<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
POST-EFFECTIVE AMENDMENT NO. 2
TO REGISTRATION STATEMENT No. 33-50968
Under
The Securities Act of 1933
IDS Life Insurance Company
(Exact name of registrant as specified in charter)
Minnesota
(State or other jurisdiction of incorporation or organization)
63
(Primary Standard Industrial Classification Code Number)
41-0823832
(I.R.S. Employer Identification No.)
IDS Tower 10, Minneapolis, MN 55440-0010
(612) 671-3131
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mary Ellyn Minenko, Counsel
IDS Life Insurance Company
IDS Tower 10, Minneapolis, Minnesota 55440-0010
(612) 671-3678
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
It is proposed that this filing become effective on April 29, 1994.
If any of the Securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
Calculation of Registration Fee
Proposed
Title of each class Amount Proposed maximum Amount of
of securities to be to be maximum offering aggregate registration
registered registered price per unit offering price fee
<S> <C> <C> <C>
N/A
</TABLE>
<PAGE>
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IDS LIFE ACCOUNT MGA
GROUP AND INDIVIDUAL FLEXIBLE PREMIUM
MARKET VALUE ANNUITY CONTRACTS ISSUED BY
IDS LIFE INSURANCE COMPANY
Cross-Reference Sheet
Pursuant to Regulation S-K
Item 501(b)
<TABLE>
<CAPTION>
Page
Number in
Form S-1 Item Number and Caption Location in Prospectus Prospectus
<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus.... Outside Front Cover 5-6
2. Inside Front and Outside Back
Cover Pages of Prospectus .................... Table of Contents 7-8
(inside front cover)
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Charges ....... Summary or, as to ratio 9-11
of earnings to fixed
charges, Not Applicable
4. Use of Proceeds .............................. Investments by IDS Life 25-26
5. Determination of Offering Price .............. Not Applicable
6. Dilution ..................................... Not Applicable
7. Selling Security Holders ..................... Not Applicable
8. Plan of Distribution ......................... Distribution of Contracts 26
9. Description of Securities to Be
Registered ................................... Description of Contracts 12-25
10. Interests of Named Experts and Counsel ....... Not Applicable
11. Information with Respect to the
Registrant ................................... The Company; 29-35
Directors and Executive 36-37
Officers of the Registrant;
Executive Compensation; 37
Security Ownership of 38
Management;
Legal Proceedings and 38
Opinion; and
Financial Statements 43-58
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities ............................. See Item 14 in Part II 59-60
/TABLE
<PAGE>
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PART I.
INFORMATION REQUIRED IN PROSPECTUS
Attached hereto and made a part hereof is the Prospectus.
<PAGE>
PAGE 5
IDS Life Preferred Choice Annuity
Prospectus, April 29, 1994
This prospectus describes interests in a flexible premium group
market value annuity contract and individual market value annuity
contracts offered by IDS Life Insurance Company (IDS Life) to the
general public for non-tax qualified purchases. With respect to
the group contract, eligible individuals include members of the
general public.
Participation in a group contract will be accounted for separately
by the issuance of a certificate showing the owner's interest under
the group contract. Participation in an individual contract is
shown by the issuance of an individual annuity contract. The
certificate and the individual contract are both referred to as the
"Contract."
In addition, IDS Life may offer these Contracts to fund retirement
programs that qualify under the following Sections of the Internal
Revenue Code of 1986, as amended (the Code): (1) plans qualified
under Section 401 (including 401(k)); (2) Tax-Sheltered Annuity
(TSA) plans adopted by public school systems and certain tax-exempt
organizations pursuant to Section 403(b); (3) individual retirement
annuities (IRAs) and simplified employee pensions (SEP/IRAs)
qualified under Section 408; and (4) deferred compensation plans
eligible under Section 457.
A minimum purchase payment of at least $5,000 must accompany the
application for a Contract. Additional purchase payments of at
least $2,000 are permitted under a Contract. The Contract
accumulation value will be guaranteed by the general assets of IDS
Life. IDS Life generally intends to invest funds received in
relation to Contracts in a variety of debt instruments having price
durations which tend to match the applicable guarantee periods
under the Contract.
IDS Life Account MGA
Group and Individual Flexible Premium
Market Value Annuity Contracts
Sold by:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: 800-422-3542
THESE SECURITIES MAY BE SUBJECT TO A SUBSTANTIAL SURRENDER CHARGE
AND/OR MARKET VALUE ADJUSTMENT IF NOT HELD TO THE END OF A
GUARANTEE PERIOD WHICH COULD RESULT IN RECEIPT OF LESS THAN THE
ORIGINAL PURCHASE PAYMENT.
GUARANTEED INTEREST RATES THAT APPLY TO FUTURE GUARANTEE PERIODS
WILL BE DECLARED BY IDS LIFE BASED ON VARIOUS FACTORS. THESE
INTEREST RATES MAY BE HIGHER OR LOWER THAN THE RATES PREVIOUSLY
GUARANTEED.
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PAGE 6
THE MINIMUM GUARANTEED RATE IS 3 PERCENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IDS LIFE INSURANCE COMPANY IS NOT A BANK AND THE SECURITIES IT
OFFERS ARE NOT BACKED OR GUARANTEED BY ANY BANK, NOR ARE THEY
INSURED BY THE FDIC.
<PAGE>
PAGE 7
Table of Contents Page
Summary...................................................
Glossary of Special Terms.................................
Description of Contracts..................................
General...................................................
Application and Purchase Payment..........................
Right to Cancel...........................................
Guarantee Periods.........................................
Surrenders, Free Withdrawals and Systematic Withdrawals...
Surrender Charge..........................................
Transfers.................................................
Market Value Adjustment...................................
Premium Taxes.............................................
Death Benefit Prior to Settlement.........................
Death Benefit After Settlement............................
Statement.................................................
Electing the Settlement Date and Annuity Payment Plan.....
Investments by IDS Life...................................
Amendment of Contracts....................................
Distribution of Contracts.................................
Assignment of Contracts...................................
Federal Tax Considerations................................
The Company...............................................
Business..................................................
Selected Financial Data...................................
Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations.............
Reserves..................................................
Investments...............................................
Competition...............................................
Employees.................................................
Properties................................................
State Regulation..........................................
Directors and Executive Officers..........................
Executive Compensation....................................
Security Ownership of Management..........................
Legal Proceedings and Opinion.............................
Experts...................................................
<PAGE>
PAGE 8
Appendix A (Total Surrender Illustration).................
Appendix B (Market Value Adjustment Illustration).........
IDS Life Financial Information............................
<PAGE>
PAGE 9
Summary
IDS Life is offering group and individual flexible premium market
value annuity Contracts to the general public for non-tax qualified
and tax qualified purchases. IDS Life is a wholly owned subsidiary
of IDS Financial Corporation (IDS), which itself is a wholly owned
subsidiary of American Express Company (American Express). As
described in this prospectus, each subaccount of the Contracts has
a guaranteed rate of interest that is credited to the purchase
payment when it is held to the end of the subaccount guarantee
period. Surrenders or transfers before the end of a subaccount
guarantee period are subject to a market value adjustment and a
surrender charge (if applicable). Surrenders or transfers are
available without market value adjustment on the last day of each
subaccount guarantee period and during the first ten days of each
new subaccount guarantee period. A free withdrawal amount is
available under each subaccount.
When an initial purchase payment is made under an application, or
when additional purchase payments or transfers are made, the owner
allocates the payment or transfer to one or more subaccounts then
offered by IDS Life. A subaccount is established for each
combination of guarantee period and guarantee rate to which the
owner allocates a purchase payment or transfer. The purchase
payment or transfer allocated to each subaccount earns interest at
the applicable rate for that subaccount guarantee period as
established by IDS Life. Since interest is credited on a daily
basis, the interest credited also earns interest at the applicable
rate established for the guarantee period. The guarantee rate
established by IDS Life will always be at least 3 percent (See
Guarantee Periods page ).
When a subaccount guarantee period ends, a new guarantee period
will begin. IDS Life will transfer the subaccount accumulation
value without market value adjustment to a new subaccount. The new
subaccount guarantee period will be for one year unless the owner
elects a different period from those IDS Life then offers. The new
guarantee period may never extend beyond the settlement date (See
Guarantee Periods page ).
Each Contract year, the owner may surrender or transfer free
withdrawal amounts. These free withdrawal amounts are not subject
to either a surrender charge or a market value adjustment.
However, they are subject to federal income tax and may be subject
to a federal penalty tax and, under certain tax qualified
Contracts, to 20 percent income tax withholding. Free withdrawal
amounts are calculated separately for each subaccount. From the
time a subaccount is established by payment or transfer up to the
next Contract anniversary, the free withdrawal amount is 10 percent
of the subaccount payment or transfer. During each Contract year
thereafter, the free withdrawal amount is 10 percent of the prior
Contract anniversary subaccount accumulation value. The owner also
may establish systematic withdrawals of amounts up to the free
withdrawal amount. (See Surrenders, Free Withdrawals and Systematic
Withdrawals page ).
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PAGE 10
Subject to certain restrictions, partial or total surrenders are
permitted. IDS Life may defer payment of any surrender for a
period up to six months from the date it receives notice of
surrender, or for the period permitted by state law, if less. IDS
Life will not defer a payment for a period greater than seven days
except under extraordinary circumstances. IDS Life will pay annual
interest of at least 3 percent of any amounts deferred for more
than thirty days during such period if it chooses to exercise this
deferral right (See Surrenders, Free Withdrawals and Systematic
Withdrawals page ).
Surrenders may be subject to a surrender charge. Surrender charges
are calculated separately for each subaccount. The surrender
charge depends on the number of Contract years a purchase payment
to a subaccount has been in the Contract. For purchase payments
that have been in the Contract for less than eight Contract years,
a surrender charge, beginning at a maximum of 7 percent, will be
assessed on a surrender. There are no surrender charges for
payments that have been in the Contract for eight or more Contract
years or if the surrender occurs on the last day of a subaccount
guarantee period or during the first ten days of the new subaccount
guarantee period. In addition, IDS Life will waive the surrender
charge in certain instances (See Surrender Charge page ).
The owner may transfer the accumulation value from an existing
subaccount to a new subaccount at any time before the settlement
date as long as a subaccount is established for at least one
calendar year prior to the transfer. The minimum accumulation
value the owner may transfer is $2,000 or the entire subaccount
accumulation value, if less. For transfers before the end of a
subaccount guarantee period, there will be a market value
adjustment to the accumulation value in excess of the free
withdrawal amount (See Transfers page ).
A market value adjustment will be applied to a surrender or
transfer that occurs before the end of a subaccount guarantee
period. A market value adjustment is a positive or negative
adjustment of the subaccount accumulation value. Therefore, the
amount distributed from a subaccount on surrender or transfer may
be more or less than the total purchase payments or transfers made
to that subaccount (plus accrued interest). The market value
adjustment reflects the relationship, at the time of surrender or
transfer, between the subaccount guarantee rate and the interest
rate IDS Life then is crediting on purchase payments or transfers
made to new subaccounts with guarantee periods of the same duration
as the time remaining in the subaccount guarantee period (See
Market Value Adjustment page ).
IDS Life reserves the right to deduct applicable premium taxes from
the accumulation value of the Contract (See Premium Taxes page ).
<PAGE>
PAGE 11
The Contract provides for a guaranteed death benefit. In the event
of the death of the annuitant or owner prior to the settlement
date, IDS Life will pay to the owner or beneficiary the death
benefit in lieu of any other payment under the Contract. The
amount of the death benefit will equal the accumulation value (See
Death Benefit Prior to Settlement page ).
On the settlement date specified by the owner, IDS Life will pay
the owner a lump sum payment or start to pay a series of payments.
A series of payments may be elected under certain annuity payment
plans (See Electing the Settlement Date and Annuity Payment Plan
page ).
Glossary of Special Terms
As used in this prospectus, the following terms have the indicated
meanings:
Accumulation Value - The value of the net purchase and transfer
payments plus interest credited, adjusted for any surrenders. The
Contract accumulation value is the sum of all subaccount
accumulation values.
Annuitant - The person on whose life monthly annuity payments
depend.
Contract Anniversary - The same day and month as the Contract date
each year that the Contract remains in force.
Contract Date - The date from which Contract anniversaries,
Contract years and Contract months are determined.
Free Withdrawal Amount - The amount of surrenders and transfers
that may be made each Contract year without market value adjustment
or surrender charge. Free withdrawal amounts are calculated
separately for each subaccount. From the time a subaccount is
established by payment or transfer to the next Contract
anniversary, the free withdrawal amount is 10 percent of the
subaccount payment or transfer. During each Contract year
thereafter, the free withdrawal amount is 10 percent of the prior
Contract anniversary subaccount accumulation value.
Guarantee Period - The period for which IDS Life guarantees a
particular declared effective annual interest rate.
Guarantee Rate - The particular declared effective annual interest
rate IDS Life guarantees for a guarantee period.
Market Adjusted Value - The accumulation value in excess of the
free withdrawal amount, adjusted by the market value adjustment
formula, plus the free withdrawal amount. The adjustment is for
interest rate changes since a subaccount begins. The adjustment is
calculated separately for each subaccount. The Contract market
adjusted value is the sum of all subaccount market adjusted values.
<PAGE>
PAGE 12
Market Value Adjustment - The difference between the market
adjusted value and the accumulation value. It is positive if the
market adjusted value is greater than the accumulation value. It
is negative if the accumulation value is greater than the market
adjusted value.
Owner - The person or entity to whom the Contract is issued. The
owner may be someone other than the annuitant.
Settlement - The application of the accumulation value of the
Contract to provide annuity payments.
Settlement Date - The date on which annuity payments are to begin.
Subaccount - An account IDS Life establishes for each combination
of guarantee period and guarantee rate to which the owner allocates
a purchase or transfer payment. Each subaccount is distinguished
by the guarantee period and the date the guarantee period begins.
Surrender Value - The accumulation value plus any applicable market
value adjustment, less any applicable surrender charge.
Written Request - A request in writing signed by the owner and
delivered to IDS Life at its Home Office.
Description of Contracts
General
This prospectus describes interests in a flexible premium group
market value annuity and individual market value annuity Contracts
offered by IDS Life to the general public for non-tax qualified
purchases. In addition, IDS Life may offer the Contracts in the
following tax qualified programs: (1) Section 401(a) (including
401(k)) plans; (2) TSA plans; (3) IRAs and IRA/SEPs; and (4)
deferred compensation plans eligible under Section 457.
As described in this prospectus, each subaccount of the Contracts
has a guaranteed interest rate that is credited to a purchase
payment when it is held to the end of the subaccount guarantee
period. Surrenders or transfers before the end of a subaccount
guarantee period are subject to a market value adjustment and a
surrender charge (if applicable).
Subject to insurance department approval of the Contract, IDS Life
will be offering this Contract in the District of Columbia and all
states except New York.
Application and Purchase Payment
To apply for a Contract, the owner must complete an application and
make a minimum purchase payment of $5,000. Additional purchase
payments of at least $2,000 are permitted under a Contract. These
additional purchase payments may be made until the date the
Contract terminates or the date on which annuity payments begin,
whichever is earlier. The maximum total purchase payments in the <PAGE>
PAGE 13
first and later Contract years is $500,000. IDS Life reserves the
right to change this maximum. If the owner purchases the Contract
to fund a tax qualified plan, that plan's limit on contributions
also will apply.
IDS Life will return an improperly completed application, along
with the corresponding purchase payment, five days after its
receipt if the application has not, by that time, been properly
completed.
A payment is credited to a Contract on the date IDS Life receives a
properly completed application along with the purchase payment.
Interest is earned the next day. IDS Life then issues a Contract
and confirms the purchase payment in writing.
When an initial purchase payment is made under an application, or
when additional purchase payments or transfers are made, the owner
allocates the payment to one or more subaccounts then offered by
IDS Life. The minimum amount the owner may allocate to a
subaccount is $2,000 or, in the case of a transfer, the entire
subaccount accumulation value if less than $2,000. The owner has a
subaccount for each guarantee period to which an initial purchase
payment is allocated. The owner also has a subaccount for each
guarantee period to which an additional purchase payment is
allocated or to which a transfer of all or a portion of an existing
subaccount is made. Each subaccount is distinguished by the
guarantee period and the date the guarantee period begins.
Right to Cancel
The owner has the right to cancel the Contract within 10 days after
receipt of the Contract and receive a refund of the entire purchase
payment. For cancellation to be effective, mailing or delivery of
notice of cancellation must be made in writing to IDS Life's Home
Office at IDS Tower 10, Minneapolis, Minnesota 55440-0010.
Guarantee Periods
The owner selects guarantee periods from among those offered by IDS
Life. As of the date of this prospectus, IDS Life is offering
guarantee periods with annual durations from one to 10 years;
however, the guarantee periods IDS Life offers in the future could
be different. The guarantee period selected will determine the
guarantee rate. The purchase payment (less surrenders made and
less applicable premium taxes, if any) or any transfer will earn
interest at this guarantee rate during the entire guarantee period.
All interest earned will be credited daily; this compounding effect
is reflected in the guarantee rate.<PAGE>
PAGE 14
Below is an illustration of how IDS Life will credit interest
during the guarantee period. For the purpose of this example, IDS
Life has made the assumptions as indicated.
Example of Guarantee Rate
Beginning Subaccount Accumulation Value: $50,000
Guaranteed Period: 10 years
Guarantee Rate: 5 percent Annual Effective Rate
Interest Credited Cumulative Interest
Year During Year Credited to the Account
1 $2,500.00 $ 2,500.00
2 2,625.00 5,125.00
3 2,756.25 7,881.25
4 2,894.06 10,775.31
5 3,038.77 13,814.08
6 3,190.70 17,004.78
7 3,350.24 20,355.02
8 3,517.75 23,872.77
9 3,693.64 27,566.41
10 3,878.32 31,444.73
Guaranteed Accumulation Value at the End of 10 Years is:
$50,000 + $31,444.73 = $81,444.73
Note: This example assumes no surrenders of any amount during the
entire ten-year period. A market value adjustment applies and a
surrender charge may apply to any interim surrender in excess of
the free withdrawal amount (See Surrenders, Free Withdrawals and
Systematic Withdrawals). The hypothetical interest rates are
illustrative only and are not intended to predict future interest
rates to be declared by IDS Life. Actual interest rates declared
for any given time may be more or less than those shown.
End of a Subaccount Guarantee Period - When a subaccount guarantee
period ends, a new guarantee period will begin. IDS Life will
transfer the owner's subaccount accumulation value to a new
subaccount without applying a market value adjustment. At the end
of a guarantee period, or during the first ten days of the new
subaccount guarantee period, the owner also will be able to totally
or partially surrender the subaccount accumulation value without
market value adjustment or surrender charge. However, such a
surrender will be subject to federal income tax and may be subject
to a federal penalty tax. Surrenders from certain tax qualified
Contracts also may be subject to 20 percent income tax withholding.
If the owner surrenders less than the entire subaccount
accumulation value, at least $1,000 must remain in the subaccount.
IDS Life will mail the owner a notice twenty-one calendar days
before the guarantee period ends to remind the owner to select a
new guarantee period. If IDS Life does not receive the written
selection request within ten calendar days after the guarantee
period ends, the new guarantee period will be one year. The new<PAGE>
PAGE 15
guarantee period will never extend beyond the settlement date. For
example, if the annuitant is age 62 at the end of a guarantee
period and the settlement date is the annuitant's age 65, a
three-year guarantee period is the maximum guarantee period that
may be selected under the Contract.
The accumulation value transferred to the new subaccount is
guaranteed by IDS Life's general assets and will earn interest at a
guarantee rate that IDS Life has declared for the guarantee period.
This guarantee rate may be higher or lower than previous guarantee
rates. IDS Life may declare new schedules of guaranteed interest
rates as frequently as daily.
At the owner's written request, IDS Life will provide notice of the
guarantee rate that applies to a specific guarantee period. The
owner also may call IDS Life to inquire about guarantee rates.
Establishment of Guarantee Rates - The guaranteed rate of interest
for a chosen guarantee period will be known at the time a purchase
payment is received or a transfer is made. IDS Life will send the
owner a confirmation that will show the amount paid or transferred
and the applicable guarantee rate. When one subaccount guarantee
period ends and another begins, IDS Life will establish a guarantee
rate for the new period that is equal to or greater than the rate
credited on new comparable purchase payments at the time. The
minimum guarantee rate established by IDS Life will always be at
least 3 percent per year.
IDS Life has no specific formula for determining the rates of
interest that it will declare as guarantee rates in the future.
IDS Life will declare the guarantee rates from time to time based
on its analysis of current market conditions. (See Investments by
IDS Life). In addition, IDS Life also may consider various other
factors in determining guarantee rates for a given period,
including: regulatory and tax requirements; sales commission and
administrative expenses; general economic trends; and competitive
factors. IDS Life management will make the final determination as
to the guarantee rates to be declared. IDS Life cannot predict or
guarantee future guarantee rates above the 3 percent rate.
Surrenders, Free Withdrawals and Systematic Withdrawals
General - Subject to certain tax law and retirement plan
restrictions noted below, total and partial surrenders may be made
under a Contract at any time.
In the case of all surrenders, the accumulation value will be
reduced by the amount surrendered on the surrender date and that
amount will be payable to the owner. The accumulation value also
will be reduced by any applicable surrender charge and either
reduced or increased by any market value adjustment applicable to
the surrender. IDS Life will, on request, inform the owner of the
amount payable in a total or partial surrender. Any total or
partial surrender may be subject to tax and tax penalties and<PAGE>
PAGE 16
surrenders from certain tax qualified Contracts may be subject to
20 percent income tax withholding. (See Federal Tax
Considerations).
Tax-Sheltered Annuities - The Code imposes certain restrictions on
an owner's right to receive early distributions attributable to
salary reduction contributions from a Contract purchased for a
retirement plan qualified under Section 403(b) of the Code as a
TSA.
Distributions attributable to salary reduction contributions made
after Dec. 31, 1988, plus the earnings on them, or to transfers or
rollovers of such amounts from other contracts may be made from the
TSA Contract only if the owner has attained age 59-1/2, has become
disabled as defined in the Code, has separated from the service of
the employer that purchased the Contract or has died.
Additionally, if the owner should encounter a financial hardship
(within the meaning of the Code), he or she may receive a
distribution of all Contract values attributable to salary
reduction contributions made after Dec. 31, 1988, but not of the
earnings on them.
Even though a distribution may be permitted under these rules
(e.g., for hardship or after separation from service), it may
nonetheless be subject to a 10 percent IRS penalty tax (in addition
to income tax) as a premature distribution and to 20 percent income
tax withholding. (See Federal Tax Considerations).
These restrictions do not apply to transfers of Contract values to
another TSA investment vehicle available through the employer.
Free Withdrawal Amounts - Each Contract year, the owner may
surrender or transfer free withdrawal amounts. These free
withdrawal amounts are not subject to either a surrender charge or
a market value adjustment. However, they are subject to federal
income tax and may be subject to a federal penalty tax and, if made
from certain tax qualified Contracts, to 20 percent income tax
withholding. Free withdrawal amounts are calculated separately for
each subaccount. From the time a subaccount is established by
payment or transfer up to the next Contract anniversary, the free
withdrawal amount is 10 percent of the subaccount payment or
transfer. During each Contract year thereafter, the free
withdrawal amount is 10 percent of the prior Contract anniversary
subaccount accumulation value.
Systematic Withdrawals - The owner may establish systematic
withdrawals of amounts up to the free withdrawal amount by written
request or other method acceptable to IDS Life. The minimum
systematic withdrawal amount from the Contract is $100, and these
withdrawals can be made on a monthly, quarterly, semi-annual or
annual basis. The owner may designate the systematic withdrawal to
be made from the Contract in one of the following ways:
o withdrawing interest earnings up to the free withdrawal amount
from each subaccount over the systematic withdrawal period;<PAGE>
PAGE 17
o withdrawing the entire free withdrawal amount over the
systematic withdrawal period; or
o withdrawing a specific dollar amount less than the free
withdrawal amount. Under this option, the specific dollar
amount will be withdrawn on a pro-rata basis from all the
subaccounts in which the owner has a balance, unless the owner
instructs otherwise.
The minimum Contract accumulation value required to begin
systematic withdrawals is $5,000. The owner may start or stop this
service at any time, but must give IDS Life 30 days' notice to
change any systematic withdrawal instructions that are currently in
place.
Systematic withdrawals may result in taxes, tax penalties and 20
percent income tax withholding being applied to all or a portion of
the amount withdrawn. The owner should consult a tax advisor
regarding the tax consequences of systematic withdrawals.
Partial Surrenders - The minimum Contract accumulation value the
owner may surrender is $1,000 (except for free withdrawal amounts
and systematic withdrawals as explained above). The minimum
balance in a subaccount after surrender is $1,000.
The owner may make a surrender by written request. This request
must specify the subaccount(s) from which the surrender is to be
made and the surrender amount. A partial surrender request not
exceeding $40,000 also may be made by telephone. IDS Life has the
authority to honor any telephone partial surrender request believed
to be authentic and will use reasonable procedures to confirm that
they are. This includes asking identifying questions and tape
recording calls. As long as reasonable procedures are followed,
neither IDS Life nor its affiliates will be liable for any loss
resulting from fraudulent requests. At times when the volume of
telephone requests is unusually high, IDS Life will take special
measures to ensure that calls are answered as promptly as possible.
A telephone surrender request will not be allowed within 30 days of
a phoned-in address change.
The owner may request the net check amount that he or she wishes to
receive. IDS Life will determine how much accumulation value needs
to be surrendered to yield the net check amount after any
applicable market value adjustments and surrender charge
deductions.
Total Surrenders - IDS Life will compute the value of the Contract
at the close of business after receipt of the owner's request for a
complete surrender. A Contract terminates upon total surrender.
IDS Life may request return of the Contract prior to a total
surrender.
Payment on Surrender - IDS Life may defer payment of any partial or
total surrender for a period not exceeding 6 months from the date
it receives the owner's notice of surrender or the period permitted<PAGE>
PAGE 18
by state insurance law, if less. Only under extraordinary
circumstances will IDS Life defer a surrender payment more than 7
days. If payment is deferred for more than 30 days, IDS Life will
pay annual interest of at least 3 percent on the amount deferred.
While all circumstances under which IDS Life could defer payment
upon surrender may not be foreseeable at this time, such
circumstances could include, for example, IDS Life's inability to
liquidate assets due to a general financial crisis. IDS Life will
notify the owner in writing if it intends to withhold payment more
than 30 days.
Surrender at the End of a Guarantee Period - A subaccount surrender
at the end of the guarantee period or during the first ten days of
the new guarantee period will not incur a surrender charge or
market value adjustment, nor will it reflect any interest earned
during this ten day period.
Surrender Charge
A surrender charge may be assessed on any total or partial
surrender of purchase payments that have been in the Contract for
less than eight Contract years unless the surrender occurs on the
last day of a subaccount guarantee period or during the first ten
days of the new subaccount guarantee period. Surrender charges are
calculated separately for each subaccount. The surrender charge
depends on the number of Contract years a purchase payment to a
subaccount has been in the Contract. The surrender charge
decreases each year on the Contract anniversary date. There are no
surrender charges for payments that have been in the Contract for
eight or more Contract years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by the subaccount market adjusted value
in excess of the free withdrawal amount. The surrender charge
percentages are as follows:
Contract Years Since Surrender Charge
Payment Received Percentage
1 7%
2 6
3 5
4 4
5 3
6 2
7 1
8 or more 0
For an example of how the surrender charge is calculated for the
total surrender of a subaccount, please see Appendix A.
No Surrender Charge - There will be no surrender charge for:
<PAGE>
PAGE 19
o exercise of the cancellation right;
o free withdrawal amounts;
o payments that have been in the Contract for eight or more
Contract years;
o transfers between subaccounts;
o surrenders from a subaccount at the end of its guarantee
period and during the first ten days of the new subaccount
guarantee period;
o application of the accumulation value to provide annuity
payments using an annuity payment plan; or
o death benefits.
In some cases, such as when an employer makes this annuity
available to employees, IDS Life may expect to incur lower sales
and administrative expenses or perform fewer services due to the
size of the group, the average contribution and the use of group
enrollment procedures. Then IDS Life may be able to reduce or
eliminate surrender charges. However, IDS Life expects this to
occur infrequently.
Transfers
The owner may transfer the accumulation value from an existing
subaccount to a new subaccount at any time before the settlement
date. A subaccount must have been established for at least one
calendar year before the owner can make a transfer from it. IDS
Life will not charge a fee for these transfers. However, the
transfers are subject to a market value adjustment.
For transfers before the end of a guarantee period, there will be a
market value adjustment to the accumulation value in excess of the
free withdrawal amount. There will not be a market value
adjustment for transfers at the end of a guarantee period.
The minimum accumulation value the owner may transfer is $2,000 or
the entire subaccount accumulation value, if less. The owner may
transfer less than the entire subaccount accumulation value only if
a minimum accumulation value of $1,000 remains in the subaccount
after the transfer.
The owner may make a transfer by written request. This request
must specify the subaccount from which the transfer is to be made
and the amount of the transfer if it is less than the entire
subaccount accumulation value. The request must also specify the
length of the new guarantee period.
<PAGE>
PAGE 20
Market Value Adjustment
The subaccount accumulation value, including the interest credited,
is guaranteed if the value is held in the subaccount until the end
of the guarantee period. However, IDS Life will apply a market
value adjustment if a surrender or transfer occurs prior to the end
of the guarantee period.
A market value adjustment is a positive or negative adjustment of
the subaccount accumulation value. The market value adjustment
reflects the relationship, at the time of surrender or transfer,
between the subaccount guarantee rate and the interest rate IDS
Life then is crediting on purchase payments or transfers made to
new subaccounts with guarantee periods of the same duration as the
time remaining in the subaccount guarantee period.
The market adjusted value is the subaccount accumulation value (in
excess of the free withdrawal amount) adjusted by the market value
adjustment, plus the free withdrawal amount. A subaccount's market
adjusted value may be lower or higher than its accumulation value.
For example, assume the owner made a purchase payment to a
subaccount with a guarantee period of 10 years and a guarantee rate
of 4.5 percent annually. Assume that after 3 years the owner
decides to surrender the value of that subaccount (with 7 years
left in the subaccount guarantee period). If, at the time of
surrender, the guarantee rate IDS Life is crediting on subaccounts
with 7-year guarantee periods is 5 percent, the market adjusted
value will be lower than the accumulation value. On the other
hand, if the current guarantee rates on subaccounts with 7-year
guarantee periods is 4 percent, the market adjusted value will be
higher than the accumulation value.
Determining the Market Value Adjustment - The market value
adjustment is determined by:
o Calculating the subaccount accumulation value to be adjusted.
This is the amount to be surrendered or transferred from the
subaccount;
o Calculating the market adjusted value of that accumulation
value using the market adjusted value formula below; and
o Subtracting the accumulation value from the market adjusted
value.
Market Adjusted Value Formula:
Market Adjusted Value = [(AVc - FWA) X F] + FWA
<PAGE>
PAGE 21
where:
AVc = the subaccount accumulation value to be surrendered or
transferred
FWA = free withdrawal amount
F = (1 + ig)(N + t)
_____________________
(1 + ic + .0025)(N + t)
where:
ig = the subaccount guarantee rate
N = the number of complete years to the end of the
guarantee period for the subaccount
t = the fraction of a year remaining to the end of the
guarantee period (for example, if 180 days remain in
a 365 day year, t would be .493 for the subaccount)
ic = the subaccount guarantee rate IDS Life then is
crediting on purchase payments or transfers made to
new subaccounts with guarantee periods of the same
duration as the time remaining in the subaccount
guarantee period (straight line interpolation
between whole year rates. If N is zero, ic is the
rate for a one year guarantee period)
For an illustration showing an upward and downward market value
adjustment, please see Appendix B.
No Market Value Adjustment - There will be no market value
adjustment for:
o exercise of the cancellation right;
o free withdrawal amounts;
o surrenders or transfers from a subaccount at the end of its
guarantee period and during the first ten days of the new
subaccount guarantee period;
o application of the accumulation value to provide annuity
payments using an annuity payment plan; or
o death benefits.
<PAGE>
PAGE 22
Premium Taxes
IDS Life reserves the right to deduct an amount from the
accumulation value of the Contract at the time that any applicable
premium taxes not previously deducted are payable. If a tax is
payable at the time of the purchase payment and IDS Life chooses
not to deduct it at that time, it further reserves the right to
deduct it at a later date. Current premium taxes range in an
amount up to 3.5 percent depending on jurisdiction.
Death Benefit Prior to Settlement
If the annuitant or owner dies before the settlement date while the
Contract is in force, the death benefit payable to the beneficiary
will equal the accumulation value as determined at the next close
of business after IDS Life's death claim requirements are
fulfilled.
If the Spouse is Sole Beneficiary or Co-Owner - If the owner or
co-owner dies before the settlement date and the spouse is the only
beneficiary or co-owner, the spouse may keep the Contract as owner.
To do this, the spouse must, within 60 days after IDS Life receives
proof of death, give IDS Life written instructions to keep the
Contract in force.
Tax qualified Plans - If the Contract is purchased under a plan
qualified under Code Section 401 (including 401(k)), a TSA plan, a
plan eligible under Code Section 457, a custodial or trusteed plan,
or as an IRA or a SEP/IRA and IDS Life receives proof of the
annuitant's death before the settlement date, IDS Life will pay the
beneficiary the death benefit described above. If the annuitant
dies before reaching age 70-1/2 and the spouse is the only
beneficiary, the spouse may keep the Contract in force until the
date on which the annuitant would have reached 70-1/2 or such other
date as permitted by the Code. To do this, the spouse must, within
60 days after IDS Life receives proof of death, give IDS Life
written instructions to keep the Contract in force.
Paying the Beneficiary - Unless the owner has given other written
instructions, IDS Life will pay the beneficiary in a single
payment. Payment from a tax qualified Contract (except an IRA or
SEP/IRA) made to a surviving spouse instead of being directly
rolled over to an IRA may be subject to 20 percent income tax
withholding. The beneficiary may elect to receive this payment at
any time within 5 years after the date of death. Instead of a
single payment, IDS Life may make payments under any annuity
payment plan available under this Contract if:
o the beneficiary elects the plan in writing within 60 days
after IDS Life receives proof of death;
o payments begin no later than one year after death; and
o the plan provides payments over a period that does not extend
beyond the beneficiary's life or life expectancy.
<PAGE>
PAGE 23
Death Benefit After Settlement
If the annuitant dies after settlement, the amount payable, if any,
will be as provided in the annuity payment plan then in effect.
Statement
Prior to the settlement date, at least annually, IDS Life will send
a statement showing a summary of the Contract.
Electing the Settlement Date and Annuity Payment Plan
A settlement date is established when the owner applies for the
Contract. The settlement date may be changed, but any such change
must be made in writing and received by IDS Life at least 30 days
prior to the scheduled settlement date. The settlement date cannot
be later than the latest of:
o the Contract anniversary nearest the annuitant's 85th
birthday; or
o the 10th Contract anniversary.
Annuity Payments - The first payment will be made as of the
settlement date. Once annuity payments have started for an
annuitant, no surrender of the annuity benefit can be made for the
purpose of receiving a lump sum in lieu of payments.
Annuity Payment Plans - On the settlement date, the owner may
receive a lump sum payment of the surrender value (see Surrenders,
Free Withdrawals and Systematic Withdrawals) or begin receiving
annuity payments. If a lump sum payment is made from a tax
qualified Contract (except an IRA or SEP/IRA), 20 percent income
tax withholding may apply. There are different ways to receive
annuity payments called payment plans. The owner may elect one of
these payment plans, or another payment arrangement to which IDS
Life agrees, by giving IDS Life written notice at least 30 days
before the settlement date. In the absence of an election, IDS
Life will make annuity payments according to Plan B with payments
guaranteed for ten years.
If the amount to be applied to a payment plan is not at least
$2,000 or if payments are to be made to other than a natural
person, IDS Life has the right to make a lump sum payment of the
surrender value.
o Plan A - This provides monthly annuity payments for the
lifetime of the annuitant. No payments will be made after the
annuitant dies.
o Plan B - This provides monthly annuity payments for the
lifetime of the annuitant with a guarantee by IDS Life that
payments will be made for a period of at least 5, 10 or 15
years. The owner must select the guaranteed period.<PAGE>
PAGE 24
o Plan C - This provides monthly annuity payments for the
lifetime of the annuitant with a guarantee by IDS Life that
payments will be made for a certain number of months. IDS
Life determines the number of months by dividing the
accumulation value applied under this plan by the amount of
the monthly annuity payment.
o Plan D - This is a Joint and Survivor life annuity. Monthly
payments will be paid for the lifetime of the annuitant and a
joint annuitant. When either the annuitant or joint annuitant
dies, IDS Life will continue to make monthly payments for the
lifetime of the survivor. No payments will be made after the
death of both the annuitant and joint annuitant.
o Plan E - This provides monthly fixed dollar annuity payments
for a period of years. The period of years may be no less
than 10 or more than 30.
The Contract provides for annuity payments on a fixed basis only.
The amount of each annuity payment will not change during the
annuity payment period. The amount of the annuity payment will
depend on:
o the annuity table IDS Life then is using for annuity
settlements (never less than the table guaranteed in the
Contract);
o the annuitant's age; and
o the annuity payment plan selected.
The tables for Plans A, B, C and D are based on the "1983
Individual Annuitant Mortality Table A" and an assumed rate of 4
percent per year. The table for Plan E is based on an interest
rate of 4 percent. IDS Life may, at its discretion, if mortality
appears more favorable and interest rates justify, apply other
tables that will result in higher monthly payments.
Restrictions for Some Tax qualified Plans - If the Contract was
purchased under a plan qualified under Code Section 401( including
401(k)), a TSA plan, a plan eligible under Code Section 457, a
custodial or trusteed plan, or as an IRA or a SEP/IRA, the owner
must elect a payment plan that provides for payments:
o during the life of the annuitant;
o during the joint lives of the annuitant and beneficiary;
o for a period not exceeding the life expectancy of the
annuitant; or
o for a period not exceeding the joint life expectancies of the
annuitant and beneficiary.
<PAGE>
PAGE 25
Reference also must be made to the terms of the tax qualified plan
and applicable law for any limitations or restrictions on the
settlement date or annuity payment plan that may be selected.
Investments by IDS Life
Assets of IDS Life must be invested in accordance with requirements
established by applicable state laws regarding the nature and
quality of investments that may be made by life insurance companies
and the percentage of their assets that may be committed to any
particular type of investment. In general, these laws permit
investments, within specified limits and subject to certain
qualifications, in federal, state, and municipal obligations,
corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments. All claims
by purchasers of the Contracts, and other general account products,
will be funded by the general account.
IDS Life intends to construct and manage the investment portfolio
using a strategy known as "immunization." Immunization seeks to
lock in a defined return on the pool of assets versus the pool of
liabilities over a specified time horizon. Since the return on the
assets versus the liabilities is locked in, it is "immune" to any
potential fluctuations in interest rates during the given time.
Immunization is achieved by constructing a portfolio of assets with
a price sensitivity to interest rate changes (i.e., price duration)
that is essentially equal to the price duration of the
corresponding portfolio of liabilities. Portfolio immunization
provides flexibility and efficiency to IDS Life in creating and
managing the asset portfolio, while still assuring safety and
soundness for funding liability obligations.
IDS Life's investment strategy will incorporate the use of a
variety of debt instruments having price durations tending to match
the applicable guaranteed interest periods. These instruments
include, but are not necessarily limited to, the following:
o Securities issued by the U.S. government or its agencies
or instrumentalities, which issues may or may not by
guaranteed by the U.S. government;
o Debt securities that have an investment grade, at the
time of purchase, within the four highest grades assigned
by the nationally recognized rating agencies;
o Debt instruments that are unrated, but which are deemed
by IDS Life to have an investment quality within the four
highest grades;
o Other debt instruments, which are rated below investment
grade, limited to 10 percent of assets at the time of
purchase; and
o Real estate mortgages, limited to 30 percent of portfolio
assets at the time of acquisition.
<PAGE>
PAGE 26
In addition, options and futures contracts on fixed income
securities will be used from time to time to achieve and maintain
appropriate investment and liquidity characteristics on the overall
asset portfolio.
While this information generally describes our investment strategy,
we are not obligated to follow any particular strategy except as
may be required by Federal law and Minnesota and other state
insurance laws.
Amendment of Contracts
IDS Life reserves the right to amend the Contracts to meet the
requirements of applicable federal or state laws or regulations.
IDS Life will notify the owner of the Contract in writing of any
such amendments.
Distribution of Contracts
IDS Life is the principal underwriter for the Contracts. IDS Life
is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (1934 Act) as a broker-dealer and
is a member of the National Association of Securities Dealers,
Inc. IDS Life may enter into Distribution Agreements with certain
broker-dealers registered under the 1934 Act. IDS Life will pay a
maximum commission of 5 percent for the sale of a Contract. In the
future, IDS Life may pay a commission on an election of a
subsequent guarantee period by an owner or when an owner maintains
a Contract in force.
Assignment of Contracts
The owner may change ownership of the Contract at any time by
filing a change of ownership with IDS Life at its home office. No
change of ownership will be binding upon IDS Life until it receives
and records the change. IDS Life takes no responsibility for the
validity of the change. If the Contract is purchased under a tax
qualified plan, the Contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other
purpose to any person other than IDS Life; provided, however, that
if the owner is a trustee or custodian, or an employer acting in a
similar capacity, ownership of a Contract may be transferred to the
annuitant.
The value of any part of a non-tax qualified Contract assigned or
pledged is taxed like a surrender to the extent allocable to
investment in annuity contracts after Aug. 13, 1982.
Transfer of a non-tax qualified Contract to another person without
adequate consideration is considered a gift and the transfer will
be considered a surrender of the Contract for federal income tax
purposes. The income in the Contract will be taxed to the
transferor who may be subject to the 10 percent IRS penalty tax for
early withdrawal. The transferee's investment in the Contract will
be the value of the Contract at the time of the transfer. The
owner should consult with a tax adviser before taking any action.
<PAGE>
PAGE 27
Federal Tax Considerations
Under current law, there is no liability for federal income tax on
any increase in the Contract's value until payments are made
(except for change of ownership discussed above in "Assignment of
Contracts"). However, since federal tax consequences cannot always
be anticipated, the owner should consult a tax adviser regarding
any questions about the taxation of the Contract.
The owner is not taxed on the investment in the Contract. The
investment in the Contract generally includes purchase payments
made into the Contract with after-tax dollars. If the investment
in the Contract was made by or on behalf of the owner with pre-tax
dollars as part of a tax qualified retirement plan, such amounts
are not considered to be part of the investment in the Contract and
will be taxed when payment is made.
If the owner surrenders part or all of the Contract or takes a free
withdrawal amount, the owner will be taxed on the payments
received, to the extent that the value of the Contract exceeds the
investment in the Contract, and the owner may have to pay an IRS
penalty tax for early withdrawal.
A portion of each annuity payment under a non-tax qualified
Contract will be subject to tax and a portion of each payment will
be considered to be part of the investment in the Contract and will
not be taxed. All amounts received after the investment in the
Contract is recovered will be subject to tax. All annuity payments
from a tax qualified Contract, for example an IRA, TSA or a plan
eligible under Code Section 457, generally will be subject to
taxation except to the extent that the contributions were made with
after-tax dollars.
Unlike life insurance proceeds, the death benefit under a Contract
is not tax exempt. The gain, if any, is taxable as ordinary income
to the beneficiary in the year(s) he or she receives the payments.
Tax law requires that all non-tax qualified deferred annuity
contracts issued by the same company to the same contract owner
during a calendar year are to be treated as a single, unified
contract. The amount of income included and taxed in a
distribution (or a transaction deemed a distribution under tax law)
taken from any one of such contracts is determined by summing all
such contracts.
The income earned on a Contract held by such entities as
corporations, partnerships or trusts generally will be treated as
ordinary income received during that year.
A 10 percent IRS penalty tax may apply on any amount includible in
ordinary income. This penalty will not apply to any amount
received:
o after the owner reaches age 59-1/2;
o after the owner dies;
<PAGE>
PAGE 28
o after the owner becomes disabled (as defined in the Code);
o as a distribution that is part of a series of substantially
equal periodic payments over the life or life expectancy of
the owner (or joint lives or life expectancies of the owner
and beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982
(except for Contracts in tax qualified plans).
These are the major exceptions to the 10 percent IRS penalty tax.
Additional exceptions may apply depending upon whether or not the
Contract is tax qualified.
For tax qualified Contracts, other penalties apply if a Contract
bought under a plan is surrendered before the plan specifies that
payments can be made under the plan.
If the owner receives all or part of the Contract value from a tax
qualified annuity (except an IRA or SEP/IRA), mandatory 20 percent
income tax withholding generally will be imposed at the time the
payment is made. In addition, federal income tax and the 10
percent IRS penalty tax for early withdrawals may apply to amounts
properly includible in income. This mandatory 20 percent income
tax withholding will not be imposed if:
o instead of receiving the payment, the owner elects to have the
payment rolled over directly to an IRA or another eligible
plan;
o the payment is one of a series of substantially equal periodic
payments, made at least annually, over the life or life
expectancy of the owner (or joint lives or life expectancies
of the owner and beneficiary) or made over a period of 10
years or more; or
o the payment is a minimum distribution required under the Code.
These are the major exceptions to the mandatory 20 percent income
tax withholding. Payments made to a surviving spouse instead of
being directly rolled over to an IRA may be subject to 20 percent
income tax withholding. For taxable distributions that are not
subject to the mandatory 20 percent withholding, federal income tax
will be withheld from the taxable part of the owner's distribution
unless he or she elects otherwise. State withholding also may be
imposed on taxable distributions.
IDS Life will send the owner and/or annuitant, as appropriate, a
tax statement for any year that a taxable distribution from the
Contract is received.
This discussion of federal tax laws is based upon IDS Life's
understanding of these laws as they are currently interpreted.
Either federal tax laws or current interpretations of them may
change. Please consult a tax adviser concerning specific
circumstances.
<PAGE>
PAGE 29
The Company
Business
IDS Life is a stock life insurance company organized in 1957 under
the laws of the State of Minnesota. IDS Life is a wholly owned
subsidiary of IDS Financial Corporation, which is a wholly owned
subsidiary of American Express Company. IDS Life acts as a direct
writer of insurance policies and annuities and as the investment
manager of various investment companies. IDS Life is licensed to
write life insurance and annuity contracts in 49 states and the
District of Columbia. The headquarters of IDS Life is IDS Tower
10, Minneapolis, MN 55440-0010.
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 included in the prospectus beginning
on page .
<TABLE>
<CAPTION>
Years ended Dec. 31, (Thousands)
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Premiums $ 127,245 $ 114,379 $ 102,338 $ 89,749 $ 135,700
Net investment income 1,783,219 1,616,821 1,422,866 1,204,934 1,030,232
Net gain (loss) on investments (6,737) (3,710) (5,837) 1,022 17,668
Other 304,344 240,959 198,344 165,742 136,809
Total revenues 2,208,071 1,968,449 1,717,711 1,461,447 1,320,409
Income before income taxes 412,726 315,821 259,467 227,742 214,639
Net income $ 270,079 $ 211,170 $ 182,037 $ 157,748 $ 144,019
Total assets $33,057,753 $27,295,773 $22,558,809 $18,088,351 $15,119,628
</TABLE>
Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations
Results of Operations
1993 Compared to 1992: Consolidated income before income taxes
totaled $413 million in 1993, compared with $316 million in 1992.
In 1993, $104 million was from the life, disability income, health
and long-term care insurance segment, compared with $96 million in
1992. In 1993, $315 million was from the annuity segment, compared
with $223 million in 1992. The remaining $6.7 million loss in 1993
was a net loss on investments, compared with a net loss on
investments of $3.7 million in 1992.
Total premiums received increased to $5.3 billion in 1993, compared
with $4.4 billion in 1992. This increase is primarily due to
strong sales of variable annuities due to the low interest rate
environment. In addition, IDS Life reported small increases in its
fixed single premium deferred annuity line. Universal life-type
insurance and variable universal life insurance premiums received
also increased from the prior year.
<PAGE>
PAGE 30
Total revenues increased to $2.2 billion in 1993, compared with
$2.0 billion in 1992. Of this, net investment income was $1.8
billion in 1993, compared with $1.6 billion in 1992, reflecting an
increase in invested assets. Total invested assets grew 14 percent
to $21.9 billion at Dec. 31, 1993, from $19.2 billion at Dec. 31,
1992.
Policyholder and contractholder charges, which consist primarily of
cost of insurance charges on universal life-type policies,
increased 18 percent to $184 million in 1993, compared with $156
million in 1992. This increase reflects higher total life
insurance in force which grew 13 percent to $46.1 billion at
Dec. 31, 1993.
Management and other fees increased 41 percent to $120 million in
1993, compared with $85 million in 1992. This is primarily due to
an increase in assets held in segregated asset accounts, which grew
45 percent to $9.0 billion at Dec. 31, 1993, resulting from strong
sales of variable products. IDS Life provides investment
management services for the mutual funds used as investment options
for variable annuities and variable life insurance. IDS Life also
receives a mortality and expense risk fee from the segregated asset
accounts.
In 1993, IDS Life reported a net loss on investments of $6.7
million, compared with a net loss on investments of $3.7 million in
1992. During 1993, net realized losses from the sale of
investments amounted to $12.5 million. This was offset by a net
decrease in allowance for losses of $5.8 million, including an
increase of $9.3 million for mortgage investments and real estate,
offset by a decrease of $15.1 million for below investment grade
bonds (those rated below BBB).
Total benefits and expenses increased to $1.8 billion in 1993,
compared with $1.7 billion in 1992. The largest component of
expenses, interest credited to policyholder accounts for universal
life-type insurance and investment contracts aggregated $1.2
billion and was essentially unchanged from the prior year. This
reflected interest credited to higher accumulation values offset by
lower interest credited rates.
Amortization of deferred policy acquisition costs increased to $212
million in 1993, compared with $140 million in 1992, reflecting
prior years' growth of life insurance and annuity business and a
cumulative adjustment driven by the long-term decrease in accrual
rates on fixed annuities.
Other insurance and operating expenses, which include non-
capitalized commissions and indirect selling expenses, direct and
indirect operating expenses, premium taxes and guaranty association
expenses increased to $242 million in 1993, compared with $216
million in 1992.
In May 1993, the Financial Accounting Standards Board issued SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which IDS Life will implement, effective Jan. 1, 1994.
Under the new rules, debt securities that IDS Life has both the <PAGE>
PAGE 31
positive intent and ability to hold to maturity will be carried at
amortized cost. Debt securities that IDS Life does not have the
positive intent and ability to hold to maturity and all marketable
equity securities will be classified as available-for-sale and
carried at fair value. Unrealized gains and losses on securities
classified as available-for-sale will be carried as a separate
component of stockholder's equity. The effect of the new rules
will be to increase stockholder's equity by approximately $181
million, net of taxes, as of Jan. 1, 1994, but the new rules will
have no material impact on IDS Life's results of operations.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan,"
and FASB Interpretation No. 39, "Offsetting of Amounts Related to
Certain Contracts," are expected to have no material impact on IDS
Life's results of operations or financial condition.
1992 Compared to 1991: Consolidated income before income taxes
totaled $316 million in 1992, compared with $259 million in 1991.
In 1992, $96 million was from the life, disability income, health
and long-term care insurance segment, compared with $90 million in
1991. In 1992, $223 million was from the annuity segment, compared
with $175 million in 1991. The remaining $3.7 million loss in 1992
was a net loss on investments, compared with a net loss on
investments of $5.8 million in 1991.
Total premiums received increased to $4.4 billion in 1992, compared
with $3.3 billion in 1991. This increase is primarily due to
strong sales of annuities with equity investment options as
investors were attracted to the stock market due to the low
interest rate environment. In addition, IDS Life reported
increases in its fixed single premium deferred annuity line.
Universal life-type insurance and variable universal life
insurance premiums increased from the prior year. Traditional
life insurance premiums were essentially unchanged from the prior
year, while long-term care sales increased.
Total revenues increased to $2.0 billion in 1992, compared with
$1.7 billion in 1991. Of this, net investment income was $1.6
billion in 1992, compared with $1.4 billion in 1991, reflecting an
increase in invested assets, partially offset by lower yields.
Total invested assets grew 20 percent to $19.2 billion at Dec. 31,
1992, from $16.0 billion at Dec. 31, 1991.
Policyholder and contractholder charges, which consist primarily
of cost of insurance charges on universal life-type policies,
increased to $156 million in 1992, compared with $137 million in
1991. This increase reflects higher total life insurance in force
which grew 12 percent to $40.9 billion at Dec. 31, 1992.
Management and other fees increased to $85 million in 1992,
compared with $61 million in 1991. This is primarily due to an
increase in assets held in segregated asset accounts, which grew 33
percent to $6.2 billion at Dec. 31, 1992, resulting from strong
sales of variable products and market appreciation. IDS Life <PAGE>
PAGE 32
provides investment management services for the mutual funds used
as investment options for variable annuities and variable life
insurance. IDS Life also receives a mortality and expense risk fee
from the segregated asset accounts.
In 1992, IDS Life reported a net loss on investments of $3.7
million, compared with a net loss on investments of $5.8 million
in 1991. During 1992, net realized gains from the sale of
investments amounted to $1.2 million. This was offset by a net
increase in allowance for losses of $4.9 million, including an
increase of $12.5 million for mortgage investments and real estate,
offset by a decrease of $7.6 million for below investment grade
bonds (those rated below BBB).
During 1991, net realized gains from the sale of investments of
$16.0 million were offset by an increase in allowance for losses
of $21.8 million, resulting in a net loss of $5.8 million.
Total benefits and expenses increased to $1.7 billion in 1992,
compared with $1.5 billion in 1991. The largest component of
expenses, interest credited to policyholder accounts for universal
life-type insurance and investment contracts, increased to $1.2
billion in 1992, compared with $1.1 billion in 1991. This reflects
an increase in liabilities for future policy benefits for universal
life-type insurance, which grew 8.8 percent to $2.6 billion at Dec.
31, 1992, and an increase in liabilities for future policy benefits
for fixed annuities, which grew 20 percent to $16 billion at Dec.
31, 1992.
Amortization of deferred policy acquisition costs increased to $140
million in 1992, compared with $116 million in 1991, reflecting
prior years' growth of life insurance and annuity business.
Other insurance and operating expenses, which include non-
capitalized commissions and indirect selling expenses, direct and
indirect operating expenses, premium taxes and guaranty association
expenses increased to $216 million in 1992, compared with $154
million in 1991. The increase is primarily due to an increased
provision for assessments by state guaranty associations. The
assessments are used to fund claims of policyholders of insolvent
insurance companies.
Liquidity and Capital Resources
The liquidity requirements of IDS Life are met by funds provided
from operations and investment activity. The components of the
funds provided are 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 and new investment purchases.
IDS Life has available lines of credit with two banks aggregating
$75 million, which are used strictly as short-term
sources of funds. Borrowings outstanding under the agreements were
<PAGE>
PAGE 33
$1.5 million at Dec. 31, 1993. IDS Life also uses reverse
repurchase agreements for short-term liquidity needs. Reverse
repurchase agreements aggregated $30 million at Dec. 31, 1993.
At Dec. 31, 1993, investments in fixed maturities comprised 89
percent of IDS Life's total invested assets. Of the fixed maturity
portfolio, approximately 51 percent is invested in GNMA, FNMA and
FHLMC mortgage-backed securities which are considered AAA/Aaa
quality.
At Dec. 31, 1993, approximately 8.8 percent of IDS Life's
investments in fixed maturities were below investment grade bonds.
These investments may be subject to a higher degree of risk than
the more "traditional" 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. IDS
Life has established an allowance for losses for below investment
grade bonds totaling $23 million at Dec. 31, 1993. Management
believes that the allowance for losses is adequate, however, future
economic factors could impact the ratings of securities owned and
additional reserves for losses may be required.
At Dec. 31, 1993, net unrealized appreciation on fixed maturities
included $1.1 billion of gross unrealized appreciation and $82
million of gross unrealized depreciation.
At Dec. 31, 1993, IDS Life had an allowance for losses for mortgage
loans totaling $35 million and for real estate totaling $11
million.
The economy and other factors have caused an increase in the number
of insurance companies that are under regulatory supervision. This
circumstance has resulted in an increase 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. IDS Life established an asset for guaranty association
assessments from those states allowing a reduction in future
premium taxes over a reasonable period of time. The asset will be
amortized as future premium taxes are reduced. IDS Life has also
estimated the potential effect of future assessments on IDS Life's
financial position and results of operations and has established a
reserve for such potential assessments.
In the first quarter of 1994, IDS Life paid a $40 million dividend
to its parent. In 1993, dividends paid to its parent were $25
million.
<PAGE>
PAGE 34
Segment Information
IDS Life's operations consist of two business segments:
Individual and group life, disability income, long-term care and
health insurance; and fixed and variable annuity products designed
for individuals, pension plans, small businesses and
employer-sponsored groups. IDS Life is not dependent upon any
single customer and no single customer accounted for more than 10
percent of revenue in 1993, 1992 or 1991. (See Note 8, Segment
information, in the "Notes to Consolidated Financial Statements".)
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, 1993, traditional
life and universal life-type insurance in force aggregated $46.1
billion, of which $3.0 billion was reinsured.
IDS Life has a reinsurance agreement with an affiliated company,
whereby IDS Life assumed 100 percent of a block of single premium
life insurance business. Reserves related to this agreement were
$760 million at Dec. 31, 1993. IDS Life also has a reinsurance
agreement to cede 50 percent of its long-term care insurance
business to an affiliated company. Reserves and reinsurance
receivables related to this agreement both amounted to $44.1
million at Dec. 31, 1993.
Reserves
In accordance with the insurance laws and regulations under which
IDS Life operates, it is obligated to carry 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 $21.9 billion at
Dec. 31, 1993, 46 percent was invested in mortgage-backed
securities, 43 percent in corporate and other bonds, 9.4 percent
in primary mortgage loans on real estate, 1.6 percent in policy
loans and the remaining 0.5 percent in other investments.
<PAGE>
PAGE 35
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 2,600
stock, mutual and other types of insurers in the life insurance
business. In Fortune magazine's May 1993 listing of the 50 largest
life insurance companies as ranked by assets, IDS Life ranked
fourteenth. Best's Insurance Reports, Life-Health edition, 1993,
assigned IDS Life one of its highest classifications, A+
(Superior).
Employees
As of Dec. 31, 1993, IDS Life and its subsidiaries had 764
employees; including 711 employed at the home office in
Minneapolis, MN, and 53 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, IDS Financial Corporation. IDS Life reimburses IDS
Financial Corporation for rent based on direct and indirect
allocation methods. Facilities occupied by IDS Life and its
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 the Minnesota
Department of Commerce. An annual statement in the prescribed form
is filed with the Minnesota Department of Commerce each year
covering IDS Life's 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. IDS Life'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 IDS Life'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.
<PAGE>
PAGE 36
Directors and Executive Officers*
The members of the Board of Directors and the principal executive
officers of IDS Life, together with the principal occupation of
each during the last five years, are as follows:
Directors
Louis C. Fornetti, 44
Director since March 1994; Senior Vice President and Director, IDS,
since February 1985.
David R. Hubers, 51
Director since September 1989; President and Chief Executive
Officer, IDS, since August 1993, and Director, IDS, since January
1984. Senior Vice President, Finance and Chief Financial Officer,
IDS, from January 1984 to August 1993.
Richard W. Kling, 53
Director since February 1984; President since March 1994.
Executive Vice President, Marketing and Products from January 1988
to March 1994. Vice President, IDS, since January 1988. Director
of IDS Life Series Fund, Inc. and Manager of IDS Life Variable
Annuity Funds A & B.
Paul F. Kolkman, 47
Director since May 1984; Executive Vice President since March 1994;
Vice President, Finance from May 1984 to March 1994; Vice
President, IDS, since January 1987.
Peter A. Lefferts, 52
Director and Executive Vice President, Marketing since March 1994;
Senior Vice President and Director, IDS, since February 1986.
Janis E. Miller, 42
Director and Executive Vice President, Variable Assets since March
1994; Vice President, IDS, since June 1990. Director, Mutual Funds
Product Development and Marketing, IDS, from May 1987 to May 1990.
Director of IDS Life Series Fund, Inc. and Manager of IDS Life
Variable Annuity Funds A & B.
James A. Mitchell, 52
Chairman of the Board since March 1994; Director since July 1984;
Chief Executive Officer since November 1986; President from July
1984 to March 1994; Senior Vice President and Director, IDS, since
July 1984.
Barry J. Murphy, 43
Director and Executive Vice President, Client Service since March
1994; Senior Vice President, Operations, Travel Related Services
(TRS), a subsidiary of American Express Company, since July 1992;
Vice President, TRS, from November 1989 to July 1992; Chief
Operating Officer, TRS, from March 1988 to November 1989.
<PAGE>
PAGE 37
Stuart A. Sedlacek, 36
Director and Executive Vice President, Assured Assets since March
1994; Vice President, IDS, since September 1988.
Melinda S. Urion, 40
Director and Controller since September 1991; Executive Vice
President since March 1994; Vice President and Treasurer from
September 1991 to March 1994; Vice President, IDS, since September
1991; Chief Accounting Officer, IDS, from July 1988 to September
1991.
Officers Other Than Directors
Morris Goodwin Jr., 42
Vice President and Treasurer since March 1994; Vice President and
Corporate Treasurer, IDS, since July 1989; Chief Financial Officer
and Treasurer, IDS Bank & Trust, from January 1988 to July 1989.
William A. Stoltzmann, 45
Vice President, General Counsel and Secretary since 1985.
*The address for all of the directors and principal officers is:
IDS Tower 10, Minneapolis, MN 55440-0010.
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 1993 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 1993.
Name of individual Cash
or number in group Position held compensation
Five most highly compensated
executive officers as a group: $ 1,929,713
James A. Mitchell President
Richard W. Kling Exec. Vice President,
Marketing and Products
ReBecca K. Roloff Exec. Vice President,
Operations
Alan R. Dakay Vice President,
Institutional Insurance Marketing
Paul F. Kolkman Vice President,
Finance
All executive officers
as a group (12) $ 2,811,894
<PAGE>
PAGE 38
Security Ownership of Management
IDS Life's directors and officers do not beneficially own any
outstanding shares of stock of IDS Life. All of the outstanding
shares of stock of IDS Life are beneficially owned by its parent,
IDS Financial Corporation. The percentage of shares of IDS
Financial Corporation owned by any director, and by all directors
and officers of IDS Life as a group, does not exceed one percent of
the class outstanding.
Legal Proceedings and Opinion
Legal matters in connection with federal laws and regulations
affecting the issue and sale of the Contracts described in this
prospectus and the organization of IDS Life, its authority to issue
Contracts under Minnesota law and the validity of the forms of the
Contracts under Minnesota law have been passed on by the General
Counsel of IDS Life.
Experts
The consolidated financial statements of IDS Life Insurance Company
at Dec. 31, 1993 and 1992, and for each of the three years in the
period ended Dec. 31, 1993, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young,
independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
Appendix A
Total Surrender of a Subaccount
This example shows how surrender charges are calculated for the
total surrender of one subaccount.
Assumptions:
The Contract is dated January 15, 1993. The Contract year is
January 15 to January 14 and the anniversary date is January 15th
each year.
Subaccount P is established with a $5,000 payment on July 1, 1994.
The surrender charge percentages for Subaccount P will be:
Surrender Date Surrender Charge Percentage
7-1-94 to 1-14-95 7%
1-15-95 to 1-14-96 6
1-15-96 to 1-14-97 5
1-15-97 to 1-14-98 4
1-15-98 to 1-14-99 3
1-15-99 to 1-14-00 2
1-15-00 to 1-14-01 1
January 15, 2001+ 0
<PAGE>
PAGE 39
The Subaccount P market adjusted value is transferred to Subaccount
Q on September 1, 1995. The above surrender charge percentage date
limits do not change even though Subaccount P transferred to
Subaccount Q.
Subaccount Q is entirely surrendered November 4, 1998, when the
Subaccount Q accumulation value is $8,300. Interest rates have
increased since Subaccount Q started. The January 15, 1998 (prior
Contract anniversary) Subaccount Q accumulation value was $8,000.
Assume that the November 4, 1998 market adjusted value is $8,000.
This includes the $800 free withdrawal amount (10 percent of the
January 15, 1998 Subaccount Q accumulation value) and an assumed
($300) negative market value adjustment due to interest rate
increases.
What is the Surrender Charge Amount?
The $8,000 market adjusted value less the $800 free withdrawal
amount is subject to a 3 percent surrender charge. The surrender
charge is 3 percent of $7,200 which is $216.
What Net Amount does the Owner Receive?
The owner receives a net surrender check of $7,784 which is:
Subaccount Q Market adjusted value $8,000
(Which includes the $800 free withdrawal amount
and the ($300) market value adjustment)
Less Subaccount Q surrender charge - 216
Net Subaccount Q surrender check $7,784
Appendix B
Market Value Adjustment Illustration
Assumptions:
Contract Date: January 1, 1993
Subaccount Established: July 1, 1993
Purchase Payment: $50,000
Subaccount Guarantee Period: 10 Years
Subaccount Guarantee Rate: 4.5 percent effective annual yield
Market Value Adjustment Assumptions: These examples show how the
market value adjustment may affect your Contract subaccount values.
The surrenders in these examples occur on July 1, 1994, one year
after the subaccount is established. There are no previous
surrenders.
The subaccount accumulation value at the end of one year is
$52,250. If there are no surrenders, the subaccount accumulation
value at the end of the 10-year guarantee period will be
$77,648.47.
<PAGE>
PAGE 40
The subaccount accumulation value on January 1, 1994, the Contract
anniversary, is: $50,000 x (1 + .045)(184/365) = $51,121.87. The
free withdrawal amount for the next year is $5,112.19. This free
withdrawal amount (10 percent of the Contract anniversary
subaccount accumulation value) is free of both market value
adjustment and surrender charge.
The market value adjustment reflects the relationship (at the time
of surrender) between the subaccount guarantee rate and the
interest rate IDS Life then is crediting on purchase payments or
transfers made to new subaccounts with guarantee periods of the
same duration as the time remaining in the subaccount guarantee
period. After one year, there are 9 years left of the 10-year
subaccount guarantee period.
Example I shows a downward market value adjustment. Example II
shows an upward market value adjustment. These examples do not
show the surrender charge (if any) which would be calculated
separtately after the market value adjustment. Surrender charge
calculations are shown in Appendix A.
Market Adjusted Value Formula:
Market Adjusted Value = [(AVc - FWA) x F] + FWA
where:
AVc = the subaccount accumulation value to be surrendered or
transferred
FWA = free withdrawal amount
F = (1 + ig)(N + t)
(1 + ic + .0025)(N + t)
where:
ig = the subaccount guarantee rate
N = the number of complete years to the end of the guarantee
period for the subaccount
t = the fraction of a year remaining to the end of the
guarantee period (for example, if 180 days remain in a
365 day year, t would be .493 for the subaccount)
ic = the subaccount guarantee rate IDS Life then is crediting
on purchase payments or transfers made to new subaccounts
with guarantee periods of the same duration as the time
remaining in the subaccount guarantee period (straight
line interpolation between whole year rates. If N is
zero, ic is the rate for a one year guarantee period)
<PAGE>
PAGE 41
Example I - Downward Market Value Adjustment
A surrender results in a downward market value adjustment when
interest rates have increased. Assume after one year, IDS Life is
crediting 5 percent for a new subaccount with a 9-year guarantee
period. If the owner totally surrenders the subaccount, the market
adjusted value is:
[(AVc - FWA) x F] + FWA
[($52,250.00 - $5,112.19) x (1 + .045)9]+ 5,112.19 = $49,311.66
(1 + .05 + .0025)9]
The market value adjustment is a $2,938.34 reduction of the
accumulation value:
($2,938.34) = $49,311.66 - $52,250.00
Example II - Upward Market Value Adjustment
A surrender results in an upward market value adjustment when
interest rates have decreased. Assume after one year, IDS Life is
crediting 4 percent for a new subaccount with a 9-year guarantee
period. If the owner totally surrenders the subaccount, the market
adjusted value is:
[(AVc - FWA) x F] + FWA
[$52,250.00 - $5,112.19) x (1 + .045)9] + $5,112.19 = $53,277.18
(1 + .04 + .0025)9]
The market value adjustment is a $1,027.18 increase of the
accumulation value:
$1,027.18 = $53,277.18 - $52,250.00
<PAGE>
PAGE 42
Annual Financial Information
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 IDS Financial
Corporation) as of December 31, 1993 and 1992, and the related
consolidated statement of income and cash flows for each of the
three years in the period ended December 31, 1993. 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, 1993 and
1992, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
Ernst & Young
Minneapolis, Minnesota
February 3, 1994
<PAGE>
PAGE 43
IDS Life Financial Information
The Financial statements shown below are those of the insurance
company and not those of the Account. They are included in the
prospectus for the purpose of informing investors as to the
financial condition of the insurance company and its ability to
carry out its obligations under the variable annuity contracts.
IDS Life Insurance Company
<TABLE>
<CAPTION>
Consolidated Balance Sheets Dec. 31, 1993 Dec. 31,1992
Assets (Thousands)
______________________________________________________________________________________________________________________________
<S> <C> <C>
Investments:
Fixed maturities (Fair value: 1993, $20,425,979; 1992, $17,896,374) $19,392,424 $17,185,879
Mortgage loans on real estate (Fair value: 1993, $2,125,686; 1992, $1,785,970) 2,055,450 1,688,490
Policy loans 350,501 320,016
Other investments 56,307 51,955
______________________________________________________________________________________________________________________________
Total investments 21,854,682 19,246,340
______________________________________________________________________________________________________________________________
Cash and cash equivalents 146,281 73,563
Receivables:
Reinsurance 55,298 -
Amounts due from brokers 5,719 20,202
Other accounts receivable 21,459 20,095
Premiums due 1,329 1,361
______________________________________________________________________________________________________________________________
Total receivables 83,805 41,658
______________________________________________________________________________________________________________________________
Accrued investment income 307,177 285,120
Deferred policy acquisition costs 1,652,384 1,440,875
Other assets 21,730 18,672
Assets held in segregated asset accounts, primarily common stocks at market 8,991,694 6,189,545
______________________________________________________________________________________________________________________________
Total assets $33,057,753 $27,295,773
______________________________________________________________________________________________________________________________
Liabilities and Stockholder's Equity
______________________________________________________________________________________________________________________________
Liabilities:
Fixed annuities - future policy benefits $18,492,135 $16,342,419
Universal life-type insurance - future policy benefits 2,753,455 2,567,687
Traditional life-type insurance - future policy benefits 210,205 210,886
Disability income, health and long-term care insurance - future policy benefits 185,272 104,896
Policy claims and other policyholders' funds 44,516 49,899
Deferred federal income taxes 43,620 87,913
Amounts due to brokers 351,486 258,654
Other liabilities 292,024 235,509
Liabilities related to segregated asset accounts 8,991,694 6,189,545
______________________________________________________________________________________________________________________________
Total liabilities 31,364,407 26,047,408
______________________________________________________________________________________________________________________________
Stockholder's equity:
Capital stock, $30 per value per share; 100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 222,000 22,000
Net unrealized appreciation on equity securities 114 214
Retained earnings 1,468,232 1,223,151
______________________________________________________________________________________________________________________________
Total stockholder's equity 1,693,346 1,248,365
______________________________________________________________________________________________________________________________
Total liabilities and stockholder's equity $33,057,753 $27,295,773
Commitments and contingencies (Note 6)
______________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 44
<TABLE>
<CAPTION>
Consolidated Statement of Income Years ended Dec. 31,
1993 1992 1991
(Thousands)
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 48,137 $ 49,719 $ 49,706
Disability income and long-term care insurance 79,108 64,660 52,632
__________________________________________________________________________________________________________________________________
127,245 114,379 102,338
Policyholder and contractholder charges 184,205 156,368 137,202
Management and other fees 120,139 84,591 61,142
Net investment income 1,783,219 1,616,821 1,422,866
Net loss on investments (6,737) (3,710) (5,837)
__________________________________________________________________________________________________________________________________
Total revenues 2,208,071 1,968,449 1,717,711
__________________________________________________________________________________________________________________________________
Benefits and expenses:
Death and other benefits - traditional life insurance 32,136 34,139 30,170
Death and other benefits - universal life-type insurance
and investment contracts 49,692 42,174 38,529
Death and other benefits - disability income, health and
long-term care insurance 13,148 10,701 8,242
Increase (decrease) in liabilities for future policy benefits -
traditional life insurance (4,513) (5,788) (6,425)
Increase (decrease) in liabilities for future policy benefits -
disability income, health and long-term care insurance 32,528 27,172 19,700
Interest credited on universal life-type insurance and investment contracts 1,218,647 1,188,379 1,098,281
Amortization of deferred policy acquisition costs 211,733 140,159 116,078
Other insurance and operating expenses 241,974 215,692 153,669
__________________________________________________________________________________________________________________________________
Total benefits and expenses 1,795,345 1,652,628 1,458,244
__________________________________________________________________________________________________________________________________
Income before income taxes 412,726 315,821 259,467
Income taxes 142,647 104,651 77,430
__________________________________________________________________________________________________________________________________
Net income $ 270,079 $ 211,170 $ 182,037
__________________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 45
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows Years ended Dec. 31,
1993 1992 1991
(Thousands)
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 270,079 $ 211,170 $ 182,037
Adjustments to reconcile net income to net cash provided by operating activities:
Issuance - policy loans, excluding universal life-type insurance (35,886) (32,881) (29,309)
Repayment - policy loans, excluding universal life-type insurance 29,557 26,750 19,928
Change in reinsurance receivable (55,298) - -
Change in other accounts receivable (1,364) (4,772) (1,558)
Change in accrued investment income (22,057) (15,853) (26,022)
Change in deferred policy acquisition costs, net (211,509) (229,252) (175,442)
Change in liabilities for future policy benefits for traditional life, disability
income, health and long-term care insurance 79,695 21,384 13,275
Change in policy claims and other policyholders' funds (5,383) (1,347) 11,801
Change in deferred federal income taxes (44,237) (30,385) (29,207)
Change in other liabilities 56,515 88,997 45,323
Amortization of premium (accretion of discount), net (27,438) (4,289) 19,726
Net loss on investments 6,737 3,710 5,837
Premiums related to universal life-type insurance 397,883 312,621 264,504
Surrenders and death benefits related to universal life-type insurance (255,133) (166,162) (109,307)
Interest credited to account balances related to universal life-type insurance 156,885 161,873 160,585
Policyholder and contractholder charges, non-cash (115,140) (100,975) (96,211)
Other, net (1,907) (10,647) 2,258
__________________________________________________________________________________________________________________________________
Net cash provided by operating activities $ 221,999 $ 229,942 $ 258,218
__________________________________________________________________________________________________________________________________
Cash flows from investing activities:
Acquisition of investments, excluding policy loans $(7,102,546) $(7,001,348) $(5,518,481)
Maturities, sinking fund payments and calls of investments, excluding policy loans 3,931,819 2,700,479 838,589
Sale of investments, excluding policy loans 613,571 1,073,950 2,274,401
Change in amounts due from brokers 14,483 289,335 (134,312)
Change in amounts due to brokers 92,832 42,182 72,382
__________________________________________________________________________________________________________________________________
Net cash used in investing activities (2,449,841) (2,895,402) (2,467,421)
__________________________________________________________________________________________________________________________________
Cash flows from financing activities:
Considerations received related to investment contracts 2,843,668 2,821,069 2,316,333
Surrenders and death benefits related to investment contracts (1,765,869) (1,168,633) (871,808)
Interest credited to account balances related to investment contracts 1,071,917 1,026,506 937,696
Issuance - universal life-type insurance policy loans (70,304) (72,007) (76,010)
Repayment - universal life-type insurance policy loans 46,148 40,351 31,860
Capital contribution from parent 200,000 - -
Cash dividend to parent (25,000) (20,000) (20,000)
__________________________________________________________________________________________________________________________________
Net cash provided by financing activities 2,300,560 2,627,286 2,318,071
__________________________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents 72,718 (38,174) 108,868
Cash and cash equivalents at beginning of year 73,563 111,737 2,869
__________________________________________________________________________________________________________________________________
Cash and cash equivalents at end of year $ 146,281 $ 73,563 $ 111,737
__________________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 46
Notes to Consolidated Financial Statements ($ Thousands)
Dec. 31, 1993, 1992, 1991
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is engaged in the
insurance and annuity business. The Company sells various forms of
fixed and variable individual life insurance, group life insurance,
individual and group disability income insurance, long-term care
insurance, and single and installment premium fixed and variable
annuities.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Financial
Corporation (IDS), which is a wholly owned subsidiary of American
Express Company. The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries, IDS Life Insurance Company of New York and American
Enterprise Life Insurance Company. 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.
Also, the consolidated financial statements are presented on a
historical cost basis without adjustment of the net assets
attributable to the 1984 acquisition of IDS by American Express
Company.
Investments
Investments in fixed maturities are carried at cost, adjusted where
appropriate for amortization of premiums and accretion of
discounts. Mortgage loans on real estate are carried principally
at the unpaid principal balances of the related loans. Policy
loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related
policies. Other investments include interest rate caps, real
estate and equity securities. 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 estimated realizable value by a charge to income. Equity
securities are carried at market value and the related net
unrealized appreciation or depreciation is reported as a credit or
charge to stockholder's equity.
The Company has the ability and the intent to recover the costs of
these investments by holding them for the forseeable future. The
ability to hold investments to scheduled maturity dates is
dependent on, among other things, annuity contract owners
maintaining their annuity contracts in force.
The Company will implement, effective January 1, 1994, Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under the new rules,
debt securities that the Company has both the positive intent and
ability to hold to maturity will be carried at amortized cost.
Debt securities that the Company does not have the positive intent <PAGE>
PAGE 47
1. Summary of significant accounting policies (continued)
and ability to hold to maturity and all marketable equity
securities will be classified as available-for-sale and carried at
fair value. Unrealized gains and losses on securites classified as
available-for-sale will be carried as a separate component of
stockholder's equity. The effect of the new rules will be to
increase stockholder's equity by approximately $181 million, net of
taxes, as of January 1, 1994, but the new rules will have no
material impact on the Company's results of operations.
Realized investment gain or loss is determined on an identified
cost basis.
Interest rate cap contracts are purchased to reduce the Company's
exposure to rising interest rates which would increase the cost of
future policy benefits for interest sensitive products. Costs
are amortized over the lives of the agreements and benefits are
recognized when realized.
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.
Statement 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 statement of cash
flows for the years ended Dec. 31 is summarized as follows:
1993 1992 1991
___________________________________________________________________
Cash paid during the year for:
Income taxes $188,204 $140,445 $111,809
Interest on borrowings 2,661 1,265 108
___________________________________________________________________
Recognition of profits on annuity contracts and insurance policies
The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
Single premium deferred annuities issued prior to 1980 had a sales
fee and no surrender charge. All of the Company's single premium
deferred annuity contracts provide for crediting the contract
owners' accumulations at specified rates of interest. Such rates
are revised by the Company from time to time based on changes in
the market investment yield rates for fixed-income securities.
<PAGE>
PAGE 48
1. Summary of significant accounting policies (continued)
Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned
from investment of contract considerations over interest credited
to contract owners and other expenses.
The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.
Premiums on traditional life, disability income, health and
long-term care insurance policies are recognized as revenue when
collected or 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.
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 single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be
realized on the policies. For traditional life, disability income,
health 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, single premium
deferred annuities and installment annuities are accumulation
values.
Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981), policy persistency derived from Company experience data
(first year rates ranging from approximately 70 percent to 90
percent and increasing rates thereafter), and estimated future
investment yields of 4 percent for policies issued before 1974 and
<PAGE>
PAGE 49
1. Summary of significant accounting policies (continued)
5.25 percent for policies issued from 1974 to 1980. Cash value
plans issued in 1980 and later assume future investment rates that
grade from 9.5 percent to 5 percent over 20 years. Term insurance
issued from 1981 to 1984 assumes an 8 percent level investment rate
and term insurance issued after 1984 assumes investment rates that
grade from 10 percent to 6 percent over 20 years.
Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for 1980
and prior, 8 percent interest for persons disabled from 1981 to
1991 and 6 percent interest for persons disabled after 1991.
Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991 and 6 percent for claims incurred after
1991.
At Dec. 31, 1993 and 1992, the carrying amount and fair value of
fixed annuities future policy benefits, after excluding life
insurance-related contracts carried at $913,127 and $834,909, were
$17,579,008 and $15,507,510, and $16,881,747 and $14,867,066,
respectively. The fair value is net of policy loans of $59,132 and
$51,394 at Dec. 31, 1993 and 1992, respectively. The fair value of
these benefits is based on the status of the annuities at Dec. 31,
1993 and 1992. The fair value of deferred annuities is estimated
as the carrying amount less any 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 the rate appropriate for contracts issued in 1993 and
1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis. Graded premium whole life policies
and long term care are primarily reinsured on a coinsurance basis.
In 1993 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 113, "Accounting and Reporting for Reinsurance
of Short-Duration and Long-Duration Contracts." Under SFAS No.
113, amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance receivables. Prior to 1993,
these amounts were recorded as a reduction of the liability for
future insurance policy benefits. The cost of reinsurance is
accounted for over the period covered by the reinsurance contract.
<PAGE>
PAGE 50
1. Summary of significant accounting policies (continued)
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 IDS 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 IDS and its
subsidiaries that IDS will reimburse a subsidiary for any tax
benefit.
Included in other liabilities at Dec. 31, 1993 and 1992 are $14,709
and $18,181, respectively, payable to IDS for federal income taxes.
Segregated asset account business
The segregated asset 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 and mortality and expense assurance fees from the
variable annuity and variable life insurance mutual funds and
segregated asset accounts. The Company also deducts a monthly cost
of insurance charge and receives a minimum death benefit guarantee
fee and issue and administrative fee from the variable life
insurance segregated asset accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the segregated asset
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries
from the mortality assumptions implicit in the annuity contracts.
The Company makes periodic fund transfers to, or withdrawals from,
the segregated asset accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. The
Company guarantees, for the variable life insurance policyholders,
the cost of the contractual insurance rate and that the death
benefit will never be less than the death benefit at the date of
issuance.
At Dec. 31, 1993 and 1992 the fair value of liabilities related to
segregated asset accounts was $8,305,209 and $5,727,402,
respectively. The fair value of these liabilities at Dec. 31, 1993
and 1992 is estimated as the carrying amount less variable
insurance contracts carried at $346,276 and $226,946, respectively,
and surrender charges, if applicable.
Reclassification
Certain 1992 and 1991 amounts have been reclassified to conform to
the 1993 presentation.
2. Investments
Market values of investments in fixed maturities represent quoted
market prices and estimated fair values when quoted prices are not
available. Estimated fair 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. <PAGE>
PAGE 51
2. Investments (continued)
Net gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
<TABLE>
<CAPTION>
1993 1992 1991
________________________________________________________________________________________________
<S> <C> <C> <C>
Fixed maturities $ 5,460 $ 14,474 $ 22,750
Mortgage loans (11,422) (5,004) (1,064)
Other investments (6,606) (8,265) (5,695)
(12,568) 1,205 15,991
Net (increase) decrease in allowance for losses 5,831 (4,915) (21,828)
$ (6,737) $ (3,710) $ (5,837)
________________________________________________________________________________________________
Changes in net unrealized appreciation
(depreciation) of investments for the years
ended Dec. 31 are summarized as follows:
1993 1992 1991
________________________________________________________________________________________________
Fixed maturities $323,060 $(128,683) $861,355
Equity securities (156) 300 418
________________________________________________________________________________________________
Fair values of and gross unrealized gains
and losses on investments in fixed maturities
carried at amortized cost at Dec. 31 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
1993 Cost Gains Losses Value
________________________________________________________________________________________________
U.S. Government agency obligations $ 63,532 $ 3,546 $ 1,377 $ 65,701
State and municipal obligations 11,072 2,380 - 13,452
Corporate bonds and obligations 9,362,074 768,747 45,706 10,085,115
Mortgage-backed securities 9,978,523 341,067 57,879 10,261,711
19,415,201 1,115,740 104,962 20,425,979
Less allowance for losses 22,777 - 22,777 -
$19,392,424 $1,115,740 $ 82,185 $20,425,979
________________________________________________________________________________________________
Gross Gross
Amortized Unrealized Unrealized Fair
1992 Cost Gains Losses Value
________________________________________________________________________________________________
U.S. Government agency obligations $ 36,753 $ 3,658 $ 4 $ 40,407
State and municipal obligations 11,234 1,542 - 12,776
Corporate bonds and obligations 7,688,190 431,781 104,707 8,015,264
Mortgage-backed securities 9,487,601 377,539 37,213 9,827,927
17,223,778 814,520 141,924 17,896,374
Less allowance for losses 37,899 - 37,899 -
$17,185,879 $ 814,520 $104,025 $17,896,374
________________________________________________________________________________________________
The amortized cost and fair value of investments in fixed maturities at Dec. 31, 1993 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.
Amortized Fair
Cost Value
________________________________________________________________________________________________
Due in one year or less $ 89,160 $ 90,928
Due from one to five years 1,430,756 1,532,298
Due from five to ten years 5,488,955 5,924,580
Due in more than ten years 2,427,807 2,616,462
Mortgage-backed securities 9,978,523 10,261,711
$19,415,201 $20,425,979
________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 52
2. Investments (continued)
Proceeds from sales of investments in fixed maturities during 1993
and 1992 were $482,523 and $996,619, respectively. During 1993 and
1992, gross gains of $48,499 and $94,915, respectively, and gross
losses of $43,039 and $80,441, respectively, were realized on those
sales.
At Dec. 31, 1993, the amount of net unrealized appreciation on
equity securities included $160 of gross unrealized appreciation,
$nil of gross unrealized depreciation and deferred tax credits of
$46. At Dec. 31, 1992, the amount of net unrealized appreciation
on equity securities included $328 of gross unrealized
appreciation, $12 of gross unrealized depreciation and deferred tax
credits of $102. The fair value of equity securities was $1,900
and $2,005 at Dec. 31, 1993 and 1992, respectively.
Included in other investments at Dec. 31, 1993 are interest rate
caps at amortized cost of $26,923 with a fair value of $14,201.
These interest rate caps carry a notional amount of $4,400,000 and
expire on various dates from 1994 to 1998.
At Dec. 31, 1993, bonds carried at $4,184 were on deposit with
various states as required by law.
Net investment income for the years ended Dec. 31 is summarized as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
______________________________________________________________________________________
<S> <C> <C> <C>
Interest on fixed maturities $1,589,802 $1,449,234 $1,279,317
Interest on mortgage loans 175,063 148,693 122,723
Other investment income 29,345 24,281 20,005
Interest on cash equivalents 2,137 5,363 8,729
1,796,347 1,627,571 1,430,774
Less investment expenses 13,128 10,750 7,908
______________________________________________________________________________________
$1,783,219 $1,616,821 $1,422,866
______________________________________________________________________________________
</TABLE>
At Dec. 31, 1993, investments in fixed maturities comprised 89
percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for
approximately $2.1 billion which is rated by IDS internal analysts
using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities by rating on Dec. 31 is as follows:
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
Rating 1993 1992
________________________________________________________________________
<S> <C> <C>
Aaa/AAA $ 9,959,884 $ 9,480,345
Aa/AA 258,659 219,370
Aa/A 160,638 109,806
A/A 2,021,177 1,735,750
A/BBB 654,949 447,592
Baa/BBB 3,936,366 3,352,192
Baa/BB 717,606 392,361
Below investment grade 1,705,922 1,486,362
________________________________________________________________________
$19,415,201 $17,223,778
________________________________________________________________________
</TABLE> <PAGE>
PAGE 53
2. Investments (continued)
At Dec. 31, 1993, 99 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than 1 percent of the Company's total
investments in fixed maturities.
At Dec. 31, 1993, approximately 9.4 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 at Dec. 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
______________________________________________________________________________________
<S> <C> <C> <C> <C>
East North Central $ 552,150 $ 20,933 $ 484,808 $ 21,728
West North Central 361,704 16,746 357,388 14,327
South Atlantic 452,679 52,440 320,593 32,022
Middle Atlantic 260,239 41,090 188,294 56,816
New England 155,214 17,620 114,170 24,677
Pacific 120,378 15,492 89,636 5,148
West South Central 43,948 525 46,296 716
East South Central 73,748 - 83,994 10,085
Mountain 70,410 14,594 26,906 8,882
______________________________________________________________________________________
2,090,470 179,440 1,712,085 174,401
Less allowance for losses 35,020 - 23,595 -
______________________________________________________________________________________
$2,055,450 $179,440 $1,688,490 $174,401
______________________________________________________________________________________
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
______________________________________________________________________________________
Apartments $ 744,788 $ 79,153 $ 541,855 $ 70,198
Department/retail stores 624,651 65,402 504,331 74,671
Office buildings 234,042 15,583 327,216 12,950
Industrial buildings 217,648 9,279 203,361 15,150
Nursing/retirement homes 83,768 917 56,431 716
Hotels/motels 33,138 - 34,631 716
Medical buildings 30,429 5,954 23,006 -
Residential 78 - 6,618 -
Other 121,928 3,152 14,636 -
______________________________________________________________________________________
2,090,470 179,440 1,712,085 174,401
Less allowance for losses 35,020 - 23,595 -
______________________________________________________________________________________
$2,055,450 $179,440 $1,688,490 $174,401
______________________________________________________________________________________
</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 the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The 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. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.
<PAGE>
PAGE 54
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.
Income tax expense consists of the following:
<TABLE>
<CAPTION>
1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Federal income taxes:
Current $180,558 $130,998 $104,292
Deferred (44,237) (30,385) (29,207)
_______________________________________________________________________________
136,321 100,613 75,085
State income taxes-Current 6,326 4,038 2,345
_______________________________________________________________________________
Income tax expense $142,647 $104,651 $ 77,430
_______________________________________________________________________________
</TABLE>
Increases (decreases) to the federal tax provision applicable to
pretax income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1993 1992 1991
_________________________________________________________________________________________________________
Provision Rate Provision Rate Provision Rate
_________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based on
the statutory rate $144,454 35.0% $107,379 34.0% $88,219 34.0%
Increases (decreases) are attributable to:
Tax-excluded interest and dividend income (11,002) (2.7) (8,209) (2.6) (9,496) (3.7)
Other, net 2,869 0.7 1,443 0.4 (3,638) (1.4)
_________________________________________________________________________________________________________
Federal income taxes $136,321 33.0% $100,613 31.8% $75,085 28.9%
_________________________________________________________________________________________________________
</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 Dec. 31, 1993,
the Company had a policyholders' surplus account balance of
$19,032. The policyholders' surplus account is only taxable if
dividends to the stockholder exceed the stockholder's surplus
account or if the Company is liquidated. Deferred income taxes of
$6,661 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 Dec. 31 are as follows:
<TABLE>
<CAPTION>
Deferred tax assets: 1993 1992
______________________________________________________________________________________
<S> <C> <C>
Policy reserves $453,436 $356,712
Life insurance guarantee fund assessment reserve 35,000 21,794
______________________________________________________________________________________
Total deferred tax assets 488,436 378,506
______________________________________________________________________________________
Deferred tax liabilities:
______________________________________________________________________________________
Deferred policy acquisition costs 509,868 446,579
Investments 10,105 2,435
Other 12,083 17,405
______________________________________________________________________________________
Total deferred tax liabilities 532,056 466,419
______________________________________________________________________________________
Net deferred tax liabilities $ 43,620 $ 87,913
______________________________________________________________________________________
/TABLE
<PAGE>
PAGE 55
4. Stockholder's equity
Retained earnings available for distribution as dividends to 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 $922,246 as
of Dec. 31, 1993 and $685,103 as of Dec. 31, 1992 (see Note 3 with
respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1994 in excess of
approximately $259,063 would require approval of the Department of
Commerce of the State of Minnesota.
Statutory net income for 1993, 1992 and 1991 and stockholder's
equity as of Dec. 31, 1993, 1992 and 1991 are summarized as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
___________________________________________________________________________________
<S> <C> <C> <C>
Statutory net income $ 275,015 $180,296 $200,704
Statutory stockholder's equity 1,157,022 714,942 551,939
___________________________________________________________________________________
</TABLE>
Dividends paid to IDS were $25,000 in 1993, $20,000 in 1992 and
$20,000 in 1991.
5. Related party transactions
The Company has loaned funds or agreed to loan funds to IDS under
two separate loan agreements. The balance of the first loan was
$75,000 and $nil at Dec. 31, 1993 and 1992, respectively. This
loan can be increased to a maximum of $100,000 and pays interest at
a rate equal to the preceding month's effective new money rate for
the Company's permanent investments. It is collateralized by
equities valued at $96,790 at Dec. 31, 1993. The second loan was
used to fund the construction of the IDS Operations Center. This
loan had an outstanding balance of $84,588 and $85,278 at Dec. 31,
1993 and 1992, respectively. The loan is secured by a first lien
on the IDS Operations Center property and has an interest rate of
9.89 percent. The Company also has a loan to an affiliate which
was used to fund construction of the IDS Learning Center. At Dec.
31, 1993 and 1992, the balance outstanding was $22,573 and $22,755,
respectively. The loan is secured by a first lien on the IDS
Learning Center property and has an interest rate of 9.82 percent.
Interest income on the above loans totaled $11,116, $10,711 and
$14,783 in 1993, 1992 and 1991, respectively.
The Company purchased a five year secured note from an affiliated
company which had an outstanding balance of $27,222 and $31,111 at
Dec. 31, 1993 and 1992, respectively. The note bears a market
interest rate, revised semi-annually, which at Dec. 31, 1993 was
8.42 percent.
The Company has a reinsurance agreement whereby it assumed 100
percent of a block of single premium life insurance business from
an affiliated company. The accompanying consolidated balance sheet
at Dec. 31, 1993 and 1992 includes $759,714 and $746,060,
respectively, of future policy benefits related to this agreement. <PAGE>
PAGE 56
5. Related party transactions (continued)
The accompanying consolidated statement of income includes revenue
from policyholder charges of $21, $109 and $243, and expenses of
$4,931, $5,897 and $6,445 related to this agreement for 1993, 1992
and 1991, respectively.
The Company has a reinsurance agreement to cede 50 percent of its
long-term care insurance business to an affiliated company. The
accompanying consolidated balance sheet at Dec. 31, 1993 includes
$44,086 of reinsurance receivables related to this agreement.
Liabilities for future policy benefits were reduced by $27,028 at
Dec. 31, 1992 for the effect of this agreement. Premiums ceded
amounted to $16,230, $12,499 and $6,365 and reinsurance recovered
from reinsurers amounted to $404, $250 and $187 for the years ended
Dec. 31, 1993, 1992 and 1991, respectively.
The Company participates in the retirement plan of IDS which covers
all permanent employees age 21 and over who have met certain
employment requirements. The benefits are based on the number of
years the employee participates in the plan, their final average
monthly salary, the level of social security benefits the employee
is eligible for and the level of vesting the employee has earned in
the plan. IDS' policy is to fund retirement plan costs accrued
subject to ERISA and federal income tax considerations. The
Company's share of the total net periodic pension cost was $nil in
1993, 1992 and 1991.
The Company also participates in defined contribution pension plans
of IDS 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 1993,
1992 and 1991 were $2,008, $1,826 and $1,682, respectively.
The Company participates in defined benefit health care plans of
IDS that provide health care and life insurance benefits to retired
employees and retired financial planners. The plans include
participant contributions and service-related eligibility
requirements. Upon retirement, such employees are considered to
have been employees of IDS. IDS expenses these benefits and
allocates the expenses to its subsidiaries. Accordingly, costs of
such benefits to the Company are included in employee compensation
and benefits and cannot be identified on a separate company basis.
Charges by IDS for use of joint facilities and other services
aggregated $243,346, $204,675 and $174,500 for 1993, 1992 and 1991,
respectively. Certain of these costs are included in deferred
policy acquisition costs. In addition, the Company rents its home
office space from IDS on an annual renewable basis. Such rentals
aggregated $4,513, $4,074 and $3,469 for 1993, 1992 and 1991,
respectively.
Certain commission and marketing services expenses are allocated to
the Company by its affiliates. The expenses for 1993, 1992 and
1991 were $127,000, $110,064 and $95,367, respectively. Certain of
the costs assessed to the Company are included in deferred policy
acquisition costs.
<PAGE>
PAGE 57
6. Commitments and contingencies
At Dec. 31, 1993 and 1992, traditional life insurance and universal
life-type insurance in force aggregated $46,125,515 and
$40,904,345, respectively, of which $3,038,426 and $2,937,590 were
reinsured at the respective year ends. The Company also reinsures
a portion of the risks assumed under disability income policies.
Under the agreements, premiums ceded to reinsurers amounted to
$28,276, $24,222 and $16,908 and reinsurance recovered from
reinsurers amounted to $3,345, $6,766 and $6,447 for the years
ended Dec. 31, 1993, 1992 and 1991.
Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.
The Company is a defendant in various lawsuits, none of which, in
the opinion of the Company counsel, will result in a material
liability.
The Company received the revenue agent's report for the tax years
1984 through 1986 in February 1992, and has settled on all agreed
audit issues. The Company will protest the remaining open issues
and, while the outcome of the appeal is not known at this time,
management does not believe there will be any material impact as a
result of this audit.
7. Lines of credit
The Company has available lines of credit with two banks
aggregating $75,000 at 45 to 80 basis points over the banks' cost
of funds or equal to the prime rate, depending on which line of
credit agreement is used. Borrowings outstanding under these
agreements were $1,519 and $nil at Dec. 31, 1993 and 1992,
respectively.
8. Segment information
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income, health and
long-term care insurance, and second, annuity products designed for
individuals, pension plans, small businesses and employer-sponsored
groups. The consolidated statement of income for the years ended
Dec. 31, 1993, 1992 and 1991 and total assets at Dec. 31, 1993,
1992 and 1991 by segment are summarized as follows:
<PAGE>
PAGE 58
8. Segment information (continued)
<TABLE>
<CAPTION>
1993 1992 1991
___________________________________________________________________________________________________________
<S> <C> <C> <C>
Net investment income:
Life, disability income, health and long-term care insurance $ 250,224 $ 246,676 $ 233,828
Annuities 1,532,995 1,370,145 1,189,038
___________________________________________________________________________________________________________
$ 1,783,219 $ 1,616,821 $ 1,422,866
___________________________________________________________________________________________________________
Premiums and other considerations:
Life, disability income and long-term care insurance $ 281,284 $ 250,386 $ 220,754
Annuities 143,876 104,952 79,928
___________________________________________________________________________________________________________
$ 425,160 $ 355,338 $ 300,682
___________________________________________________________________________________________________________
Income before income taxes:
Life, disability income, health and long-term care insurance $ 104,127 $ 96,215 $ 90,050
Annuities 315,336 223,316 175,254
Net loss on investments (6,737) (3,710) (5,837)
___________________________________________________________________________________________________________
$ 412,726 $ 315,821 $ 259,467
___________________________________________________________________________________________________________
Total assets:
Life, disability income, health and long-term care insurance $ 4,810,145 $ 4,093,778 $ 3,670,197
Annuities 28,247,608 23,201,995 18,888,612
___________________________________________________________________________________________________________
$33,057,753 $27,295,773 $22,558,809
___________________________________________________________________________________________________________
</TABLE>
Allocations of net investment income and certain general expenses
are based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits
by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
PAGE 59
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The expenses of the issuance and distribution of the interests
in the IDS Life Account MGA of IDS Life Insurance Company to be
registered, other than commissions on sales of the Contracts, are
to be borne by the registrant.
Item 14. Indemnification of Directors and Officers
Section 300.083 of Minnesota Law provides in part that a
corporation organized under such law shall have power to indemnify
anyone made, or threatened to be made, a party to a threatened,
pending or completed proceeding, whether civil or criminal,
administrative or investigative, because he is or was a director or
officer of the corporation, or served as a director or officer of
another corporation at the request of the corporation.
Indemnification in such a proceeding may extend to judgments,
penalties, fines and amounts paid in settlement, as well as to
reasonable expenses, including attorneys' fees and disbursements.
In a civil proceeding, there can be no indemnification under the
statute, unless it appears that the person seeking indemnification
has acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation and
its shareholders and unless such person has received no improper
personal benefit; in a criminal proceeding, the person seeking
indemnification must also have no reasonable cause to believe his
conduct was unlawful.
Article IX of the By-laws of the IDS Life Insurance Company
requires the IDS Life Insurance Company to indemnify directors and
officers to the extent indemnification is permitted as stated by
the preceding paragraph, and contains substantially the same
language as the above-mentioned Section 300.083.
Article IX, paragraph (2), of the By-laws of the IDS Life
Insurance Company provides as follows:
"Section 2. The Corporation 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."
<PAGE>
PAGE 60
The parent company of IDS Life Insurance Company maintains an
insurance policy which affords liability coverage to directors and
officers of the IDS Life Insurance Company while acting in that
capacity. IDS Life Insurance Company pays its proportionate share
of the premiums for the policy.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, 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 15. Recent Sales of Unregistered Securities
None
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
3.1 Copy of Certificate of Incorporation of IDS Life
Insurance Company is filed electronically herewith.
3.2 Copy of the Amended By-laws of IDS Life Insurance Company
is filed electronically herewith.
3.3 Copy of Resolution of the Board of Directors of IDS Life
Insurance Company, dated May 5, 1989, establishing IDS
Life Account MGA is filed electronically herewith.
4.1 Form of Group Annuity Contract, Form 30363D, is filed
electronically herewith.
4.2 Form of Group Annuity Certificate, Form 30360D, is filed
electronically herewith.
4.3 Form of Deferred Annuity Contract, Form 30365E, is filed
electronically herewith.
5. Copy of Opinion of Counsel regarding legality of
contracts, dated Sept. 28, 1992, is filed electronically
herewith.
22. Copy of List of Subsidiaries is filed electronically
herewith.<PAGE>
PAGE 61
24. Consent of Independent Auditors is filed electronically
herewith.
25. Power of Attorney, dated March 31, 1994, is filed
electronically herewith.
(b) Financial Statement Schedules
27. Report of Independent Auditors dated February 3, 1994.
Schedule I - Consolidated Summary of Investments Other than
Investments in Related Parties
Schedule V - Supplementary Insurance Information
Schedule VI - Reinsurance
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
All other schedules to the consolidated financial statements
required by Article 7 of Regulation S-X are not required
under the related instructions or are inapplicable and,
therefore, have been omitted.
Item 17. Undertakings
A. The Registrant undertakes: (a) to file, during any period in
which offers or sales are being made, a post-effective amendment to
this registration statement: (i) to include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933, (ii) to reflect
in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement, (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to
such information in the Registration Statement, (b) that, for the
purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment may be deemed to be a new
Registration Statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof, (c) that all post-
effective amendments will comply with the applicable forms, rules
and regulations of the Commission in effect at the time such post-
effective amendments are filed, and (d) to remove from registration
by means of a post-effective amendment any of the securities being
registered which will remain at the termination of the offering.
B. The Registrant represents that it is relying upon the no-
action assurance given to the American Council of Life Insurance
(pub. avail. Nov. 28, 1988). Further, the Registrant represents
that it has complied with the provisions of paragraphs (1) - (4) of
the no-action letter.
<PAGE>
PAGE 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, IDS
Life Insurance Company has duly caused this Registration Statement
to be signed on behalf of the Registrant by the undersigned,
thereunto duly authorized in this City of Minneapolis, and State of
Minnesota on the 5th day of April, 1994.
IDS Life Insurance Company
(Registrant)
By IDS Life Insurance Company
By /s/ James A. Mitchell*
James A. Mitchell
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities indicated on the 5th day of April, 1994.
Signature Title
/s/ James A. Mitchell* Chairman of the Board
James A. Mitchell and Chief Executive
Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Louis C. Fornetti* Director
Louis C. Fornetti
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Peter A. Lefferts* Director and Executive Vice
Peter A. Lefferts President, Marketing
/s/ Janis E. Miller* Director and Executive Vice
Janis E. Miller President, Variable Assets
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
<PAGE>
PAGE 63
/s/ Melinda S. Urion* Director, Exective Vice
Melinda S. Urion President and Controller
*Signed pursuant to Power of Attorney dated March 31, 1994, filed
as Exhibit 25 to Registration Statement No. 33-50968 for IDS Life
Insurance Company (IDS Life Account MGA).
By:
Mary Ellyn Minenko
IDS LIFE ACCOUNT MGA
Registration Number 33-50968
EXHIBIT INDEX
Exhibit 3.1 Copy of Certificate of Incorporation of IDS
Life Insurance Company is filed electronically
herewith.
Exhibit 3.2 Copy of the Amended By-laws of IDS Life
Insurance Company is filed electronically
herewith.
Exhibit 3.3 Copy of Resolution of the Board of Directors of
IDS Life Insurance Company, dated May 5, 1989,
establishing IDS Life Account MGA is filed
electronically herewith.
Exhibit 4.1 Form of Group Annuity Contract, Form 30363D is
filed electronically herewith.
Exhibit 4.2 Form of Group Annuity Certificate, Form 30360D
is filed electronically herewith.
Exhibit 4.3 Form of Deferred Annuity Contract, Form 30365E
is filed electronically herewith.
Exhibit 5. Copy of Opinion of Counsel regarding legality
of contracts, dated Sept. 28, 1992 is filed
electronically herewith.
Exhibit 22. Copy of List of Subsidiaries is filed
electronically herewith.
Exhibit 24. Consent of Independent Auditors is filed
electronically herewith.
Exhibit 25. Power of Attorney, dated March 31, 1994, is
filed electronically herewith.
Exhibit 27. Financial Statement Schedules and Report of
Independent Auditors
<PAGE>
PAGE 1
CERTIFICATE OF INCORPORATION
OF
IDS LIFE INSURANCE COMPANY
We, the undersigned, for the purpose of forming an insurance
corporation under and pursuant to the provisions of the Minnesota
Statutes, Chapter 300 relating thereto, and of any amendments
thereof, do hereby associate ourselves as a body corporate and do
hereby adopt the following Articles of Incorporation:
ARTICLE I
The name of this Corporation shall be IDS Life Insurance
Company.
ARTICLE II
The purposes of and general nature of its business shall be:
(a) To engage in the general business of a life insurance company,
and to effect all forms, types, variations and combinations of
life insurance, endownment or annuity contracts or policies,
on a group or individual basis, for the payment of money in a
single sum or in installments upon the contingencies of death,
disability or survivorship. To provide in such policies or
contracts supplemental thereto, for additional benefits in the
event of the death of the insured by accidental means, total
and permenent disability of the insured, or specific
dismemberment or disablement suffered by the insured.
(b) To engage in the general business of an accident and health
insurance company, for the purpose of effecting insurance
against loss or damage by the sickness, bodily injury or death
by accident of the assured or his dependents, on a group or
individual basis; to effect all forms, types, variations and
combinations of policies or contracts of insurance providing
for indemnities in the event of death, sickness or disability.
(c) To effect contracts of reinsurance or co-insurance of any
individual or group risk underwritten by this Corporation, to
reinsure risks of this Corporation or any part thereof with
any other company or to reinsure the whole of or any portion
of the risks of any other company.
(d) To effect all other contracts of insurance authorized by
clauses (4) and (5)(a) of subdivision 1 of Section 60.29 of
Minnesota Statutes.
(e) To have one or more offices and to conduct business in this
state or elsewhere.
(f) To acquire, hold and dispose of shares of stock, notes, bonds
or other evidences of indebtedness or securities of any other
corporation or corporations.
<PAGE>
PAGE 2
(g) To transact all business and to do all other things necessary
or incidental to the foregoing purposes.
ARTICLE III
The duration of this Corporation shall be perpetual.
ARTICLE IV
The principal place of transacting the business of this
Corporation shall be the City of Minneapolis, State of Minnesota.
ARTICLE V
2/9/72
10/18/85
The capital stock of this Corporation shall consist of One
Hundred Thousand (100,000) shares of stock with a par value of
Thirty Dollars ($30.00) per share. The amount of stated capital of
this Corporation shall be Three Million Dollars ($3,000,000).
ARTICLE VI
(1) The general management of this Corporation shall be vested
in a Board of Directors.
(2) The names and post office addresses of the members of the
first Board of Directors are respectively as follows:
Joseph M. Fitzsimmons 800 Investors Building
Minneapolis 2, Minnesota
John W. McCartin 800 Investors Building
Minneapolis 2, Minnesota
Virgil C. Sullivan 800 Investors Building
Minneapolis 2, Minnesota
A. Edward Archibald 800 Investors Building
Minneapolis 2, Minnesota
Harold E. Miller, M.D. 1531 Medical Arts Building
Minneapolis 2, Minnesota
Said named Directors shall serve as such until the first
annual meeting of the shareholders of the Corporation and until
their successors have been duly elected and qualified.
ARTICLE VII
The first Board of Directors of this Corporation shall have
full power and authority to make and adopt By-Laws for the
government of this Corporation and its affairs as they may deem
advisable or necessary and as shall not be inconsistent with the
<PAGE>
PAGE 3
provisions of these Articles. The By-Laws may be amended or
altered by the shareholders at any regular or special meeting
called therefore.
ARTICLE VIII
These Articles of Incorporation may be amended by the
affirmative vote of the holders of a majority of the voting power
of the capital stock.
ARTICLE IX
The first meeting of the Corporation shall be a meeting of the
Incorporators and Subscribers to the capital stock of the
Corporation. Three days' written notice of such meeting shall be
given unless there is a written Waiver of Notice.
ARTICLE X
The names and post office addresses of the Incorporators are
as follows:
Lloyd J. Muehlberg 800 Investors Building
Minneapolis 2, Minnesota
Joseph F. Grinnell 800 Investors Building
Minneapolis 2, Minnesota
Edward M. Burke 800 Investors Building
Minneapolis 2, Minnesota
IN TESTIMONY WHEREOF we have set our hands this 23rd day of
July, 1957.
IN PRESENCE OF: Lloyd J. Muehlberg
M. Gould Joseph F. Grinnell
D. Fairchild Edward M. Burke
State of Minnesota)
)SS.
County of Hennepin)
On this 23rd day of July, 1957, before me, a Notary Public,
personally appeared Lloyd J. Muehlberg, Joseph F. Grinnell, and
Edward M. Burke, to me known to be the persons named in and who
executed the foregoing instrument, and they acknowledged to me that
they executed the same as their free act and deed and for the uses
and purposes therein expressed.
<PAGE>
PAGE 4
(Notarial seal) Helen M. Bochnak
Helen M. Bochnak
Notary Public, Hennepin County, Minn.
My Commission Expired Nov. 12, 1958
APPROVAL OF COMMISSIONER OF INSURANCE
The foregoing Certificate of Incorporation of Investors
Syndicate Life Insurance and Annuity Company is hereby approved
this 24th day of July, 1957.
Cyril C. Sheehan
Commissioner of Insurance
State of Minnesota
J.O.M.
<PAGE>
PAGE 1
AMENDED BY-LAWS OF
IDS LIFE INSURANCE COMPANY
ARTICLE I
OFFICES
Section 1. The principal place of transacting the business of
this Corporation shall be in the City of Minneapolis, State of
Minnesota.
Section 2. The Corporation may also have offices at such
other places, within or without the State, as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDER'S MEETINGS
Secction 1. All meetings of stockholders for the election of
Directors shall be held at the principal office of the Corporation
in the City of Minneapolis, Minnesota. Meetings of stockholders
for any other purpose may be held at such place, within or without
the State of Minnesota, and at such time as may be designated in
the call and notice thereof.
Section 2. The annual meeting of stockholders for the
election of Directors and the transaction of such other business as
may properly come before the meeting shall be held on the Wednesday
following the first Tuesday on or after the nineteenth day of April
in each year, at 10:30 o'clock A.M. Election of Directors shall be
by plurality vote.
Section 3. In the event the stockholders shall fail to hold
an annual meeting at the time specified therefore in Section 2 of
this Article, or the Directors are not elected thereat, Directors
may be elected at a special meeting held for that purpose upon call
and notice as hereinafter provided for a special meeting of
stockholders.
Section 4. Special meetings of stockholders may be called for
any purpose or purposes at any time by the President, the
Secretary, the Board of Directors, any two or more members of the
Board of Directors or in the manner hereinafter provided by one or
more stockholders holding not less than one-tenth of the issued and
outstanding stock entitled to vote. Upon request in writing by
registered mail or delivered in person to the President, any Vice
President, or Secretary, by any person or persons entitled to call
a meeting of stockholders, such officer shall forthwith cause
notice to be given to the stockholders entitled to vote at a
special meeting of stockholders to be held at such time and place
as such officer shall fix, not less than ten or more than sixty
days after the receipt of such request. Any such request shall
state the purpose or purposes of the proposed meeting.
<PAGE>
PAGE 2
Section 5. Written notice of each meeting of stockholders,
stating the time and place, and in case of a special meeting the
purpose thereof, shall be served upon or mailed to each stockholder
of record entitled to vote thereat at such address as appears on
the stock register of the Corporation, at least ten days before
such meeting.
Section 6. Notice of the time, place and purpose of any
meeting of shareholders, whether required by statute, by the
Articles of Incorporation or by these By-Laws, may be waived in
writing by any stockholder. Such waiver may be given before or
after the meeting, and shall be filed with the Secretary or entered
upon the records of the meeting.
Section 7. Business transacted at all special meetings shall
be confined to the objects stated in the call.
Section 8. The presence, at any meeting of stockholders, in
person or by proxy of the holder of a majority of the stock
entitled to vote thereat shall constitute a quorum for the
transaction of business, except as otherwise provided by statute.
If, however, a quorum shall not be present at any meeting of the
stockholders, the stockholders present in person or by proxy shall
have power to adjourn the meeting from time to time, until a quorum
shall be present. If any meeting of stockholders be adjourned to
another time or place, whether for lack of quorum or otherwise, no
notice as to such adjourned meeting need by given other than by an
announcement, giving the time and place thereof, at the meeting at
which the adjournment is taken. At such adjourned meeting at which
a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed.
The stockholders present at a duly called or held meeting at which
a quorum is present may continue to transact business until final
adjournment, notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.
Section 9. At each meeting of the stockholders, every
stockholder of record at the date fixed by the Board of Directors
as the record date for the determination of the persons entitled to
vote at a meeting of stockholders, or, of no date has been fixed,
then at the date of the meeting, shall be entitled at such meeting
to one vote for each share having voting power standing in his name
on the books of the Corporation. A stockholder may cast his vote
or votes in person or by proxy. The appointment of a proxy shall
be in writing filed with the Secretary at or before the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. The number of directors which shall constitute the
whole Board shall not be less than three nor more than fourteen, as
the stockholders may from time to time determine. The President of
the Corporation shall be a Director. Directors shall be elected at
the annual meeting of the stockholders of the Corporation, except
<PAGE>
PAGE 3
that if the number of directors is increased at any time other than
at an annual meeting of stockholders, an additional Director or
Directors to fill the places on the Board created by any such
increase may be elected at a special meeting of stockholders called
for that purpose. Each Director shall be elected to serve until
the next annual meeting of the stockholders and until his successor
shall be elected and shall qualify.
Section 2. Vacancies in the Board of Directors, not to exceed
one-third of the members of the Board in any one year, shall be
filled by the remaining members of the Board, though less than a
quorum, and each person so elected shall be a Director until his
successor is elected by the stockholders who may make such election
at their next annual meeting or at any special meeting called for
that purpose. A vacancy in the Board of Directors, which cannot be
filled by the remaining members of the Board, shall be filled by
the stockholders at any special meeting called for that purpose.
Section 3. The Board of Directors shall have the general
management, control and supervision of all business and affairs of
the Corporation, and shall fix and change, as it may from time to
time determine, by majority vote, the compensation to be paid
Directors, officers and agents of the Corporation, and do all such
lawful acts and things as are not by statue or by the Articles of
Incorporation or by the By-Laws directed or required to be
exercised or done by the stockholders.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 1. The Board of Directors may, by affirmative action
of the entire Board, designate two or more of their number, one of
which shall be the President, to constitute an Executive Committee,
which, to the extent determined by affirmative action of the entire
Board, shall have and exercise the authority of the Board in the
management of the business of the Corporation. Any such Executive
Committee shall act only in the interval between meetings of the
Board, and shall be subject at all times to the control and
direction of the Board. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board.
ARTICLE V
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. The annual meeting of the Board of Directors of
the Corporation shall be held at its principal office in the City
of Minneapolis, Minnesota, as soon as practicable after the final
adjournment of the annual meeting of the stockholders in each year,
and no notice of such meeting shall be necessary to the newly
elected Directors in order to legally constitute the meeting
provided a quorum shall be present; except, however, that such
<PAGE>
PAGE 4
meeting may be held at such other place, whether in this state or
elsewhere, as a majority of the Board of Directors may have
previously determined.
Section 2. Regular meetings of the Board of Directors may be
held without notice at such time and place either within or without
the State of Minnesota, as shall from time to time have been
previously determined by the Board.
Section 3. Special meetings of the Board may be called by the
President on two days notice to each Director, either personally or
by mail or telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the
written request of two Directors. Any Directors, may in writing,
either before or after the meeting, waive notice thereof; and,
without notice, any Director by his attendance at and participation
in the action taken at the meeting shall be deemed to have waived
notice.
Section 4. At all meetings of the Board of Directors, a
majority of the Directors shall be necessary and sufficient to
constitute a quorum for the transaction of business; and the acts
of a majority of the Directors present at a meeting at which a
quorum is present shall be the acts of the Board of Directors. If
a quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to
time, until a quorum shall be present. No notice of an adjourned
meeting, whether for lack of quorum or otherwise, need be given
other than by announcement, giving the time and place thereof, at
the meeting at which the adjournment is taken.
Section 5. Any action, which might be taken at a meeting of
the Board of Directors, may be taken without a meeting if done in
writing signed by all of the Directors.
ARTICLE VI
NOTICES
Section 1. Whenever under the provisions of statutes or of
the Articles of Incorporation or of the By-Laws, notice is required
to be given to any Directors or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in
writing by depositing the same in a post office or letter box, in a
postpaid sealed wrapper, addressed to such Director or stockholder
at such address as appears on the stock register or books of this
Corporation, or, in default of address appearing in the stock
register of the Corporation or any known address, to such Director
or stockholder at the Main Post Office in the City of Minneapolis,
Minnesota, and such notice shall be deemed to be given at the time
when the same shall thus be mailed.
<PAGE>
PAGE 5
ARTICLE VII
OFFICERS
Section 1. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents
(the number thereof to be determined by the Board of Directors), a
Treasurer, a Secretary, a Medical Director, and such Assistant
Treasurers, Assistant Secretaries, and such other officers as the
Board of Directors may deem necessary. All officers of the
Corporation shall exercise such powers and perform such duties as
shall be set forth in these By-Laws and as shall be determined from
time to time by the Board of Directors or by the President. Any
two of the offices, except those of President and Vice President,
Treasurer and Assistant Treasurer, and Secretary and Assistant
Secretary may be held by the same person.
Section 2. The Board of Directors, at its annual meeting,
shall elect a Chairman of the Board, a President, a Secretary, a
Treasurer, a Medical Director and such Executive Vice Presidents or
Senior Vice Presidents as the Board shall determine. Only the
Chairman of the Board and the President need be a member of the
Board. The President, or his designee, may appoint any other
officers permitted by Section 1 of this Article.
Section 3. The officers of the Corporation shall, except in
the event of death, resignation, or removal by the Board of
Directors, hold office until their successors are chosen and
qualify in their stead. Any officer elected by the Board of
Directors may be removed at any time by the Board of Directors with
or without cause; such removal, however, shall be without prejudice
to the contract rights, if any, of the person so removed. When a
vacancy for any reason occurs among the officers, the Board of
Directors shall have the power to elect a successor to fill such
vacancy for the unexpired term.
Section 4. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the stockholders and of the Board
of Directors, and will perform such other duties as are assigned to
him by the Board of Directors.
Section 5. President. The President shall be the chief
executive officer of the Corporation. He shall have general and
active supervision and direction over the business affairs of the
Corporation and over its several officers, subject to the control
of the Board of Directors whose policies he shall execute. He
shall see that all lawful orders and resolutions of the Board of
Directors and of the Executive Committee are carried into effect
and he shall make or cause to be made timely and appropriate
reports to the Board of Directors of all matters which in the
interest of the Corporation are required to be brought to their
notice. He shall be a member of the Executive Committee and shall
preside at its meetings and he shall ex officio be a member of all
standing committees or other committees as may be from time to time
constituted or appointed by the Board of Directors.
<PAGE>
PAGE 6
Section 6. Secretary. The Secretary shall attend all
meetings of the Board of Directors and of the stockholders and
record their proceedings in a book to be kept for that purpose, and
shall perform like duties for the Executive Committee when
required. In case the Secretary shall be absent from any meeting,
the Chairman of the meeting may appoint a temporary secretary to
act at such meeting. The Secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special
meetings of the Board of Directors. He shall have the custody of
the stock register, minute books and the seal of the Corporation,
and shall make such reports and perform such other duties as are
incident to this office or are properly required of him by the
Board of Directors.
Section 7. Treasurer. The Treasurer, unless otherwise
ordered by the Board of Directors, shall have the custody of all
the funds and securities of the Corporation, and shall deposit all
monies and valuables in the name of and to the credit of the
Corporation in such banks or depositories as the Board of Directors
may designate, and shall keep regular books of account, and shall
have custody of the books and records incident to his office and
such as the Board of Directors may direct, and he shall have such
other powers and shall perform such other duties as are incident to
his office or which are properly required of him by the Board of
Directors.
Section 8. Medical Director. The Medical Director shall,
under the direction of the Board of Directors, appoint all medical
examiners for this Corporation and shall have such other powers and
shall perform such other duties as are incident to his office or
which are properly required of him by the Board of Directors. In
his absence or inability to act, an assistant, designated by the
Executive Committee, may act for and in his stead.
Section 9. The powers and duties of all other officers shall
be such as are usual in like corporations under the direction and
control of the Board of Directors.
ARTICLE VIII
CLOSING OF TRANSFER BOOKS
AND FIXING OF RECORD DATE
Section 1. The Board of Directors may fix a time, not less
than twenty nor more than forty days preceding the date of any
meeting of stockholders, as a record date for the determination of
the stockholders entitled to notice of and to vote at such meeting,
and in such case by stockholders of record on the date so fixed, or
their legal representatives, shall be entitled to notice of and to
vote at such meeting, notwithstanding any transfer of any shares on
the books of the Corporation after any record date so fixed. The
Board of Directors may close the books of the Corporation against
transfers of shares during the whole or any part of such period.
<PAGE>
PAGE 7
Section 2. The Board of Directors may fix a time not
exceeding forty days preceding the date fixed for the payment of
any dividend or distribution, or the date for the allotment of
rights, or, subject to contract rights with respect thereto, the
date when any change or conversion or exchange of shares shall be
made or go into effect, as a record date for the determination of
the stockholders entitled to receive payment of any such dividend,
distribution or allotment of rights or to exercise rights in
respect to any such change, conversion or exchange of shares, and
in such case only stockholders of record on the date so fixed shall
be entitled to receive payment of such dividend, distribution or
allotment of rights or to exercise such rights of change,
conversion or exchange of shares, as the case may be,
notwithstanding any transfer of any shares on the books of the
Corporation after any record date fixed as aforesaid. The Board of
Directors may close the books of the Corporation against the
transfer of shares during the whole or any part of such period.
ARTICLE IX
MISCELLANEOUS
Section 1. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof, and, accordingly, shall not be found to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of the
State of Minnesota.
Section 2. The Corporation 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 Manager of Variable Annuity Funds A and B,
director, officer, employee or agent of this Corporation, or is or
was serving at the direction of the Corporation as a Manager of
Variable Annuity Funds A and B, 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 Manager of Variable Annuity Funds A and B,
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.
<PAGE>
PAGE 8
ARTICLE X
LOST STOCK CERTIFICATES
Section 1. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation
alleged to have been destroyed or lost upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed, and the Board of Directors, when
authorizing such issue of a new certificate or certificates, may,
in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond
in such sum as it may direct, to indemnify the Corporation against
any claim arising from the issue of such new certificate.
ARTICLE XI
POLICIES, CONTRACTS AND CONVEYANCES
Section 1. Subject to the provisions of Section 2 of this
Article, the President or any Vice President may with the Secretary
or any Assistant Secretary, sign, cause the corporate seal to be
affixed thereto when necessary, acknowledge and deliver all
conveyances, contracts, deeds, notes, mortgages, satisfactions,
leases, assignments, licenses, transfers, powers of attorney,
certificates for shares of stock, and all other similar and
dissimilar instruments.
The Board of Directors may by resolution authorize any officer or
officers alone or with another officer or officers, to sign or
counter-sign, cause the corporate seal to be affixed thereto when
necessary, acknowledge and deliver any written instrument, or class
of written instruments, for and on behalf of this Corporation.
Section 2. All insurance, annuity or endowment policies or
contracts issued by this Corporation and all reinsurance agreements
of this Corporation shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary. The
signature of any of said officers, on the foregoing or any other
instrument may be a facsimile signature, if the same is
countersigned by an officer or employee duly authorized by the
Board of Directors or Executive Committee of this Corporation to
counter-sign the same.
Section 3. All checks, demands for money, and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as may from time to time be authorized by
the Board of Directors.
<PAGE>
PAGE 9
ARTICLE XII
AMENDMENTS OF BY-LAWS
Section 1. These By-Laws may be altered at any regular
meeting of the stockholders, or at any special meeting of the
stockholders at which a quorum is present or represented, provided
notice of the proposed alteration is contained in the notice of
such meeting, by the affirmative vote of the holders of a majority
of the shares issued and outstanding and entitled to vote at such
meeting and present or represented thereat.
<PAGE>
PAGE 1
MINUTES OF A SPECIAL MEETING
of the
Board of Directors
IDS Life Insurance Company
May 5, 1989
Pursuant to the call of the President and notice duly given, a
special meeting in lieu of the Annual Meeting of the Board of
Directors of IDS Life Insurance Company was held at 11:30 a.m., May
5, 1989, at the offices of the Corporation in the IDS Tower,
Minneapolis, Minnesota. Members present were: Ms. Roloff and
Messrs. Kling, Kolkman, Kudrna, Mitchell and Smith. The Secretary,
Mr. O'Brien, was also present and recorded the minutes of the
meeting.
Mr. Mitchell said that the first item of business was to consider a
proposal to ratify the investment transactions were listed in the
1988 NAIC Convention Blanks, which were available to the directors
at the meeting. After a discussion, upon motion duly made and
seconded, the following resolution was unanimously adopted:
RESOLVED, that the investment transactions entered into by the
Corporation during 1988 for its general and separate accounts,
as listed in the 1988 Annual Statement on the NAIC Convention
Blanks, are hereby ratified and confirmed in all respects.
The Board next considered the election of officers to serve until
the next annual meeting. After a discussion, upon motion duly made
and seconded, the following resolution was duly adopted:
RESOLVED, that the individuals listed below are elected to the
office set forth opposite their names, to serve at the
pleasure of this Board until the next annual election:
Harvey Golub Chairman of the Board
James A. Mitchell President and Chief Executive
Officer
Richard W. Kling Executive Vice President,
Marketing and Products
ReBecca K. Roloff Executive Vice President,
Operations
Timothy V. Bechtold Vice President, Insurance
Product Development
John L. Burbidge Vice President
William H. Dudley Vice President
Theodore H. Busboom Vice President, Investments
Roger P. Husemoller Vice President, Intercorporate
Insurance Operations
Thomas J. Kelly Vice President, New Business
Paul F. Kolkman Vice President, Finance
Donald E. Kreider Vice President, Intercorporate
Insurance Products
Christopher R. Kudrna Vice President, Systems &
Technology Development
<PAGE>
PAGE 2
Ryan R. Larson Vice President, Annuity Product
Development
Patricia A. Mitshulis Vice President, Real Estate Loan
Management
William F. Nuessle, M.D. Vice President, Medical Director
Richard J. O'Brien Vice President, General Counsel
and Secretary
James R. Palmer Vice President, Taxes
William A. Smith Vice President, Controller and
Treasurer
Cathy H. Waldhauser Vice President, Corporate
Actuarial, Planning and
Analysis
Nancy R. Hughes Assistant Vice President
Laurie Anderson Assistant Secretary
Nancy R. Anderson Assistant Secretary
Sena M. Barr Assistant Secretary
Sandra Berg Assistant Secretary
Carrie Bergum Assistant Secretary
Karen G. Brajdich Assistant Secretary
Teresa Butts Assistant Secretary
Mary Clasemann Assistant Secretary
Margaret Coyle Assistant Secretary
Joni Dalman Assistant Secretary
Patricia Engelstad Assistant Secretary
Janet M. Foster Assistant Secretary
Elizabeth Gamber Assistant Secretary
Kim Goodsell Assistant Secretary
Lisa Graney Assistant Secretary
Bob Hammond Assistant Secretary
John J. Hirsch Assistant Secretary
Paula Hodges Assistant Secretary
Paul E. Horvath Assistant Secretary
Dawn M. Johnson Assistant Secretary
Andrea Kelly Assistant Secretary
Heidi Keske Assistant Secretary
Jack R. Kispert Assistant Secretary
Milton S. Lysdahl Assistant Secretary
Jane Mayer Assistant Secretary
N. Clyde Nielsen Assistant Secretary
Sandra K. Norby Assistant Secretary
Becky Orrock Assistant Secretary
Ronald W. Powell Assistant Secretary
Michelle L. Price Assistant Secretary
Diana L. Roberts Assistant Secretary
Paul D. Sand Assistant Secretary
William A. Stoltzmann Assistant Secretary
Joyce Ternus Assistant Secretary
Lori Thompson Assistant Secretary
Karen Underwood Assistant Secretary
Daniel J. Willius Assistant Secretary
Robert Young Assistant Secretary
Norma Zachow Assistant Secretary
Richard W. Burnham Assistant Treasurer
Lavern Johnson Assistant Treasurer
Lowell A. Turner Assistant Treasurer
<PAGE>
PAGE 3
F. Dale Simmons Assistant Treasurer
Melinda S. Urion Assistant Treasurer
Gary C. Ziemer Assistant Treasurer
The Board then considered the composition of the Investment
Committee. After discussion, upon motion duly made and seconded,
the following resolution was unanimously adopted:
RESOLVED, that the following individuals shall serve as the
Corporation's Investment Committee until the next annual
meeting of this Board:
Theodore H. Busboom
William H. Dudley
Richard W. Kling
Paul F. Kolkman
James A. Mitchell
William A. Smith, and
David R. Hubers - Advisor
Mr. Mitchell then said that the final item of business was to
consider certain actions to facilitate the introduction of a new
product - a modified guaranteed annuity. After a discussion, upon
motion duly made and seconded, the following resolutions were
unanimously adopted:
RESOLVED, That a separate account, to be known as IDS Life
Separate Account MGA, is hereby established in accordance with
Section 61A.14, Minnesota Statutes, for use in connection with
the Corporation's proposed modified guaranteed annuity
product; and
RESOLVED FURTHER, That the proper officers of the Corporation
are hereby authorized and directed to accomplish all filings
and registrations necessary to enable the corporation to offer
a modified guaranteed annuity product.
There being no further business to come before the meeting, it was
duly voted to adjourn.
/s/ Richard J. O'Brien
Secretary
<PAGE>
PAGE 1
___________________________________________________________________
GROUP ANNUITY CONTRACT
___________________________________________________________________
Contractholder: Citizen's Trust Company as Trustee of the
Market Value Annuity Group Trust
Contract Number: GA 201
Contract Date: November 2, 1992
IDS Life Insurance Company, herein called the Company, will pay the
benefits provided by this contract in accordance with and subject
to all provisions of this contract.
We issue this contract in consideration of the application of the
contractholder.
Signed for and issued by IDS Life Insurance Company, Minneapolis,
Minnesota, as of the contract date shown above.
THE GROUP ANNUITY CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA WHICH MAY RESULT IN BOTH UPWARD AND DOWNWARD ADJUSTMENTS IN
CASH SURRENDER BENEFITS. Surrenders are available without market
value adjustment on the last day of each subaccount guarantee
period and during the following first ten days of each new
subaccount guarantee period.
NOTICE OF CERTIFICATE OWNERS' RIGHT TO EXAMINE CERTIFICATES FOR TEN
DAYS. If for any reason a certificate owner is not satisfied with
a certificate, the owner may return it to us or our agent within
ten days after the owner receives it. We will then cancel the
certificate and refund all purchase payments made. The certificate
will then be considered void from the start.
PRESIDENT
James A. Mitchell
SECRETARY
William A. Stoltzmann
___________________________________________________________________
o Flexible purchase payments.
o Annuity payments to begin on the settlement date.
o This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
___________________________________________________________________
<PAGE>
PAGE 2
___________________________________________________________________
GUIDE TO CONTRACT PROVISIONS
___________________________________________________________________
DEFINITIONS Important words and meanings/Page 4
THE ANNUITY CONTRACT Entire contract; Modification;
Incontestability; Benefits based on
incorrect data/Page 6
CONTRACTHOLDER AND OWNER Contractholder; Owner's rights;
Change of ownership;
Assignment/Page 7
BENEFICIARY AND Who is the beneficiary; Change of
PAYMENTS TO BENEFICIARY beneficiary; Payments to
beneficiary; Spousal option/Page 8
PURCHASE PAYMENTS Purchase payments; Payment limits;
Allocation among subaccounts/Page 9
ACCUMULATION VALUE AND How the accumulation value is
MARKET VALUE ADJUSTMENT determined; Premium tax;
Subaccounts; Interest crediting;
How the market value adjustment is
determined/Page 10
TRANSFERS Transferring from one subaccount to
another/page 12
SURRENDERS Surrender of the certificate for
the surrender value; TSA prohibited
distributions/page 13
ANNUITY PAYMENT PLANS When annuity payments begin;
Different ways to receive annuity
payments/Page 15
TABLES OF SETTLEMENT RATES Tables showing monthly annuity
payment amounts for the various
plans/Page 17
<PAGE>
PAGE 3
___________________________________________________________________
CONTRACT DATA
___________________________________________________________________
Group Contractholder: Citizens Trust Company as Trustee for the
Market Value Annuity Group Trust
Group Contract Number: GA201
Contract Date: November 2, 1992
PURCHASE PAYMENT ALLOCATION: The owner's initial purchase payment
will be allocated to the subaccounts in accordance with
instructions on the enrollment application. The owner may make
additional payments and change the payment allocation as provided
in this Group Contract. The maximum total purchase payments in the
first and later certificate years are $500,000. We reserve the
right to change this maximum. SEE PURCHASE PAYMENTS INFORMATION ON
PAGE 9.
GUARANTEE PERIOD TRANSITION: When a subaccount guarantee period
ends, a new guarantee period will begin. The subaccount
accumulation value will be transferred without market value
adjustment to a new subaccount. The new subaccount guarantee
period will be a one year period unless the owner elects a
different length from those we then offer. The new guarantee
period may never extend beyond the settlement date. The interest
rate we establish for any guarantee period will always be at least
3%. SEE GUARANTEE PERIOD INFORMATION ON PAGE 10.
MARKET VALUE ADJUSTMENT: A market value adjustment is made if the
owner surrenders or transfers values from a subaccount during the
guarantee period. There are no market value adjustments for:
o exercise of the cancellation right;
o free withdrawal amounts;
o surrenders or transfers from a subaccount at expiry of its
guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan;
o death benefits.
SEE MARKET VALUE ADJUSTMENT INFORMATION ON PAGE 11.
SURRENDER CHARGE: If the owner surrenders all or a portion of the
certificate surrender charges may apply. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of certificate years the
subaccount payment has been in the certificate. There are no
surrender charges for payments which have been in the certificate
for eight or more certificate years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by amount of the subaccount market
adjusted value surrendered in excess of the free withdrawal amount.
<PAGE>
PAGE 4
___________________________________________________________________
CONTRACT DATA (Continued)
___________________________________________________________________
The surrender charge percentages are:
<TABLE>
<CAPTION>
Number of Number of
Certificate Years Certificate Years
Since Payment Since Payment
Received Surrender Charge Percentage Received Surrender Charge Percentage
_______________ ___________________________ _______________ ___________________________
<S> <C> <C> <C>
1 7% 5 3%
2 6% 6 2%
3 5% 7 1%
4 4% 8 or more 0%
</TABLE>
There are no surrender charges for:
o exercise of the cancellation right;
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan;
o death benefits.
SEE SURRENDER CHARGE INFORMATION ON PAGE 13.
<PAGE>
PAGE 5
___________________________________________________________________
DEFINITIONS
___________________________________________________________________
The following words are used often in the certificate. When we use
these words, this is what we mean:
the annuitant
The person on whose life monthly annuity payments depend.
you, your, owner
The owner of the certificate. The owner may be someone other than
the annuitant. The owner is shown in the enrollment application
unless the owner has been changed as provided in the certificate.
we, us, our
IDS Life Insurance Company
certificate date
The date from which certificate anniversaries, certificate years,
and certificate months are determined. The certificate date is
shown in CERTIFICATE DATA, in the certificate.
certificate anniversary
The same day and month as the certificate date each year that the
certificate remains in force.
subaccount
An account we establish for each combination of guarantee period
and guarantee rate to which a purchase or transfer payment is
allocated. Each subaccount is distinguished by the guarantee
period and the date the guarantee period begins.
guarantee period
The period for which we guarantee a particular declared effective
annual interest rate.
guarantee rate
The particular declared effective annual interest rate we guarantee
for a guarantee period.
accumulation value
The value of the purchase and transfer payments plus interest
credited, adjusted for any surrenders. The certificate
accumulation value is the sum of all subaccount accumulation
values.
<PAGE>
PAGE 6
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
market adjusted value
The accumulation value in excess of the free withdrawal amount,
adjusted by the market value adjustment formula, plus the free
withdrawal amount. The adjustment is for interest rate changes
since a subaccount begins. The adjustment is calculated separately
for each subaccount. The certificate market adjusted value is the
sum of all subaccount market adjusted values.
market value adjustment
The difference between the market adjusted value and the
accumulation value. It is positive if the market adjusted value is
greater than the accumulation value. It is negative if the
accumulation value is greater than the market adjusted value.
surrender value
The accumulation value plus any applicable market value adjustment,
less any applicable surrender charge.
free withdrawal amount
The amount of surrenders and transfers that may be made each
certificate year without market value adjustment or surrender
charge. Free withdrawal amounts are calculated separately for each
subaccount. From the time a subaccount is established by payment
or transfer to the next certificate anniversary, the free
withdrawal amount is 10% of the subaccount payment or transfer.
During each certificate year thereafter, the free withdrawal amount
is 10% of the prior certificate anniversary subaccount accumulation
value.
written request
A request in writing signed by the owner and delivered to us at our
home office.
settlement
The application of the accumulation value of the certificate to
provide annuity payments.
settlement date
The date on which annuity payments are to begin. This date may be
changed as provided in the certificate.
Code
The Internal Revenue Code of 1986, as amended, and all related laws
and regulations which are in effect during the term of this
contract.
<PAGE>
PAGE 7
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
tax-qualified certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 401, 403, 408 or 457 of the Code.
These include, but are not limited to, TSA certificates, IRA
certificates and SEP/IRA certificates defined below.
TSA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 403(b) of the Code as a Tax-
Sheltered Annuity.
IRA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 408(b) of the Code as an
Individual Retirement Annuity.
SEP/IRA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 408(k) of the Code as a
Simplified Employee Pension (SEP/IRA). A SEP/IRA is an IRA with
special features and requirements.
non-qualified certificate
A certificate used primarily for retirement purposes under a plan
or program that is not intended to qualify under Section 401, 403,
408 or 457 of the Code.
<PAGE>
PAGE 8
___________________________________________________________________
THE ANNUITY CONTRACT
___________________________________________________________________
What is the entire contract?
The entire contract consists of this Group Annuity Contract, the
application of the Group Contractholder which is attached to the
Group Contract, and the enrollment applications.
No one except one of our corporate officers (President, Vice
President, Secretary, or Assistant Secretary) can change or waive
any of our rights or requirements under the contract. That person
must do so in writing. None of our agents or other persons has the
authority to change or waive any of our rights or requirements
under the contract.
Can the Group Contract be modified?
The Group Contract may be modified by a written agreement with the
contractholder signed by one of our corporate officers (President,
Vice President, Secretary or Assistant Secretary). No modification
will affect the amount or term of any certificate unless it is
required to conform the Group Contract to any federal or state
statutes.
When will the certificate become incontestable?
The certificate is incontestable from its issue date.
What if benefits are based on incorrect data?
For non-qualified or IRA certificates purchased by residents of all
states except Massachusetts and Montana, annuity payments will be
based on the annuitant's birthdate and sex. If the annuitant's
birthdate or sex has been misstated, payments will be adjusted.
They will be based on what would have been provided at the correct
birthdate and sex. Any underpayments made by us will be made up
immediately. Any overpayments made by us will be subtracted from
the future payments.
For tax-qualified certificates, except IRA certificates, and for
all certificates purchased by Massachusetts and Montana residents,
annuity payments will be based on the annuitant's birthdate. If
the annuitant's birthdate has been misstated, payments will be
adjusted. They will be based on what would have been provided at
the correct birthdate. Any underpayments made by us will be made
up immediately. Any overpayments made by us will be subtracted
from the future payments.
What laws govern the contract?
The contract is governed by the law of the state in which it is
delivered. The values and benefits of the certificates are at
least equal to those required by such state.
<PAGE>
PAGE 9
___________________________________________________________________
THE ANNUITY CONTRACT (Continued)
___________________________________________________________________
Will the owner receive information about the certificate values?
Yes. At least once a year we will send the owner a statement
showing both the accumulation value and the surrender value of the
certificate. The statement will specify the surrender charge and
market value adjustment used to determine the surrender value.
This statement will be based on any laws or regulations that apply.
We also will mail the owner a notice twenty-one calendar days
before the end of a subaccount guarantee period describing the
automatic transfer of the subaccount accumulation value to a one
year guarantee period subaccount if the owner does not elect a
different length guarantee period. The notice will describe the
owner's right to surrender without a surrender charge or market
value adjustment on the last day of the guarantee period and during
the following ten days of the new subaccount guarantee period.
Are certificate proceeds protected?
Payments under the certificate are not assignable by any
beneficiary prior to the time they are due. To the extent allowed
by law, payments are not subject to the claims of creditors or to
legal process.
<PAGE>
PAGE 10
___________________________________________________________________
CONTRACTHOLDER AND OWNER
___________________________________________________________________
Who is the group contractholder?
The group contractholder is listed on the face page of this
contract. The contract provides for a successor contractholder.
In the event the contractholder should merge with another
corporation, the new corporation would be the group contractholder.
What are the rights of the certificate owners?
As long as the annuitant is living and unless otherwise provided in
this contract, the owner may exercise all rights and privileges in
this contract or allowed by us.
For IRA or SEP/IRA certificates, during the lifetime of the
annuitant the owner will have sole and absolute power to receive
and enjoy all rights under this contract. The owner's entire
interest is non-forfeitable.
How can ownership be changed on the certificate?
For tax-qualified certificates, the owner's right to change the
ownership is restricted. The certificate may not be sold,
assigned, transferred, discounted or pledged as collateral for a
loan, or as security for the performance of an obligation or for
any other purpose to any person other than as may be required or
permitted under Sections 401, 403, 408 or 457 of the Code, or under
any other applicable section of the Code. However, if the
certificate is owned by a trustee of a tax-qualified trust or the
custodian of a tax-qualified custodial account, such trustee or
custodian may transfer ownership of the certificate to the
annuitant or to a qualified successor trustee or custodian.
For non-qualified certificates, the owner may change the ownership.
Any change of ownership must be made by written request on a form
approved by us. The change must be made while the annuitant is
living. Once the change is recorded by us, it will take effect as
of the date of the owner's request, subject to any action taken or
payment made by us before the recording.
Can the owner assign the certificate as collateral?
For tax-qualified certificates, the owner may not assign it as
collateral.
For non-qualified certificates, the owner may assign it or any
interest in it while the annuitant is living. The owner's interest
and the interest of any beneficiary is subject to the interest of
the assignee. An assignment is not a change of ownership and an
assignee is not an owner as these terms are used in this contract.
Any amounts payable to the assignee will be paid in a single sum.
<PAGE>
PAGE 11
___________________________________________________________________
CONTRACTHOLDER AND OWNER (Continued)
___________________________________________________________________
The owner must send a copy of the assignment to us at our home
office. Any assignment is subject to any action taken by us before
the assignment was recorded at our home office. We are not
responsible for the validity of any assignment.
<PAGE>
PAGE 12
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY
___________________________________________________________________
What death benefits are paid if the annuitant or owner dies before
settlement?
If the annuitant or owner dies before settlement while the
certificate is in force, we will pay the beneficiary the
accumulation value.
The accumulation value will be determined as of the date on which
we receive due proof of death at our home office.
We will pay the above amount in a lump sum upon the receipt of due
proof of death of the annuitant or the owner, whichever first
occurs. The beneficiary may elect to receive payment anytime
within five years after the date of death.
We also will make the above described payment upon the first to die
if ownership is in a joint tenancy except where spouses are joint
owners with right of survivorship and the surviving spousal owner
elects to continue the certificate.
In lieu of a lump sum, payments may be calculated and made in
accordance with the Code under an annuity payment plan, provided:
1. The beneficiary elects the plan within sixty days after we
receive due proof of death; and
2. The plan provides payments over a period which does not exceed
the life or life expectancy of the beneficiary; and
3. For non-qualified certificates:
Payments must begin no later than one year after the date of
death.
For tax-qualified certificates:
(a) Payments must begin no later than one year after the date of
death, in the case of a nonspouse beneficiary; or
(b) Payments must begin no later than the latest of the date the
annuitant would have attained age 70 1/2 or one year after
the date of death, in the case of a spousal beneficiary.
In this event, the reference to "annuitant" in ANNUITY PAYMENT
PLANS shall apply to the beneficiary.
To whom are the death benefits payable?
Benefits will be paid equally to all primary beneficiaries
surviving the annuitant. If none survives, proceeds will be paid
equally to all contingent beneficiaries surviving the annuitant.
If no beneficiary survives the annuitant, we will pay the benefits
to the owner, if living, otherwise to the owner's estate.
<PAGE>
PAGE 13
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY (Continued)
___________________________________________________________________
Who is the beneficiary?
The beneficiary or beneficiaries are as named in the enrollment
application unless the owner has since changed the beneficiary as
provided below. If the beneficiary has been changed, we will pay
any benefits in accordance with the last change of beneficiary
request.
How does the owner change the beneficiary?
The owner may change the beneficiary any time while the annuitant
is living by satisfactory written request to us. Once the change
is recorded by us, it will take effect as of the date of the
request, subject to any action taken or payment made by us before
the recording.
What is the spouse's option to continue the certificate?
For non-qualified certificates: If the owner dies prior to the
settlement date and the owner's spouse is the sole beneficiary or
co-owner of the certificate, the spouse may elect to forego receipt
of the death benefit and instead continue the certificate in force
as its owner and annuitant. The spouse may make additional
purchase payments to the certificate. The spouse must make this
election within sixty days after we receive due proof of death.
For IRAs and SEP/IRAs: If the owner dies prior to the settlement
date and the owner's spouse is the sole beneficiary of the
certificate, the spouse may elect to forego receipt of the death
benefit and instead keep the certificate in force as its owner and
annuitant. The spouse may make additional purchase payments to the
certificate. The spouse must make this election within sixty days
after we receive due proof of death. The spouse may defer
beginning annuity payment until attaining age 70 1/2 or such other
date as provided in the Code. Any annuity payment plan later
elected must provide for amounts calculated in accordance with the
Code.
For tax-qualified certificates other than IRAs and SEP/IRAs: If the
annuitant dies prior to the settlement date and the annuitant's
spouse is the sole beneficiary of the certificate, the spouse may
elect to forego receipt of the death benefit and instead keep the
certificate in force as its owner and annuitant. The spouse may
not make additional purchase payments to the certificate. The
spouse must make this election within sixty days after we receive
due proof of death. The spouse may defer beginning annuity
payments until the annuitant would have attained age 70 1/2 or such
other date as provided in the Code. Any annuity payment plan later
elected must provide for amounts calculated in accordance with the
Code.
<PAGE>
PAGE 14
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY (Continued)
___________________________________________________________________
What if the annuitant dies after settlement?
If the annuitant dies after settlement, the amount payable, if any,
will be as provided in the annuity plan then in effect.
<PAGE>
PAGE 15
___________________________________________________________________
PURCHASE PAYMENTS
___________________________________________________________________
What are the purchase payments for the certificate?
Purchase payments are the payments the owner makes for the
certificate and the benefits it provides. Purchase payments
consist of the initial purchase payment and any additional purchase
payments made. Purchase payments must be paid or mailed to us at
our home office or to an authorized agent. If requested, we'll
give the owner a receipt for the purchase payments. Upon payment
to us, purchase payments become our property.
Net purchase payments are the purchase payments less any applicable
premium tax charge.
What are the payment limits for the certificate?
Additional purchase payments may be made until the earlier of:
1. the date the certificate terminates by surrender or otherwise;
or
2. the date on which annuity payments begin.
The maximum total purchase payments for the certificate may not
exceed the amounts shown in CERTIFICATE DATA, in the certificate.
We reserve the right to increase the maximums.
The owner may make additional purchase payments of at least $2,000.
What are the additional IRA and SEP/IRA payment limits?
For IRAs the total purchase payments for any taxable year may not
exceed $2,000. For SEP/IRAs, employer purchase payments for any
taxable year may not exceed 15% of compensation, or $30,000,
whichever is less.
However, for rollover contributions described in Sections
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the
Code, there is no limit on the amount of the purchase payment.
If the owner dies before the entire interest in the certificate has
been distributed, and the beneficiary is other than the owner's
surviving spouse, no additional payments will be accepted from the
beneficiary under the certificate.
How are purchase payments allocated among the subaccounts?
The owner instructs us on how the purchase payments are to be
allocated among the subaccounts. The minimum amount the owner may
allocate to a subaccount is $2,000. Subaccount guarantee periods
may not extend beyond the settlement date.
<PAGE>
PAGE 16
___________________________________________________________________
PURCHASE PAYMENTS (Continued)
___________________________________________________________________
The allocation instructions as of the certificate date are shown in
CERTIFICATE DATA, in the certificate. By written request or
another method agreed to by us, the owner may change the allocation
instructions for additional purchase payments.
<PAGE>
PAGE 17
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT
___________________________________________________________________
How is the accumulation value determined?
The certificate accumulation value at any time is the sum of all
the certificate subaccount accumulation values.
The accumulation value of a subaccount is:
1. the net purchase payment or transfer amount allocated to the
subaccount,
2. plus interest credited at the guarantee rate for that
subaccount,
3. minus any amounts withdrawn for surrenders or transfers,
including any applicable surrender charges or market value
adjustments.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation
value of the certificate for any applicable premium taxes not
previously deducted.
What is a subaccount?
There are one or more subaccounts in the certificate. A subaccount
is established for each combination of guarantee period and
guarantee rate to which a purchase or transfer payment is
allocated. Each subaccount is distinguished by the guarantee
period and the date the guarantee period begins.
There is a subaccount for each guarantee period to which the owner
initially allocates a purchase payment. There also is a subaccount
for each guarantee period to which the owner later transfer all or
a portion of an existing subaccount.
How is interest credited to a subaccount?
Interest is credited daily to result in an effective annual yield
of the guarantee rate. Interest crediting begins when we receive
the net purchase payment or transfer amount and continues until the
end of the guarantee period or until amounts are either surrendered
or transferred from the subaccount. However, a subaccount
surrender during the first ten days of a new guarantee period
following expiry of an existing guarantee period will not reflect
any interest earned during the ten day period - see SURRENDERS.
The guarantee rate we establish for any guarantee period will
always be at least 3%.
<PAGE>
PAGE 18
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
What happens when a guarantee period ends?
When a guarantee period ends, a new guarantee period will begin.
The subaccount accumulation value will be transferred to a new
subaccount without market value adjustment.
We will mail the owner a notice twenty-one calendar days before the
guarantee period ends as a reminder to select a new guarantee
period. If we do not receive the selection within ten calendar
days after the guarantee period ends, the new guarantee period will
be one year. The new guarantee period may never extend beyond the
settlement date.
At the end of a guarantee period, the owner also will be able to
fully or partially surrender the subaccount accumulation value
without market value adjustment or surrender charge - see
SURRENDERS. If less than the entire subaccount accumulation value
is surrendered, at least $1,000 must remain in the subaccount.
What is a free withdrawal amount?
This is an amount which may be surrendered or transferred each
certificate year without market value adjustment (or surrender
charge). Free withdrawal amounts are calculated separately for
each subaccount. From the time a subaccount is established by
payment or transfer to the next certificate anniversary, the free
withdrawal amount is 10% of the subaccount payment or transfer.
During each certificate year thereafter, the free withdrawal amount
is 10% of the prior certificate anniversary subaccount accumulation
value.
What is a market value adjustment?
It is a positive or negative adjustment of a subaccount
accumulation value. A market value adjustment is made if the owner
surrenders or transfers values from a subaccount during the
guarantee period. It reflects the relationship between:
1. the interest rate we are then crediting for new purchase
payments or transfers for the time remaining until expiration of
the subaccount; and
2. the guarantee rate for the specific subaccount.
When aren't market value adjustments made?
There are no market value adjustments for:
o exercise of the cancellation right (see the face page of this
contract and the certificate);
o free withdrawal amounts;
<PAGE>
PAGE 19
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
o surrenders or transfers from a subaccount at expiry of its
guarantee period and during the first ten days of the new
subaccount guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan - see ANNUITY
PAYMENT PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
How is the market value adjustment determined?
The market value adjustment is determined by:
1. Determining the subaccount accumulation value to be adjusted.
This is the amount surrendered or transferred from the
subaccount; and
2. Calculating the market adjusted value of that accumulation value
using the formula at the right; and
3. Subtracting the accumulation value (#1) from the market adjusted
value (#2).
The market adjusted value formula is:
market adjusted value = [(AVc - FWA) X F] + FWA
where:
AVc = the subaccount accumulation value
to be surrendered or transferred
FWA = free withdrawal amount
F = (1 + ig)(N + t)
_______________________
(1 + ic + .0025)(N + t)
where:
ig = the subaccount guaranteed interest
rate
N = the number of complete years to
the end of the guarantee period
for the subaccount
t = the fraction of a year remaining to
the end of the guarantee period (for
example, if 180 days remain in a 365
day year, t would be .493) for the
subaccount
<PAGE>
PAGE 20
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
ic = the interest rate we are then crediting
for the certificate for new purchase
payments or transfers for the time
remaining in the subaccount (straight
line interpolation between whole year
rates. If N is zero, ic is the rate for a
one year guarantee period.)
<PAGE>
PAGE 21
___________________________________________________________________
TRANSFERS
___________________________________________________________________
Can values be transferred from one subaccount to another before
settlement?
Yes. The owner may transfer accumulation values from an existing
subaccount to a new subaccount before the settlement date. A
subaccount must have been established at least one calendar year
before a transfer from it may be made. There is no fee or charge
for these transfers. There will be a market value adjustment.
Here are the transfer rules:
1. Request
The owner may make a transfer by written request. Specify the
subaccount the transfer is to be made from and the amount of the
transfer if it is less than the entire subaccount accumulation
value. Also specify the new guarantee period length.
The owner also may make telephone transfers according to the
telephone procedures that are then currently in effect, if any.
2. Market Value Adjustment
For transfers before the end of a guarantee period there will be
a market value adjustment to the accumulation value in excess of
the free withdrawal amount. There will not be a market value
adjustment for transfers at the end of a guarantee period.
3. Minimum Transfer
The minimum accumulation value the owner may transfer is $2,000,
or if less, the entire subaccount accumulation value.
4. Minimum Balance After Transfer
The owner may transfer less than the entire accumulation value
from a subaccount if such partial transfer results in a minimum
$1,000 accumulation value balance remaining after the transfer.
<PAGE>
PAGE 22
___________________________________________________________________
SURRENDERS
___________________________________________________________________
Can the owner surrender amounts from the certificate before
settlement?
Yes. The owner may surrender the certificate for the total
surrender value or partially surrender it for a part of the
surrender value. If totally surrendered for the total surrender
value, the certificate will terminate. Surrender values, charges
and rules are explained below and on page 14.
What is a free withdrawal amount?
This is an amount the owner may surrender or transfer each
certificate year without surrender charge (or market value
adjustment). Free withdrawal amounts are calculated separately for
each subaccount. From the time a subaccount is established by
payment or transfer to the next certificate anniversary, the free
withdrawal amount is 10% of the subaccount payment or transfer.
During each certificate year thereafter, the free withdrawal amount
is 10% of the prior certificate anniversary subaccount accumulation
value.
How is a surrender from a subaccount at the end of a guarantee
period treated?
A subaccount surrender at the end of the guarantee period and
during the first ten days of the new guarantee period will not
incur a surrender charge or market value adjustment, nor will it
reflect any interest earned during this ten day period.
What are the surrender rules?
1. Request
The owner may make a surrender by written request. Specify the
subaccount(s) the surrender is to be made from and the amount to
surrender. The owner may tell us the desired check amount to
receive and we will calculate how much accumulation value to
surrender. The owner may also make telephone surrenders
according to the telephone procedures that are then currently in
effect, if any.
We may require that the owner return the certificate to our home
office before we pay the total surrender value.
The surrender payment will normally be mailed within seven days
of the receipt of the request.
2. Minimum Surrender
The minimum accumulation value to surrender is $1,000.
<PAGE>
PAGE 23
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
3. Minimum Balance After Surrender
The minimum balance in a subaccount after surrender is $1,000.
What distributions are prohibited if the certificate is a TSA?
To meet the requirements of Section 403(b) of the Code, unless
otherwise provided in the Code, no amounts may be distributed
unless the owner has:
1. attained age 59 1/2; or
2. separated from service; or
3. died; or
4. become disabled (as defined in Section 72(m)(7) of the Code; or
5. encountered hardship (within the meaning of Section 403(b) of
the Code);
and then only such amounts as the Code may provide. We will
require satisfactory written proof of the event(s) in items 1
through 5 above prior to any distribution from the certificate.
Can we delay or suspend payment of a partial or full surrender?
We may defer payment of any partial or full surrender for a period
not to exceed six months from the date we receive the surrender
request, or the period permitted by state insurance law, if less.
If we defer payment more than thirty days, we will pay annual
interest of at least 3% on the amount deferred.
How is the surrender value determined?
The surrender value is the accumulation value, plus the market
value adjustment, less a surrender charge. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of certificate years the
subaccount payment has been in the certificate. The surrender
charge percentage decreases each year on the certificate
anniversary date. There are no surrender charges for payments
which have been in the certificate for eight or more certificate
years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by the subaccount market adjusted value
surrendered in excess of the free withdrawal amount.
<PAGE>
PAGE 24
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
The surrender charge percentages are:
Certificate Years Since Surrender Charge
Payment Received Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or more 0%
When are there no surrender charges?
There are no surrender charges for:
o exercise of the cancellation right (see the face page of this
contract and the certificate);
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period
and during the first ten days of the new subaccount guarantee
period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan - see ANNUITY
PAYMENT PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
Example of How the Surrender Charge Would be Calculated for the
Full Surrender of One Subaccount
This example shows how surrender charges would be calculated for
the full surrender of one subaccount from a certificate dated
January 15, 1993. The certificate year is January 15 to January 14
and the anniversary date is January 15th each year.
Subaccount P is established with a $5,000 payment on July 1, 1994.
The surrender charge percentages for Subaccount P will be:
Surrender Date Surrender Charge Percentage
7-1-94 to 1-14-95 7%
1-15-95 to 1-14-96 6%
1-15-96 to 1-14-97 5%
1-15-97 to 1-14-98 4%
1-15-98 to 1-14-99 3%
1-15-99 to 1-14-00 2%
1-15-00 to 1-14-01 1%
January 15, 2001 0%
<PAGE>
PAGE 25
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
The Subaccount P market adjusted value is transferred to Subaccount
Q on September 1, 1995. The above surrender charge percentage date
limits do not change even though Subaccount P transferred to
Subaccount Q.
Subaccount Q is entirely surrendered November 4, 1998, when the
Subaccount Q accumulation value is $8,300. Interest rates have
increased since Subaccount Q started. The January 15, 1998 (prior
certificate anniversary) Subaccount Q accumulation value was
$8,000.
Assume that the November 4, 1998 market adjusted value is $8,000.
This includes the $800 free withdrawal amount (10% of the January
15, 1998 Subaccount Q accumulation value) and an assumed ($300)
negative market value adjustment due to interest rate increases.
The $8,000 market adjusted value less the $800 free withdrawal
amount is subject to a 3% surrender charge. So the surrender
charge is 3% of $7,200 which is $216.
The owner will receive a net surrender check of $7,784 which
consists of:
Subaccount Q Market adjusted value $8,000
(Includes $800 free withdrawal amount
and ($300) market value adjustment)
Less Subaccount Q surrender charge -$216
______
Net Subaccount Q surrender check $7,784
<PAGE>
PAGE 26
___________________________________________________________________
ANNUITY PAYMENT PLANS
___________________________________________________________________
When will annuity payments begin?
The first payment will be made as of the settlement date. Before
payments begin we will require satisfactory proof that the
annuitant is alive. We may also require the owner exchange the
certificate for a supplemental contract which provides the annuity
payments.
Can the owner change the settlement date?
Yes. Tell us the new date by written request. If the owner
selects a new date, it must be at least thirty days after we
receive the written request at our home office.
The settlement date for a tax-qualified certificate cannot be later
than the latest of:
1. the April 1 following the calendar year in which the annuitant
attains age 70 1/2; or
2. such other date which allows satisfaction of the minimum
distribution requirements under the Code, its regulations and/or
promulgations by the Internal Revenue Service; or
3. such other date as agreed upon by us.
In addition to the above, and for all non-qualified certificates,
the settlement date cannot be later than the latest of:
1. the certificate anniversary nearest the annuitant's 85th
birthday; or
2. the tenth certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call
these plans. Annuity payments are made on a fixed dollar basis.
The owner can schedule receipt of annuity payments according to one
of the Plans A through E below or another plan agreed to by us.
If this is a tax-qualified certificate, any such plan must be
calculated in accordance with the Code and must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or the life of the annuitant and
a joint annuitant; or
b. in equal or substantially equal payments over a period which
does not exceed the life expectancy of the annuitant and a joint
annuitant; and
<PAGE>
PAGE 27
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
c. any plan selected must also, if selected by a non-spouse
beneficiary, meet the incidental death benefits under the Code.
Plan A - This provides monthly annuity payments for the lifetime of
the annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a period of at least five, ten or fifteen years. The owner must
select the guaranteed period.
Plan C - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a certain number of months. We determine the number of months by
dividing the accumulation value applied under this plan by the
amount of the monthly annuity payment.
Plan D - We call this a joint and survivor life annuity. Monthly
payments will be paid for the lifetime of the annuitant and a joint
annuitant. When either the annuitant or joint annuitant dies we
will continue to make monthly payments for the lifetime of the
survivor. No payments will be paid after the death of both the
annuitant and the joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a
period of years. The period of years may not be less than ten or
more than thirty.
What are the requirements for selecting a plan?
The owner may select the plan by written request to us at any time
at least thirty days prior to the settlement date.
If at least thirty days before the settlement date we have not
received at our home office the written request to select a plan,
we will make payments according to Plan B with payments guaranteed
for ten years.
If the amount to be applied to a plan is not at least $2,000, or if
payments are to be made to other than a natural person, we have the
right to make a lump sum payment of the surrender value.
How will payments be made?
Payments will be made by us by check. The check must be personally
endorsed by the payee or payees as well as the annuitant (or joint
annuitant under Plan D). If the annuitant or joint annuitant does
not endorse the check, other evidence must be furnished to show
that the annuitant or joint annuitant is still alive.
If the owner chooses an annuity payment plan, what will be the
amount of the monthly annuity payments?
<PAGE>
PAGE 28
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
The amount of each monthly annuity payment for each $1,000 of
accumulation value applied under any annuity payment plan will be
based on our fixed dollar Table of Settlement Rates in effect on
the settlement date. We guarantee such rates will not be less than
those shown in:
TABLE A Non-qualified and IRA certificates purchased by
residents of states other than Massachusetts and
Montana - or
TABLE B Tax-qualified certificates (including SEP/IRAs but
excluding IRAs) purchased by residents of states
other than Massachusetts and Montana - or
TABLE BMA Non-qualified, IRA and tax-qualified certificates
purchased by Massachusetts residents.
TABLE BMT Non-qualified, IRA and tax-qualified certificates
purchased by Montana residents.
Table A is on page 17, Table B is on page 18, TABLE BMA is on page
19 and TABLE BMT is on page 20.
For non-qualified and IRA certificates purchased by residents of
all states except Massachusetts and Montana, the amount of annuity
payments under Plans A, B and C will depend on the sex and adjusted
age of the annuitant on the settlement date. The amount of annuity
payments under Plan D will depend on the sex and adjusted age of
the annuitant and the joint annuitant on the settlement date.
For tax-qualified certificates including SEP/IRAs but excluding
IRAs, and for all certificates (including non-qualified and IRA
certificates) purchased by Massachusetts and Montana residents, the
amount of annuity payments under Plans A, B and C will depend on
the adjusted age of the annuitant on the settlement date. The
amount of annuity payments under Plan D will depend upon the
adjusted age of the annuitant and the joint annuitant on the
settlement date.
Adjusted age is equal to the age on the nearest birthday minus an
"adjustment" depending on the calendar year of birth of the
annuitant as follows:
<PAGE>
PAGE 29
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
Calendar Year of Annuitant's Birth Adjustment
Prior to 1920 0
1920 through 1924 1
1925 through 1929 2
1930 through 1934 3
1935 through 1939 4
1940 through 1944 5
1945 through 1949 6
1950 through 1959 7
1960 through 1969 8
1970 through 1979 9
1980 through 1989 10
After 1989 11
<PAGE>
PAGE 30
<TABLE>
<CAPTION>
__________________________________________________________________________________________
TABLE A - TABLE OF SETTLEMENT RATES
NON-QUALIFIED AND IRA CERTIFICATES
__________________________________________________________________________________________
[Excludes Massachusetts and Montana Residents]
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Life 5 Years 10 Years 15 Years With Adj. Adjusted Age of Female Joint Annuitant
Adj. Income Certain Certain Certain Refund Male 10 Years 5 Years Same 5 Years 10 Years
Age* M F M F M F M F M F Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 5.29 4.84 5.26 4.83 5.20 4.80 5.09 4.74 5.05 4.71 55 4.11 4.27 4.45 4.62 4.79
56 5.39 4.92 5.36 4.91 5.29 4.87 5.17 4.81 5.13 4.77 56 4.15 4.32 4.51 4.70 4.88
57 5.49 5.00 5.47 4.99 5.38 4.95 5.25 4.88 5.21 4.85 57 4.19 4.37 4.57 4.77 4.96
58 5.61 5.09 5.58 5.08 5.48 5.03 5.33 4.96 5.30 4.92 58 4.24 4.43 4.64 4.85 5.06
59 5.73 5.19 5.70 5.17 5.59 5.12 5.42 5.04 5.40 5.00 59 4.28 4.49 4.71 4.94 5.16
60 5.86 5.29 5.82 5.27 5.70 5.22 5.51 5.12 5.50 5.09 60 4.34 4.55 4.79 5.03 5.27
61 6.00 5.40 5.96 5.38 5.82 5.32 5.60 5.21 5.60 5.18 61 4.39 4.62 4.87 5.13 5.38
62 6.16 5.52 6.10 5.50 5.95 5.42 5.69 5.30 5.72 5.27 62 4.45 4.69 4.96 5.24 5.50
63 6.32 5.65 6.26 5.62 6.08 5.53 5.79 5.39 5.83 5.37 63 4.51 4.77 5.06 5.35 5.64
64 6.49 5.78 6.42 5.75 6.21 5.65 5.89 5.49 5.96 5.48 64 4.57 4.85 5.16 5.48 5.78
65 6.68 5.92 6.60 5.89 6.35 5.77 5.98 5.58 6.09 5.59 65 4.64 4.94 5.27 5.61 5.93
66 6.88 6.08 6.78 6.03 6.50 5.90 6.08 5.69 6.23 5.71 66 4.71 5.03 5.38 5.75 6.09
67 7.09 6.24 6.98 6.19 6.65 6.04 6.18 5.79 6.38 5.83 67 4.79 5.13 5.51 5.90 6.27
68 7.31 6.42 7.18 6.36 6.81 6.19 6.28 5.90 6.53 5.97 68 4.87 5.24 5.64 6.06 6.46
69 7.56 6.61 7.40 6.54 6.97 6.34 6.37 6.01 6.69 6.11 69 4.96 5.35 5.78 6.24 6.66
70 7.82 6.81 7.64 6.74 7.14 6.50 6.47 6.12 6.86 6.26 70 5.06 5.47 5.94 6.43 6.87
71 8.09 7.04 7.88 6.95 7.31 6.67 6.55 6.22 7.04 6.42 71 5.16 5.60 6.10 6.63 7.11
72 8.39 7.28 8.14 7.17 7.48 6.84 6.64 6.33 7.23 6.59 72 5.26 5.74 6.28 6.84 7.36
73 8.71 7.54 8.41 7.41 7.65 7.02 6.72 6.44 7.43 6.77 73 5.38 5.89 6.47 7.08 7.62
74 9.05 7.83 8.70 7.67 7.83 7.21 6.80 6.54 7.64 6.97 74 5.50 6.05 6.68 7.33 7.91
75 9.41 8.14 9.00 7.95 8.00 7.40 6.87 6.64 7.86 7.17 75 5.63 6.22 6.90 7.60 8.22
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 16. M = Male F = Female
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually. Settlement rates for any age, or any combination of age and sex not shown above, will be calculated on
the same basis as those rates shown in the table above. Such rates will be furnished by us upon request. Amounts shown in
the table below are based on an assumed interest rate of 4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 31<TABLE><CAPTION>
__________________________________________________________________________________________
TABLE B - TABLE OF SETTLEMENT RATES TAX-QUALIFIED CERTIFICATES
(Includes SEP/IRA Certificates, Excludes IRA Certificates)
[Excludes Massachusetts and Montana Residents]
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Adjusted Age of Joint Annuitant
Adj. Life 5 Years 10 Years 15 Years With Adj. 10 Years 5 Years Same 5 Years 10 Years
Age* Income Certain Certain Certain Refund Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.84 4.83 4.80 4.74 4.71 55 4.07 4.20 4.34 4.47 4.58
56 4.92 4.91 4.87 4.71 4.77 56 4.10 4.25 4.40 4.53 4.65
57 5.00 4.99 4.95 4.88 4.85 57 4.15 4.30 4.45 4.60 4.72
58 5.09 5.08 5.03 4.96 4.92 58 4.19 4.35 4.52 4.67 4.80
59 5.19 5.17 5.12 5.04 5.00 59 4.24 4.41 4.58 4.75 4.89
60 5.29 5.27 5.22 5.12 5.09 60 4.28 4.47 4.65 4.83 4.98
61 5.40 5.38 5.32 5.21 5.18 61 4.34 4.53 4.73 4.92 5.07
62 5.52 5.50 5.42 5.30 5.27 62 4.39 4.60 4.81 5.01 5.18
63 5.65 5.62 5.53 5.39 5.37 63 4.45 4.67 4.90 5.11 5.29
64 5.78 5.75 5.65 5.49 5.48 64 4.51 4.75 4.99 5.21 5.41
65 5.92 5.89 5.77 5.58 5.59 65 4.58 4.83 5.09 5.33 5.53
66 6.08 6.03 5.90 5.69 5.71 66 4.65 4.92 5.19 5.45 5.67
67 6.24 6.19 6.04 5.79 5.83 67 4.72 5.01 5.30 5.58 5.81
68 6.42 6.36 6.19 5.90 5.97 68 4.80 5.11 5.42 5.72 5.97
69 6.61 6.54 6.34 6.01 6.11 69 4.89 5.21 5.55 5.88 6.14
70 6.81 6.74 6.50 6.12 6.26 70 4.98 5.33 5.69 6.04 6.33
71 7.04 6.95 6.67 6.22 6.42 71 5.07 5.45 5.85 6.22 6.52
72 7.28 7.17 6.84 6.33 6.59 72 5.18 5.58 6.01 6.41 6.74
73 7.54 7.41 7.02 6.44 6.77 73 5.29 5.72 6.19 6.62 6.97
74 7.83 7.67 7.21 6.54 6.97 74 5.41 5.88 6.38 6.84 7.22
75 8.14 7.95 7.40 6.64 7.17 75 5.53 6.04 6.58 7.09 7.49
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 16.
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Female Mortality Table A" assuming an interest rate of 4% per year
compounded annually.
Settlement rates for any age not shown above will be calculated on the same basis as those rates shown in the table above.
Such rates will be furnished by us upon request. Amounts shown in the table below are based on an assumed interest rate of
4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 32<TABLE><CAPTION>
__________________________________________________________________________________________
TABLE BMA - TABLE OF SETTLEMENT RATES
CERTIFICATES PURCHASED BY MASSACHUSETTS RESIDENTS
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Adjusted Age of Joint Annuitant
Adj. Life 5 Years 10 Years 15 Years With Adj. 10 Years 5 Years Same 5 Years 10 Years
Age* Income Certain Certain Certain Refund Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 5.00 4.99 4.95 4.87 4.83 55 4.13 4.28 4.43 4.57 4.69
56 5.09 5.07 5.03 4.94 4.90 56 4.18 4.33 4.49 4.64 4.77
57 5.18 5.16 5.11 5.02 4.98 57 4.22 4.39 4.55 4.71 4.85
58 5.28 5.26 5.20 5.10 5.06 58 4.27 4.44 4.62 4.79 4.93
59 5.39 5.36 5.30 5.18 5.14 59 4.32 4.50 4.69 4.87 5.02
60 5.50 5.47 5.40 5.26 5.23 60 4.37 4.57 4.77 4.96 5.12
61 5.62 5.59 5.50 5.35 5.33 61 4.43 4.64 4.85 5.05 5.23
62 5.75 5.72 5.61 5.44 5.43 62 4.49 4.71 4.94 5.15 5.34
63 5.89 5.85 5.73 5.54 5.53 63 4.55 4.79 5.03 5.26 5.46
64 6.03 5.99 5.85 5.63 5.64 64 4.62 4.87 5.13 5.37 5.58
65 6.19 6.14 5.98 5.73 5.76 65 4.69 4.96 5.23 5.49 5.72
66 6.36 6.30 6.12 5.83 5.89 66 4.77 5.05 5.35 5.63 5.87
67 6.54 6.47 6.26 5.93 6.02 67 4.85 5.15 5.47 5.77 6.02
68 6.73 6.65 6.41 6.04 6.16 68 4.93 5.26 5.60 5.92 6.19
69 6.93 6.84 6.56 6.14 6.30 69 5.02 5.37 5.74 6.08 6.37
70 7.16 7.05 6.73 6.24 6.46 70 5.12 5.49 5.88 6.25 6.57
71 7.40 7.27 6.89 6.34 6.62 71 5.23 5.63 6.04 6.44 6.78
72 7.65 7.50 7.06 6.44 6.80 72 5.34 5.77 6.22 6.64 7.00
73 7.93 7.75 7.24 6.54 6.98 73 5.46 5.92 6.40 6.86 7.24
74 8.23 8.02 7.42 6.63 7.18 74 5.58 6.08 6.60 7.10 7.50
75 8.55 8.30 7.61 6.72 7.39 75 5.72 6.25 6.82 7.35 7.78
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 16.
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Female Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually. This is based on a blend of 60% female and 40% male mortality. Settlement rates for any age not shown
above will be calculated on the same basis as those rates shown in the table above. Such rates will be furnished by us upon
request. Amounts shown in the table below are based on an assumed interest rate of 4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 33
<TABLE><CAPTION>
__________________________________________________________________________________________
TABLE BMT - TABLE OF SETTLEMENT RATES
CERTIFICATES PURCHASED BY MONTANA RESIDENTS
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Adjusted Age of Joint Annuitant
Adj. Life 5 Years 10 Years 15 Years With Adj. 10 Years 5 Years Same 5 Years 10 Years
Age* Income Certain Certain Certain Refund Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.84 4.83 4.80 4.74 4.71 55 4.07 4.20 4.34 4.47 4.58
56 4.92 4.91 4.87 4.71 4.77 56 4.10 4.25 4.40 4.53 4.65
57 5.00 4.99 4.95 4.88 4.85 57 4.15 4.30 4.45 4.60 4.72
58 5.09 5.08 5.03 4.96 4.92 58 4.19 4.35 4.52 4.67 4.80
59 5.19 5.17 5.12 5.04 5.00 59 4.24 4.41 4.58 4.75 4.89
60 5.29 5.27 5.22 5.12 5.09 60 4.28 4.47 4.65 4.83 4.98
61 5.40 5.38 5.32 5.21 5.18 61 4.34 4.53 4.73 4.92 5.07
62 5.52 5.50 5.42 5.30 5.27 62 4.39 4.60 4.81 5.01 5.18
63 5.65 5.62 5.53 5.39 5.37 63 4.45 4.67 4.90 5.11 5.29
64 5.78 5.75 5.65 5.49 5.48 64 4.51 4.75 4.99 5.21 5.41
65 5.92 5.89 5.77 5.58 5.59 65 4.58 4.83 5.09 5.33 5.53
66 6.08 6.03 5.90 5.69 5.71 66 4.65 4.92 5.19 5.45 5.67
67 6.24 6.19 6.04 5.79 5.83 67 4.72 5.01 5.30 5.58 5.81
68 6.42 6.36 6.19 5.90 5.97 68 4.80 5.11 5.42 5.72 5.97
69 6.61 6.54 6.34 6.01 6.11 69 4.89 5.21 5.55 5.88 6.14
70 6.81 6.74 6.50 6.12 6.26 70 4.98 5.33 5.69 6.04 6.33
71 7.04 6.95 6.67 6.22 6.42 71 5.07 5.45 5.85 6.22 6.52
72 7.28 7.17 6.84 6.33 6.59 72 5.18 5.58 6.01 6.41 6.74
73 7.54 7.41 7.02 6.44 6.77 73 5.29 5.72 6.19 6.62 6.97
74 7.83 7.67 7.21 6.54 6.97 74 5.41 5.88 6.38 6.84 7.22
75 8.14 7.95 7.40 6.64 7.17 75 5.53 6.04 6.58 7.09 7.49
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 16.
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Female Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually.
Settlement rates for any age not shown above will be calculated on the same basis as those rates shown in the table above.
Such rates will be furnished by us upon request. Amounts shown in the table below are based on an assumed interest rate of
4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 1
___________________________________________________________________
GROUP ANNUITY CERTIFICATE
___________________________________________________________________
Certificate Number: 9300-SAMPLE
Owner: John Doe
Certificate Date: November 2, 1992
Annuitant: John Doe
This annuity certificate summarizes the provisions of the Group
Annuity Contract specified on the enrollment application. It does
not amend or modify any of the provisions of the Group Contract.
All rights, provisions and benefits are governed by the provisions
of the Group Contract.
The Group Contract may be inspected by the certificate owner or the
annuitant at the Contractholder's office during office hours. If
the annuitant is living on the Settlement Date, we will begin to
pay you monthly annuity payments. Any payment made by us are
subject to the Terms of the Group Contract.
We issue this certificate in consideration of your enrollment
application, and payment of the initial purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis,
Minnesota, as of the certificate date shown above.
THE GROUP ANNUITY CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT
FORMULA WHICH MAY RESULT IN BOTH UPWARD AND DOWNWARD ADJUSTMENTS IN
CASH SURRENDER BENEFITS. Surrenders are available without market
value adjustment on the last day of each subaccount guarantee
period and during the following first ten days of each new
subaccount guarantee period.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CERTIFICATE FOR TEN DAYS. If
for any reason you are not satisfied with this certificate, return
it to us or our agent within ten days after you receive it. We
will then cancel this certificate and refund all purchase payments
you have made. This certificate will then be considered void from
the start.
PRESIDENT
James A. Mitchell
SECRETARY
William A. Stoltzmann
o Flexible purchase payments.
o Annuity payments to begin on the settlement date.
o This certificate is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440<PAGE>
PAGE 2
___________________________________________________________________
GUIDE TO CERTIFICATE PROVISIONS
___________________________________________________________________
DEFINITIONS Important words and meanings/Page 5
THE ANNUITY CONTRACT Entire contract; Modification;
Incontestability; Benefits based on
incorrect data/Page 7
OWNER Owner's rights; Change of
ownership; Assignment/Page 8
BENEFICIARY AND Who is the beneficiary; Change of
PAYMENTS TO BENEFICIARY beneficiary; Payments to
beneficiary; Spousal option/Page 9
PURCHASE PAYMENTS Purchase payments; Payment limits;
Allocation among subaccounts/Page
10
ACCUMULATION VALUE AND How the accumulation value is
MARKET VALUE ADJUSTMENT determined; Premium tax;
Subaccounts; Interest crediting;
How the market value adjustment is
determined/Page 11
TRANSFERS Transferring from one subaccount to
another/page 13
SURRENDERS Surrender of the certificate for
the surrender value; TSA prohibited
distributions/page 14
ANNUITY PAYMENT PLANS When annuity payments begin;
Different ways to receive annuity
payments/Page 16
TABLES OF SETTLEMENT RATES Tables showing monthly annuity
payment amounts for the various
plans/Page 18
<PAGE>
PAGE 3
___________________________________________________________________
CERTIFICATE DATA
___________________________________________________________________
Group Contractholder: Citizens Trust Company as Trustee for the
Market Value Annuity Group Trust
Group Contract Number: GA201
Certificate Number: 9300-SAMPLE
Certificate Type: Non-qualified
Owner: John Doe
Initial Payment: $20,000
Certificate Date: November 2, 1992
Settlement Date: November 2, 2022
Annuitant: John Doe
Net Initial Payment: $20,000
PURCHASE PAYMENT ALLOCATION: Your initial purchase payment has
been allocated to the subaccounts as shown below. You may make
additional payments and change the payment allocation as provided
in the Group Contract. The maximum total purchase payment in the
first and later certificate years are $500,000. We reserve the
right to change this maximum. SEE PURCHASE PAYMENTS INFORMATION ON
PAGE 10.
<TABLE>
<CAPTION>
SUBACCOUNTS
________________________________________________________________________________________
Net Payment Allocation % Guarantee Period Interest Rate Period Ending Date Period Ending Accumulation Value
<S> <C> <C> <C> <C> <C>
$5,000.00 25.00% 3 Years 5.80% November 1, 1995 $5,921.44
$10,000.00 50.00% 6 Years 6.90% November 1, 1998 $14,923.35
$5,000.00 25.00% 10 Years 7.35% November 1, 2002 $10,162.26
__________ _______
$20,000.00 100.00%
</TABLE>
GUARANTEE PERIOD TRANSITION: When a subaccount guarantee period
ends, a new guarantee period will begin. Your subaccount
accumulation value will be transferred without market value
adjustment to a new subaccount. The new subaccount guarantee
period will be a one year period unless you elect a different
length from those we then offer. The new guarantee period may
never extend beyond the settlement date. The interest rate we
establish for any guarantee period will always be at least 3%. SEE
GUARANTEE PERIOD INFORMATION ON PAGE 11.
MARKET VALUE ADJUSTMENT: A market value adjustment is made if you
surrender or transfer values from a subaccount during the guarantee
period. There are no market value adjustments for:
o exercise of your cancellation right;
o free withdrawal amounts;
o surrenders or transfers from a subaccount at expiry of its
guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan;
o death benefits.
SEE MARKET VALUE ADJUSTMENT INFORMATION ON PAGE 12.
<PAGE>
PAGE 4
___________________________________________________________________
CERTIFICATE DATA (Continued)
___________________________________________________________________
SURRENDER CHARGE: If you surrender all or a portion of this
certificate surrender charges may apply. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of certificate years the
subaccount payment has been in the certificate. There are no
surrender charges for payments which have been in the certificate
for eight or more cetificate years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by amount of the subaccount market
adjusted value surrendered in excess of the free withdrawal amount.
The surrender charge percentages are:
<TABLE>
<CAPTION>
Number of Number of
Certificate Years Certificate Years
Since Payment Since Payment
Received Surrender Charge Percentage Received Surrender Charge Percentage
<S> <C> <C> <C>
1 7% 5 3%
2 6% 6 2%
3 5% 7 1%
4 4% 8 or more 0%
</TABLE>
There are no surrender charges for:
o exercise of your cancellation right;
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan;
o death benefits.
SEE SURRENDER CHARGE INFORMATION ON PAGE 14.
<PAGE>
PAGE 5
___________________________________________________________________
DEFINITIONS
___________________________________________________________________
The following words are used often in the certificate. When we use
these words, this is what we mean:
the annuitant
The person on whose life monthly annuity payments depend.
you, your, owner
The owner of the certificate. The owner may be someone other than
the annuitant. The owner is shown in the enrollment application
unless the owner has been changed as provided in the certificate.
we, us, our
IDS Life Insurance Company
certificate date
The date from which certificate anniversaries, certificate years,
and certificate months are determined. Your certificate date is
shown in CERTIFICATE DATA.
certificate anniversary
The same day and month as the certificate date each year that the
certificate remains in force.
subaccount
An account we establish for each combination of guarantee period
and guarantee rate to which you allocate a purchase or transfer
payment. Each subaccount is distinguished by the guarantee period
and the date the guarantee period begins.
guarantee period
The period for which we guarantee a particular declared effective
annual interest rate.
guarantee rate
The particular declared effective annual interest rate we guarantee
for a guarantee period.
accumulation value
The value of the purchase and transfer payments plus interest
credited, adjusted for any surrenders. The certificate
accumulation value is the sum of all subaccount accumulation
values.
<PAGE>
PAGE 6
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
market adjusted value
The accumulation value in excess of the free withdrawal amount,
adjusted by the market value adjustment formula, plus the free
withdrawal amount. The adjustment is for interest rate changes
since a subaccount begins. The adjustment is calculated separately
for each subaccount. The certificate market adjusted value is the
sum of all subaccount market adjusted values.
market value adjustment
The difference between the market adjusted value and the
accumulation value. It is positive if the market adjusted value is
greater than the accumulation value. It is negative if the
accumulation value is greater than the market adjusted value.
surrender value
The accumulation value plus any applicable market value adjustment,
less any applicable surrender charge.
free withdrawal amount
The amount of surrenders and transfers that may be made each
certificate year without market value adjustment or surrender
charge. Free withdrawal amounts are calculated separately for each
subaccount. From the time a subaccount is established by payment
or transfer to the next certificate anniversary, the free
withdrawal amount is 10% of the subaccount payment or transfer.
During each certificate year thereafter, the free withdrawal amount
is 10% of the prior certificate anniversary subaccount accumulation
value.
written request
A request in writing signed by the owner and delivered to us at our
home office.
settlement
The application of the accumulation value of the certificate to
provide annuity payments.
settlement date
The date on which annuity payments are to begin. This date may be
changed as provided in the certificate.
Code
The Internal Revenue Code of 1986, as amended, and all related laws
and regulations which are in effect during the term of this
certificate.
<PAGE>
PAGE 7
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
tax-qualified certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 401, 403, 408 or 457 of the Code.
These include, but are not limited to, TSA certificates, IRA
certificates and SEP/IRA certificates defined below.
TSA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 403(b) of the Code as a Tax-
Sheltered Annuity.
IRA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 408(b) of the Code as an
Individual Retirement Annuity.
SEP/IRA certificate
A certificate used in or under a retirement plan or program that is
intended to qualify under Section 408(k) of the Code as a
Simplified Employee Pension (SEP/IRA). A SEP/IRA is an IRA with
special features and requirements.
non-qualified certificate
A certificate used primarily for retirement purposes under a plan
or program that is not intended to qualify under Section 401, 403,
408 or 457 of the Code.
<PAGE>
PAGE 8
___________________________________________________________________
THE ANNUITY CONTRACT
___________________________________________________________________
What is the entire contract?
The entire contract consists of this Group Annuity Contract, the
application of the Group Contractholder which is attached to the
Group Contract, and the enrollment application.
No one except one of our corporate officers (President, Vice
President, Secretary, or Assistant Secretary) can change or waive
any of our rights or requirements under the contract. That person
must do so in writing. None of our agents or other persons has the
authority to change or waive any of our rights or requirements
under the contract.
Can the Group Contract be modified?
The Group Contract may be modified by a written agreement with the
contractholder signed by one of our corporate officers (President,
Vice President, Secretary or Assistant Secretary). No modification
will affect the amount or term of any certificate unless it is
required to conform the Group Contract to any federal or state
statutes.
When will the certificate become incontestable?
This certificate is incontestable from its issue date.
What if benefits are based on incorrect data?
If this is a non-qualified or IRA certificate, annuity payments
will be based on the annuitant's birthdate and sex. If the
annuitant's birthdate or sex has been misstated, payments will be
adjusted. They will be based on what would have been provided at
the correct birthdate and sex. Any underpayments made by us will
be made up immediately. Any overpayments made by us will be
subtracted from the future payments.
If this is a tax-qualified certificate, except an IRA certificate,
annuity payments will be based on the annuitant's birthdate. If
the annuitant's birthdate has been misstated, payments will be
adjusted. They will be based on what would have been provided at
the correct birthdate. Any underpayments made by us will be made
up immediately. Any overpayments made by us will be subtracted
from the future payments.
What laws govern the Group Contract?
The Group Contract is governed by the law of the state in which it
is delivered. The values and benefits of this certificate are at
least equal to those required by such state.
<PAGE>
PAGE 9
___________________________________________________________________
THE ANNUITY CONTRACT (Continued)
___________________________________________________________________
Will you receive information about your certificate values?
Yes. At least once a year we will send you a statement showing
both the accumulation value and the surrender value of this
certificate. The statement will specify the surrender charge and
market value adjustment used to determine the surrender value.
This statement will be based on any laws or regulations that apply.
We also will mail you a notice twenty-one calendar days before the
end of a subaccount guarantee period describing the automatic
transfer of the subaccount accumulation value to a one year
guarantee period subaccount if you do not elect a different length
guarantee period. The notice will describe your right to surrender
without a surrender charge or market value adjustment on the last
day of your guarantee period and during the following ten days of
the new subaccount guarantee period.
Are certificate proceeds protected?
Payments under this certificate are not assignable by any
beneficiary prior to the time they are due. To the extent allowed
by law, payments are not subject to the claims of creditors or to
legal process.
<PAGE>
PAGE 10
___________________________________________________________________
OWNER
___________________________________________________________________
What are your rights as owner of this certificate?
As long as the annuitant is living and unless otherwise provided in
the Group Contract, you may exercise all rights and privileges in
the Group Contract or allowed by us.
If this is an IRA or SEP/IRA certificate, during the lifetime of
the annuitant you will have sole and absolute power to receive and
enjoy all rights under the Group Contract. Your entire interest is
non-forfeitable.
How can you change ownership for this certificate?
If this is a tax-qualified certificate, your right to change the
ownership is restricted. The certificate may not be sold,
assigned, transferred, discounted or pledged as collateral for a
loan, or as security for the performance of an obligation or for
any other purpose to any person other than as may be required or
permitted under Sections 401, 403, 408 or 457 of the Code, or under
any other applicable section of the Code. However, if this
certificate is owned by a trustee of a tax-qualified trust or the
custodian of a tax-qualified custodial account, such trustee or
custodian may transfer ownership of the certificate to the
annuitant or to a qualified successor trustee or custodian.
If this is a non-qualified certificate, you may change the
ownership.
Any change of ownership must be made by written request on a form
approved by us. The change must be made while the annuitant is
living. Once the change is recorded by us, it will take effect as
of the date of your request, subject to any action taken or payment
made by us before the recording.
Can you assign this certificate as collateral?
If this is a tax-qualified certificate, you may not assign it as
collateral.
If this is a non-qualified certificate, you may assign it or any
interest in it while the annuitant is living. Your interest and
the interest of any beneficiary is subject to the interest of the
assignee. An assignment is not a change of ownership and an
assignee is not an owner as these terms are used in the Group
Contract. Any amounts payable to the assignee will be paid in a
single sum.
You must send a copy of the assignment to us at our home office.
Any assignment is subject to any action taken by us before the
assignment was recorded at our home office. We are not responsible
for the validity of any assignment.
<PAGE>
PAGE 11
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY
___________________________________________________________________
What death benefits are paid if the annuitant or owner dies before
settlement?
If the annuitant or owner dies before settlement while this
certificate is in force, we will pay the beneficiary the
accumulation value.
The accumulation value will be determined as of the date on which
we receive due proof of death at our home office.
We will pay the above amount in a lump sum upon the receipt of due
proof of death of you or the annuitant, whichever first occurs.
The beneficiary may elect to receive payment anytime within five
years after the date of death.
We also will make the above described payment upon the first to die
if ownership is in a joint tenancy except where spouses are joint
owners with right of survivorship and the surviving spousal owner
elects to continue this certificate.
In lieu of a lump sum, payments may be calculated and made in
accordance with the Code under an annuity payment plan, provided:
1. The beneficiary elects the plan within sixty days after we
receive due proof of death; and
2. The plan provides payments over a period which does not exceed
the life or life expectancy of the beneficiary; and
3. For non-qualified certificates:
Payments must begin no later than one year after the date of
death.
For tax-qualified certificates:
(a) Payments must begin no later than one year after the date of
death, in the case of a nonspouse beneficiary; or
(b) Payments must begin no later than the latest of the date the
annuitant would have attained age 70 1/2 or one year after
the date of death, in the case of a spousal beneficiary.
In this event, the reference to "annuitant" in ANNUITY PAYMENT
PLANS shall apply to the beneficiary.
To whom are the death benefits payable?
Benefits will be paid equally to all primary beneficiaries
surviving the annuitant. If none survives, proceeds will be paid
equally to all contingent beneficiaries surviving the annuitant.
If no beneficiary survives the annuitant, we will pay the benefits
to you, if living, otherwise to your estate.
<PAGE>
PAGE 12
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY (Continued)
___________________________________________________________________
Who is the beneficiary?
The beneficiary or beneficiaries are as named in the enrollment
application unless you have since changed the beneficiary as
provided below. If the beneficiary has been changed, we will pay
any benefits in accordance with your last change of beneficiary
request.
How do you change the beneficiary?
You may change the beneficiary any time while the annuitant is
living by satisfactory written request to us. Once the change is
recorded by us, it will take effect as of the date of your request,
subject to any action taken or payment made by us before the
recording.
What is the spouse's option to continue this certificate?
For non-qualified certificates: If you die prior to the settlement
date and your spouse is the sole beneficiary or co-owner of the
certificate, your spouse may elect to forego receipt of the death
benefit and instead continue this certificate in force as its owner
and annuitant. Your spouse may make additional purchase payments
to the certificate. Your spouse must make this election within
sixty days after we receive due proof of death.
For IRAs and SEP/IRAs: If you die prior to the settlement date and
your spouse is the sole beneficiary of the certificate, your spouse
may elect to forego receipt of the death benefit and instead keep
the certificate in force as its owner and annuitant. Your spouse
may make additional purchase payments to the certificate. Your
spouse must make this election within sixty days after we receive
due proof of death. Your spouse may defer beginning annuity
payments until attaining age 70 1/2 or such other date as provided
in the Code. Any annuity payment plan later elected must provide
for amounts calculated in accordance with the Code.
For tax-qualified certificates other than IRAs and SEP/IRAs: If the
annuitant dies prior to the settlement date and the annuitant's
spouse is the sole beneficiary of the certificate, the spouse may
elect to forego receipt of the death benefit and instead keep the
certificate in force as its owner and annuitant. The spouse may
not make additional purchase payments to the certificate. The
spouse must make this election within sixty days after we receive
due proof of death. The spouse may defer beginning annuity
payments until the annuitant would have attained age 70 1/2 or such
other date as provided in the Code. Any annuity payment plan later
elected must provide for amounts calculated in accordance with the
Code.
<PAGE>
PAGE 13
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY (Continued)
___________________________________________________________________
What if the annuitant dies after settlement?
If the annuitant dies after settlement, the amount payable, if any,
will be as provided in the annuity plan then in effect.
<PAGE>
PAGE 14
___________________________________________________________________
PURCHASE PAYMENTS
___________________________________________________________________
What are the purchase payments for this certificate?
Purchase payments are the payments you make for this certificate
and the benefits it provides. Purchase payments consist of the
initial purchase payment and any additional purchase payments you
make. Purchase payments must be paid or mailed to us at our home
office or to an authorized agent. If requested, we'll give you a
receipt for your purchase payments. Upon payment to us, purchase
payments become our property.
Net purchase payments are your purchase payments less any
applicable premium tax charge.
What are the payment limits for this certificate?
Additional purchase payments may be made until the earlier of:
1. the date this certificate terminates by surrender or otherwise;
or
2. the date on which annuity payments begin.
The maximum total purchase payments for this certificate may not
exceed the amounts shown in CERTIFICATE DATA. We reserve the right
to increase the maximums.
You may make additional purchase payments of at least $2,000.
What are the additional IRA and SEP/IRA payment limits?
For IRAs the total purchase payments for any taxable year may not
exceed $2,000. For SEP/IRAs, employer purchase payments for any
taxable year may not exceed 15% of your compensation, or $30,000,
whichever is less.
However, for rollover contributions described in Sections
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the
Code, there is no limit on the amount of your purchase payment.
If you die before the entire interest in this certificate has been
distributed to you, and your beneficiary is other than your
surviving spouse, no additional payments will be accepted from your
beneficiary under the certificate.
How are purchase payments allocated among the subaccounts?
You instruct us on how you want your purchase payments allocated
among the subaccounts. The minimum amount you may allocate to a
subaccount is $2,000. Subaccount guarantee periods you choose may
not extend beyond the settlement date.
<PAGE>
PAGE 15
___________________________________________________________________
PURCHASE PAYMENTS (Continued)
___________________________________________________________________
Your allocation instructions as of the certificate date are shown
in CERTIFICATE DATA. By written request or another method agreed
to by us, you may change your allocation instructions for
additional purchase payments.
<PAGE>
PAGE 16
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT
___________________________________________________________________
How is the accumulation value determined?
The certificate accumulation value at any time is the sum of all
the certificate subaccount accumulation values.
The accumulation value of a subaccount is:
1. the net purchase payment or transfer amount allocated to the
subaccount,
2. plus interest credited at the guarantee rate for that
subaccount,
3. minus any amounts withdrawn for surrenders or transfers,
including any applicable surrender charges or market value
adjustments.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation
value of this certificate for any applicable premium taxes not
previously deducted.
What is a subaccount?
You have one or more subaccounts in this certificate. A subaccount
is established for each combination of guarantee period and
guarantee rate to which you allocate a purchase or transfer
payment. Each subaccount is distinguished by the guarantee period
and the date the guarantee period begins.
You have a subaccount for each guarantee period to which you
initially allocate a purchase payment. You also have a subaccount
for each guarantee period to which you later transfer all or a
portion of an existing subaccount.
How is interest credited to a subaccount?
Interest is credited daily to result in an effective annual yield
of the guarantee rate. Interest crediting begins when we receive
the net purchase payment or transfer amount and continues until the
end of the guarantee period or until amounts are either surrendered
or transferred from the subaccount. However, a subaccount
surrender during the first ten days of a new guarantee period
following expiry of an existing guarantee period will not reflect
any interest earned during the ten day period - see SURRENDERS.
The guarantee rate we establish for any guarantee period will
always be at least 3%.
<PAGE>
PAGE 17
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
What happens when a guarantee period ends?
When a guarantee period ends, a new guarantee period will begin.
Your subaccount accumulation value will be transferred to a new
subaccount without market value adjustment.
We will mail the owner a notice twenty-one calendar days before the
guarantee period ends to remind you to select a new guarantee
period. If we do not receive your selection within ten calendar
days after the guarantee period ends, the new guarantee period will
be one year. The new guarantee period may never extend beyond the
settlement date.
At the end of a guarantee period, you also will be able to fully or
partially surrender your subaccount accumulation value without
market value adjustment or surrender charge - see SURRENDERS. If
you surrender less than the entire subaccount accumulation value,
at least $1,000 must remain in the subaccount.
What is a free withdrawal amount?
This is an amount you may surrender or transfer each certificate
year without market value adjustment (or surrender charge). Free
withdrawal amounts are calculated separately for each subaccount.
From the time a subaccount is established by payment or transfer to
the next certificate anniversary, the free withdrawal amount is 10%
of the subaccount payment or transfer. During each certificate
year thereafter, the free withdrawal amount is 10% of the prior
certificate anniversary subaccount accumulation value.
What is a market value adjustment?
It is a positive or negative adjustment of a subaccount
accumulation value. A market value adjustment is made if you
surrender or transfer values from a subaccount during the guarantee
period. It reflects the relationship between:
1. the interest rate we are then crediting for new purchase
payments or transfers for the time remaining until expiration of
the subaccount; and
2. the guarantee rate for the specific subaccount.
When aren't market value adjustments made?
There are no market value adjustments for:
o exercise of your cancellation right (see the face page of the
certificate);
o free withdrawal amounts;
<PAGE>
PAGE 18
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
o surrenders or transfers from a subaccount at expiry of its
guarantee period and during the first ten days of the new
subaccount guarantee period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan - see ANNUITY
PAYMENT PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
How is the market value adjustment determined?
The market value adjustment is determined by:
1. Determining the subaccount accumulation value to be adjusted.
This is the amount surrendered or transferred from the
subaccount; and
2. Calculating the market adjusted value of that accumulation value
using the formula at the right; and
3. Subtracting the accumulation value (#1) from the market adjusted
value (#2).
The market adjusted value formula is:
market adjusted value = [(AVc - FWA) X F] + FWA
where:
AVc = the subaccount accumulation value
to be surrendered or transferred
FWA = free withdrawal amount
F = (1 + ig)(N + t)
_______________________
(1 + ic + .0025)(N + t)
where:
ig = the subaccount guaranteed interest
rate
N = the number of complete years to
the end of the guarantee period
for the subaccount
t = the fraction of a year remaining to
the end of the guarantee period (for
example, if 180 days remain in a 365
day year, t would be .493) for the
subaccount
<PAGE>
PAGE 19
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
ic = the interest rate we are then crediting
for this certificate for new purchase
payments or transfers for the time
remaining in the subaccount (straight
line interpolation between whole year
rates. If N is zero, ic is the rate for a
one year guarantee period.)
<PAGE>
PAGE 20
___________________________________________________________________
TRANSFERS
___________________________________________________________________
Can you transfer values from one subaccount to another before
settlement?
Yes. You may transfer accumulation values from an existing
subaccount to a new subaccount before the settlement date. A
subaccount must have been established at least one calendar year
before a transfer from it may be made. There is no fee or charge
for these transfers. There will be a market value adjustment.
Here are the transfer rules:
1. Request
You may make a transfer by written request. Specify the
subaccount the transfer is to be made from and the amount of the
transfer if it is less than the entire subaccount accumulation
value. Also specify the new guarantee period length.
You also may make telephone transfers according to the
telephone procedures that are then currently in effect, if any.
2. Market Value Adjustment
For your transfers before the end of a guarantee period there
will be a market value adjustment to the accumulation value in
excess of the free withdrawal amount. There will not be a
market value adjustment for your transfers at the end of a
guarantee period.
3. Minimum Transfer
The minimum accumulation value you may transfer is $2,000,
or if less, the entire subaccount accumulation value.
4. Minimum Balance After Transfer
You may transfer less than the entire accumulation value
from a subaccount if such partial transfer results in a minimum
$1,000 accumulation value balance remaining after the transfer.
<PAGE>
PAGE 21
___________________________________________________________________
SURRENDERS
___________________________________________________________________
Can you surrender amounts from this certificate before settlement?
Yes. You may surrender this certificate for the total surrender
value or partially surrender it for a part of the surrender value.
If totally surrendered for the total surrender value, this
certificate will terminate. Surrender values, charges and rules
are explained below and on page 15.
What is a free withdrawal amount?
This is an amount you may surrender or transfer each certificate
year without surrender charge (or market value adjustment). Free
withdrawal amounts are calculated separately for each subaccount.
From the time a subaccount is established by payment or transfer to
the next certificate anniversary, the free withdrawal amount is 10%
of the subaccount payment or transfer. During each certificate
year thereafter, the free withdrawal amount is 10% of the prior
certificate anniversary subaccount accumulation value.
How is a surrender from a subaccount at the end of a guarantee
period treated?
A subaccount surrender at the end of the guarantee period and
during the first ten days of the new guarantee period will not
incur a surrender charge or market value adjustment, nor will it
reflect any interest earned during this ten day period.
What are the surrender rules?
1. Request
You may make a surrender by written request. Specify the
subaccount(s) the surrender is to be made from and the amount
you wish to surrender. You may tell us the check amount you
wish to receive and we will calculate how much accumulation
value to surrender. You may also make telephone surrenders
according to the telephone procedures that are then currently in
effect, if any.
We may require that you return this certificate to our home
office before we pay the total surrender value.
The surrender payment will normally be mailed to you within
seven days of the receipt of your request.
2. Minimum Surrender
The minimum accumulation value you may surrender is $1,000.
3. Minimum Balance After Surrender
The minimum balance in a subaccount after surrender is $1,000.
<PAGE>
PAGE 22
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
What distributions are prohibited if your certificate is a TSA?
To meet the requirements of Section 403(b) of the Code, unless
otherwise provided in the Code, no amounts may be distributed
unless you have:
1. attained age 59 1/2; or
2. separated from service; or
3. died; or
4. become disabled (as defined in Section 72(m)(7) of the Code; or
5. encountered hardship (within the meaning of Section 403(b) of
the Code);
and then only such amounts as the Code may provide. We will
require satisfactory written proof of the event(s) in items 1
through 5 above prior to any distribution from the certificate.
Can we delay or suspend payment of a partial or full surrender?
We may defer payment of any partial or full surrender for a period
not to exceed six months from the date we receive your surrender
request, or the period permitted by state insurance law, if less.
If we defer payment more than thirty days, we will pay annual
interest of at least 3% on the amount deferred.
How is the surrender value determined?
The surrender value is the accumulation value, plus the market
value adjustment, less a surrender charge. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of certificate years the
subaccount payment has been in the certificate. The surrender
charge percentage decreases each year on the certificate
anniversary date. There are no surrender charges for payments
which have been in the certificate for eight or more certificate
years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by the subaccount market adjusted value
surrendered in excess of the free withdrawal amount.
<PAGE>
PAGE 23
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
The surrender charge percentages are:
Certificate Years Since Surrender Charge
Payment Received Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or more 0%
When are there no surrender charges?
There are no surrender charges for:
o exercise of your cancellation right (see the face page the
certificate);
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period
and during the first ten days of the new subaccount guarantee
period;
o application of the certificate accumulation value to provide
annuity payments using an annuity payment plan - see ANNUITY
PAYMENT PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
Example of How the Surrender Charge Would be Calculated for the
Full Surrender of One Subaccount
This example shows how surrender charges would be calculated for
the full surrender of one subaccount from a certificate dated
January 15, 1993. The certificate year is January 15 to January 14
and the anniversary date is January 15th each year.
Subaccount P is established with a $5,000 payment on July 1, 1994.
The surrender charge percentages for Subaccount P will be:
Surrender Date Surrender Charge Percentage
7-1-94 to 1-14-95 7%
1-15-95 to 1-14-96 6%
1-15-96 to 1-14-97 5%
1-15-97 to 1-14-98 4%
1-15-98 to 1-14-99 3%
1-15-99 to 1-14-00 2%
1-15-00 to 1-14-01 1%
January 15, 2001 + 0%
<PAGE>
PAGE 24
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
The Subaccount P market adjusted value is transferred to Subaccount
Q on September 1, 1995. The above surrender charge percentage date
limits do not change even though Subaccount P transferred to
Subaccount Q.
Subaccount Q is entirely surrendered November 4, 1998, when the
Subaccount Q accumulation value is $8,300. Interest rates have
increased since Subaccount Q started. The January 15, 1998 (prior
certificate anniversary) Subaccount Q accumulation value was
$8,000.
Assume that the November 4, 1998 market adjusted value is $8,000.
This includes the $800 free withdrawal amount (10% of the January
15, 1998 Subaccount Q accumulation value) and an assumed ($300)
negative market value adjustment due to interest rate increases.
The $8,000 market adjusted value less the $800 free withdrawal
amount is subject to a 3% surrender charge. So the surrender
charge is 3% of $7,200 which is $216.
The owner will receive a net surrender check of $7,784 which
consists of:
Subaccount Q Market adjusted value $8,000
(Includes $800 free withdrawal amount
and ($300) market value adjustment)
Less Subaccount Q surrender charge -$216
______
Net Subaccount Q surrender check $7,784
<PAGE>
PAGE 25
___________________________________________________________________
ANNUITY PAYMENT PLANS
___________________________________________________________________
When will annuity payments begin?
The first payment will be made as of the settlement date. Before
payments begin we will require satisfactory proof that the
annuitant is alive. We may also require you to exchange this
certificate for a supplemental contract which provides the annuity
payments.
Can you change the settlement date?
Yes. Tell us the new date by written request. If you select a new
date, it must be at least thirty days after we receive your written
request at our home office.
The settlement date for a tax-qualified certificate cannot be later
than the latest of:
1. the April 1 following the calendar year in which the annuitant
attains age 70 1/2; or
2. such other date which allows satisfaction of the minimum
distribution requirements under the Code, its regulations and/or
promulgations by the Internal Revenue Service; or
3. such other date as agreed upon by us.
In addition to the above, and for all non-qualified certificates,
the settlement date cannot be later than the latest of:
1. the certificate anniversary nearest the annuitant's 85th
birthday; or
2. the tenth certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call
these plans. Annuity payments are made on a fixed dollar basis.
You can schedule receipt of annuity payments according to one of
the Plans A through E below or another plan agreed to by us.
If this is a tax-qualified certificate, any such plan must be
calculated in accordance with the Code and must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or the life of the annuitant and
a joint annuitant; or
b. in equal or substantially equal payments over a period which
does not exceed the life expectancy of the annuitant and a joint
annuitant; and
<PAGE>
PAGE 26
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
c. any plan selected must also, if selected by a non-spouse
beneficiary, meet the incidental death benefits under the Code.
Plan A - This provides monthly annuity payments for the lifetime of
the annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a period of at least five, ten or fifteen years. You must select
the guaranteed period.
Plan C - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a certain number of months. We determine the number of months by
dividing the accumulation value applied under this plan by the
amount of the monthly annuity payment.
Plan D - We call this a joint and survivor life annuity. Monthly
payments will be paid for the lifetime of the annuitant and a joint
annuitant. When either the annuitant or joint annuitant dies we
will continue to make monthly payments for the lifetime of the
survivor. No payments will be paid after the death of both the
annuitant and the joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a
period of years. The period of years may not be less than ten or
more than thirty.
What are the requirements for selecting a plan?
You may select the plan by written request to us at any time at
least thirty days prior to the settlement date.
If at least thirty days before the settlement date we have not
received at our home office your written request to select a Plan,
we will make payments according to Plan B with payments guaranteed
for ten years.
If the amount to be applied to a plan is not at least $2,000, or if
payments are to be made to other than a natural person, we have the
right to make a lump sum payment of the surrender value.
How will payments be made?
Payments will be made by us by check. The check must be personally
endorsed by the payee or payees as well as the annuitant (or joint
annuitant under Plan D). If the annuitant or joint annuitant does
not endorse the check, other evidence must be furnished to show
that the annuitant or joint annuitant is still alive.
If you choose an annuity payment plan, what will be the amount of
the monthly annuity payments?
<PAGE>
PAGE 27
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
The amount of each monthly annuity payment for each $1,000 of
accumulation value applied under any annuity payment plan will be
based on our fixed dollar Table of Settlement Rates in effect on
the settlement date. We guarantee such rates will not be less than
those shown in TABLE A (non-qualified and IRA certificates) and
TABLE B (tax-qualified certificates including SEP/IRAs but
excluding IRAs). Table A is on page 18 and Table B is on page 19.
For non-qualified and IRA certificates purchased, the amount of
annuity payments under Plans A, B and C will depend on the sex and
adjusted age of the annuitant on the settlement date. The amount
of annuity payments under Plan D will depend on the sex and
adjusted age of the annuitant and the joint annuitant on the
settlement date.
For tax-qualified certificates including SEP/IRAs but excluding
IRAs, the amount of annuity payments under Plans A, B and C will
depend on the adjusted age of the annuitant on the settlement date.
The amount of annuity payments under Plan D will depend upon the
adjusted age of the annuitant and the joint annuitant on the
settlement date.
Adjusted age is equal to the age on the nearest birthday minus an
"adjustment" depending on the calendar year of birth of the
annuitant as follows:
Calendar Year of Annuitant's Birth Adjustment
Prior to 1920 0
1920 through 1924 1
1925 through 1929 2
1930 through 1934 3
1935 through 1939 4
1940 through 1944 5
1945 through 1949 6
1950 through 1959 7
1960 through 1969 8
1970 through 1979 9
1980 through 1989 10
After 1989 11
<PAGE>
PAGE 28
<TABLE>
<CAPTION>
__________________________________________________________________________________________
TABLE A - TABLE OF SETTLEMENT RATES
NON-QUALIFIED AND IRA CERTIFICATES
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Life 5 Years 10 Years 15 Years With Adj. Adjusted Age of Female Joint Annuitant
Adj. Income Certain Certain Certain Refund Male 10 Years 5 Years Same 5 Years 10 Years
Age* M F M F M F M F M F Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 5.29 4.84 5.26 4.83 5.20 4.80 5.09 4.74 5.05 4.71 55 4.11 4.27 4.45 4.62 4.79
56 5.39 4.92 5.36 4.91 5.29 4.87 5.17 4.81 5.13 4.77 56 4.15 4.32 4.51 4.70 4.88
57 5.49 5.00 5.47 4.99 5.38 4.95 5.25 4.88 5.21 4.85 57 4.19 4.37 4.57 4.77 4.96
58 5.61 5.09 5.58 5.08 5.48 5.03 5.33 4.96 5.30 4.92 58 4.24 4.43 4.64 4.85 5.06
59 5.73 5.19 5.70 5.17 5.59 5.12 5.42 5.04 5.40 5.00 59 4.28 4.49 4.71 4.94 5.16
60 5.86 5.29 5.82 5.27 5.70 5.22 5.51 5.12 5.50 5.09 60 4.34 4.55 4.79 5.03 5.27
61 6.00 5.40 5.96 5.38 5.82 5.32 5.60 5.21 5.60 5.18 61 4.39 4.62 4.87 5.13 5.38
62 6.16 5.52 6.10 5.50 5.95 5.42 5.69 5.30 5.72 5.27 62 4.45 4.69 4.96 5.24 5.50
63 6.32 5.65 6.26 5.62 6.08 5.53 5.79 5.39 5.83 5.37 63 4.51 4.77 5.06 5.35 5.64
64 6.49 5.78 6.42 5.75 6.21 5.65 5.89 5.49 5.96 5.48 64 4.57 4.85 5.16 5.48 5.78
65 6.68 5.92 6.60 5.89 6.35 5.77 5.98 5.58 6.09 5.59 65 4.64 4.94 5.27 5.61 5.93
66 6.88 6.08 6.78 6.03 6.50 5.90 6.08 5.69 6.23 5.71 66 4.71 5.03 5.38 5.75 6.09
67 7.09 6.24 6.98 6.19 6.65 6.04 6.18 5.79 6.38 5.83 67 4.79 5.13 5.51 5.90 6.27
68 7.31 6.42 7.18 6.36 6.81 6.19 6.28 5.90 6.53 5.97 68 4.87 5.24 5.64 6.06 6.46
69 7.56 6.61 7.40 6.54 6.97 6.34 6.37 6.01 6.69 6.11 69 4.96 5.35 5.78 6.24 6.66
70 7.82 6.81 7.64 6.74 7.14 6.50 6.47 6.12 6.86 6.26 70 5.06 5.47 5.94 6.43 6.87
71 8.09 7.04 7.88 6.95 7.31 6.67 6.55 6.22 7.04 6.42 71 5.16 5.60 6.10 6.63 7.11
72 8.39 7.28 8.14 7.17 7.48 6.84 6.64 6.33 7.23 6.59 72 5.26 5.74 6.28 6.84 7.36
73 8.71 7.54 8.41 7.41 7.65 7.02 6.72 6.44 7.43 6.77 73 5.38 5.89 6.47 7.08 7.62
74 9.05 7.83 8.70 7.67 7.83 7.21 6.80 6.54 7.64 6.97 74 5.50 6.05 6.68 7.33 7.91
75 9.41 8.14 9.00 7.95 8.00 7.40 6.87 6.64 7.86 7.17 75 5.63 6.22 6.90 7.60 8.22
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 17. M = Male F = Female
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually. Settlement rates for any age, or any combination of age and sex not shown above, will be calculated on
the same basis as those rates shown in the table above. Such rates will be furnished by us upon request. Amounts shown in
the table below are based on an assumed interest rate of 4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 29
<TABLE><CAPTION>
__________________________________________________________________________________________
TABLE B - TABLE OF SETTLEMENT RATES
TAX-QUALIFIED CERTIFICATES
(Includes SEP/IRA Certificates, Excludes IRA Certificates)
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Adjusted Age of Joint Annuitant
Adj. Life 5 Years 10 Years 15 Years With Adj. 10 Years 5 Years Same 5 Years 10 Years
Age* Income Certain Certain Certain Refund Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.84 4.83 4.80 4.74 4.71 55 4.07 4.20 4.34 4.47 4.58
56 4.92 4.91 4.87 4.71 4.77 56 4.10 4.25 4.40 4.53 4.65
57 5.00 4.99 4.95 4.88 4.85 57 4.15 4.30 4.45 4.60 4.72
58 5.09 5.08 5.03 4.96 4.92 58 4.19 4.35 4.52 4.67 4.80
59 5.19 5.17 5.12 5.04 5.00 59 4.24 4.41 4.58 4.75 4.89
60 5.29 5.27 5.22 5.12 5.09 60 4.28 4.47 4.65 4.83 4.98
61 5.40 5.38 5.32 5.21 5.18 61 4.34 4.53 4.73 4.92 5.07
62 5.52 5.50 5.42 5.30 5.27 62 4.39 4.60 4.81 5.01 5.18
63 5.65 5.62 5.53 5.39 5.37 63 4.45 4.67 4.90 5.11 5.29
64 5.78 5.75 5.65 5.49 5.48 64 4.51 4.75 4.99 5.21 5.41
65 5.92 5.89 5.77 5.58 5.59 65 4.58 4.83 5.09 5.33 5.53
66 6.08 6.03 5.90 5.69 5.71 66 4.65 4.92 5.19 5.45 5.67
67 6.24 6.19 6.04 5.79 5.83 67 4.72 5.01 5.30 5.58 5.81
68 6.42 6.36 6.19 5.90 5.97 68 4.80 5.11 5.42 5.72 5.97
69 6.61 6.54 6.34 6.01 6.11 69 4.89 5.21 5.55 5.88 6.14
70 6.81 6.74 6.50 6.12 6.26 70 4.98 5.33 5.69 6.04 6.33
71 7.04 6.95 6.67 6.22 6.42 71 5.07 5.45 5.85 6.22 6.52
72 7.28 7.17 6.84 6.33 6.59 72 5.18 5.58 6.01 6.41 6.74
73 7.54 7.41 7.02 6.44 6.77 73 5.29 5.72 6.19 6.62 6.97
74 7.83 7.67 7.21 6.54 6.97 74 5.41 5.88 6.38 6.84 7.22
75 8.14 7.95 7.40 6.64 7.17 75 5.53 6.04 6.58 7.09 7.49
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 17.
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Female Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually.
Settlement rates for any age not shown above will be calculated on the same basis as those rates shown in the table above.
Such rates will be furnished by us upon request. Amounts shown in the table below are based on an assumed interest rate of
4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 1
___________________________________________________________________
DEFERRED ANNUITY CONTRACT
___________________________________________________________________
Contract Number: 9300-SAMPLE
Owner: John Doe
Contract Date: November 2, 1992
Annuitant: John Doe
This is a deferred annuity contract. It is a legal contract
between you, as the owner, and us, IDS Life Insurance Company.
PLEASE READ YOUR CONTRACT CAREFULLY.
If the annuitant is living on the Settlement Date, we will begin to
pay you monthly annuity payments. Any payments made by us are
subject to the terms of this contract. The owner and beneficiary
are as named in the application unless they are changed as provided
for in this contract.
We issue this contract in consideration of your application, and
payment of the initial purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis,
Minnesota, as of the contract date shown above.
THIS ANNUITY CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA
WHICH MAY RESULT IN BOTH UPWARD AND DOWNWARD ADJUSTMENTS IN CASH
SURRENDER BENEFITS. Surrenders are available without market value
adjustment on the last day of each subaccount guarantee period and
during the following first ten days of each new subaccount
guarantee period.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CONTRACT FOR TEN DAYS. If for
any reason you are not satisfied with this contract, return it to
us or our agent within ten days after you receive it. We will then
cancel this contract and refund all purchase payments you have
made. This contract will then be considered void from the start.
PRESIDENT
James A. Mitchell
SECRETARY
William A. Stoltzmann
___________________________________________________________________
o Flexible purchase payments.
o Annuity payments to begin on the settlement date.
o This contract is nonparticipating. Dividends are not payable.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
<PAGE>
PAGE 2
___________________________________________________________________
GUIDE TO CONTRACT PROVISIONS
___________________________________________________________________
DEFINITIONS Important words and meanings/Page 5
THE ANNUITY CONTRACT Entire contract; Modification;
Incontestability; Benefits based on
incorrect data/Page 7
OWNER Owner's rights; Change of
ownership; Assignment/Page 8
BENEFICIARY AND Who is the beneficiary; Change of
PAYMENTS TO BENEFICIARY beneficiary; Payments to
beneficiary; Spousal option/Page 9
PURCHASE PAYMENTS Purchase payments; Payment limits;
Allocation among subaccounts/Page
10
ACCUMULATION VALUE AND How the accumulation value is
MARKET VALUE ADJUSTMENT determined; Premium tax;
Subaccounts; Interest crediting;
How the market value adjustment is
determined/Page 11
TRANSFERS Transferring from one subaccount to
another/page 13
SURRENDERS Surrender of the contract for the
surrender value; TSA prohibited
distributions/page 14
ANNUITY PAYMENT PLANS When annuity payments begin;
Different ways to receive annuity
payments/Page 16
TABLES OF SETTLEMENT RATES Tables showing monthly annuity
payment amounts for the various
plans/Page 18
<PAGE>
PAGE 3
___________________________________________________________________
CONTRACT DATA
___________________________________________________________________
Contract Number: 9300-SAMPLE
Contract Type: Non-qualified
Owner: John Doe
Initial Payment: $20,000
Contract Date: November 2, 1992
Settlement Date: November 2, 2022
Annuitant: John Doe
Net Initial Payment: $20,000
PURCHASE PAYMENT ALLOCATION: Your initial purchase payment has
been allocated to the subaccounts as shown below. You may make
additional payments and change the payment allocation as provided
in this contract. The maximum total purchase payments in the first
and later contract years are $500,000. We reserve the right to
change this maximum. SEE PURCHASE PAYMENTS INFORMATION ON PAGE 10.
<TABLE>
<CAPTION>
SUBACCOUNTS
________________________________________________________________________________________
Net Payment Allocation % Guarantee Period Interest Rate Period Ending Date Period Ending Accumulation Value
<S> <C> <C> <C> <C> <C>
$5,000.00 25.00% 3 Years 5.80% November 1, 1995 $5,921.44
$10,000.00 50.00% 6 Years 6.90% November 1, 1998 $14,923.35
$5,000.00 25.00% 10 Years 7.35% November 1, 2002 $10,162.26
__________ _______
$20,000.00 100.00%
</TABLE>
GUARANTEE PERIOD TRANSITION: When a subaccount guarantee period
ends, a new guarantee period will begin. Your subaccount
accumulation value will be transferred without market value
adjustment to a new subaccount. The new subaccount guarantee
period will be a one year period unless you elect a different
length from those we then offer. The new guarantee period may
never extend beyond the settlement date. The interest rate we
establish for any guarantee period will always be at least 3%. SEE
GUARANTEE PERIOD INFORMATION ON PAGE 11.
MARKET VALUE ADJUSTMENT: A market value adjustment is made if you
surrender or transfer values from a subaccount during the guarantee
period. There are no market value adjustments for:
o exercise of your cancellation right;
o free withdrawal amounts;
o surrenders or transfers from a subaccount at expiry of its
guarantee period;
o application of the contract accumulation value to provide annuity
payments using an annuity payment plan;
o death benefits.
SEE MARKET VALUE ADJUSTMENT INFORMATION ON PAGE 12.
<PAGE>
PAGE 4
___________________________________________________________________
CONTRACT DATA (Continued)
___________________________________________________________________
SURRENDER CHARGE: If you surrender all or a portion of this
contract surrender charges may apply. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of contract years the
subaccount payment has been in the contract. There are no
surrender charges for payments which have been in the contract for
eight or more contract years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by amount of the subaccount market
adjusted value surrendered in excess of the free withdrawal amount.
The surrender charge percentages are:
<TABLE>
<CAPTION>
Number of Number of
Contract Years Contract Years
Since Payment Since Payment
Received Surrender Charge Percentage Received Surrender Charge Percentage
<S> <C> <C> <C>
1 7% 5 3%
2 6% 6 2%
3 5% 7 1%
4 4% 8 or more 0%
</TABLE>
There are no surrender charges for:
o exercise of your cancellation right;
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period;
o application of the contract accumulation value to provide annuity
payments using an annuity payment plan;
o death benefits.
SEE SURRENDER CHARGE INFORMATION ON PAGE 14.
<PAGE>
PAGE 5
___________________________________________________________________
DEFINITIONS
___________________________________________________________________
The following words are used often in this contract. When we use
these words, this is what we mean:
the annuitant
The person on whose life monthly annuity payments depend.
you, your, owner
The owner of this contract. The owner may be someone other than
the annuitant. The owner is shown in the application unless the
owner has been changed as provided in this contract.
we, us, our
IDS Life Insurance Company
contract date
It is the date from which contract anniversaries, contract years,
and contract months are determined. Your contract date is shown in
CONTRACT DATA.
contract anniversary
The same day and month as the contract date each year that the
contract remains in force.
subaccount
An account we establish for each combination of guarantee period
and guarantee rate to which you allocate a purchase or transfer
payment. Each subaccount is distinguished by the guarantee period
and the date the guarantee period begins.
guarantee period
The period for which we guarantee a particular declared effective
annual interest rate.
guarantee rate
The particular declared effective annual interest rate we guarantee
for a guarantee period.
accumulation value
The value of the purchase and transfer payments plus interest
credited, adjusted for any surrenders. The contract accumulation
value is the sum of all subaccount accumulation values.
<PAGE>
PAGE 6
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
market adjusted value
The accumulation value in excess of the free withdrawal amount,
adjusted by the market value adjustment formula, plus the free
withdrawal amount. The adjustment is for interest rate changes
since a subaccount begins. The adjustment is calculated separately
for each subaccount. The contract market adjusted value is the sum
of all subaccount market adjusted values.
market value adjustment
The difference between the market adjusted value and the
accumulation value. It is positive if the market adjusted value is
greater than the accumulation value. It is negative if the
accumulation value is greater than the market adjusted value.
surrender value
The accumulation value plus any applicable market value adjustment,
less any applicable surrender charge.
free withdrawal amount
The amount of surrenders and transfers that may be made each
contract year without market value adjustment or surrender charge.
Free withdrawal amounts are calculated separately for each
subaccount. From the time a subaccount is established by payment
or transfer to the next contract anniversary, the free withdrawal
amount is 10% of the subaccount payment or transfer. During each
contract year thereafter, the free withdrawal amount is 10% of the
prior contract anniversary subaccount accumulation value.
written request
A request in writing signed by you and delivered to us at our home
office.
settlement
The application of the accumulation value of this contract to
provide annuity payments.
settlement date
The date on which annuity payments are to begin. This date may be
changed as provided in this contract.
Code
The Internal Revenue Code of 1986, as amended, and all related laws
and regulations which are in effect during the term of this
contract.
<PAGE>
PAGE 7
___________________________________________________________________
DEFINITIONS (Continued)
___________________________________________________________________
tax-qualified contract
A contract used in or under a retirement plan or program that is
intended to qualify under Section 401, 403, 408 or 457 of the Code.
These include, but are not limited to, TSA contract, IRA contracts
and SEP/IRA contracts defined below.
TSA contract
A contract used in or under a retirement plan or program that is
intended to qualify under Section 403(b) of the Code as a Tax-
Sheltered Annuity.
IRA contract
A contract used in or under a retirement plan or program that is
intended to qualify under Section 408(b) of the Code as an
Individual Retirement Annuity.
SEP/IRA contract
A contract used in or under a retirement plan or program that is
intended to qualify under Section 408(k) of the Code as a
Simplified Employee Pension (SEP/IRA). A SEP/IRA is an IRA with
special features and requirements.
non-qualified contract
A used used primarily for retirement purposes under a plan or
program that is not intended to qualify under Section 401, 403, 408
or 457 of the Code.
<PAGE>
PAGE 8
___________________________________________________________________
THE ANNUITY CONTRACT
___________________________________________________________________
What is the entire contract?
This contract form and the copy of the application attached to it
are the entire contract between you and us.
No one except one of our corporate officers (President, Vice
President, Secretary, or Assistant Secretary) can change or waive
any of our rights or requirements under the contract. That person
must do so in writing. None of our agents or other persons has the
authority to change or waive any of our rights or requirements
under the contract.
Can the contract be modified?
We reserve the right to modify this contract to the extent
necessary to:
1. qualify this contract as an annuity contract under
Section 72 of the Code and all related laws and
regulations which are in effect during the term of this
contract; and
2. if this contract is a tax-qualified contract, to qualify
this contract as such a tax-qualified contract under the
applicable Section 401, 403, 408 or 457 of the Code and
all related laws and regulations which are in effect
during the term of this contract.
We will obtain the approval of any regulatory authority for the
modifications.
When will this contract become incontestable?
This contract is incontestable from its issue date.
What if benefits are based on incorrect data?
If this is a non-qualified or IRA contract, annuity payments will
be based on the annuitant's birthdate and sex. If the annuitant's
birthdate or sex has been misstated, payments will be adjusted.
They will be based on what would have been provided at the correct
birthdate and sex. Any underpayments made by us will be made up
immediately. Any overpayments made by us will be subtracted from
the future payments.
If this is a tax-qualified contract, except an IRA contract,
annuity payments will be based on the annuitant's birthdate. If
the annuitant's birthdate has been misstated, payments will be
adjusted. They will be based on what would have been provided at
the correct birthdate. Any underpayments made by us will be made
up immediately. Any overpayments made by us will be subtracted
from the future payments.
<PAGE>
PAGE 9
___________________________________________________________________
THE ANNUITY CONTRACT (Continued)
___________________________________________________________________
What laws govern the contract?
The contract is governed by the law of the state in which it is
delivered. The values and benefits of this contract are at least
equal to those required by such state.
Will you receive information about your contract values?
Yes. At least once a year we will send you a statement showing
both the accumulation value and the surrender value of this
contract. The statement will specify the surrender charge and
market value adjustment used to determine the surrender value.
This statement will be based on any laws or regulations that apply.
We also will mail you a notice twenty-one calendar days before the
end of a subaccount guarantee period describing the automatic
transfer of the subaccount accumulation value to a one year
guarantee period subaccount if you do not elect a different length
guarantee period. The notice will describe your right to surrender
without a surrender charge or market value adjustment on the last
day of your guarantee period and during the following ten days of
the new subaccount guarantee period.
Are contract proceeds protected?
Payments under this contract are not assignable by any beneficiary
prior to the time they are due. To the extent allowed by law,
payments are not subject to the claims of creditors or to legal
process.
<PAGE>
PAGE 10
___________________________________________________________________
OWNER
___________________________________________________________________
What are your rights as owner of this contract?
As long as the annuitant is living and unless otherwise provided in
this contract, you may exercise all rights and privileges in this
contract or allowed by us.
If this is an IRA or SEP/IRA contract, during the lifetime of the
annuitant you will have sole and absolute power to receive and
enjoy all rights under the contract. Your entire interest is non-
forfeitable.
How can you change ownership for this contract?
If this is a tax-qualified contract, your right to change the
ownership is restricted. The contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan, or as
security for the performance of an obligation or for any other
purpose to any person other than as may be required or permitted
under Sections 401, 403, 408 or 457 of the Code, or under any other
applicable section of the Code. However, if this contract is owned
by a trustee of a tax-qualified trust or the custodian of a tax-
qualified custodial account, such trustee or custodian may transfer
ownership of the contract to the annuitant or to a qualified
successor trustee or custodian.
If this is a non-qualified contract, you may change the ownership.
Any change of ownership must be made by written request on a form
approved by us. The change must be made while the annuitant is
living. Once the change is recorded by us, it will take effect as
of the date of your request, subject to any action taken or payment
made by us before the recording.
Can you assign this contract as collateral?
If this is a tax-qualified contract, you may not assign it as
collateral.
If this is a non-qualified contract, you may assign it or any
interest in it while the annuitant is living. Your interest and
the interest of any beneficiary is subject to the interest of the
assignee. An assignment is not a change of ownership and an
assignee is not an owner as these terms are used in this contract.
Any amounts payable to the assignee will be paid in a single sum.
You must send a copy of the assignment to us at our home office.
Any assignment is subject to any action taken by us before the
assignment was recorded at our home office. We are not responsible
for the validity of any assignment.
<PAGE>
PAGE 11
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY
___________________________________________________________________
What death benefits are paid if the annuitant or owner dies before
settlement?
If the annuitant or owner dies before settlement while this
contract is in force, we will pay the beneficiary the accumulation
value.
The accumulation value will be determined as of the date on which
we receive due proof of death at our home office.
We will pay the above amount in a lump sum upon the receipt of due
proof of death of you or the annuitant, whichever first occurs.
The beneficiary may elect to receive payment anytime within five
years after the date of death.
We also will make the above described payment upon the first to die
if ownership is in a joint tenancy except where spouses are joint
owners with right of survivorship and the surviving spousal owner
elects to continue this contract.
In lieu of a lump sum, payments may be calculated and made in
accordance with the Code under an annuity payment plan, provided:
1. The beneficiary elects the plan within sixty days after we
receive due proof of death; and
2. The plan provides payments over a period which does not exceed
the life or life expectancy of the beneficiary; and
3. For non-qualified contracts:
Payments must begin no later than one year after the date of
death.
For tax-qualified contracts:
(a) Payments must begin no later than one year after the date of
death, in the case of a nonspouse beneficiary; or
(b) Payments must begin no later than the latest of the date the
annuitant would have attained age 70 1/2 or one year after
the date of death, in the case of a spousal beneficiary.
In this event, the reference to "annuitant" in ANNUITY PAYMENT
PLANS shall apply to the beneficiary.
To whom are the death benefits payable?
Benefits will be paid equally to all primary beneficiaries
surviving the annuitant. If none survives, proceeds will be paid
equally to all contingent beneficiaries surviving the annuitant.
If no beneficiary survives the annuitant, we will pay the benefits
to you, if living, otherwise to your estate.
<PAGE>
PAGE 12
___________________________________________________________________
BENEFICIARY AND PAYMENTS TO BENEFICIARY (Continued)
___________________________________________________________________
Who is the beneficiary?
The beneficiary or beneficiaries are as named in the application
unless you have since changed the beneficiary as provided below.
If the beneficiary has been changed, we will pay any benefits in
accordance with your last change of beneficiary request.
How do you change the beneficiary?
You may change the beneficiary any time while the annuitant is
living by satisfactory written request to us. Once the change is
recorded by us, it will take effect as of the date of your request,
subject to any action taken or payment made by us before the
recording.
What is the spouse's option to continue this contract?
For non-qualified contracts: If you die prior to the settlement
date and your spouse is the sole beneficiary or co-owner of the
contract, your spouse may elect to forego receipt of the death
benefit and instead continue this contract in force as its owner
and annuitant. Your spouse may make additional purchase payments
to the contract. Your spouse must make this election within sixty
days after we receive due proof of death.
For IRAs and SEP/IRAs: If you die prior to the settlement date and
your spouse is the sole beneficiary of the contract, your spouse
may elect to forego receipt of the death benefit and instead keep
the contract in force as its owner and annuitant. Your spouse may
make additional purchase payments to the contract. Your spouse
must make this election within sixty days after we receive due
proof of death. Your spouse may defer beginning annuity payments
until attaining age 70 1/2 or such other date as provided in the
Code. Any annuity payment plan later elected must provide for
amounts calculated in accordance with the Code.
For tax-qualified contracts other than IRAs and SEP/IRAs: If the
annuitant dies prior to the settlement date and the annuitant's
spouse is the sole beneficiary of the contract, the spouse may
elect to forego receipt of the death benefit and instead keep the
contract in force as its owner and annuitant. The spouse may not
make additional purchase payments to the contract. The spouse must
make this election within sixty days after we receive due proof of
death. The spouse may defer beginning annuity payments until the
annuitant would have attained age 70 1/2 or such other date as
provided in the Code. Any annuity payment plan later elected must
provide for amounts calculated in accordance with the Code.
What if the annuitant dies after settlement?
If the annuitant dies after settlement, the amount payable, if any,
will be as provided in the annuity plan then in effect.
<PAGE>
PAGE 13
___________________________________________________________________
PURCHASE PAYMENTS
___________________________________________________________________
What are the purchase payments for this contract?
Purchase payments are the payments you make for this contract and
the benefits it provides. Purchase payments consist of your
initial purchase payment and any additional purchase payments you
make. Purchase payments must be paid or mailed to us at our home
office or to an authorized agent. If requested, we'll give you a
receipt for your purchase payments. Upon payment to us, purchase
payments become our property.
Net purchase payments are your purchase payments less any
applicable premium tax charge.
What are the payment limits for this contract?
Additional purchase payments may be made until the earlier of:
1. the date this contract terminates by surrender or otherwise; or
2. the date on which annuity payments begin.
The maximum total purchase payments for this contract may not
exceed the amounts shown in CONTRACT DATA. We reserve the right to
increase the maximums.
You may make additional purchase payments of at least $2,000.
What are the additional IRA and SEP/IRA payment limits?
For IRAs the total purchase payments for any taxable year may not
exceed $2,000. For SEP/IRAs, employer purchase payments for any
taxable year may not exceed 15% of your compensation, or $30,000,
whichever is less.
However, for rollover contributions described in Sections
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the
Code, there is no limit on the amount of your purchase payment.
If you die before the entire interest in this contract has been
distributed to you, and your beneficiary is other than your
surviving spouse, no additional payments will be accepted from your
beneficiary under the contract.
How are purchase payments allocated among the subaccounts?
You instruct us on how you want your purchase payments allocated
among the subaccounts. The minimum amount you may allocate to a
subaccount is $2,000. Subaccount guarantee periods you choose may
not extend beyond the settlement date.
Your allocation instructions as of the contract date are shown in
CONTRACT DATA. By written request or another method agreed to by
us, you may change your allocation instructions for additional
purchase payments.<PAGE>
PAGE 14
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT
___________________________________________________________________
How is the accumulation value determined?
The contract accumulation value at any time is the sum of all the
contract subaccount accumulation values.
The accumulation value of a subaccount is:
1. the net purchase payment or transfer amount allocated to the
subaccount,
2. plus interest credited at the guarantee rate for that
subaccount,
3. minus any amounts withdrawn for surrenders or transfers,
including any applicable surrender charges or market value
adjustments.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation
value of this contract for any applicable premium taxes not
previously deducted.
What is a subaccount?
You have one or more subaccounts in this contract. A subaccount is
established for each combination of guarantee period and guarantee
rate to which you allocate a purchase or transfer payment. Each
subaccount is distinguished by the guarantee period and the date
the guarantee period begins.
You have a subaccount for each guarantee period to which you
initially allocate a purchase payment. You also have a subaccount
for each guarantee period to which you later transfer all or a
portion of an existing subaccount.
How is interest credited to a subaccount?
Interest is credited daily to result in an effective annual yield
of the guarantee rate. Interest crediting begins when we receive
the net purchase payment or transfer amount and continues until the
end of the guarantee period or until amounts are either surrendered
or transferred from the subaccount. However, a subaccount
surrender during the first ten days of a new guarantee period
following expiry of an existing guarantee period will not reflect
any interest earned during the ten day period - see SURRENDERS.
The guarantee rate we establish for any guarantee period will
always be at least 3%.
<PAGE>
PAGE 15
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
What happens when a guarantee period ends?
When a guarantee period ends, a new guarantee period will begin.
Your subaccount accumulation value will be transferred to a new
subaccount without market value adjustment.
We will mail you a notice twenty-one calendar days before the
guarantee period ends to remind you to select a new guarantee
period. If we do not receive your selection within ten calendar
days after the guarantee period ends, the new guarantee period will
be one year. The new guarantee period may never extend beyond the
settlement date.
At the end of a guarantee period, you also will be able to fully or
partially surrender your subaccount accumulation value without
market value adjustment or surrender charge - see SURRENDERS. If
you surrender less than the entire subaccount accumulation value,
at least $1,000 must remain in the subaccount.
What is a free withdrawal amount?
This is an amount you may surrender or transfer each contract year
without market value adjustment (or surrender charge). Free
withdrawal amounts are calculated separately for each subaccount.
From the time a subaccount is established by payment or transfer to
the next contract anniversary, the free withdrawal amount is 10% of
the subaccount payment or transfer. During each contract year
thereafter, the free withdrawal amount is 10% of the prior contract
anniversary subaccount accumulation value.
What is a market value adjustment?
It is a positive or negative adjustment of a subaccount
accumulation value. A market value adjustment is made if you
surrender or transfer values from a subaccount during the guarantee
period. It reflects the relationship between:
1. the interest rate we are then crediting for new purchase
payments or transfers for the time remaining until expiration of
the subaccount; and
2. the guarantee rate for the specific subaccount.
When aren't market value adjustments made?
There are no market value adjustments for:
o exercise of your cancellation right (see the face page of the
contract);
o free withdrawal amounts;
<PAGE>
PAGE 16
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
o surrenders or transfers from a subaccount at expiry of its
guarantee period and during the first ten days of the new
subaccount guarantee period;
o application of the contract accumulation value to provide
annuity payments using an annuity payment plan - see ANNUITY
PAYMENT PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
How is the market value adjustment determined?
The market value adjustment is determined by:
1. Determining the subaccount accumulation value to be adjusted.
This is the amount surrendered or transferred from the
subaccount; and
2. Calculating the market adjusted value of that accumulation value
using the formula at the right; and
3. Subtracting the accumulation value (#1) from the market adjusted
value (#2).
The market adjusted value formula is:
market adjusted value = [(AVc - FWA) X F] + FWA
where:
AVc = the subaccount accumulation value
to be surrendered or transferred
FWA = free withdrawal amount
F = (1 + ig)(N + t)
_______________________
(1 + ic + .0025)(N + t)
where:
ig = the subaccount guaranteed interest
rate
N = the number of complete years to
the end of the guarantee period
for the subaccount
t = the fraction of a year remaining to
the end of the guarantee period (for
example, if 180 days remain in a 365
day year, t would be .493) for the
subaccount
<PAGE>
PAGE 17
___________________________________________________________________
ACCUMULATION VALUE AND
MARKET VALUE ADJUSTMENT (Continued)
___________________________________________________________________
ic = the interest rate we are then crediting
for this contract for new purchase
payments or transfers for the time
remaining in the subaccount (straight
line interpolation between whole year
rates. If N is zero, ic is the rate for a
one year guarantee period.)
<PAGE>
PAGE 18
___________________________________________________________________
TRANSFERS
___________________________________________________________________
Can you transfer values from one subaccount to another before
settlement?
Yes. You may transfer accumulation values from an existing
subaccount to a new subaccount before the settlement date. A
subaccount must have been established at least one calendar year
before a transfer from it may be made. There is no fee or charge
for these transfers. There will be a market value adjustment.
Here are the transfer rules:
1. Request
You may make a transfer by written request. Specify the
subaccount the transfer is to be made from and the amount of the
transfer if it is less than the entire subaccount accumulation
value. Also specify the new guarantee period length.
You also may make telephone transfers according to the
telephone procedures that are then currently in effect, if any.
2. Market Value Adjustment
For your transfers before the end of a guarantee period there
will be a market value adjustment to the accumulation value in
excess of the free withdrawal amount. There will not be a
market value adjustment for your transfers at the end of a
guarantee period.
3. Minimum Transfer
The minimum accumulation value you may transfer is $2,000,
or if less, the entire subaccount accumulation value.
4. Minimum Balance After Transfer
You may transfer less than the entire accumulation value
from a subaccount if such partial transfer results in a minimum
$1,000 accumulation value balance remaining after the transfer.
<PAGE>
PAGE 19
___________________________________________________________________
SURRENDERS
___________________________________________________________________
Can you surrender amounts from this contract before settlement?
Yes. You may surrender this contract for the total surrender value
or partially surrender it for a part of the surrender value. If
totally surrendered for the total surrender value, this contract
will terminate. Surrender values, charges and rules are explained
below and on page 15.
What is a free withdrawal amount?
This is an amount you may surrender or transfer each contract year
without surrender charge (or market value adjustment). Free
withdrawal amounts are calculated separately for each subaccount.
From the time a subaccount is established by payment or transfer to
the next contract anniversary, the free withdrawal amount is 10% of
the subaccount payment or transfer. During each contract year
thereafter, the free withdrawal amount is 10% of the prior contract
anniversary subaccount accumulation value.
How is a surrender from a subaccount at the end of a guarantee
period treated?
A subaccount surrender at the end of the guarantee period and
during the first ten days of the new guarantee period will not
incur a surrender charge or market value adjustment, nor will it
reflect any interest earned during this ten day period.
What are the surrender rules?
1. Request
You may make a surrender by written request. Specify the
subaccount(s) the surrender is to be made from and the amount
you wish to surrender. You may tell us the check amount you
wish to receive and we will calculate how much accumulation
value to surrender. You may also make telephone surrenders
according to the telephone procedures that are then currently in
effect, if any.
We may require that you return this contract to our home office
before we pay the total surrender value.
The surrender payment will normally be mailed to you within
seven days of the receipt of your request.
2. Minimum Surrender
The minimum accumulation value you may surrender is $1,000.
3. Minimum Balance After Surrender
The minimum balance in a subaccount after surrender is $1,000.
<PAGE>
PAGE 20
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
What distributions are prohibited if your contract is a TSA?
To meet the requirements of Section 403(b) of the Code, unless
otherwise provided in the Code, no amounts may be distributed
unless you have:
1. attained age 59 1/2; or
2. separated from service; or
3. died; or
4. become disabled (as defined in Section 72(m)(7) of the Code; or
5. encountered hardship (within the meaning of Section 403(b) of
the Code);
and then only such amounts as the Code may provide. We will
require satisfactory written proof of the event(s) in items 1
through 5 above prior to any distribution from the contract.
Can we delay or suspend payment of a partial or full surrender?
We may defer payment of any partial or full surrender for a period
not to exceed six months from the date we receive your surrender
request, or the period permitted by state insurance law, if less.
If we defer payment more than thirty days, we will pay annual
interest of at least 3% on the amount deferred.
How is the surrender value determined?
The surrender value is the accumulation value, plus the market
value adjustment, less a surrender charge. Surrender charges are
calculated separately for each subaccount. For each subaccount,
the surrender charge depends on the number of contract years the
subaccount payment has been in the contract. The surrender charge
percentage decreases each year on the contract anniversary date.
There are no surrender charges for payments which have been in the
contract for eight or more contract years.
The surrender charge is determined by multiplying the applicable
surrender charge percentage by the subaccount market adjusted value
surrendered in excess of the free withdrawal amount.
The surrender charge percentages are:
Contract Years Since Surrender Charge
Payment Received Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or more 0%
<PAGE>
PAGE 21
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
When are there no surrender charges?
There are no surrender charges for:
o exercise of your cancellation right (see the face page the
contract);
o free withdrawal amounts;
o transfers between subaccounts;
o surrenders from a subaccount at expiry of its guarantee period
and during the first ten days of the new subaccount guarantee
period;
o application of the contract accumulation value to provide annuity
payments using an annuity payment plan - see ANNUITY PAYMENT
PLANS;
o death benefits - see PAYMENTS TO BENEFICIARY.
Example of How the Surrender Charge Would be Calculated for the
Full Surrender of One Subaccount
This example shows how surrender charges would be calculated for
the full surrender of one subaccount from a contract dated January
15, 1993. The contract year is January 15 to January 14 and the
anniversary date is January 15th each year.
Subaccount P is established with a $5,000 payment on July 1, 1994.
The surrender charge percentages for Subaccount P will be:
Surrender Date Surrender Charge Percentage
7-1-94 to 1-14-95 7%
1-15-95 to 1-14-96 6%
1-15-96 to 1-14-97 5%
1-15-97 to 1-14-98 4%
1-15-98 to 1-14-99 3%
1-15-99 to 1-14-00 2%
1-15-00 to 1-14-01 1%
January 15, 2001 + 0%
The Subaccount P market adjusted value is transferred to Subaccount
Q on September 1, 1995. The above surrender charge percentage date
limits do not change even though Subaccount P transferred to
Subaccount Q.
Subaccount Q is entirely surrendered November 4, 1998, when the
Subaccount Q accumulation value is $8,300. Interest rates have
increased since Subaccount Q started. The January 15, 1998 (prior
contract anniversary) Subaccount Q accumulation value was $8,000.
Assume that the November 4, 1998 market adjusted value is $8,000.
This includes the $800 free withdrawal amount (10% of the January
15, 1998 Subaccount Q accumulation value) and an assumed ($300)
negative market value adjustment due to interest rate increases.
<PAGE>
PAGE 22
___________________________________________________________________
SURRENDERS (Continued)
___________________________________________________________________
The $8,000 market adjusted value less the $800 free withdrawal
amount is subject to a 3% surrender charge. So the surrender
charge is 3% of $7,200 which is $216.
The owner will receive a net surrender check of $7,784 which
consists of:
Subaccount Q Market adjusted value $8,000
(Includes $800 free withdrawal amount
and ($300) market value adjustment)
Less Subaccount Q surrender charge -$216
______
Net Subaccount Q surrender check $7,784
<PAGE>
PAGE 23
___________________________________________________________________
ANNUITY PAYMENT PLANS
___________________________________________________________________
When will annuity payments begin?
The first payment will be made as of the settlement date. Before
payments begin we will require satisfactory proof that the
annuitant is alive. We may also require you to exchange this
contract for a supplemental contract which provides the annuity
payments.
Can you change the settlement date?
Yes. Tell us the new date by written request. If you select a new
date, it must be at least thirty days after we receive your written
request at our home office.
The settlement date for a tax-qualified contract cannot be later
than the latest of:
1. the April 1 following the calendar year in which the annuitant
attains age 70 1/2; or
2. such other date which allows satisfaction of the minimum
distribution requirements under the Code, its regulations and/or
promulgations by the Internal Revenue Service; or
3. such other date as agreed upon by us.
In addition to the above, and for all non-qualified contracts, the
settlement date cannot be later than the latest of:
1. the contract anniversary nearest the annuitant's 85th birthday;
or
2. the tenth contract anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call
these plans. Annuity payments are made on a fixed dollar basis.
You can schedule receipt of annuity payments according to one of
the Plans A through E below or another plan agreed to by us.
If this is a tax-qualified contract, any such plan must be
calculated in accordance with the Code and must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or the life of the annuitant and
a joint annuitant; or
b. in equal or substantially equal payments over a period which
does not exceed the life expectancy of the annuitant and a joint
annuitant; and
<PAGE>
PAGE 24
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
c. any plan selected must also, if selected by a non-spouse
beneficiary, meet the incidental death benefits under the Code.
Plan A - This provides monthly annuity payments for the lifetime of
the annuitant. No payments will be made after the annuitant dies.
Plan B - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a period of at least five, ten or fifteen years. You must select
the guaranteed period.
Plan C - This provides monthly annuity payments for the lifetime of
the annuitant with a guarantee by us that payments will be made for
a certain number of months. We determine the number of months by
dividing the accumulation value applied under this plan by the
amount of the monthly annuity payment.
Plan D - We call this a joint and survivor life annuity. Monthly
payments will be paid for the lifetime of the annuitant and a joint
annuitant. When either the annuitant or joint annuitant dies we
will continue to make monthly payments for the lifetime of the
survivor. No payments will be paid after the death of both the
annuitant and the joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a
period of years. The period of years may not be less than ten or
more than thirty.
What are the requirements for selecting a plan?
You may select the plan by written request to us at any time at
least thirty days prior to the settlement date.
If at least thirty days before the settlement date we have not
received at our home office your written request to select a Plan,
we will make payments according to Plan B with payments guaranteed
for ten years.
If the amount to be applied to a plan is not at least $2,000, or if
payments are to be made to other than a natural person, we have the
right to make a lump sum payment of the surrender value.
How will payments be made?
Payments will be made by us by check. The check must be personally
endorsed by the payee or payees as well as the annuitant (or joint
annuitant under Plan D). If the annuitant or joint annuitant does
not endorse the check, other evidence must be furnished to show
that the annuitant or joint annuitant is still alive.
If you choose an annuity payment plan, what will be the amount of
the monthly annuity payments?
<PAGE>
PAGE 25
___________________________________________________________________
ANNUITY PAYMENT PLANS (Continued)
___________________________________________________________________
The amount of each monthly annuity payment for each $1,000 of
accumulation value applied under any annuity payment plan will be
based on our fixed dollar Table of Settlement Rates in effect on
the settlement date. We guarantee such rates will not be less than
those shown in TABLE A (non-qualified and IRA contracts) and
TABLE B (tax-qualified contracts including SEP/IRAs but excluding
IRAs). Table A is on page 18 and Table B is on page 19.
For non-qualified and IRA contracts, the amount of annuity payments
under Plans A, B and C will depend on the sex and adjusted age of
the annuitant on the settlement date. The amount of annuity
payments under Plan D will depend on the sex and adjusted age of
the annuitant and the joint annuitant on the settlement date.
For tax-qualified contracts including SEP/IRAs but excluding IRAs,
the amount of annuity payments under Plans A, B and C will depend
on the adjusted age of the annuitant on the settlement date. The
amount of annuity payments under Plan D will depend upon the
adjusted age of the annuitant and the joint annuitant on the
settlement date.
Adjusted age is equal to the age on the nearest birthday minus an
"adjustment" depending on the calendar year of birth of the
annuitant as follows:
Calendar Year of Annuitant's Birth Adjustment
Prior to 1920 0
1920 through 1924 1
1925 through 1929 2
1930 through 1934 3
1935 through 1939 4
1940 through 1944 5
1945 through 1949 6
1950 through 1959 7
1960 through 1969 8
1970 through 1979 9
1980 through 1989 10
After 1989 11
<PAGE>
PAGE 26
<TABLE>
<CAPTION>
__________________________________________________________________________________________
TABLE A - TABLE OF SETTLEMENT RATES
NON-QUALIFIED AND IRA CONTRACTS
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Life 5 Years 10 Years 15 Years With Adj. Adjusted Age of Female Joint Annuitant
Adj. Income Certain Certain Certain Refund Male 10 Years 5 Years Same 5 Years 10 Years
Age* M F M F M F M F M F Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 5.29 4.84 5.26 4.83 5.20 4.80 5.09 4.74 5.05 4.71 55 4.11 4.27 4.45 4.62 4.79
56 5.39 4.92 5.36 4.91 5.29 4.87 5.17 4.81 5.13 4.77 56 4.15 4.32 4.51 4.70 4.88
57 5.49 5.00 5.47 4.99 5.38 4.95 5.25 4.88 5.21 4.85 57 4.19 4.37 4.57 4.77 4.96
58 5.61 5.09 5.58 5.08 5.48 5.03 5.33 4.96 5.30 4.92 58 4.24 4.43 4.64 4.85 5.06
59 5.73 5.19 5.70 5.17 5.59 5.12 5.42 5.04 5.40 5.00 59 4.28 4.49 4.71 4.94 5.16
60 5.86 5.29 5.82 5.27 5.70 5.22 5.51 5.12 5.50 5.09 60 4.34 4.55 4.79 5.03 5.27
61 6.00 5.40 5.96 5.38 5.82 5.32 5.60 5.21 5.60 5.18 61 4.39 4.62 4.87 5.13 5.38
62 6.16 5.52 6.10 5.50 5.95 5.42 5.69 5.30 5.72 5.27 62 4.45 4.69 4.96 5.24 5.50
63 6.32 5.65 6.26 5.62 6.08 5.53 5.79 5.39 5.83 5.37 63 4.51 4.77 5.06 5.35 5.64
64 6.49 5.78 6.42 5.75 6.21 5.65 5.89 5.49 5.96 5.48 64 4.57 4.85 5.16 5.48 5.78
65 6.68 5.92 6.60 5.89 6.35 5.77 5.98 5.58 6.09 5.59 65 4.64 4.94 5.27 5.61 5.93
66 6.88 6.08 6.78 6.03 6.50 5.90 6.08 5.69 6.23 5.71 66 4.71 5.03 5.38 5.75 6.09
67 7.09 6.24 6.98 6.19 6.65 6.04 6.18 5.79 6.38 5.83 67 4.79 5.13 5.51 5.90 6.27
68 7.31 6.42 7.18 6.36 6.81 6.19 6.28 5.90 6.53 5.97 68 4.87 5.24 5.64 6.06 6.46
69 7.56 6.61 7.40 6.54 6.97 6.34 6.37 6.01 6.69 6.11 69 4.96 5.35 5.78 6.24 6.66
70 7.82 6.81 7.64 6.74 7.14 6.50 6.47 6.12 6.86 6.26 70 5.06 5.47 5.94 6.43 6.87
71 8.09 7.04 7.88 6.95 7.31 6.67 6.55 6.22 7.04 6.42 71 5.16 5.60 6.10 6.63 7.11
72 8.39 7.28 8.14 7.17 7.48 6.84 6.64 6.33 7.23 6.59 72 5.26 5.74 6.28 6.84 7.36
73 8.71 7.54 8.41 7.41 7.65 7.02 6.72 6.44 7.43 6.77 73 5.38 5.89 6.47 7.08 7.62
74 9.05 7.83 8.70 7.67 7.83 7.21 6.80 6.54 7.64 6.97 74 5.50 6.05 6.68 7.33 7.91
75 9.41 8.14 9.00 7.95 8.00 7.40 6.87 6.64 7.86 7.17 75 5.63 6.22 6.90 7.60 8.22
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 17. M = Male F = Female
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually. Settlement rates for any age, or any combination of age and sex not shown above, will be calculated on
the same basis as those rates shown in the table above. Such rates will be furnished by us upon request. Amounts shown in
the table below are based on an assumed interest rate of 4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 27<TABLE><CAPTION>
__________________________________________________________________________________________
TABLE B - TABLE OF SETTLEMENT RATES
TAX-QUALIFIED CONTRACTS
(Includes SEP/IRA Contracts, Excludes IRA Contracts)
__________________________________________________________________________________________
__________________________________________________________________________________________
Amount of Each Monthly Annuity Payment Per $1,000 Applied
__________________________________________________________________________________________
Plan A Plan B Plan C Plan D - Joint and Survivor
_____________________________________________________________________________________________________________________________
Adjusted Age of Joint Annuitant
Adj. Life 5 Years 10 Years 15 Years With Adj. 10 Years 5 Years Same 5 Years 10 Years
Age* Income Certain Certain Certain Refund Age* Younger Younger Age Older Older
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
55 4.84 4.83 4.80 4.74 4.71 55 4.07 4.20 4.34 4.47 4.58
56 4.92 4.91 4.87 4.71 4.77 56 4.10 4.25 4.40 4.53 4.65
57 5.00 4.99 4.95 4.88 4.85 57 4.15 4.30 4.45 4.60 4.72
58 5.09 5.08 5.03 4.96 4.92 58 4.19 4.35 4.52 4.67 4.80
59 5.19 5.17 5.12 5.04 5.00 59 4.24 4.41 4.58 4.75 4.89
60 5.29 5.27 5.22 5.12 5.09 60 4.28 4.47 4.65 4.83 4.98
61 5.40 5.38 5.32 5.21 5.18 61 4.34 4.53 4.73 4.92 5.07
62 5.52 5.50 5.42 5.30 5.27 62 4.39 4.60 4.81 5.01 5.18
63 5.65 5.62 5.53 5.39 5.37 63 4.45 4.67 4.90 5.11 5.29
64 5.78 5.75 5.65 5.49 5.48 64 4.51 4.75 4.99 5.21 5.41
65 5.92 5.89 5.77 5.58 5.59 65 4.58 4.83 5.09 5.33 5.53
66 6.08 6.03 5.90 5.69 5.71 66 4.65 4.92 5.19 5.45 5.67
67 6.24 6.19 6.04 5.79 5.83 67 4.72 5.01 5.30 5.58 5.81
68 6.42 6.36 6.19 5.90 5.97 68 4.80 5.11 5.42 5.72 5.97
69 6.61 6.54 6.34 6.01 6.11 69 4.89 5.21 5.55 5.88 6.14
70 6.81 6.74 6.50 6.12 6.26 70 4.98 5.33 5.69 6.04 6.33
71 7.04 6.95 6.67 6.22 6.42 71 5.07 5.45 5.85 6.22 6.52
72 7.28 7.17 6.84 6.33 6.59 72 5.18 5.58 6.01 6.41 6.74
73 7.54 7.41 7.02 6.44 6.77 73 5.29 5.72 6.19 6.62 6.97
74 7.83 7.67 7.21 6.54 6.97 74 5.41 5.88 6.38 6.84 7.22
75 8.14 7.95 7.40 6.64 7.17 75 5.53 6.04 6.58 7.09 7.49
_____________________________________________________________________________________________________________________________
*Adjusted age of annuitant. Refer to explanation of adjusted age on page 17.
_____________________________________________________________________________________________________________________________
The table above is based on the "1983 Individual Female Annuitant Mortality Table A" assuming an interest rate of 4% per year
compounded annually.
Settlement rates for any age not shown above will be calculated on the same basis as those rates shown in the table above.
Such rates will be furnished by us upon request. Amounts shown in the table below are based on an assumed interest rate of
4% per year compounded annually.
_____________________________________________________________________________________________________________________________
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
_____________________________________________________________________________________________________________________________
Years Payable Monthly Payment Years Payable Monthly Payment Years Payable Monthly Payment
10 $10.06 17 $6.71 24 $5.35
11 9.31 18 6.44 25 5.22
12 8.69 19 6.21 26 5.10
13 8.17 20 6.00 27 5.00
14 7.72 21 5.81 28 4.90
15 7.34 22 5.64 29 4.80
16 7.00 23 5.49 30 4.72
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 1
September 28, 1992
Board of Directors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Gentlemen:
As General Counsel of IDS Life Insurance Company ("Company"), I am
familiar with its legal affairs and with IDS Life Account MGA, a
non-unitized separate account of the Company ("Account"). I am
familiar with the Registration Statement on Form S-1 and Pre-
Effective Amendment No. 1 thereto (File No. 33-50968), filed by the
Company with the Securities and Exchange Commission with respect to
the Account pursuant to Flexible Premium Group and Individual
Market Value Annuity Contracts ("Contracts").
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 express the following opinions. I am of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Minnesota, and is duly
licensed or qualified to do business in each other
jurisdiction wherein the business transacted by it requires
such licensing or qualification. The Company has all
corporate powers required to carry on its business as now
conducted and to issue the Contracts.
2. The Account validly exists pursuant to Minnesota Law.
3. The Contracts, when issued, offered and sold in accordance
with the Prospectus contained in the aforesaid Registration
Statement and, upon reliance with the local law, will be legal
and binding obligations of the Company in accordance with
their terms.
4. There is no limitation as to the interests in the Account that
may be issued.
5. There is no pending or unthreatened litigation, claims or
assessments (including any unasserted claims or assessments)
against the Company.
<PAGE>
PAGE 2
September 28, 1992
Opinion
Page 2
Please be advised you are correct in your understanding that I will
advise and consult with you concerning questions of disclosure and
the applicable requirements of Statements of Financial Accounting
Standards No. 5 if, and when, in the course of performing legal
services for the Company or the Account with respect to a matter
recognized by me to involve an unasserted claim or assessment that
may require financial statement disclosure or consider disclosure
of any such possible claim or assessment in your financial
statements. You may furnish a copy of this letter to your
independent accountants.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ William A. Stoltzmann
William A. Stoltzmann
Vice President, General Counsel and Secretary
<PAGE>
PAGE 1
List of Subsidiaries
The wholly-owned subsidiaries of IDS Life Insurance Company are:
IDS Life Insurance Company of New York
American Enterprise Life Insurance Company
<PAGE>
PAGE 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
and to the use of our reports dated February 3, 1994 on the
financial statements and financial statement schedules of IDS Life
Insurance Company in Post-Effective Amendment No. 2 to the
Registration Statement (Form S-1 No. 33-50968) and related
Prospectus of IDS Life Insurance Company for the registration of
interests in the flexible premium group and individual market value
annuity contracts.
Ernst & Young
Minneapolis, Minnesota
April 5, 1994
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
DIRECTORS POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of the below listed unit
investment trusts that previously have filed registration
statements and amendments thereto pursuant to the requirements of
the Securities Act of 1933 and the Investment Company Act of 1940
with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Variable and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract
(Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Market Value Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Preferred Choice Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
IDS Life Single Premium Variable Life 2-97637 811-4298
IDS Life Variable Account for Smith Barney Shearson
LifeVest Single Premium Variable Life 33-5210 811-4652
IDS Life Account SBS
IDS Life Symphony Annuity 33-40779 812-7731
IDS Life Account RE
IDS Life Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn
Minenko and Colleen Curran or either one of them, as her or his
attorney-in-fact and agent, to sign for her or him in her or his
name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration
statements (with all exhibits and other documents required or
desirable in connection therewith) other documents, and amendments
thereto and to file such filings, applications, periodic reports,
registration statements other documents, and amendments thereto
with the Securities and Exchange Commission, and any necessary
states, and grants to any or all of them the full power and
authority to do and perform each and every act required or
necessary in connection therewith.<PAGE>
PAGE 2
Dated the 31st day of March, 1994.
/s/ Louis C. Fornetti /s/ Janis E. Miller
Louis C. Fornetti Janis E. Miller
/s/ David R. Hubers /s/ James A. Mitchell
David R. Hubers James A. Mitchell
/s/ Richard W. Kling /s/ Barry J. Murphy
Richard W. Kling Barry J. Murphy
/s/ Paul F. Kolkman /s/ Stuart A. Sedlacek
Paul F. Kolkman Stuart A. Sedlacek
/s/ Peter A. Lefferts /s/ Melinda S. Urion
Peter A. Lefferts Melinda S. Urion
of Independent Auditors
<PAGE>
PAGE 1
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the consolidated financial statements of IDS Life
Insurance Company as of December 31, 1993 and 1992, and for each of
the three years in the period ended December 31, 1993, and have
issued our report thereon dated February 3, 1994 (included
elsewhere in this Registration Statement).
Our audits also included the financial statement schedules I, V,
VI, VIII and IX included elsewhere in this Registration Statement.
These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
Ernst & Young
Minneapolis, Minnesota
February 3, 1994
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1993
________________________________________________________________________________________
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
________________________________________________________________________________________
<S> <C> <C> <C>
Fixed maturities:
Bonds:
United States Government and
government agencies and
authorities (a) $ 5,591,309 $ 5,737,439 $ 5,591,309
States, municipalities and
polictical subdivisions 11,072 13,452 11,072
All other corporate bonds 13,790,043 14,675,088 13,790,043
____________ _____________ ______________
Total fixed maturities 19,392,424 20,425,979 19,392,424
Mortgage loans on real estate 2,055,450 XXXXXXXXX 2,055,450
Policy loans 350,501 XXXXXXXXX 350,501
Other investments 56,307 XXXXXXXXX 56,307
____________ ______________ ______________
Total investment $ 21,854,682 $ XXXXXXXXX $ 21,854,682
____________ ______________ ______________
(a) - Includes mortgage-backed securities with a cost and market value of $5,527,777 and $5,671,738, respectively.
/TABLE
<PAGE>
PAGE 3
IDS LIFE INSURANCE COMPANY
SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1991
<TABLE><CAPTION>
Column A Column B Column C Column D Column E Column F
Segment Deferred Future Unearned Other policy Premium
policy policy premiums claims and revenue
acquisition benefits benefits
cost losses, payable
claims and
loss expenses
<S> <C> <C> <C> <C> <C>
Annuities $ 693,184 $13,663,477 $ - $ 30,041 $ -
Life, DI,
Long-Term Care and
Health Insurance 518,439 2,654,915 - 21,205 102,338
Total $1,211,623 $16,318,392 $ - $ 51,246 $102,338
</TABLE>
<TABLE><CAPTION>
Column A Column G Column H Column I Column J Column K
Segment Net Benefits, Amortization Other Premiums
investment claims, of deferred operating written
income losses and policy expenses
settlement acquisition
expenses costs
<S> <C> <C> <C> <C> <C>
Annuities $1,189,038 $ 1,639 $ 63,821 $ 66,068 $ N/A
Life, DI,
Long-Term Care and
Health Insurance 233,828 88,577 52,257 87,601 N/A
Total $1,422,866 $90,216 $116,078 $ 153,669 N/A
</TABLE>
<PAGE>
PAGE 4
DS LIFE INSURANCE COMPANY
SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE><CAPTION>
Column A Column B Column C Column D Column E Column F
Segment Deferred Future Unearned Other policy Premium
policy policy premiums claims and revenue
acquisition benefits benefits
cost losses, payable
claims and
loss expenses
<S> <C> <C> <C> <C> <C>
Annuities $ 860,027 $16,342,419 $ - $ 28,705 $ -
Life, DI,
Long-Term Care and
Health Insurance 580,848 2,883,469 - 21,194 114,379
Total $1,440,875 $19,225,888 $ - $ 49,899 $114,379
</TABLE>
<TABLE><CAPTION>
Column A Column G Column H Column I Column J Column K
Segment Net Benefits, Amortization Other Premiums
investment claims, of deferred operating written
income losses and policy expenses
settlement acquisition
expenses costs
<S> <C> <C> <C> <C> <C>
Annuities $1,370,145 $ 1,870 $ 81,706 $ 100,928 $ N/A
Life, DI,
Long-Term Care and
Health Insurance 246,676 106,528 58,453 114,764 N/A
Total $1,616,821 $108.398 $140,159 $ 215,692 N/A
</TABLE>
<PAGE>
PAGE 5
IDS LIFE INSURANCE COMPANY
SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE><CAPTION>
Column A Column B Column C Column D Column E Column F
Segment Deferred Future Unearned Other policy Premium
policy policy premiums claims and revenue
acquisition benefits benefits
cost losses, payable
claims and
loss expenses
<S> <C> <C> <C> <C> <C>
Annuities $1,008,378 $18,492,135 $ - $ 21,508 $ -
Life, DI,
Long-Term Care and
Health Insurance 644,006 3,148,932 - 23,008 127,245
Total $1,652,384 $21,641,067 $ - $ 44,516 $127,245
</TABLE>
<TABLE><CAPTION>
Column A Column G Column H Column I Column J Column K
Segment Net Benefits, Amortization Other Premiums
investment claims, of deferred operating written
income losses and policy expenses
settlement acquisition
expenses costs
<S> <C> <C> <C> <C> <C>
Annuities $1,532,995 $ 3,656 $139,602 $ 122,999 $ N/A
Life, DI,
Long-Term Care and
Health Insurance 250,224 119,335 72,131 118,975 N/A
Total $1,783,219 $122,991 $211,733 $ 241,974 N/A
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE VI - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
____________________________________________________________________________________________________________________
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1993
Life insurance in force $ 44,188,493 $ 3,038,426 $ 2,015,382 $ 43,165,449 4.67%
____________________________________________________________________________________________________________________
Premiums:
Life insurance $ 51,764 $ 3,627 $ -- $ 48,137 0.00%
DI & health insurance 96,250 17,142 -- 79,108 0.00%
____________________________________________________________________________________________________________________
Total premiums $ 148,014 $ 20,769 $ -- $ 127,245 0.00%
____________________________________________________________________________________________________________________
For the year ended
December 31, 1992
Life insurance in force $ 38,888,963 $ 2,937,590 $ 2,015,382 $ 37,966,755 5.31%
____________________________________________________________________________________________________________________
Premiums:
Life insurance $ 53,238 $ 3,849 $ 330 $ 49,719 0.66%
DI & health insurance 78,347 13,687 -- 64,660 0.00%
____________________________________________________________________________________________________________________
Total premiums $ 131,585 $ 17,536 $ 330 $ 114,379 0.29%
____________________________________________________________________________________________________________________
For the year ended
December 31, 1991
Life insurance in force $ 34,596,113 $ 2,902,381 $ 2,020,900 $ 33,714,632 5.99%
_____________________________________________________________________________________________________________________
Premiums:
Life insurance $ 53,223 $ 3,902 $ 385 $ 49,706 0.77%
DI & health insurance 59,844 7,212 -- 52,632 0.00%
____________________________________________________________________________________________________________________
Total premiums $ 113,067 $ 11,114 $ 385 $ 102,338 0.38%
____________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 7
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
____________________________________________________________________________________________________________________
Column A Column B Column C Column D Column E
Additions
--------------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe * Describe ** of Period
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1993
- ------------------------------
Reserve for Mortgage Loans $23,595 $13,635 $0 $2,210 $35,020
Reserve for Fixed Maturities $37,899 ($15,122) $0 $22,777
Reserve for Other Investments $12,834 ($4,344) $0 ($2,210) $10,700
For the year ended
December 31, 1992
- -------------------------------
Reserve for Mortgage Loans $16,131 $8,440 $0 $976 $23,595
Reserve for Fixed Maturities $45,100 ($7,601) $400 $0 $37,899
Reserve for Other Investments $7,782 $4,076 $0 ($976) $12,834
For the year ended
December 31, 1991
- ------------------------------
Reserve for Mortgage Loans $12,655 $6,860 $0 $3,384 $16,131
Reserve for Fixed Maturities $26,096 $19,004 $0 $0 $45,100
Reserve for Other Investments $8,434 ($4,036) $0 ($3,384) $7,782
* Cash received on bond previously written down
** Transfer between reserve accounts
/TABLE
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IX - SHORT-TERM BORROWINGS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
______________________________________________________________________________________________________
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Weighted amount amount average
Category of aggregate Balance average outstanding outstanding interest rate
short-term borrowing at end interest during the during the during the
of period rate period period period
______________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1993
Line of Credit $1,519 N/A $22,700 $1,297 3.70%
1992
Line of Credit $ 0 N/A $20,000 $ 825 5.45%
1991
Line of Credit $ 0 N/A $32,725 $1,483 7.28%
</TABLE>
