company's results of
operations or financial condition.
 
In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments," providing guidance for the
timing of recognition of liabilities related to guaranty fund assessments. The
Company will adopt the SOP on January 1, 1999. The Company has historically
carried a balance
 
F-8
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
in other liabilities on the balance sheet for potential guaranty fund assessment
exposure. Adoption of the SOP will not have a material impact on the Company's
results of operations or financial condition.
 
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2000. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
Earlier application of all of the provisions of this Statement is encouraged,
but it is permitted only as of the beginning of any fiscal quarter that begins
after issuance of the Statement. This Statement cannot be applied retroactively.
The ultimate financial impact of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
 
RECLASSIFICATION
Certain 1997 and 1996 amounts have been reclassified to conform to the 1998
presentation.
 
- --------------------------------------------------------------------------------
2. INVESTMENTS
 
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values are
determined by established procedures involving, among other things, review of
market indices, price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial files.
 
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1998 are
as follows:
 
<TABLE>
<CAPTION>
                                                               GROSS         GROSS
                                                AMORTIZED   UNREALIZED    UNREALIZED        FAIR
HELD TO MATURITY                                  COST         GAINS        LOSSES         VALUE
<S>                                            <C>          <C>           <C>           <C>
- ----------------------------------------------------------------------------------------------------
U.S. Government agency obligations...........  $   39,888     $  4,460      $     --    $     44,348
State and municipal obligations..............       9,683          491            --          10,173
Corporate bonds and obligations..............   6,305,476      447,752        27,087       6,726,141
Mortgage-backed securities...................   1,609,067       30,458           152       1,639,373
- ----------------------------------------------------------------------------------------------------
                                               $7,964,114     $483,161      $ 27,239    $  8,420,035
- ----------------------------------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
                                                               GROSS         GROSS
                                                AMORTIZED   UNREALIZED    UNREALIZED        FAIR
AVAILABLE FOR SALE                                COST         GAINS        LOSSES         VALUE
<S>                                            <C>          <C>           <C>           <C>
- ----------------------------------------------------------------------------------------------------
U.S. Government agency obligations...........  $   52,043     $  3,324      $     --    $     55,367
State and municipal obligations..............      11,060        1,231            --          12,291
Corporate bonds and obligations..............   7,332,344      271,174       155,181       7,448,337
Mortgage-backed securities...................   5,949,502      151,511         3,869       6,097,144
- ----------------------------------------------------------------------------------------------------
Total fixed maturities.......................  13,344,949      427,240       159,050      13,613,139
Equity securities............................       3,000          158            --           3,158
- ----------------------------------------------------------------------------------------------------
                                               $13,347,949    $427,398      $159,050    $ 13,616,297
- ----------------------------------------------------------------------------------------------------
</TABLE>
 
                                                                             F-9
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
2. INVESTMENTS (CONTINUED)
The amortized cost, gross unrealized gains and losses and fair values of
investmentsin fixed maturities and equity securities at December 31, 1997 are as
follows:
 
<TABLE>
<CAPTION>
                                                               GROSS         GROSS
                                                AMORTIZED   UNREALIZED    UNREALIZED
HELD TO MATURITY                                  COST         GAINS        LOSSES       FAIR VALUE
<S>                                            <C>          <C>           <C>           <C>
- -----------------------------------------------------------------------------------------------------
U.S. Government agency obligations...........  $   41,932     $  2,949      $    --     $      44,881
State and municipal obligations..............       9,684          568           --            10,252
Corporate bonds and obligations..............   7,280,646      415,700        9,322         7,687,024
Mortgage-backed securities...................   1,983,188       25,976        7,911         2,001,253
- -----------------------------------------------------------------------------------------------------
                                               $9,315,450     $445,193      $17,233     $   9,743,410
- -----------------------------------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
                                                               GROSS         GROSS
                                                AMORTIZED   UNREALIZED    UNREALIZED        FAIR
AVAILABLE FOR SALE                                COST         GAINS        LOSSES          VALUE
<S>                                            <C>          <C>           <C>           <C>
- -----------------------------------------------------------------------------------------------------
U.S. Government agency obligations...........  $   65,291     $  4,154      $    --     $      69,445
State and municipal obligations..............      11,045        1,348           --            12,393
Corporate bonds and obligations..............   5,308,129      232,761       30,198         5,510,692
Mortgage-backed securities...................   7,130,565      160,478        6,879         7,284,164
- -----------------------------------------------------------------------------------------------------
Total fixed maturities.......................  12,515,030      398,741       37,077        12,876,694
Equity securities............................       3,000          361           --             3,361
- -----------------------------------------------------------------------------------------------------
                                               $12,518,030    $399,102      $37,077     $  12,880,055
- -----------------------------------------------------------------------------------------------------
</TABLE>
 
The amortized cost and fair value of investments in fixed maturities at December
31, 1998 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
 
<TABLE>
<CAPTION>
                                           AMORTIZED      FAIR
HELD TO MATURITY                             COST         VALUE
<S>                                       <C>          <C>
- ------------------------------------------------------------------
Due in one year or less.................  $  354,296   $   359,020
Due from one to five years..............   2,111,369     2,249,847
Due from five to ten years..............   3,012,227     3,189,789
Due in more than ten years..............     877,155       982,006
Mortgage-backed securities..............   1,609,067     1,639,373
- ------------------------------------------------------------------
                                          $7,964,114   $ 8,420,035
- ------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
                                           AMORTIZED      FAIR
AVAILABLE FOR SALE                           COST         VALUE
<S>                                       <C>          <C>
- ------------------------------------------------------------------
Due in one year or less.................  $  102,463   $   104,475
Due from one to five years..............     682,336       725,859
Due from five to ten years..............   3,904,326     4,044,378
Due in more than ten years..............   2,718,659     2,654,382
Mortgage-backed securities..............   5,937,165     6,084,045
- ------------------------------------------------------------------
                                          $13,344,949  $13,613,139
- ------------------------------------------------------------------
</TABLE>
 
During the years ended December 31, 1998, 1997 and 1996, fixed maturities
classified as held to maturity were sold with amortized cost of $230,036,
$229,848 and $277,527, respectively. Net gains and losses on these sales were
not significant. The sale of these fixed maturities was due to significant
deterioration in the issuers' credit worthiness.
 
Fixed maturities available for sale were sold during 1998 with proceeds of
$278,955 and gross realized gains and losses of $15,658 and $22,102,
respectively. Fixed maturities
 
F-10
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
2. INVESTMENTS (CONTINUED)
available for sale were sold during 1997 with proceeds of $457,585 and gross
realized gains and losses of $6,639 and $7,518, respectively. Fixed maturities
available for sale were sold during 1996 with proceeds of $238,905 and gross
realized gains and losses of $571 and $16,084, respectively.
 
At December 31, 1998, bonds carried at $14,302 were on deposit with various
states as required by law.
 
At December 31, 1998, investments in fixed maturities comprised 83 percent of
the Company's total invested assets. These securities are rated by Moody's and
Standard & Poor's (S&P), except for securities carried at approximately $3.6
billion which are rated by AEFC's internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at amortized
cost, by rating on December 31 is as follows:
 
<TABLE>
<CAPTION>
RATING                                       1998         1997
<S>                                       <C>          <C>
- ------------------------------------------------------------------
Aaa/AAA.................................  $ 7,629,628  $ 9,195,619
Aaa/AA..................................        2,277           --
Aa/AA...................................      308,053      232,451
Aa/A....................................      301,325      246,792
A/A.....................................    2,525,283    2,787,936
A/BBB...................................    1,148,736    1,200,345
Baa/BBB.................................    6,237,014    5,226,616
Baa/BB..................................      492,696      475,084
Below investment grade..................    2,664,051    2,465,637
- ------------------------------------------------------------------
                                          $21,309,063  $21,830,480
- ------------------------------------------------------------------
</TABLE>
 
At December 31, 1998, 93 percent of the securities rated Aaa/AAA are GNMA, FNMA
and FHLMC mortgage-backed securities. No holdings of any other issuer are
greater than one percent of the Company's total investments in fixed maturities.
At December 31, 1998, approximately 13 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:
 
<TABLE>
<CAPTION>
                                   DECEMBER 31, 1998            DECEMBER 31, 1997
- --------------------------------------------------------------------------------------
                                ON BALANCE  COMMITMENTS     ON BALANCE    COMMITMENTS
REGION                            SHEET     TO PURCHASE       SHEET       TO PURCHASE
<S>                             <C>         <C>            <C>            <C>
- --------------------------------------------------------------------------------------
East North Central............  $ 750,705     $ 16,393     $  748,372       $ 32,462
West North Central............    491,006       81,648        456,934         14,340
South Atlantic................    839,233       21,020        922,172         14,619
Middle Atlantic...............    476,448        6,169        545,601         15,507
New England...................    263,761        2,824        316,250          2,136
Pacific.......................    195,851       16,946        184,917          3,204
West South Central............    136,841        1,412        125,227             --
East South Central............     46,029           --         60,274             --
Mountain......................    345,379        8,473        297,545         28,717
- --------------------------------------------------------------------------------------
                                3,545,253      154,885      3,657,292        110,985
Less allowance for losses.....     39,795           --         38,645             --
- --------------------------------------------------------------------------------------
                                $3,505,458    $154,885     $3,618,647       $110,985
- --------------------------------------------------------------------------------------
</TABLE>
 
                                                                            F-11
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
2. INVESTMENTS (CONTINUED)
 
<TABLE>
<CAPTION>
                                     DECEMBER 31, 1998             DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------
                                 ON BALANCE    COMMITMENTS     ON BALANCE    COMMITMENTS
PROPERTY TYPE                      SHEET       TO PURCHASE       SHEET       TO PURCHASE
<S>                             <C>            <C>            <C>            <C>
- -----------------------------------------------------------------------------------------
Department/retail stores......  $ 1,139,349    $    59,305    $ 1,189,203    $    27,314
Apartments....................      960,808          9,272      1,089,127         16,576
Office buildings..............      783,576         50,450        716,729         34,546
Industrial buildings..........      298,549         13,263        295,889         21,200
Hotels/motels.................      109,185         14,122        101,052             --
Medical buildings.............      124,369             --         99,979          9,748
Nursing/retirement homes......       46,696             --         72,359             --
Mixed Use.....................       65,151             --         71,007             --
Other.........................       17,570          8,473         21,947          1,601
- -----------------------------------------------------------------------------------------
                                  3,545,253        154,885      3,657,292        110,985
Less allowance for losses.....       39,795             --         38,645             --
- -----------------------------------------------------------------------------------------
                                $ 3,505,458    $   154,885    $ 3,618,647    $   110,985
- -----------------------------------------------------------------------------------------
</TABLE>
 
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
 
At December 31, 1998 and 1997, the Company's recorded investment in impaired
loans was $24,941 and $45,714, respectively, with allowances of $6,662 and
$9,812, respectively. During 1998 and 1997, the average recorded investment in
impaired loans was $37,873 and $61,870, respectively.
The Company recognized $1,809, $2,981and $4,889 of interest income related to
impaired loans for the years ended December 31, 1998, 1997 and 1996
respectively.
 
The following table presents changes in the allowance for investment losses
related to all loans:
 
<TABLE>
<CAPTION>
                                      1998     1997     1996
<S>                                  <C>      <C>      <C>
- --------------------------------------------------------------
Balance, January 1.................  $38,645  $37,495  $37,340
Provision for investment losses....    7,582    8,801   10,005
Loan payoffs.......................     (800)  (3,851)  (4,700)
Foreclosures and writeoffs.........   (5,632)  (3,800)  (5,150)
- --------------------------------------------------------------
Balance, December 31...............  $39,795  $38,645  $37,495
- --------------------------------------------------------------
</TABLE>
 
At December 31, 1998, the Company had commitments to purchase investments other
than mortgage loans for $223,011. Commitments to purchase investments are
made in the ordinary course of business. The fair value of these commitments is
$nil.
 
Net investment income for the years ended December 31 is summarized as follows:
 
<TABLE>
<CAPTION>
                                        1998        1997        1996
<S>                                  <C>         <C>         <C>
- -----------------------------------------------------------------------
Interest on fixed maturities.......  $1,676,984  $1,692,481  $1,666,929
Interest on mortgage loans.........     301,253     305,742     283,830
Other investment income............      43,518      25,089      43,283
Interest on cash equivalents.......       5,486       5,914       5,754
- -----------------------------------------------------------------------
                                      2,027,241   2,029,226   1,999,796
Less investment expenses...........      40,756      40,837      34,434
- -----------------------------------------------------------------------
                                     $1,986,485  $1,988,389  $1,965,362
- -----------------------------------------------------------------------
</TABLE>
 
F-12
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
2. INVESTMENTS (CONTINUED)
Net realized gain (loss) on investments for the years ended December 31 is
summarized as follows:
 
<TABLE>
<CAPTION>
                                      1998     1997     1996
<S>                                  <C>      <C>      <C>
- --------------------------------------------------------------
Fixed maturities...................  $12,084  $16,115  $ 8,736
Mortgage loans.....................   (5,933)  (6,424)  (8,745)
Other investments..................      751   (8,831)    (150)
- --------------------------------------------------------------
                                     $ 6,902  $   860  $  (159)
- --------------------------------------------------------------
</TABLE>
 
Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:
 
<TABLE>
<CAPTION>
                                            1998      1997       1996
<S>                                       <C>       <C>        <C>
- ------------------------------------------------------------------------
Fixed maturities available for sale.....  $(93,474) $ 223,441  $(231,853)
Equity securities.......................      (203)        53        (52)
- ------------------------------------------------------------------------
</TABLE>
 
- --------------------------------------------------------------------------------
3. INCOME TAXES
 
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance companies.
 
The income tax expense (benefit) for the years ended December 31 consists of the
following:
 
<TABLE>
<CAPTION>
                                       1998      1997      1996
<S>                                  <C>       <C>       <C>
- -----------------------------------------------------------------
Federal income taxes:
Current............................  $244,946  $176,879  $260,357
Deferred...........................   (16,602)   19,982   (65,609)
- -----------------------------------------------------------------
                                      228,344   196,861   194,748
State income taxes-current.........     7,337     9,803    12,390
- -----------------------------------------------------------------
Income tax expense.................  $235,681  $206,664  $207,138
- -----------------------------------------------------------------
</TABLE>
 
Increases (decreases) to the federal tax provision applicable to pretax income
based on the statutory rate are attributable to:
 
<TABLE>
<CAPTION>
                                                                     1998                 1997                 1996
- --------------------------------------------------------------------------------------------------------------------------
                                                              PROVISION    RATE    PROVISION    RATE    PROVISION    RATE
<S>                                                           <C>          <C>     <C>          <C>     <C>          <C>
- --------------------------------------------------------------------------------------------------------------------------
Federal income taxes based
on the statutory rate.......................................   $271,527    35.0%    $238,319    35.0%    $217,600    35.0%
(Decreases) increases are attributable to:
Tax-excluded interest and dividend income...................    (12,289)   (1.6)     (10,294)   (1.5)      (9,636)   (1.5)
State taxes, net of federal benefit.........................      4,769      .6        6,372      .9        8,053     1.3
Affordable housing credits..................................    (19,688)   (2.5)     (20,705)   (3.0)      (5,090)    (.8)
Other, net..................................................     (8,638)   (1.1)      (7,028)   (1.0)      (3,789)    (.7)
- --------------------------------------------------------------------------------------------------------------------------
Federal income taxes........................................   $235,681    30.4%    $206,664    30.4%    $207,138    33.3%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
 
A portion of life insurance company income earned prior to 1984 was not subject
to current taxation but was accumulated, for tax purposes, in a policyholders'
surplus account. At December 31, 1998, the Company had a policyholders' surplus
account balance of $20,114. The policyholders' surplus account is only
 
                                                                            F-13
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------
 
3. INCOME TAXES (CONTINUED)
taxable if dividends to the stockholder exceed the stockholder's surplus account
or if the Company is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
 
Significant components of the Company's deferred tax assets and liabilities as
of December 31 are as follows:
 
<TABLE>
<CAPTION>
                                                           1998      1997
<S>                                                      <C>       <C>
- ---------------------------------------------------------------------------
Deferred tax assets:
Policy reserves........................................  $756,769  $748,204
Life insurance guaranty fund assessment reserve........    15,289    20,101
Other..................................................     4,253     9,589
- ---------------------------------------------------------------------------
Total deferred tax assets..............................   776,311   777,894
- ---------------------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs......................   698,471   700,032
Unrealized gain on investments.........................    91,315   121,885
Investments, other.....................................     3,455    17,559
- ---------------------------------------------------------------------------
Total deferred tax liabilities.........................   793,241   839,476
- ---------------------------------------------------------------------------
Net deferred tax liabilities...........................  $ 16,930  $ 61,582
- ---------------------------------------------------------------------------
</TABLE>
 
The Company is required to establish a valuation allowance for any portion of
the deferred tax assets that management believes will not be realized. In the
opinion of management, it is more likely than not that the Company will realize
the benefit of the deferred tax assets and, therefore, no such valuation
allowance has been established.
 
- --------------------------------------------------------------------------------
4. STOCKHOLDER'S EQUITY
 
Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by state insurance regulatory authorities. Statutory
unassigned surplus aggregated $1,598,203 as of December 31, 1998 and $1,468,677
as of December 31, 1997 (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in 1999 in
excess of approximately $353,933 would require approval of the Department of
Commerce of the State of Minnesota.
 
Statutory net income for the years ended December 31 and capital and surplus as
of December 31 are summarized as follows:
 
<TABLE>
<CAPTION>
                                        1998        1997        1996
<S>                                  <C>         <C>         <C>
- -----------------------------------------------------------------------
Statutory net income...............  $  429,903  $  379,615  $  365,585
Statutory capital and surplus......   1,883,405   1,765,290   1,565,082
- -----------------------------------------------------------------------
</TABLE>
 
F-14
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS
 
The Company loans funds to AEFC under a collateral loan agreement. The balance
of the loan was $nil at December 31, 1998 and 1997. This loan can be increased
to a maximum of $75,000 and pays interest at a rate equal to the preceding
month's effective new money rate for the Company's permanent investments.
Interest income on related party loans totaled $nil, $103 and $780 in 1998, 1997
and 1996, respectively.
 
The Company participates in the American Express Company Retirement Plan which
covers all permanent employees age 21 and over who have met certain employment
requirements. Employer contributions to the plan are based on participants' age,
years of service and total compensation for the year. Funding of retirement
costs for this plan complies with the applicable minimum funding requirements
specified by ERISA. The Company's share of the total net periodic pension cost
was $211, $201 and $174 in 1998, 1997 and 1996, respectively.
 
The Company also participates in defined contribution pension plans of American
Express Company which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of either each
employee's eligible compensation or basic contributions. Costs of these plans
charged to operations in 1998, 1997 and 1996 were $1,503, $1,245 and $990,
respectively.
 
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees and retired
financial advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees are considered
to have been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. The Company's share of postretirement benefits in
1998, 1997 and 1996 was $1,352, $1,330 and $1,449, respectively.
 
Charges by AEFC for use of joint facilities, technology support, marketing
services and other services aggregated $411,337, $414,155 and $397,362 for 1998,
1997 and 1996, respectively. Certain of these costs are included in deferred
policy acquisition costs.
 
- --------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENCIES
 
At December 31, 1998, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $81,074,928, $74,730,720 and
$67,274,354, respectively, of which $4,912,313, $4,351,904 and $3,875,921 were
reinsured at the respective year ends. The Company also reinsures a portion of
the risks assumed under disability income and long-term care policies. Under all
reinsurance agreements, premiums ceded to reinsurers amounted to $66,378,
$60,495 and $48,250 and reinsurance recovered from reinsurers amounted to
$20,982, $19,042, and $15,612 for the years ended December 31, 1998, 1997 and
1996, respectively. Reinsurance contracts do not relieve the Company from its
primary obligation to policyholders.
 
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which the Company, its parent and its subsidiaries conduct
business involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. The Company has been named as a
defendant in three of these types of actions.
 
The plaintiffs purport to represent a class consisting of all persons who
purchased policies or contracts from the Company and its subsidiaries. The
complaints put at issue various alleged sales practices and misrepresentations,
alleged breaches of fiduciary duties and alleged violations of consumer fraud
statutes. The Company and its subsidiaries believe they have meritorious
defenses to the claims raised in these lawsuits.
 
The outcome of any litigation cannot be predicted with certainty. In the opinion
of
 
                                                                            F-15
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------
 
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
management, however, the ultimate resolution of these lawsuits, taken in the
aggregate, should not have a material adverse effect on the Company's
consolidated financial position.
 
The IRS routinely examines the Company's federal income tax returns, and is
currently auditing the Company's returns for the 1990 through 1992 tax years.
Management does not believe there will be a material adverse effect on the
Company's consolidated financial position as a result of this audit.
 
- --------------------------------------------------------------------------------
7. LINES OF CREDIT
 
The Company has available lines of credit with its parent aggregating $100,000.
The interest rate for any borrowings is established by reference to various
indices plus 20 to 45 basis points, depending on the term. Borrowings
outstanding under this agreement were $nil at December 31, 1998 and 1997.
 
- --------------------------------------------------------------------------------
8. DERIVATIVE FINANCIAL INSTRUMENTS
 
The Company enters into transactions involving derivative financial instruments
to manage its exposure to interest rate risk and equity market risk, including
hedging specific transactions. The Company does not hold derivative instruments
for trading purposes. The Company manages risks associated with these
instruments as described below.
 
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate or equity market index.
The Company is not impacted by market risk related to derivatives held for
non-trading purposes beyond that inherent in cash market transactions.
Derivatives held for purposes other than trading are largely used to manage risk
and, therefore, the cash flow and income effects of the derivatives are inverse
to the effects of the underlying transactions.
 
Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. The Company monitors credit risk related to derivative
financial instruments through established approval procedures, including setting
concentration limits by counterparty, and requiring collateral, where
appropriate. A vast majority of the Company's counterparties are rated A or
better by Moody's and Standard & Poor's.
 
Credit risk related to interest rate caps and floors and index options is
measured by the replacement cost of the contracts. The replacement cost
represents the fair value of the instruments.
 
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance sheet.
Notional amounts far exceed the related credit risk.
 
F-16
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------
 
8. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The Company's holdings of derivative financial instruments are as follows:
 
<TABLE>
<CAPTION>
                                                                        TOTAL
DECEMBER 31, 1998                NOTIONAL     CARRYING      FAIR       CREDIT
ASSETS:                           AMOUNT       AMOUNT       VALUE     EXPOSURE
<S>                             <C>           <C>         <C>         <C>
- -------------------------------------------------------------------------------
Assets:
Interest rate caps............  $ 3,400,000   $ 15,985    $   4,256    $ 4,256
Interest rate floors..........    1,000,000      1,082       13,971     13,971
Options purchased.............      110,912     24,094       29,453     29,453
Liabilities:
Options purchased/written.....      265,454    (10,526)     (11,062)        --
Off balance sheet:
Interest rate swaps...........    1,667,000         --      (73,477)        --
- -------------------------------------------------------------------------------
                                              $ 30,635    $ (36,859)   $47,680
- -------------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
DECEMBER 31, 1997                NOTIONAL   CARRYING      FAIR      TOTAL CREDIT
ASSETS:                           AMOUNT     AMOUNT       VALUE       EXPOSURE
<S>                             <C>         <C>         <C>         <C>
- ---------------------------------------------------------------------------------
Assets:
Interest rate caps............  $4,600,000   $24,963    $  15,665      $15,665
Interest rate floors..........   1,000,000     1,561        4,551        4,551
Options purchased/written.....     279,737     9,808       10,449       10,449
Liabilities:
Options written...............       7,373       (89)         114           --
Off balance sheet:
Interest rate swaps...........   1,267,000        --      (45,799)          --
- ---------------------------------------------------------------------------------
                                             $36,243    $ (15,020)     $30,655
- ---------------------------------------------------------------------------------
</TABLE>
 
The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The interest rate caps, floors and swaps expire
on various dates from 1999 to 2003. The put and call options expire on various
dates from 1999 to 2005.
 
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect the margin
between interest rates earned on investments and the interest rates credited to
related annuity contract holders.
 
The Company is also using interest rate swaps to manage interest rate risk
related to the level of fee income earned on the management of fixed income
securities in separate accounts and the underlying mutual funds. The amount of
fee income received is based upon the daily market value of the separate account
and mutual fund assets. As a result, changing interest rate conditions could
impact the Company's fee income significantly. The Company entered into interest
rate swaps to hedge anticipated fee income for 1999 related to separate accounts
and mutual funds which invest in fixed income securities. Interest will be
accrued and reported in accrued investment income and other liabilities, as
appropriate, and management and other fees.
 
The Company offers a certain annuity product that pays interest based upon the
relative change in a major stock market index between the beginning and end of
the product's term. As a means of hedging its obligation under the provisions of
this product, the Company purchases and writes options on the major stock market
index.
 
Index options are used to manage the equity market risk related to the fee
income that the Company receives from its separate accounts and the underlying
mutual funds. The amount of the fee income received is based upon the daily
market value of the separate account and mutual fund assets. As a result, the
Company's fee income could be impacted significantly by changing economic
conditions in the equity market. The Company entered into index option
 
                                                                            F-17
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------
 
8. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
collars (combination of puts and calls) to hedge anticipated fee income for 1998
and 1999 related to separate accounts and mutual funds which invest in equity
securities. Testing has demonstrated the impact of these instruments on the
income statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation no longer
exists, or in the event the Company disposes of the index options collars, the
instruments will be marked-to-market through the income statement. At December
31, 1998 deferred losses on purchased put and written call index options were
$2,933 and $7,435, respectively. At December 31, 1997 deferred losses on
purchased put index options were $2,428 and deferred gains on written call index
options were $5,275.
 
- --------------------------------------------------------------------------------
9. FAIR VALUES OF FINANCIAL INSTRUMENTS
 
The Company discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. Fair
values of life insurance obligations and all non-financial instruments, such as
deferred acquisition costs are excluded.
 
Off-balance sheet intangible assets, such as the value of the field force, are
also excluded. Management believes the value of excluded assets and liabilities
is significant. The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
 
<TABLE>
<CAPTION>
                                          1998                      1997
- ----------------------------------------------------------------------------------
                                 CARRYING       FAIR       CARRYING       FAIR
                                   VALUE        VALUE        VALUE        VALUE
<S>                             <C>          <C>          <C>          <C>
- ----------------------------------------------------------------------------------
FINANCIAL ASSETS
Investments:
Fixed maturities (Note 2):
Held to maturity..............  $ 7,964,114  $ 8,420,035  $ 9,315,450  $ 9,743,410
Available for sale............   13,613,139   13,613,139   12,876,694   12,876,694
Mortgage loans on real estate
(Note 2)......................    3,505,458    3,745,617    3,618,647    3,808,570
Other:
Equity securities (Note 2)....        3,158        3,158        3,361        3,361
Derivative financial
instruments (Note 8)..........       41,161       47,680       36,332       30,665
Other.........................       28,872       28,872       82,347       85,383
Cash and cash equivalents
(Note 1)......................       22,453       22,453       19,686       19,686
Separate account assets
(Note 1)......................   27,349,401   27,349,401   23,214,504   23,214,504
 
FINANCIAL LIABILITIES
Future policy benefits for
fixed annuities...............  $19,855,203  $19,144,838  $20,731,052  $19,882,302
Derivative financial
instruments (Note 8)..........       10,526       84,539           89       45,685
Separate account
liabilities...................   25,005,732   24,179,115   21,488,282   20,707,620
- ----------------------------------------------------------------------------------
</TABLE>
 
At December 31, 1998 and 1997, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,226,985 and $1,185,155, respectively, and policy loans of $90,115
and $93,540, respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1998 and 1997. The fair value of
deferred annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in non-life
contingent payout status is estimated as the present value of projected benefit
payments at rates appropriate for contracts issued in 1998 and 1997.
 
At December 31, 1998 and 1997, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less any applicable surrender
charges and less variable insurance contracts carried at $2,343,669 and
$1,726,222, respectively.
 
F-18
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)
 
- -----------------------------------------------------------------
 
REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors
IDS Life Insurance Company
 
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1998. 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 consolidated financial position of IDS Life Insurance
Company at December 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
 
Ernst & Young LLP
Minneapolis, Minnesota
February 4, 1999
 
                                                                            F-19
<PAGE>
- ----------------------------------------------
 
    TABLE OF CONTENTS OF THE STATEMENT OF
      ADDITIONAL INFORMATION
 
    Performance Information......................  p. 3
 
    Calculating Annuity Payouts..................  p. 6
 
    Rating Agencies..............................  p. 6
 
    Principal Underwriter........................  p. 6
 
    Independent Auditors.........................  p. 6
 
    Financial Statements
 
                                                                              61
<PAGE>
                        Please check the box to receive a copy of the Statement
                        of Additional Information for:
 
                        / / IDS Life Group Variable Annuity Contract
 
                        / / IDS Life Retirement Annuity Mutual Funds
 
MAIL YOUR REQUEST TO:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
 
WE WILL MAIL YOUR REQUEST TO:
Your name
________________________________________________________________________________
 
Address
________________________________________________________________________________
 
City               State           Zip
________________________________________________________________________________
 
                                                                              63


<PAGE>
                       STATEMENT OF ADDITIONAL INFORMATION

                    IDS LIFE GROUP VARIABLE ANNUITY CONTRACT

               IDS LIFE ACCOUNTS F, IZ, JZ, G, H, N, KZ, LZ and MZ

                                 April 30, 1999

IDS Life  Accounts  F, IZ,  JZ,  G, H, N, KZ,  LZ and MZ are  separate  accounts
established and maintained by IDS Life Insurance Company (IDS Life).

This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained from your financial advisor, or by writing or calling us at the address
and telephone number below. The prospectus is incorporated in this SAI by
reference.


IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN  55440-0010
800-437-0602


<PAGE>

                                TABLE OF CONTENTS

Performance Information................................................p.3

Calculating Annuity Payouts............................................p.6

Rating Agencies........................................................p.6

Principal Underwriter..................................................p.6

Independent Auditors...................................................p.6

Financial Statements

<PAGE>

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

The variable accounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.

Average Annual Total Return

We will express quotations of average annual total return for the variable
accounts in terms of the average annual compounded rate of return of a
hypothetical investment in the contract over a period of one, five and 10 years
(or, if less, up to the life of the variable accounts), calculated according to
the following formula:

                                           P(1+T)n = ERV

where:         P =  a hypothetical initial payment of $1,000
               T =  average annual total return
               n =  number of years
             ERV    = Ending Redeemable Value of a hypothetical $1,000 payment
                    made at the beginning of the period, at the end of the
                    period (or fractional portion thereof)

We calculated the following performance figures on the basis of historical
performance of each fund. Past performance does not guarantee future results.

Average Annual Total Return With Withdrawal For Periods Ending Dec. 31, 1998

<TABLE>
<CAPTION>

Variable Account   Investing in:                        1 Year         5 Years        10 Years         Since
                                                                                                     Inception

                     IDS Life

<S>                                                      <C>             <C>                             <C>  
  JZ                 Aggressive Growth Fund             -4.60%           9.00%             -- %          9.53%
                     (1/92)*

  F                  Capital Resource Fund (10/81)      15.38           14.87           14.59             --

  KZ                 Global Yield Fund (4/96)            0.44             --             --              4.22

  MZ                 Growth Dimensions Fund (4/96)      19.59             --             --             20.59

  LZ                 Income Advantage Fund (4/96)      -11.14             --             --              2.08

  IZ                 International Equity Fund           7.67            5.76            --              8.10
                     (1/92)

  N                  Managed Fund (4/86)                 7.64           12.25           13.37             --

  H                  Moneyshare Fund (10/81)            -2.27            3.39           4.18              --

  G                  Special Income Fund (10/81)        -5.64            5.14           7.74              --

*    (Commencement dates of the Funds)


Average Annual Total Return Without Withdrawal For Periods Ending Dec. 31, 1998

Variable Account   Investing in:                       1 Year          5 Years        10 Years      Since Inception
                                                    

                     IDS Life

  JZ                 Aggressive Growth Fund              1.49%           9.44%             -- %           9.69%
                     (1/92)*

  F                  Capital Resource Fund (10/81)      22.74           15.33           14.59             --

  KZ                 Global Yield Fund (4/96)            6.85            --              --               6.24

  MZ                 Growth Dimensions Fund (4/96)      27.22            --              --              22.93

  LZ                 Income Advantage Fund (4/96)       -5.47            --              --               4.06

  IZ                 International Equity Fund          14.54            6.19            --               8.26
                     (1/92)

  N                  Managed Fund (4/86)                14.51           12.70           13.37             --

  H                  Moneyshare Fund (10/81)             3.97            3.80            4.18             --

  G                  Special Income Fund (10/81)         0.38            5.57            7.74             --

*    (Commencement dates of the Funds)

</TABLE>

<PAGE>

Cumulative Total Return

Cumulative total return represents the cumulative change in value of an
investment for a given period (reflecting change in a variable account's
accumulation unit value). We compute cumulative total return using the following
formula:

                                              ERV - P
                                                 P

where:                P =  a hypothetical initial payment of $1,000
                    ERV =  Ending Redeemable Value of a hypothetical $1,000
                           payment made at the beginning of the period, at the
                           end of the period (or fractional period thereof)

The SEC requires that we assume that you withdraw the entire contract at the end
of the one-, five-, and 10- year periods (or, if less, up to the life of the
variable account). In addition, we may show performance figures without the
deduction of a withdrawal charge. All total return figures reflect the deduction
of all applicable charges including the contract administrative charge and the
mortality and expense risk fee.

Calculation of Yield for Variable Accounts Investing in Money Market Funds

Annualized Simple Yield:

For the variable accounts investing in money market funds, we base quotations of
simple yield on:
     (a)  the change in the value of a hypothetical  variable account (exclusive
          of capital  changes and income  other than  investment  income) at the
          beginning of a particular seven-day period;
     (b)  less a pro rata share of the variable  account  expenses  accrued over
          the period; 
     (c)  dividing this  difference by the value of the variable  account at the
          beginning of the period to obtain the base period return; and
     (d)  multiplying the base period return by 365/7.

The variable account's value includes:
o    any declared dividends,
o    the value of any shares  purchased  with  dividends paid during the period,
     and
o    any dividends declared for such shares.

It does not include:
o    the effect of any applicable withdrawal charge, or
o    any realized or unrealized gains or losses.

Annualized Compound Yield:

We calculate compound yield using the base period return described above, which
we then compound according to the following formula:

Compound Yield = [(Base Period Return + 1) 365/7] -1
<TABLE>
<CAPTION>

Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1998

     Variable Account       Investing In:                                Simple Yield                   Compound Yield
<S>                                                                         <C>                              <C>  
            H               IDS Life Moneyshare Fund                        3.71%                            3.78%
</TABLE>

<PAGE>

You must consider (when comparing an investment in variable accounts investing
in money market funds with fixed annuities) that fixed annuities often provide
an agreed-to or guaranteed yield for a stated period of time, whereas the
variable account's yield fluctuates. In comparing the yield of the variable
account to a money market fund, you should consider the different services that
the contract provides.

Annualized Yield for Variable Accounts Investing in Income Funds

For the variable accounts investing in income funds, we base quotations of yield
on all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:

                                        YIELD = 2[(  a-b  + 1)6 - 1]
                                                     cd

where:  a =  dividends and investment income earned during the period
        b =  expenses accrued for the period (net of reimbursements)
        c =  the average daily number of accumulation units outstanding during
             the period that were entitled to receive dividends
        d =  the maximum offering price per accumulation unit on the last day of
             the period

The variable account earns yield from the increase in the net asset value of
shares of the fund in which it invests and from dividends declared and paid by
the fund, which are automatically invested in shares of the fund.
<TABLE>
<CAPTION>

Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1998

     Variable Account       Investing in:                                             Yield
<S>                                                                                   <C>  
            KZ              IDS Life Global Yield Fund                                5.38%
            LZ              IDS Life Income Advantage Fund                            9.54
            G               IDS Life Special Income Fund                              7.24
</TABLE>

The yield on the variable account's accumulation unit may fluctuate daily and
does not provide a basis for determining future yields.

Independent rating or statistical services or publishers or publications such as
those listed below may quote variable account performance, compare it to
rankings, yields or returns, or use it in variable annuity accumulation or
settlement illustrations they publish or prepare.

         The Bank Rate Monitor National Index, Barron's, Business Week, CDA
         Technologies, Donoghue's Money Market Fund Report, Financial Services
         Week, Financial Times, Financial World, Forbes, Fortune, Global
         Investor, Institutional Investor, Investor's Daily, Kiplinger's
         Personal Finance, Lipper Analytical Services, Money, Morningstar,
         Mutual Fund Forecaster, Newsweek, The New York Times, Personal
         Investor, Stanger Report, Sylvia Porter's Personal Finance, USA Today,
         U.S. News and World Report, The Wall Street Journal and Wiesenberger
         Investment Companies Service.

<PAGE>

CALCULATING ANNUITY PAYOUTS

We guarantee the fixed annuity payout amounts. Once calculated, the payout will
remain the same and never change. To calculate annuity payouts we:

o    take the total value of the fixed account and the variable  accounts at the
     annuity  start  date,  retirement  date,  or the  date  selected  to  begin
     receiving annuity payouts; then

o    using an annuity table we apply the value  according to the annuity  payout
     plan selected.

The annuity payout table we use will be the one in effect at the time chosen to
begin annuity payouts. The table will be equal to or greater than the table in
the contract.

RATING AGENCIES

The following chart reflects the ratings given to us by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the variable
accounts of the contract. This information relates only to the fixed account and
reflects our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.


    Rating Agency              Rating

      A.M. Best                  A+
                             (Superior)

    Duff & Phelps               AAA

       Moody's                  Aa2

PRINCIPAL UNDERWRITER

The principal underwriter for the contract is IDS Life which offers the contract
on a continuous basis.

Withdrawal charges we received for the last three years aggregated total
$17,936,810, $14,502,145, and $11,956,753, respectively.

Commissions we paid for the last three years aggregated total $17,634,855,
$17,883,488, and $17,247,007, respectively.

INDEPENDENT AUDITORS

The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN
55402), independent auditors, as stated in their report appearing herein.

FINANCIAL STATEMENTS


<PAGE>


Annual Financial Information

Report of Independent Auditors

The Board of Directors
IDS Life Insurance Company

We have  audited the  accompanying  individual  and combined  statements  of net
assets of IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G as of December 31,
1998, and the related  statements of operations for the year then ended, and the
statements of changes in net assets for each of the two years in the period then
ended.  These financial  statements are the  responsibility of the management of
IDS Life Insurance Company. 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 at December 31, 1998 with the affiliated mutual
fund managers.  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 individual and combined  financial  position of IDS
Life  Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G at December  31, 1998,  and the
individual  and combined  results of their  operations  and changes in their net
assets for the periods  described  above, in conformity with generally  accepted
accounting principles.



Ernst & Young LLP
Minneapolis, Minnesota
March 12, 1999


<PAGE>

<TABLE>
<CAPTION>

IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G

Statements of Net Assets                                                                                         Dec. 31,1998       

                                                                        Segregated Asset Account                                  

Assets                                          JZ              F              KZ                 MZ                 LZ           
Investments in shares of mutual funds:
<S>                                       <C>            <C>               <C>             <C>                   <C>              
    at cost                               $1,788,197,221 $3,684,935,824    $89,724,605     $1,216,218,017        $291,192,101     
                                          -------------- --------------    -----------     --------------        ------------     
    at market value                       $2,082,781,066 $5,131,361,606    $92,406,970     $1,749,002,038        $255,849,036     
Dividends receivable                                   -              -        421,690                  -           2,042,371     
Accounts receivable from IDS Life
for contract purchase payments                 2,245,222        323,481         48,064            767,173               8,521     
Receivable from mutual funds
for share redemptions                              5,982      6,927,810            468            719,242              77,256     
                                                   -----      ---------            ---            -------              ------     
Total assets                               2,085,032,270  5,138,612,897     92,877,192      1,750,488,453         257,977,184     
                                           =============  =============     ==========      =============         ===========     

Liabilities
Payable to IDS Life for:
Mortality and expense risk fee                 1,776,939      4,382,459         78,332          1,477,882             216,846     
Contract terminations                              5,982      2,868,832            468              8,534              77,256     
Payable to mutual funds
for investments purchased                        460,659              -        391,422                  -           1,834,046     
                                                 -------      ---------        -------          ---------           ---------     
Total liabilities                              2,243,580      7,251,291        470,222          1,486,416           2,128,148     
                                               ---------      ---------        -------          ---------           ---------     
Net assets applicable to 
contracts in
accumulation period                        2,077,993,544  5,116,939,216     92,156,974      1,742,693,302         254,604,759     
Net assets applicable 
to contracts in
payment period                                 4,795,146     14,422,390        249,996          6,308,735           1,244,277     
                                               ---------     ----------        -------          ---------           ---------     
Total net assets                          $2,082,788,690 $5,131,361,606    $92,406,970     $1,749,002,037        $255,849,036     
                                          ============== ==============    ===========     ==============        ============     
Accumulation units outstanding             1,087,313,726    507,310,351     78,149,847      1,001,825,924         228,164,851     
                                           =============    ===========     ==========      =============         ===========     
Net asset value per accumulation unit             $ 1.91        $ 10.09         $ 1.18             $ 1.74              $ 1.12     
                                                  ======        =======         ======             ======              ======     


                                                                                                                     Combined
                                                                                                                     Variable
Assets                                            IZ             N               H                 G                 Accounts
Investments in shares of mutual funds:
    at cost                               $1,458,478,934 $3,425,224,387   $252,973,354     $1,565,710,281     $13,772,654,724
                                          -------------- --------------   ------------     --------------     ---------------
    at market value                       $1,821,953,414 $4,446,937,115   $252,973,751     $1,523,631,898     $17,356,896,894
Dividends receivable                                   -              -      1,014,866          9,368,649          12,847,576
Accounts receivable from IDS Life
for contract purchase payments                   124,319        254,451         45,301             74,156           3,890,688
Receivable from mutual funds
for share redemptions                          2,401,429      6,179,886      3,002,032            673,389          19,987,494
                                               ---------      ---------      ---------            -------          ----------
Total assets                               1,824,479,162  4,453,371,452    257,035,950      1,533,748,092      17,393,622,652
                                           =============  =============    ===========      =============      ==============

Liabilities
Payable to IDS Life for:
Mortality and expense risk fee                 1,557,290      3,793,373        213,187          1,299,951          14,796,259
Contract terminations                            968,459      2,640,964      3,002,032            673,389          10,245,916
Payable to mutual funds
for investments purchased                              -              -         33,728          8,142,881          10,862,736
                                               ---------      ---------         ------          ---------          ----------
Total liabilities                              2,525,749      6,434,337      3,248,947         10,116,221          35,904,911
                                               ---------      ---------      ---------         ----------          ----------
Net assets applicable 
to contracts in
accumulation period                        1,818,239,593  4,430,951,683    253,582,292      1,518,130,705      17,305,292,068
Net assets applicable 
to contracts in
payment period                                 3,713,820     15,985,432        204,711          5,501,166          52,425,673
                                               ---------     ----------        -------          ---------          ----------
Total net assets                          $1,821,953,413 $4,446,937,115   $253,787,003     $1,523,631,871     $17,357,717,741
                                          ============== ==============   ============     ==============     ===============
Accumulation units outstanding             1,042,405,301  1,100,356,781     98,897,110        287,880,919
                                           =============  =============     ==========        ===========
Net asset value per accumulation unit             $ 1.74         $ 4.03         $ 2.56             $ 5.27
                                                  ======         ======         ======             ======
See accompanying notes to financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G

Statements of Operations                                                                                 Year ended Dec. 31, 1998

                                                                               Segregated Asset Account                             

Investment income                                    JZ                   F               KZ              MZ              LZ        
<S>                                             <C>                 <C>               <C>             <C>             <C>           
Dividend income from mutual funds               $134,146,265        $377,044,679      $4,596,451      $8,812,237      $26,973,910   
Mortality and expense risk fee                    20,533,567          47,281,244         840,691      14,090,021        2,498,615   
                                                  ----------          ----------         -------      ----------        ---------   
Investment income (loss) - net                   113,612,698         329,763,435       3,755,760      (5,277,784)      24,475,295   
                                                 -----------         -----------       ---------      ----------       ----------   

Realized and unrealized gain (loss) 
on investments - net
Realized gain (loss) on sales of investments 
in mutual funds:
Proceeds from sales                              199,174,546         473,839,958       2,488,079      13,841,654        5,279,074   
Cost of investments sold                         165,668,256         355,015,396       2,461,107      11,756,388        5,772,621   
                                                 -----------         -----------       ---------      ----------        ---------   
Net realized gain (loss) on investment            33,506,290         118,824,562          26,972       2,085,266         (493,547)  
Net change in unrealized appreciation or
depreciation of investments                     (116,897,748)        540,393,789       1,835,832     356,854,753      (40,099,627)  
                                                ------------         -----------       ---------     -----------      -----------   
Net gain (loss) on investments                   (83,391,458)        659,218,351       1,862,804     358,940,019      (40,593,174)  
                                                 -----------         -----------       ---------     -----------      -----------   
Net increase (decrease) in net assets
resulting from operations                        $30,221,240        $988,981,786      $5,618,564    $353,662,235     ($16,117,879)  
                                                 ===========        ============      ==========    ============     ============   


                                                                                                                        Combined
                                                                                                                        Variable
Investment income                                     IZ                  N                H              G             Accounts
Dividend income from mutual funds                $24,644,854        $492,538,113     $11,015,698    $119,862,975   $1,199,635,182
Mortality and expense risk fee                    18,854,430          42,828,816       2,206,125      16,034,502      165,168,011
                                                  ----------          ----------       ---------      ----------      -----------
Investment income (loss) - net                     5,790,424         449,709,297       8,809,573     103,828,473    1,034,467,171
                                                   ---------         -----------       ---------     -----------    -------------

Realized and unrealized gain (loss) 
on investments - net
Realized gain (loss) on sales of investments
in mutual funds:
Proceeds from sales                              294,157,633         290,145,944     272,231,869     145,538,861    1,696,697,618
Cost of investments sold                         244,674,617         215,303,335     272,232,501     143,468,656    1,416,352,877
                                                 -----------         -----------     -----------     -----------    -------------
Net realized gain (loss) on investment            49,483,016          74,842,609            (632)      2,070,205      280,344,741
Net change in unrealized appreciation or
depreciation of investments                      195,486,480          60,772,481             191     (96,451,963)     901,894,188
                                                 -----------          ----------             ---     -----------      -----------
Net gain (loss) on investments                   244,969,496         135,615,090            (441)    (94,381,758)   1,182,238,929
                                                 -----------         -----------            ----     -----------    -------------
Net increase (decrease) in net assets
resulting from operations                       $250,759,920        $585,324,387      $8,809,132      $9,446,715   $2,216,706,100
                                                ============        ============      ==========      ==========   ==============

See accompanying notes to financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G

Statements of Changes in Net Assets                                                                        Year ended Dec. 31, 1998

                                                                         Segregated Asset Account                                   

Operations                                       JZ                   F               KZ                 MZ                 LZ      
<S>                                         <C>                 <C>               <C>               <C>                 <C>         
Investment income (loss) - net              $113,612,698        $329,763,435      $3,755,760        $(5,277,784)        $24,475,295 
Net realized gain (loss) on investmets        33,506,290         118,824,562          26,972          2,085,266            (493,547)
Net change in unrealized appreciation or
depreciation of investments                 (116,897,748)        540,393,789       1,835,832        356,854,753         (40,099,627)
                                            ------------         -----------       ---------        -----------         ----------- 
Net increase (decrease) in net assets
resulting from operations                     30,221,240         988,981,786       5,618,564        353,662,235         (16,117,879)
                                              ==========         ===========       =========        ===========         =========== 

Contract transactions
Contract purchase payments                    65,985,738         105,479,671       2,038,404         64,342,063           8,136,532 
Net transfers*                               (35,763,509)       (108,133,439)     19,960,605        314,642,480          79,088,999 
Transfers for policy loans                     3,183,399           7,449,789          51,676          2,358,750             131,965 
Annuity payments                                (400,799)         (1,252,612)        (17,032)          (436,312)            (92,089)
Contract charges                              (1,742,005)         (3,987,171)        (39,574)        (1,046,612)           (119,647)
Contract terminations:
Surrender benefits                          (172,177,805)       (412,678,091)     (7,210,042)      (116,815,110)        (20,503,088)
Death benefits                                (8,726,997)        (25,027,040)       (410,791)        (5,413,424)         (1,466,072)
                                              ----------         -----------        --------         ----------          ---------- 
Increase (decrease) from 
contract transactions                       (149,641,978)       (438,148,893)     14,373,246        257,631,835          65,176,600 
                                            ------------        ------------      ----------        -----------          ---------- 
Net assets at beginning of year            2,202,209,428       4,580,528,713      72,415,160      1,137,707,967         206,790,315 
                                           -------------       -------------      ----------      -------------         ----------- 
Net assets at end of year                 $2,082,788,690      $5,131,361,606     $92,406,970     $1,749,002,037        $255,849,036 
                                          ==============      ==============     ===========     ==============        ============ 

Accumulation unit activity
Units outstanding at beginning of year     1,168,829,188         556,866,324      65,608,959        831,259,213         175,023,644 
Contracts purchase payments                   35,152,612          11,916,818       1,792,193         42,906,289           6,839,352 
Net transfers*                               (20,661,784)        (12,362,984)     17,576,406        209,719,850          65,787,681 
Transfers for policy loans                     1,704,172             843,187          45,365          1,565,644             111,933 
Contract charges                                (937,617)           (453,322)        (33,633)          (701,700)            (99,946)
Contract terminations:
Surrender benefits                           (91,770,066)        (46,477,597)     (6,465,380)       (79,116,097)        (18,148,390)
Death benefits                                (5,002,779)         (3,022,075)       (374,063)        (3,807,275)         (1,349,423)
                                              ----------          ----------        --------         ----------          ---------- 
Units outstanding at end of year           1,087,313,726         507,310,351      78,149,847      1,001,825,924         228,164,851 
                                           =============         ===========      ==========      =============         =========== 

                                                                                                                           Combined
                                                                                                                           Variable 
Operations                                        IZ                  N                H                 G                 Accounts
Investment income (loss) - net                $5,790,424        $449,709,297      $8,809,573       $103,828,473      $1,034,467,171
Net realized gain (loss) on investmets        49,483,016          74,842,609            (632)         2,070,205         280,344,741
Net change in unrealized appreciation or
depreciation of investments                  195,486,480          60,772,481             191        (96,451,963)        901,894,188
                                             -----------          ----------             ---        -----------         -----------
Net increase (decrease) in net assets
resulting from operations                    250,759,920         585,324,387       8,809,132          9,446,715       2,216,706,100
                                             ===========         ===========       =========          =========       =============

Contract transactions
Contract purchase payments                    53,287,596         102,722,742      17,799,064         38,193,749         457,985,559
Net transfers*                               (94,797,288)         (8,531,530)     65,210,894        (27,040,242)        204,636,970
Transfers for policy loans                     2,850,813           5,797,400         385,793          1,985,036          24,194,621
Annuity payments                                (322,447)         (1,407,902)        (22,173)          (514,367)         (4,465,733)
Contract charges                              (1,544,330)         (3,325,118)       (149,937)        (1,195,650)        (13,150,044)
Contract terminations:
Surrender benefits                          (158,297,324)       (355,471,928)    (51,592,016)      (148,764,277)     (1,443,509,681)
Death benefits                                (9,473,917)        (28,459,626)     (1,774,081)       (14,915,925)        (95,667,873)
                                              ----------         -----------      ----------        -----------         ----------- 
Increase (decrease) from 
contract transactions                       (208,296,897)       (288,675,962)     29,857,544       (152,251,676)       (869,976,181)
                                            ------------        ------------      ----------       ------------        ------------ 
Net assets at beginning of year            1,779,490,390       4,150,288,690     215,120,327      1,666,436,832      16,010,987,822
                                           -------------       -------------     -----------      -------------      --------------
Net assets at end of year                 $1,821,953,413      $4,446,937,115    $253,787,003     $1,523,631,871     $17,357,717,741
                                          ==============      ==============    ============     ==============     ===============

Accumulation unit activity
Units outstanding at beginning of year     1,168,353,202       1,178,734,680      87,255,005        316,788,701
Contracts purchase payments                   31,638,503          27,547,912       7,095,301          7,194,454
Net transfers*                               (58,491,047)         (2,527,414)     25,681,176         (4,997,642)
Transfers for policy loans                     1,695,063           1,525,609         153,649            375,028
Contract charges                                (924,518)           (898,151)        (60,456)          (226,888)
Contract terminations:
Surrender benefits                           (93,910,984)        (95,728,467)    (20,439,462)       (28,247,658)
Death benefits                                (5,954,918)         (8,297,388)       (788,103)        (3,005,076)
                                              ----------          ----------        --------         ---------- 
Units outstanding at end of year           1,042,405,301       1,100,356,781      98,897,110        287,880,919
                                           =============       =============      ==========        ===========

*Includes transfer activity from (to) other accounts and transfers from (to) IDS
Life's fixed account. See accompanying notes to financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H, and G

Statements of Changes in Net Assets                                                                        Year ended Dec. 31, 1997



Operations                                       JZ                   F                KZ                 MZ                 LZ     
<S>                                        <C>                  <C>              <C>                 <C>                <C>         
Investment income (loss) - net             $ 172,766,819        $ 81,933,825     $ 2,162,354         $ (1,098,484)      $11,346,551 
Net realized gain (loss) on investments       25,391,697          69,777,113          26,603              105,557            23,200 
Net change in unrealized appreciation or
depreciation of investments                   31,135,686         748,884,487          88,527          157,444,749         3,906,529 
                                              ----------         -----------          ------          -----------         --------- 
Net increase (decrease) in net 
assets resulting
from operations                              229,294,202         900,595,425       2,277,484          156,451,822        15,276,280 
                                             ===========         ===========       =========          ===========        ========== 

Contract transactions
Contract purchase payments                    87,605,673         134,271,812       3,443,369           58,794,952        10,032,844 
Net transfers*                                30,217,819        (330,558,730)     42,846,230          572,710,885       125,588,307 
Transfers for policy loans                     2,700,859           6,741,393          43,334            1,398,475            80,094 
Annuity payments                                (325,569)           (839,990)         (7,873)            (147,303)          (31,168)
Contract charges                              (1,879,204)         (4,189,959)        (26,651)            (632,210)          (70,043)
Contract terminations:
Surrender benefits                          (118,237,119)       (306,180,259)     (2,695,820)         (37,984,244)       (6,707,680)
Death benefits                                (8,138,343)        (20,091,752)       (163,126)          (2,163,641)         (464,874)
                                              ----------         -----------        --------           ----------          -------- 
Increase (decrease) from 
contract transactions                         (8,055,884)       (520,847,485)     43,439,463          591,976,914       128,427,480 
                                              ----------        ------------      ----------          -----------       ----------- 
Net assets at beginning of year            1,980,971,110       4,200,780,773      26,698,213          389,279,231        63,086,555 
                                           -------------       -------------      ----------          -----------        ---------- 
Net assets at end of year                 $2,202,209,428      $4,580,528,713     $72,415,160       $1,137,707,967      $206,790,315 
                                          ==============      ==============     ===========       ==============      ============ 

Accumulation unit activity
Units outstanding at beginning 
of year                                    1,172,792,754         628,555,221      24,878,248          350,597,571        59,938,791 
Contract purchase payments                    50,910,206          18,318,230       3,250,861           47,250,516         9,009,695 
Net transfers*                                17,204,464         (46,459,818)     40,199,836          465,445,880       112,669,161 
Transfers for policy loans                     1,552,061             911,718          40,853            1,099,049            70,990 
Contract charges                              (1,087,659)           (572,335)        (24,882)            (502,902)          (62,522)
Contract terminations:                                                                                                              
Surrender benefits                           (67,429,599)        (40,932,101)     (2,560,115)         (30,794,587)       (6,187,383)
Death benefits                                (5,113,039)         (2,954,591)       (175,842)          (1,836,314)         (415,088)
                                              ----------          ----------        --------           ----------          -------- 
Units outstanding at end of year           1,168,829,188         556,866,324      65,608,959          831,259,213       175,023,644 
                                           =============         ===========      ==========          ===========       =========== 


                                                                                                                           Combined
                                                                                                                           Variable
Operations                                       IZ                   N                H                  G                Accounts
Investment income (loss) - net              $ 48,707,495       $ 376,571,167     $ 9,208,281         $140,409,440     $ 842,007,448
Net realized gain (loss) on investments       19,817,409          28,722,923            (212)          10,087,389       153,951,679
Net change in unrealized appreciation or
depreciation of investments                  (34,561,365)        246,854,996            (586)         (23,859,115)    1,129,893,908
                                             -----------         -----------            ----          -----------     -------------
Net increase (decrease) in net 
assets resulting
from operations                               33,963,539         652,149,086       9,207,483          126,637,714     2,125,853,035
                                              ==========         ===========       =========          ===========     =============

Contract transactions
Contract purchase payments                    78,292,637         125,778,517      26,471,423           49,361,355       574,052,582
Net transfers*                               (40,464,119)         72,184,459       2,490,728         (141,589,262)      333,426,317
Transfers for policy loans                     2,538,097           4,673,820         415,203            1,893,361        20,484,636
Annuity payments                                (218,797)           (818,698)        (21,359)            (404,625)       (2,815,382)
Contract charges                              (1,744,401)         (3,418,455)       (170,801)          (1,396,704)      (13,528,428)
Contract terminations:
Surrender benefits                          (110,545,864)       (236,462,530)    (33,151,710)        (119,861,011)     (971,826,237)
Death benefits                                (9,311,925)        (25,132,076)     (2,393,157)         (15,519,877)      (83,378,771)
                                              ----------         -----------      ----------          -----------       ----------- 
Increase (decrease) from 
contract transactions                        (81,454,372)        (63,194,963)     (6,359,673)        (227,516,763)     (143,585,283)
                                             -----------         -----------      ----------         ------------      ------------ 
Net assets at beginning of year            1,826,981,223       3,561,334,567     212,272,517        1,767,315,881    14,028,720,070
                                           -------------       -------------     -----------        -------------    --------------
Net assets at end of year                 $1,779,490,390      $4,150,288,690    $215,120,327       $1,666,436,832   $16,010,987,822
                                          ==============      ==============    ============       ==============   ===============

Accumulation unit activity
Units outstanding at beginning 
of year                                    1,220,479,990       1,197,162,300      89,644,495          362,167,237
Contract purchase payments                    51,062,806          38,914,736      10,978,965            9,842,757
Net transfers*                               (25,974,782)         23,088,309       1,243,189          (28,290,096)
Transfers for policy loans                     1,642,862           1,423,911         172,138              376,163
Contract charges                              (1,139,369)         (1,055,013)        (71,845)            (279,982)
Contract terminations:                                                                        
Surrender benefits                           (71,076,097)        (72,296,420)    (13,512,157)         (23,650,436)
Death benefits                                (6,642,208)         (8,503,143)     (1,199,780)          (3,376,942)
                                              ----------          ----------      ----------           ---------- 
Units outstanding at end of year           1,168,353,202       1,178,734,680      87,255,005          316,788,701
                                           =============       =============      ==========          ===========


*Includes transfer activity from (to) other accounts and transfers from (to) IDS
Life's fixed account. See accompanying notes to financial statements.


</TABLE>

<PAGE>


IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G

Notes to Financial Statements

1. Organization

IDS Life Accounts F, G, H and N were established as segregated asset accounts of
IDS Life  Insurance  Company (IDS Life) under  Minnesota law and are  registered
collectively as a single unit investment trust under the Investment  Company Act
of 1940, as amended (the 1940 Act).  Accounts F, G and H were established on May
13, 1981 and commenced operations on Oct. 13, 1981. Account N was established on
April 17, 1985 and commenced  operations  on April 30, 1986.  Accounts IZ and JZ
were  established  as segregated  asset accounts on Sept. 20, 1991 and commenced
operations  on  Jan.  13,  1992.  Accounts  KZ,  LZ and MZ were  established  as
segregated asset accounts on April 2, 1996 and commenced operations on April 30,
1996.  IDS Life  Accounts  JZ, F, KZ, MZ,  LZ,  IZ, N, H and G are  collectively
referred to as "the Accounts."

Each Account invests exclusively in shares of the following funds (collectively,
the  Funds),   which  are  registered   under  the  1940  Act  as   diversified,
(non-diversified for Global Yield) open-end management  investment companies and
have the following investment managers.

Account       Invests exclusively in shares of     Investment Manager
JZ            IDS Life Aggressive Growth Fund      IDS Life Insurance Company 1
F             IDS Life Capital Resource Fund       IDS Life Insurance Company 1
KZ            IDS Life Global Yield Fund           IDS Life Insurance Company 1
MZ            IDS Life Growth Dimensions Fund      IDS Life Insurance Company 1
LZ            IDS Life Income Advantage Fund       IDS Life Insurance Company 1
IZ            IDS Life International Equity Fund   IDS Life Insurance Company 2
N             IDS Life Managed Fund                IDS Life Insurance Company 1
H             IDS Life Moneyshare Fund             IDS Life Insurance Company 1
G             IDS Life Special Income Fund         IDS Life Insurance Company 1

1 American Express Financial Corporation (AEFC) is the investment advisor.
2  AEFC  is  the  investment   advisor.   American   Express  Asset   Management
International, Inc. is the sub-investment advisor.

The assets of each Account are not chargeable  with  liabilities  arising out of
the business conducted by any other segregated asset account or by IDS Life.

IDS Life serves as issuer of the contracts.

2. Summary of Significant Accounting Policies

Investments in the Funds

Investments  in shares of the Funds are stated at market  value which is the net
asset  value  per  share  as  determined  by the  respective  Funds.  Investment
transactions  are  accounted  for on the date the shares are purchased and sold.
The cost of  investments  sold and  redeemed is  determined  on the average cost
method.  Dividend  distributions  received  from the  Funds  are  reinvested  in
additional  shares of the Funds and are recorded as income by the subaccounts on
the ex-dividend date.

Unrealized  appreciation  or  depreciation  of investments  in the  accompanying
financial statements  represents the Accounts' share of the Funds' undistributed
net investment  income,  undistributed  realized gain or loss and the unrealized
appreciation or depreciation on their investment securities.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of increase  and  decrease in net assets from  operations
during the period. Actual results could differ from those estimates.

Federal Income Taxes

IDS Life is taxed as a life insurance company.  The Accounts are treated as part
of IDS Life for federal income tax purposes.  Under existing  federal income tax
law, no income taxes are payable with  respect to any  investment  income of the
Accounts.

3. Mortality and Expense Risk Fee

IDS Life makes  contractual  assurances  to the Accounts  that  possible  future
adverse  changes in  administrative  expenses and  mortality  experience  of the
contract owners and annuitants  will not affect the Accounts.  The mortality and
expense risk fee paid to IDS Life is computed  daily and is equal,  on an annual
basis, to 1% of the average daily net assets of the Accounts.

4. Contract Administrative Charges

An annual  charge of $20 is deducted  from the contract  value of each  Variable
Retirement  Annuity  contract.  An  annual  charge of $30 is  deducted  from the
contract value of each  Combination  Retirement  Annuity  contract.  A quarterly
charge  of $125 is  deducted  from the  contract  value of each  Group  Variable
Annuity contract. An annual charge of $30 is deducted from the certificate value
of each  Employee  Benefit  Annuity  certificate.  A  quarterly  charge of $6 is
deducted from the contract value of each Flexible Annuity  contract.  The annual
charges  are  deducted at contract  or  certificate  year end and the  quarterly
charges are deducted at contract  quarter end, during the  accumulation  period,
for administrative services provided to the Accounts by IDS Life.

A contingent  deferred sales charge (surrender charge or withdrawal charge) will
be imposed upon:

a)    certain Variable Retirement Annuity contract surrenders during
      the first seven years,
b)    Combination Retirement Annuity contract surrenders during the first seven,
      eight or eleven years, depending on type of contract,
c)    Group Variable Annuity contract withdrawals during the first seven years,
d)    Employee Benefit Annuity  certificate  surrenders  during the first eleven
      years, and
e)    Flexible   Annuity   contract   surrenders  of  amounts  other  than  
      those representing  earnings or those representing purchase payments six 
      contract years old or more.

Charges  by  IDS  Life  for  surrenders  are  not  identified  on an  individual
segregated  asset  account  basis.  Charges for all  segregated  asset  accounts
amounted to  $17,936,810 in 1998 and  $14,502,145 in 1997.  Such charges are not
treated as a separate expense of the Accounts. They are ultimately deducted from
contract surrender benefits paid by IDS Life.

5. Investment in Shares

The Accounts' investment in shares of the Funds as of Dec. 31,1998 were 
as follows:

Account  Investment                                 Shares             NAV
JZ       IDS Life Aggressive Growth Fund       135,831,984          $15.33
F        IDS Life Capital Resource Fund        157,143,811           32.65
KZ       IDS Life Global Yield Fund              8,698,435           10.62
MZ       IDS Life Growth Dimensions Fund        99,857,192           17.52
LZ       IDS Life Income Advantage Fund         28,712,357            8.91
IZ       IDS Life International Equity Fund    116,962,935           15.58
N        IDS Life Managed Fund                 240,114,195           18.52
H        IDS Life Moneyshare Fund              252,995,233            1.00
G        IDS Life Special Income Fund          137,181,418           11.11


6. Investment Transactions

The Accounts'  purchases of Funds' shares,  including  reinvestment  of dividend
distributions, were as follows:

                                                       Year ended Dec. 31,
Account Investment                                  1998               1997
JZ      IDS Life Aggressive Growth Fund     $  161,144,482      $  281,608,415
F       IDS Life Capital Resource Fund         361,299,794         111,547,849
KZ      IDS Life Global Yield Fund              20,617,085          47,045,559
MZ      IDS Life Growth Dimensions Fund        265,183,065         592,288,967
LZ      IDS Life Income Advantage Fund          94,930,969         140,453,856
IZ      IDS Life International Equity Fund      90,031,710         122,035,293
N       IDS Life Managed Fund                  447,421,778         417,692,561
H       IDS Life Moneyshare Fund               310,085,733         230,838,115
G       IDS Life Special Income Fund            97,115,658         140,887,599
        Combined Variable Accounts          $1,847,830,274      $2,084,398,214


7. Year 2000 Issue (unaudited)

The Year 2000 issue is the result of computer programs having been written using
two  digits  rather  than  four  to  define  a  year.  Any  programs  that  have
time-sensitive  software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which  could  have a  material  impact  on the  operations  of IDS  Life and the
Account.  IDS Life and the Account have no computer systems of their own but are
dependent upon the systems of AEFC and certain other third parties.

A  comprehensive  review of AEFC's computer  systems and business  processes has
been  conducted to identify the major systems that could be affected by the Year
2000 issue.  Steps are being taken to resolve any potential  problems  including
modification  to  existing  software  and the  purchase of new  software.  These
measures  are  scheduled to be completed  and tested on a timely  basis.  AEFC's
target  date  for  substantially  completing  corrective  measures  on  business
critical  systems was Dec. 31, 1998.  Substantial  testing of these  systems was
targeted  for  completion  early in 1999.  AEFC is  currently on track with this
schedule and is also on track to finish the work on non-critical systems by June
30, 1999. The Year 2000 readiness of unaffiliated  investment managers and other
third parties whose system  failures  could have an impact on IDS Life's and the
Account's operations continues to be evaluated. The potential materiality of any
such impact is not known at this time.

AEFC's Year 2000 project includes  establishing  Year 2000 contingency plans for
all key business units.  Business  continuation  plans,  which address  business
continuation  in the  event of a  system  disruption,  are in place  for all key
business  units.  These plans are being  amended to include  specific  Year 2000
considerations  and will  continue to be refined  throughout  1999 as additional
information related to potential Year 2000 exposure is gathered.






<PAGE>

PART C

Item 24. Financial Statements and Exhibits

(a)      Financial Statements included in Part B of this Registration Statement:

         IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ:

         Statements of Net Assets for year ended Dec. 31, 1998.
         Statements of Operations for year ended Dec. 31, 1998.
         Statements of Changes in Net Assets for years ended Dec. 31, 1998,
         1997, and 1996.
         Notes to Financial Statements.
         Report of Independent Auditors dated March 12, 1999.

Financial Statements included in Part A of this Registration Statement:

         IDS Life Insurance Company:

         Consolidated Balance Sheets as of Dec. 31, 1998 and 1997.
         Consolidated Statements of Income for years ended Dec. 31, 1998, 1997,
         and 1996.
         Consolidated Statements of Stockholder's Equity for years ended Dec.
         31, 1998, 1997 and 1996.
         Consolidated Statements of Cash Flows for years ended Dec. 31, 1998,
         1997, and 1996.
         Notes to Consolidated Financial Statements.
         Report of Independent Auditors dated February 4, 1999.

(b)       Exhibits:

1.1       Resolution of the Executive Committee of the Board of Directors of IDS
          Life  adopted May 13,  1981,  filed  electronically  as Exhibit 1.1 to
          Post-Effective Amendment No. 2 to Registration Statement No. 33-47302,
          is incorporated herein by reference.

1.2       Resolution of the Executive Committee of the Board of Directors of IDS
          Life establishing Account N on April 17, 1985, filed electronically as
          Exhibit  1.2  to  Post-Effective   Amendment  No.  2  to  Registration
          Statement No. 33-47302, is incorporated herein by reference.

1.3       Resolution of the Board of Directors of IDS Life establishing Accounts
          IZ and JZ on September 20, 1991, filed  electronically  as Exhibit 1.3
          to  Post-Effective  Amendment  No.  2 to  Registration  Statement  No.
          33-47302, is incorporated herein by reference.

1.4       Consent  in  Writing  in  Lieu  of  Meeting  of  Board  of   Directors
          establishing   Accounts  MZ,  KZ  and  LZ  on  April  2,  1996,  filed
          electronically  as Exhibit 1.4 to  Post-Effective  Amendment  No. 6 to
          Registration   Statement  No.  33-47302,  is  incorporated  herein  by
          reference.

2.        Not applicable.

3.        Not applicable.

4.        Form of Group Deferred  Variable  Annuity  Contract (form 34660) dated
          April,  1992,  filed  electronically  as  Exhibit 4 to  Post-Effective
          Amendment  No.  2  to   Registration   Statement  No.   33-47302,   is
          incorporated herein by reference.

5.        Copy of Variable Group Deferred  Annuity  Contract  Application  (form
          34661)  dated  May,  1992,  filed   electronically  as  Exhibit  5  to
          Post-Effective Amendment No. 2 to Registration Statement No. 33-47302,
          is incorporated herein by reference.

6.1       Copy of Certificate of Incorporation of IDS Life, filed electronically
          as  Exhibit  6.1 to  Post-Effective  Amendment  No. 2 to  Registration
          Statement No. 33-47302, is incorporated herein by reference.

6.2       Copy of Amended By-Laws of IDS Life, filed  electronically  as Exhibit
          6.2 to  Post-Effective  Amendment No. 2 to Registration  Statement No.
          33-47302, is incorporated herein by reference.

<PAGE>


7.        Not applicable.

8.        Not applicable.

9.        Opinion of counsel  and  consent to its use as to the  legality of the
          securities  registered,  dated April 28,  1999,  filed  electronically
          herewith.

10.       Consent of Independent Auditors, filed electronically herewith.

11.       None.

12.       Not applicable.

13.       Copy  of  Schedule  for  computation  of  each  performance  quotation
          provided in the  Registration  Statement in response to item 21, filed
          electronically  as Exhibit  13 to  Post-Effective  Amendment  No. 2 to
          Registration   Statement  No.  33-47302,  is  incorporated  herein  by
          reference.

14.       Power of Attorney  dated  August 19,  1997,  filed  electronically  as
          Exhibit 15 to Post-Effective Amendment No. 8 to Registration Statement
          No. 33-47302, is incorporated herein by reference.

15.1      Power of Attorney dated April 9, 1998, filed electronically as Exhibit
          15.1 to Post-Effective  Amendment No. 8 to Registration  Statement No.
          33-47302, is incorporated herein by reference..
<TABLE>
<CAPTION>

Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)

<S>                                <C>                                 <C>
Name                               Principal Business Address          Positions and Offices with Depositor

Timothy V. Bechtold                IDS Tower 10                        Executive Vice President, Risk
                                   Minneapolis, MN  55440              Management Products

David J. Berry                     IDS Tower 10                        Vice President
                                   Minneapolis, MN  55440

Mark W. Carter                     IDS Tower 10                        Executive Vice President, Marketing
                                   Minneapolis, MN  55440

Robert M. Elconin                  IDS Tower 10                        Vice President
                                   Minneapolis, MN  55440

Lorraine R. Hart                   IDS Tower 10                        Vice President, Investments
                                   Minneapolis, MN  55440

Jeffrey S. Horton                  IDS Tower 10                        Vice President, Treasurer and
                                   Minneapolis, MN  55440              Assistant Secretary

David R. Hubers                    IDS Tower 10                        Director
                                   Minneapolis, MN  55440

James M. Jensen                    IDS Tower 10                        Vice President, Insurance Product
                                   Minneapolis, MN  55440              Development

Richard W. Kling                   IDS Tower 10                        Director and President
                                   Minneapolis, MN  55440

Paul F. Kolkman                    IDS Tower 10                        Director and Executive Vice President
                                   Minneapolis, MN  55440

Paula R. Meyer                     IDS Tower 10                        Director and Executive Vice
                                   Minneapolis, MN  55440              President, Assured Assets


<PAGE>




Name                               Principal Business Address          Positions and Offices with Depositor

James A. Mitchell                  IDS Tower 10                        Director, Chairman of the Board and
                                   Minneapolis, MN  55440              Chief Executive Officer

Pamela J. Moret                    IDS Tower 10                        Executive Vice President, Variable
                                   Minneapolis, MN  55440              Assets

Barry J. Murphy                    IDS Tower 10                        Director and Executive Vice
                                   Minneapolis, MN  55440              President, Client Service

James R. Palmer                    IDS Tower 10                        Vice President, Taxes
                                   Minneapolis, MN  55440

Stuart A. Sedlacek                 IDS Tower 10                        Director and Executive Vice President
                                   Minneapolis, MN  55440

F. Dale Simmons                    IDS Tower 10                        Vice President, Real Estate Loan
                                   Minneapolis, MN  55440              Management

William A. Stoltzmann              IDS Tower 10                        Vice President, General Counsel and
                                   Minneapolis, MN  55440              Secretary

Philip C. Wentzel                  IDS Tower 10                        Vice President and Controller
                                   Minneapolis, MN  55440
</TABLE>

<TABLE>
<CAPTION>

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant

                  IDS Life Insurance Company which is a wholly-owned  subsidiary
                  of American Express  Financial  Corporation.  American Express
                  Financial Corporation is a wholly-owned subsidiary of American
                  Express Company (American Express).

                  The following list includes the names of major subsidiaries of
                  American Express.
<S>                                                                                     <C>
                                                                                        Jurisdiction of
Name of Subsidiary                                                                      Incorporation

I. Travel Related Services

     American Express Travel Related Services Company, Inc.                             New York

II. International Banking Services

     American Express Bank Ltd.                                                         Connecticut

III. Companies engaged in Financial Services

     Advisory Capital Partners LLC                                                      Delaware
     Advisory Capital Strategies Group Inc.                                             Minnesota
     American Centurion Life Assurance Company                                          New York
     American Enterprise Investment Services Inc.                                       Minnesota
     American Enterprise Life Insurance Company                                         Indiana
     American Express Asset Management Group Inc.                                       Minnesota
     American Express Asset Management International Inc.                               Delaware
     American Express Asset Management International (Japan) Ltd.                       Japan
     American Express Asset Management Ltd.                                             England
     American Express Client Service Corporation                                        Minnesota


<PAGE>


     American Express Corporation                                                       Delaware
     American Express Financial Advisors Inc.                                           Delaware
     American Express Financial Advisors Japan Inc.                                     Delaware

                                                                                        Jurisdiction of
Name of Subsidiary                                                                      Incorporation

     American Express Financial Corporation                                             Delaware
     American Express Insurance Agency of Arizona Inc.                                  Arizona
     American Express Insurance Agency of Idaho Inc.                                    Idaho
     American Express Insurance Agency of Nevada Inc.                                   Nevada
     American Express Insurance Agency of Oregon Inc.                                   Oregon
     American Express Minnesota Foundation                                              Minnesota
     American Express Property Casualty Insurance Agency of Kentucky Inc.               Kentucky
     American Express Property Casualty Insurance Agency of Maryland Inc.               Maryland
     American Express Property Casualty Insurance Agency of Mississippi Inc.            Mississippi
     American Express Property Casualty Insurance Agency of Pennsylvania Inc.           Pennsylvania
     American Express Trust Company                                                     Minnesota
     American Partners Life Insurance Company                                           Arizona
     IDS Cable Corporation                                                              Minnesota
     IDS Cable II Corporation                                                           Minnesota
     IDS Capital Holdings Inc.                                                          Minnesota
     IDS Certificate Company                                                            Delaware
     IDS Futures Brokerage Group                                                        Minnesota
     IDS Futures Corporation                                                            Minnesota
     IDS Insurance Agency of Alabama Inc.                                               Alabama
     IDS Insurance Agency of Arkansas Inc.                                              Arkansas
     IDS Insurance Agency of Massachusetts Inc.                                         Massachusetts
     IDS Insurance Agency of Mississippi Ltd.                                           Mississippi
     IDS Insurance Agency of New Mexico Inc.                                            New Mexico
     IDS Insurance Agency of North Carolina Inc.                                        North Carolina
     IDS Insurance Agency of Ohio Inc.                                                  Ohio
     IDS Insurance Agency of Texas Inc.                                                 Texas
     IDS Insurance Agency of Utah Inc.                                                  Utah
     IDS Insurance Agency of Wyoming Inc.                                               Wyoming
     IDS Life Insurance Company                                                         Minnesota
     IDS Life Insurance Company of New York                                             New York
     IDS Management Corporation                                                         Minnesota
     IDS Partnership Services Corporation                                               Minnesota
     IDS Plan Services of California, Inc.                                              Minnesota
     IDS Property Casualty Insurance Company                                            Wisconsin
     IDS Real Estate Services, Inc.                                                     Delaware
     IDS Realty Corporation                                                             Minnesota
     IDS Sales Support Inc.                                                             Minnesota
     Investors Syndicate Development Corp.                                              Nevada
     Public Employee Payment Company                                                    Minnesota

</TABLE>

Item 27. Number of Contractowners

         As of March 31, 1999, 165 (qualified) contracts have been issued.

<PAGE>

Item 28. Indemnification

         The By-Laws of the depositor provide that it shall indemnify any person
         who was or is a party or is threatened to be made a party, by reason of
         the fact that he is or was a  director,  officer,  employee or agent of
         this  Corporation,  or is or  was  serving  at  the  direction  of  the
         Corporation  as a  director,  officer,  employee  or agent  of  another
         corporation,  partnership, joint venture, trust or other enterprise, to
         any  threatened,  pending  or  completed  action,  suit or  proceeding,
         wherever  brought,  to the fullest extent  permitted by the laws of the
         State of Minnesota, as now existing or hereafter amended, provided that
         this Article shall not indemnify or protect any such director, officer,
         employee  or agent  against any  liability  to the  Corporation  or its
         security  holders to which he would  otherwise  be subject by reason of
         willful misfeasance, bad faith, or gross negligence, in the performance
         of his duties or by reason of his reckless disregard of his obligations
         and duties.

Insofar as  indemnification  for liability  arising under the  Securities Act of
1933 may be  permitted  to director,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Item 29. Principal Underwriters

          (a)       IDS Life is the principal  underwriter for IDS Life Accounts
                    F, IZ, JZ, G, H, N, KZ, LZ and MZ IDS Life Variable  Annuity
                    Fund A, IDS Life  Variable  Annuity Fund B, IDS Life Account
                    RE, IDS Life  Account MGA and IDS Life Account SBS, IDS Life
                    Variable Account 10, IDS Life Variable Life Separate Account
                    and IDS Life Variable Account for Smith Barney.

          (b)       This  table is the same as our  response  to Item 25 of this
                    Registration Statement.

          (c)
<TABLE>
<CAPTION>

                    Net
Name of Principal   Underwriting      Compensation on   Brokerage
Underwriter         Discounts and     Redemption        Commissions       Compensation
                    Commissions
<S>                 <C>               <C>                                     
IDS Life            $17,634,855       $17,936,810       None              None
Insurance Company
</TABLE>

Item 30. Location of Accounts and Records

         IDS Life Insurance Company
         IDS Tower 10
         Minneapolis, MN

Item 31. Management Services

         Not applicable.

<PAGE>

Item 32. Undertakings

         (a)      Registrant  undertakes  that  it  will  file a  post-effective
                  amendment to this  registration  statement as frequently as is
                  necessary to ensure that the audited  financial  statements in
                  the  registration  statement are never more than 16 months old
                  for so long as payments under the variable  annuity  contracts
                  may be accepted.

         (b)      Registrant  undertakes that it will include either (1) as part
                  of any  application  to  purchase  a  contract  offered by the
                  prospectus,  a space that an applicant  can check to request a
                  Statement  of  Additional  Information,  or (2) a post card or
                  similar  written  communication  affixed to or included in the
                  prospectus  that  the  applicant  can  remove  to  send  for a
                  Statement of Additional Information.

         (c)      Registrant  undertakes  to deliver any Statement of Additional
                  Information and any financial  statements  required to be made
                  available  under  this  Form  promptly  upon  written  or oral
                  request to IDS Life  Contract  Owner Service at the address or
                  phone number listed in the prospectus.

         (d)      The sponsoring  insurance company represents that the fees and
                  charges  deducted under the contract,  in the  aggregate,  are
                  reasonable in relation to the services rendered,  the expenses
                  expected  to  be  incurred,  and  the  risks  assumed  by  the
                  insurance company.

<PAGE>


                                   SIGNATURES

As  required by the  Securities  Act of 1933 and the  Investment  Company Act of
1940, IDS Life Insurance Company, on behalf of the Registrant, certifies that it
meets the  requirements of Securities Act Rule 485(b) for  effectiveness of this
Registration  Statement  and has duly caused this  Registration  Statement to be
signed on its behalf in the City of Minneapolis, and State of Minnesota, on this
28th day of April, 1999.

                                                              

                                        IDS LIFE ACCOUNT F
                                        IDS LIFE ACCOUNT IZ
                                        IDS LIFE ACCOUNT JZ
                                        IDS LIFE ACCOUNT G
                                        IDS LIFE ACCOUNT H
                                        IDS LIFE ACCOUNT N
                                        IDS LIFE ACCOUNT KZ
                                        IDS LIFE ACCOUNT LZ
                                        IDS LIFE ACCOUNT MZ
                                        (Registrant)

                                        By IDS Life Insurance Company
                                        (Sponsor)

                                        By /s/   Richard W. Kling*
                                                 Richard W. Kling
                                                 President

As required by the Securities Act of 1933, this Registration  Statement has been
signed by the following persons in the capacities indicated on this 28th day of
April, 1999.

Signature                    Title

/s/  James A. Mitchell*      Director, Chairman of the Board and
     James A. Mitchell       Chief Executive Officer

/s/  Richard W. Kling*       Director and President
     Richard W. Kling

/s/  Jeffrey S. Horton**     Vice President, Treasurer and Assistant Secretary
     Jeffrey S. Horton

/s/  David R. Hubers*        Director
     David R. Hubers

/s/  Paul F. Kolkman*        Director and Executive Vice President
     Paul F. Kolkman

/s/  Barry J. Murphy*        Director and Executive Vice
     Barry J. Murphy         President, Client Service

/s/  Stuart A. Sedlacek*     Director and Executive Vice President
     Stuart A. Sedlacek

/s/  Philip C. Wentzel**     Vice President and Controller
     Philip C. Wentzel


<PAGE>

*Signed   pursuant  to  Power  of  Attorney   dated  August  19,   1997,   filed
electronically as Exhibit 15 to  Post-Effective  Amendment No. 8 to Registration
Statement No. 33-47302, is incorporated herein by reference.

**Signed pursuant to Power of Attorney dated April 9, 1998, filed electronically
as Exhibit 15.1 to Post-Effective  Amendment No. 8 to Registration Statement No.
33-47302, is incorporated herein by reference.


/s/ Mary Ellyn Minenko
- -----------------------------
Mary Ellyn Minenko


<PAGE>


                   CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 9

This Amendment is comprised of the following papers and documents:

The Cover Page.

Part A.

         The prospectus.

Part B.

         Statement of Additional Information.

         Financial Statements.

Part C.

         Other Information.

         The signatures.

Exhibits.



Exhibit Index

9.   Opinion  of  counsel  and  consent  to its  use as to the  legality  of the
     securities registered.

10.  Consent of Independent Auditors.








April 28, 1999

IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010

RE:      Registration Statement on Form N-4
         Post-Effective Amendment No. 9
         File No.: 33-47302/811-3217

Ladies and Gentlemen:

I am familiar with the  establishment  of the IDS Life Accounts F, IZ, JZ, G, H,
N, KZ, LZ and MZ ("Account"),  which is a separate account of IDS Life Insurance
Company ("Company") established by the Company's Board of Directors according to
applicable   insurance  law.  I  also  am  familiar  with  the  above-referenced
Registration  Statement  filed by the Company on behalf of the Account  with the
Securities and Exchange Commission.

I have made such  examination  of law and examined such documents and records as
in my judgment are necessary and  appropriate to enable me to give the following
opinion:

1.   The Company is duly  incorporated,  validly  existing and in good  standing
     under applicable state law and is duly licensed or qualified to do business
     in each  jurisdiction  where it  transacts  business.  The  Company has all
     corporate  powers  required  to carry  on its  business  and to  issue  the
     contracts.

2.   The  Account is a validly  created  and  existing  separate  account of the
     Company and is duly authorized to issue the securities registered.

3.   The  contracts  issued by the Company,  when offered and sold in accordance
     with  the  prospectus  contained  in  the  Registration  Statement  and  in
     compliance  with  applicable  law,  will be legally  issued  and  represent
     binding obligations of the Company in accordance with their terms.

I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.

Sincerely,

/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Counsel

MEM/CLGE/arw



                         Consent of Independent Auditors




We consent to the  reference to our firm under the caption  "Experts" and to the
use  of our  report  dated  February  4,  1999  on  the  consolidated  financial
statements IDS Life Insurance Company and our report dated March 12, 1999 on the
financial  statements  of IDS Life Accounts JZ, F, KZ, MZ, LZ, IZ, N, H and G in
Post-Effective  Amendment  No. 9 to the  Registration  Statement  (Form N-4, No.
33-47302) and related  Prospectus  for the  registration  of the Group  Variable
Annuity Contracts to be offered by IDS Life Insurance Company.






/s/ Ernst & Young LLP
Minneapolis, Minnesota
April 27, 1999



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