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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
POST-EFFECTIVE AMENDMENT NO. 10
TO REGISTRATION STATEMENT NO. 33-28976
Under
The Securities Act of 1933
IDS Life Insurance Company
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(Exact name of registrant as specified in charter)
Minnesota
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(State or other jurisdiction of incorporation or organization)
63
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(Primary Standard Industrial Classification Code Number)
41-0823832
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(I.R.S. Employer Identification No.)
IDS Tower 10, Minneapolis, MN 55440-0010
(612) 671-3131
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(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Bruce Kohn, Counsel
IDS Life Insurance Company
IDS Tower 10, Minneapolis, Minnesota 55440-0010
(612) 671-2221
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Name, address, including zip code, and telephone number,
including area code, of agent for service)
It is proposed that this filing become effective on May 1, 1998.
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]
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<TABLE>
<CAPTION>
Calculation of Registration Fee
<S> <C> <C> <C> <C>
- -- ----------------------- ----------------------------- ------------------------------ --------------------------------------
Proposed
Title of each class Proposed maximum
of securities to be Amount to be maximum offering aggregate offering Amount of
registered registered price per unit price registration fee
- -------------------------------------------- ----------------------- ----------------------------- ------------------------------ -
Interests in a group market value
annuity contract and individual N/A
market value annuity contracts
or non-tax qualified purchases.
</TABLE>
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IDS LIFE ACCOUNT MGA
GROUP AND INDIVIDUAL MARKET VALUE ANNUITY CONTRACTS ISSUED
BY
IDS LIFE INSURANCE COMPANY
Cross-Reference Sheet
Pursuant to Regulation S-K
Item 501(b)
Form S-1 Item Number and Caption Location in Prospectus
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus.........................Outside Front Cover
2. Inside Front and Outside Back
Cover Pages of Prospectus........................Table of Contents
(inside front cover)
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges..........................................The Guaranteed Term Annuity
in brief, Not Applicable
4 Use of Proceeds..................................Investments by IDS Life
5. Determination of Offering Price..................Not Applicable
6. Dilution.........................................Not Applicable
7. Selling Security Holders.........................Not Applicable
8. Plan of Distribution.............................Distribution of contracts
9. Description of Securities to Be
Registered.......................................Description of contracts
10. Interests of Named Experts and
Counsel..........................................Not Applicable
11. Information with Respect to the
Registrant.......................................The Company; Directors and
executive officers;
Executive compensation;
Security ownership of
management; Legal
proceedings and opinion;
and Financial statements
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities..................................See Item 14 in Part II
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PART I.
INFORMATION REQUIRED IN PROSPECTUS
Attached hereto and made a part hereof is the Prospectus.
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IDS Life Guaranteed Term Annuity
Prospectus, May 1, 1998
This prospectus describes interests in a 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 and tax qualified
purchases. Participation in a group contract will be accounted for separately by
the issuance of a certificate showing your 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."
IDS Life may offer this contract in the following tax qualified programs: (1)
plans qualified under Section 401(a), 401(k) or 403(a) of the Internal Revenue
Code of 1986, as amended (the Code); (2) annuity purchase plans adopted by
public school systems and certain tax-exempt organizations pursuant to Section
403(b) of the Code; (3) individual retirement annuities (IRAs), SIMPLE IRAs and
Simplified Employee Pension (SEP) Plans eligible under Section 408 of the Code;
(4) contracts purchased by the U.S. government, the government of any state or
political subdivision thereof, or by any agency or instrumentality (within the
meaning of Section 414(d) of the Code), for use in satisfying its obligation to
provide a benefit under a governmental plan; and (5) deferred compensation plans
under Section 457 of the Code.
A minimum purchase payment of at least $5,000 must accompany the application for
a contract. No additional payment is permitted under a contract. The
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 contract.
IDS Life Account MGA
Group and Individual Market
Value Annuity Contracts
Sold by:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Telephone: 800-437-0602
These securities may be subject to a substantial surrender charge and/or market
value adjustment if not held to the end of the guarantee period that could
result in your receipt of less than your original purchase payment.
For renewal guarantee periods, the renewal interest rate will be declared by IDS
Life based on various factors. It may be higher or lower than the previous
guaranteed interest rate.
The minimum guaranteed renewal interest rate is 3%.
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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 is not a bank or financial institution, and the securities it offers
are not deposits or obligations of, backed or guaranteed or endorsed by any bank
or financial institution nor are they insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. Investments in this
annuity involve investment risk including the possible loss of principal.
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Table of contents Page
The Guaranteed Term Annuity in brief............................
Key terms.......................................................
Description of contracts........................................
General.........................................................
Application and purchase payment................................
Right to cancel.................................................
Guarantee periods...............................................
Surrenders......................................................
Surrender charge................................................
Market value adjustment.........................................
Premium taxes...................................................
Death benefit prior to settlement...............................
Statement.......................................................
Electing the settlement date and form of annuity................
Amendment, distribution and assignment of contracts ............
Amendment of contracts..........................................
Distribution of contracts.......................................
Assignment of contracts.........................................
Federal tax considerations......................................
The Company.....................................................
Business........................................................
Investments by IDS Life.........................................
Selected financial data.........................................
Management's discussion and analysis of consolidated
financial condition and results of operations...................
Directors and executive officers................................
Executive compensation..........................................
Security ownership of management................................
Legal proceedings and opinion...................................
Experts.........................................................
Appendix A - Partial surrender illustration.....................
Appendix B - Market value adjustment illustration...............
IDS Life financial information..................................
<PAGE>
The Guaranteed Term Annuity in brief
Contracts: IDS Life is offering group and individual market value annuities to
the general public for non-tax qualified and tax qualified purchases. IDS Life
is a wholly owned subsidiary of American Express Financial Corporation, which
itself is a wholly owned subsidiary of American Express Company. As described in
this prospectus, market value annuity contracts have a guaranteed interest rate
that is credited to the purchase payment when it is held to the end of the
guarantee period (the renewal date). Surrenders before the renewal date are
subject to a market value adjustment and a surrender charge (if applicable).
Guarantee periods: When a payment is made under an application, the applicant
selects a guarantee period from among those then offered by IDS Life. During
this guarantee period, the purchase payment earns interest at the applicable
guaranteed interest rate as established by IDS Life. Interest is credited on a
daily basis and the interest credited earns interest at the applicable
guaranteed interest rate as established by IDS Life. (p.)
Renewal guarantee periods: At the end of each guarantee period, a renewal
guarantee period of one year will begin, unless the owner elects a different
duration. The owner must elect the length of a renewal guarantee period during
the 30 days before the end of the previous guarantee period. Failure to make an
election will result in an automatic renewal for a period of one year. As of the
first day of each renewal guarantee period the renewal value will earn interest
at the then applicable renewal guaranteed interest rate and the interest
credited will earn interest at the then applicable renewal guaranteed interest
rate. (p. )
Surrenders: Subject to certain restrictions, partial or total surrenders are
permitted. We may defer payment of any surrender for a period up to six months
from the date we receive notice of surrender or the period permitted by state
law, if less. A deferral of payment will not be for a period greater than seven
days except under extraordinary circumstances. We will pay annual interest of at
least 3% of any amounts deferred for more than thirty days during such period if
we choose to exercise this deferral right. (p. )
Surrender charge: Surrenders may be subject to a surrender charge and/or a
market value adjustment. Before the eighth contract anniversary, a surrender
charge beginning at a maximum of 8% will be assessed if you surrender. No
surrender charge will be applied for any surrenders after the eighth contract
anniversary or if the surrender occurs on the last day of a guarantee period. We
will waive the surrender charge in certain instances. (p. )
Market value adjustment: A market value adjustment will be applied when the
surrender occurs before the renewal date. No market value adjustment will be
applied to any surrender effective as of the end of a guarantee period. The
market adjusted value will reflect the relationship, at the time of surrender,
between the rate we then are crediting on purchase payments to new contracts
with the same durations as the time remaining in the guarantee period, and the
guaranteed interest rate applicable to that contract. Generally, significant
factors affecting the amount of the market value adjustment are the level of
interest rates on investments that are similar to those supporting current
contract purchase payments and the time remaining to the end of the guarantee
period. The market adjusted value is sensitive, therefore, to changes in current
interest rates. The level of the market value adjustment is dependent on the
current interest rate at the time of surrender. The market value adjustment may
increase or
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decrease the value of this investment before the renewal date. It is possible
that the amount you receive on surrender would be less than your original
purchase payment if interest rates increase. Also, if interest rates decrease,
the amount you receive on surrender may be more than your original purchase
payment and accrued interest. The market adjusted value also affects settlements
under an annuity payment plan. (p. )
Premium taxes: We reserve the right to deduct applicable premium taxes from the
accumulation value of the contract. State premium taxes range from 0 to 3.5% of
the gross purchase payments. (p. )
Death benefit prior to settlement: 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. (p. )
Electing the settlement date and form of annuity: 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 plans. (p. )
Key terms
In this prospectus, "we", "us" and "IDS Life" refer to IDS Life Insurance
Company and "you" and "yours" refer to an owner who has been issued a contract.
These terms can help you understand details about your annuity:
Accumulation value - The value of the purchase payment plus interest credited,
adjusted for any surrenders.
Annuitant - The person on whose life monthly annuity payments depend.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the purchase payment until earnings are withdrawn.
Cash surrender value - The market adjusted value less any applicable surrender
charge. On the last day of a guarantee period, the cash surrender value is the
accumulation value.
Contract anniversary - The same day and month as the contract date each year
that the contract remains in force.
Contract date - The effective date of the contract as designated in the
contract.
Current interest rate - The applicable interest rate contained in a schedule of
rates established by us from time to time for various guarantee periods.
Initial guarantee period - The period during which the initial guarantee rate
will be credited.
Initial guarantee rate - The rate of interest credited to the purchase payment
during the initial guarantee period.
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Market adjusted value - The accumulation value adjusted by the market adjusted
value formula, on any date before the end of the guarantee period.
Market value adjustment - The market adjusted value minus the accumulation
value.
Owner - The person or entity to whom the annuity contract is issued.
Purchase payment - Payment made to IDS Life for an annuity.
Renewal date - The first day of a renewal guarantee period. It will always be on
a contract anniversary.
Renewal guarantee period - A renewal guarantee period will begin at the end of
each guarantee period.
Renewal guarantee rate - The rate of interest credited to the renewal value
during the renewal guarantee period.
Renewal value - The accumulation value at the end of the current guarantee
period.
Settlement - The application of contract value to provide annuity payments. If
the settlement date is not the last day of a guarantee period, we apply the
market adjusted value of the contract. On the last day of a guarantee period, we
apply the accumulation value of the contract.
Settlement date - The date on which annuity payments are to begin.
Written request - A request in writing signed by you and delivered to us at our
corporate office.
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Description of contracts
General
This prospectus describes interests in market value annuities offered by IDS
Life for non-tax qualified and tax qualified purchases. The contracts may be
offered in the following tax qualified programs: (1) Section 401(a), 401(k) and
403(a) plans; (2) Section 403(b) plans; (3) IRAs, SIMPLE IRAs and SEPs; (4)
certain governmental plans; and (5) deferred compensation plans.
As described in this prospectus, the contracts have a guaranteed interest rate
that is credited to a purchase payment in the contract when the purchase payment
is held to its renewal date. Interest is credited daily to achieve a stated
annual effective rate, based on a 365 day year. Interest is not paid on leap
days (Feb. 29th). Surrenders prior to the renewal date are subject to a market
value adjustment and a surrender charge (if applicable).
Application and purchase payment
To apply for a contract, you must complete an application and make a minimum
purchase payment of $5,000. For individuals age 90 and younger, the maximum
purchase payment is $1,000,000 without prior approval. This limit applies in
total to all IDS Life annuities you own. If you purchase the contract to fund a
tax qualified plan, that plan's limit on contributions also will apply.
We will return an improperly completed application, along with the corresponding
purchase payment, five business days after we receive it if the application has
not, by that time, been properly completed.
A payment is credited to a contract on the date we receive a properly completed
application at our corporate office along with the purchase payment. Interest is
earned the next day. IDS Life then issues a contract and confirms the purchase
payment in writing.
Right to cancel
State or federal law may give you the right to cancel the contract within a
specific period of time after receipt of the contract and receive a refund of
the entire purchase payment. For revocation to be effective, mailing or delivery
of notice of cancellation must be made in writing to our corporate office at the
following address: IDS Life Insurance Company, Attn: Transactions, P.O. Box 534,
Minneapolis, MN 55440-0534.
Guarantee periods
The owner selects the duration of the guarantee period from among those
durations we offer. As of the date of this prospectus, we are offering guarantee
periods with annual durations from one to 10 years; however, the guarantee
periods we offer in the future could be different. The duration selected will
determine the guaranteed interest rate and the purchase payment (less surrenders
made and less applicable premium taxes, if any) will earn interest at this
guaranteed interest rate during the entire guarantee period. All interest earned
will be credited daily; this compounding effect is reflected in the guaranteed
interest rate.
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Below is an illustration of how we will credit interest during the guarantee
period. For the purpose of this example, we have made the assumptions as
indicated.
Example of guaranteed rate of accumulation
Beginning account value: $50,000
Guaranteed period: 10 years
Guaranteed rate: 6% annual effective rate
Interest credited Cumulative interest
Year to the account credited to the account Accumulation
during year value
1 $3,000.00 $3,000.00 $53,000.00
2 3,180.00 6,180.00 56,180.00
3 3,370.80 9,550.80 59,550.80
4 3,573.05 13,123.85 63,123.85
5 3,787.43 16,911.28 66,911.28
6 4,014.68 20,925.96 70,925.96
7 4,255.56 25,181.51 75,181.51
8 4,510.89 29,692.40 79,692.40
9 4,781.54 34,473.95 84,473.95
10 5,068.44 39,542.38 89,542.38
Guaranteed accumulation value at the end of 10 years is:
$50,000 + $39,542.38 = $89,542.38
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. (See Surrenders). The hypothetical interest
rates are illustrative only and are not intended to predict future interest
rates to be declared under the contract. Actual interest rates declared for any
given time may be more or less than those shown.
Renewal guarantee periods: At the end of any guarantee period, a renewal
guarantee period will begin. We will notify you in writing about the renewal
guarantee periods available before the renewal date. This written notification
will not specify the interest rate for the renewal value. You may elect in
writing, during the 30-day period before the end of the guarantee period, a
renewal guarantee period of a different duration from among those we offer at
that time. If no election is made, we will automatically apply the renewal value
to a guarantee period of one year. In no event may renewal guarantee periods
extend beyond the settlement date then in effect for the contract. For example,
if the annuitant is age 82 at the end of a guarantee period and the settlement
date for the annuitant is age 85, a three-year guarantee period is the maximum
guarantee period that may be selected under the contract. The renewal value will
then earn interest at a guaranteed interest rate that we have declared for such
duration. We may declare new schedules of guaranteed interest rates as
frequently as daily.
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At the beginning of any renewal guarantee period, the renewal value will be the
accumulation value at the end of the guarantee period just ending. The renewal
value is guaranteed by our general assets. This amount will earn interest for
the renewal guarantee period at the then applicable guaranteed interest rate for
the period selected, that may be higher or lower than the previous guaranteed
interest rate.
At your written request, we will notify you of the renewal guarantee rates for
the periods then available. You also may call us to inquire about renewal
guarantee rates.
Establishment of guaranteed interest rates: The guaranteed interest rate for a
chosen guarantee period will be known at the time a purchase payment is received
or an accumulation value is renewed. We will send a confirmation that will show
the amount and the applicable guaranteed interest rate. The minimum guaranteed
interest rate for renewal values is 3% per year. The rate on renewal values will
be equal to or greater than the rate credited on new comparable purchase
payments at that time.
IDS Life has no specific formula for determining the rate of interest that it
will declare as guaranteed interest rates in the future. We will declare the
guaranteed interest rates from time to time based on our analysis of current
market conditions. (See Investments by IDS Life). In addition, IDS Life also may
consider various other factors in determining guaranteed interest rates for a
given period, including regulatory and tax requirements; sales commission and
administrative expenses we bear; general economic trends; and competitive
factors. IDS Life management will make the final determination as to the
guaranteed interest rates to be declared. We cannot predict nor can we guarantee
future guaranteed interest rates above the 3% rate.
Surrenders
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 you of the amount payable in
a total or partial surrender. Any total or partial surrender may be subject to
tax and tax penalties. Surrenders from certain tax qualified contracts also may
be subject to 20% 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 tax-sheltered annuity (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.
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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% IRS penalty tax (in addition to income tax) as a premature distribution and
to 20% income tax withholding. (See Federal tax considerations.)
These restrictions do not apply to transfers of contract value to another TSA
investment vehicle available through the employer.
Partial surrenders: Unless we agree otherwise, the minimum amount you may
surrender is $250. You cannot make a partial surrender if it would reduce the
accumulation value of your annuity to less than $2,000.
You may request the net check amount you wish to receive. We 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.
A partial surrender request not exceeding $50,000 may be made by telephone. We
have 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, we will take special measures to ensure
that your call is answered as promptly as possible. A telephone surrender
request will not be allowed within 30 days of a phoned-in address change.
Total surrenders: We will compute the value of your contract at the next close
of business after we receive your request for a complete surrender. We may ask
you to return the contract.
Payment on surrender: We may defer payment of any partial or total surrender for
a period not exceeding 6 months from the date we receive your notice of
surrender or the period permitted by state insurance law, if less. Only under
extraordinary circumstances will we defer a surrender payment more than 7 days,
and if we defer payment for more than 30 days, we will pay annual interest of at
least 3% on the amount deferred. While all circumstances under which we could
defer payment upon surrender may not be foreseeable at this time, such
circumstances could include, for example, our inability to liquidate assets due
to a general financial crisis. If we intend to withhold payment more than 30
days, we will notify you in writing.
NOTE: You will be charged a fee if you request express mail delivery of your
surrender check.
Surrender charge
A surrender charge may be assessed on any total or partial surrender taken prior
to the eighth contract anniversary unless the surrender occurs on the last day
of a guarantee period. The amount of the surrender charge will be based on the
length of the guarantee period. The table below shows the maximum amount of the
surrender charge.
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Surrender charge percentage:
Guarantee Contract years as measured from the beginning of a
period guarantee period
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1 2 3 4 5 6 7 8
1 year 1%
2 years 2 1%
3 years 3 2 1%
4 years 4 3 2 1%
5 years 5 4 3 2 1%
6 years 6 5 4 3 2 1%
7 years 7 6 5 4 3 2 1%
8 years 8 7 6 5 4 3 2 1%
9 years 8 7 6 5 4 3 2 1
10 years 8 7 6 5 4 3 2 1
</TABLE>
For renewal guarantee periods, the surrender charge will be based on the lesser
of:
o the length of the new guarantee period, or
o the number of years remaining until the eighth contract anniversary.
For example, if a contract owner chose an initial guarantee period of 5 years
and later a renewal guarantee period of 4 years, the surrender charge
percentages would be:
Contract year Surrender charge
1 5%
2 4
3 3
4 2
5 1*
6 3
7 2
8 1
9+ 0
*0% on last day of 5th contract year.
There will never be any surrender charges after the eighth contract anniversary.
Also, after the first contract anniversary, surrender charges will not apply to
surrenders of amounts totalling up to 10% of the accumulation value as of the
last contract anniversary.
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Surrender charge calculation: If there is a surrender charge, it is calculated
as:
(A minus B) multiplied by P
where: A = market adjusted value surrendered
B = the lesser of A or 10% of accumulation value on last contract
anniversary not already taken as a partial surrender this
contract year.
P = applicable surrender charge percentage
For an illustration of a partial surrender and applicable surrender charges, see
Appendix A.
Waiver of surrender charge: There will be no surrender charge:
o on the last day of a guarantee period;
o after the eighth contract anniversary;
o after the first contract anniversary for surrenders of amounts totalling
up to 10% of the contract accumulation value as of the last contract
anniversary;
o upon the death of the annuitant or owner; or
o upon the application of the market adjusted value to provide annuity
payments under an annuity payment plan (if such application occurs on a
renewal date, there will be no surrender charge or market value
adjustment, and the full accumulation value will be applied under an
annuity payment plan).
In some cases, such as when an employer makes this annuity available to
employees, we 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 we may be able to reduce or
eliminate surrender charges. However, we expect this to occur infrequently.
Market value adjustment
The accumulation value, including the interest credited, is guaranteed if the
contract is held until the end of the guarantee period. However, a market value
adjustment will be applied if a surrender occurs prior to the end of the
guarantee period. The market adjusted value also affects settlements under an
annuity payment plan occurring at any time other than the last day of a
guarantee period.
The market adjusted value is your accumulation value (purchase payment plus
interest credited minus surrenders and surrender charges) adjusted by a formula.
The market adjusted value reflects the relationship between the guaranteed
interest rate on your contract and the interest rate we are crediting on new
Guaranteed Term Annuity contracts with guarantee periods that are the same as
the time remaining in your guarantee period.
The market adjusted value is sensitive to changes in current interest rates. The
difference between your accumulation value and market adjusted value on any day
will depend on our current schedule of guaranteed interest rates on that day,
the time remaining in your guarantee period and your guaranteed interest rate.
<PAGE>
Upon surrender your market adjusted value may be greater than your contract's
accumulation value, equal to it or less than it depending on how the guaranteed
interest rate on your contract compares to the interest rate of a new Guaranteed
Term Annuity for the same number of years as the guarantee period remaining on
your contract.
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Relationship between your contract's guaranteed rate and new contract for the
same number of years as the guaranteed period remaining on your contract:
If your annuity rate is: Your market adjusted value will be:
greater than the new annuity rate +.25% greater than your accumulation value
equal to the new annuity rate equal to your accumulation value
+.25%
less than the new annuity rate less than your accumulation value
+.25%
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For example, assume you bought a contract with a guarantee period of 10 years
and a guaranteed interest rate of 4.5% annually. Assume that after 3 years you
decide to surrender your contract (you have 7 years left in your guarantee
period). If the current interest rate we are offering on new Guaranteed Term
Annuity contracts with 7-year guarantee periods is 5%, your market adjusted
value will be lower than your accumulation value. On the other hand, if the
current interest rate we are then offering on new Guaranteed Term Annuity
contracts with 7-year guarantee periods is 4%, your market adjusted value will
be higher than your accumulation value. A 5% surrender charge would then be
deducted from the market adjusted value.
Market adjusted value formula:
Market adjusted value = (Renewal value)
-------------------
(1 + ic + .0025)(N + t)
Renewal value -- The accumulation value at the end of the current guarantee
period
ic -- The current interest rate offered for new Guaranteed Term
Annuity contract sales and renewals for the number of years
remaining in the guarantee period
N -- The number of complete contract years to the end of the
current guarantee period
t -- The fraction of the contract year remaining to the end of
the contract year (for example, if 180 days remain in a 365
day contract year, it would be .493)
The current guaranteed interest rate (ic) is declared by us periodically. It is
the rate we are then paying on purchase payments and renewals paid under this
class of contracts for guarantee period durations equaling the remaining
guarantee period duration of the contract to which the formula is being applied.
If the remaining guarantee period is a number of complete years, the specific
complete year guarantee rate will be used. If the remaining guarantee period is
less than 1 year, the one year guarantee rate will be used. If the remaining
guarantee period is a number of complete years plus fractional years, the rate
will be determined by straight line interpolation between the two years' rates.
For example, if the remaining guarantee period duration is 8.5 years, and the
current guaranteed interest rate for 8 years is 4% and for 9 years is 5%, IDS
Life will use a guaranteed interest rate of 4.5%.
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Market value adjustment formula:
Market value adjustment = Market adjusted value less accumulation value
For an illustration showing an upward and downward adjustment, see Appendix B.
Premium taxes
We reserve 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 we
choose to not deduct it at that time, we further reserve the right to deduct it
at a later date. Current premium taxes range in an amount up to 3.5% depending
on jurisdiction.
Death benefit prior to settlement
If the annuitant or owner dies before the settlement date, the death benefit
payable to the beneficiary will equal the accumulation value.
If your spouse is sole beneficiary or joint owner: Unless you have given us
other written instructions, if you, as owner or joint owner, die before the
settlement date and your spouse is the only beneficiary or joint owner with a
right of survivorship, your spouse may keep the annuity as owner. To do this,
your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Section 401(k) plans, Section 403(b) plans (TSAs), Section 457 plans, custodial
and trusteed plans, and IRAs, SIMPLE IRAs and SEPs: If the contract is purchased
under a Section 401(k) plan, Section 403(b) plan, Section 457 plan, custodial or
trusteed plan or for an IRA, SIMPLE IRA or SEP, and we receive proof of the
annuitant's death before the settlement date, we will pay the beneficiary the
death benefit described above. If the annuitant dies before reaching the
settlement date 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 any other date permitted by the Code. To do this, the spouse must,
within 60 days after we receive proof of death, give us written instructions to
keep the contract in force.
Paying the beneficiary: Unless you have given us other written instructions, we
will pay the beneficiary in a single payment. The beneficiary may elect to
receive this payment at any time within 5 years after the date of death. Payment
from a tax qualified contract (except an IRA, SIMPLE IRA, SEP or Section 457
plan) made to a surviving spouse instead of being directly rolled over to an IRA
may be subject to 20% income tax withholding. We may make payments under any
payment plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive proof
of death;
o payments begin no later than one year after death or any other date
permitted by the Code; and
o the payment period does not extend beyond the beneficiary's life or life
expectancy.
<PAGE>
We will determine the accumulation value at the next close of business after our
death claim requirements are fulfilled. We will mail payment to the beneficiary
within seven days after our death claim requirements are fulfilled.
Statement
Prior to the settlement date, at least annually, we will send a statement
showing a summary of the contract.
Electing the settlement date and form of annuity
Upon processing your application we will establish the settlement date to the
maximum age or date as specified below. You can also select a date within the
maximum limits. This date can be aligned with your actual retirement from a job,
or it can be a different future date, depending on your needs and goals and on
certain restrictions. You can also change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
For non-tax qualified contracts, 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.
For tax qualified contracts, to avoid IRS penalty taxes, the settlement date
generally must be:
o on or after the date the annuitant reaches age 59-1/2;
o for IRAs, SIMPLE IRAs and SEPs, by April 1 of the year following the
calendar year when the annuitant reaches age 70-1/2; or
o for all other tax qualified contracts, by April 1 of the year following
the calendar year when the annuitant reaches age 70-1/2 or, if later,
retires; except that 5% business owners may not select a settlement date
that is later than April 1 of the year following the calendar year when
they reach age 70-1/2.
If you are taking the minimum IRA or TSA distributions as required by the Code
from another tax qualified investment, or in the form of partial surrenders from
this contract, annuity payouts can start as late as the annuitant's 85th
birthday or 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.
<PAGE>
Death after settlement date: If you or the annuitant dies after the settlement
date, the amount payable to the beneficiary, if any, will continue as provided
in the annuity payment plan then in effect.
Annuity plans: There are different ways to receive annuity payments. We call
these plans. You may select one of these plans, or another payment arrangement
to which we agree, by giving us written notice at least 30 days before the
settlement date.
The market adjusted value (less applicable premium taxes, if any) may be applied
on the settlement date under any of the annuity plans described below, but in
the absence of an election, the market adjusted value will be applied on the
settlement date under Plan B to provide a life annuity with 120 monthly payments
certain.
If the amount to be applied to an annuity 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 cash surrender value. If a lump sum payment is
made from a tax qualified contract (except an IRA, SIMPLE IRA, SEP or Section
457 plan), 20% income tax withholding may apply.
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 us that payments will be made for a period
of at least 5, 10 or 15 years. You must select the period.
o 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 market adjusted value applied under this plan by the amount of the
monthly annuity payment.
o Plan D - We call this a joint and survivor life annuity. Monthly
payments will be paid while both the annuitant and a joint annuitant are
living. When either the annuitant or joint annuitant dies, we will
continue to make monthly payments until the death of the surviving
annuitant. No payments will be paid after the death of the second
annuitant.
o Plan E - This provides monthly fixed dollar annuity payments for a
period of years that you elect. The period of years may be no less than
10 nor more than 30.
<PAGE>
The contract provides for annuity payment plans 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:
- -- the market adjusted value (less any applicable premium tax not
previously deducted) on the date;
- -- the annuity table we are then using for annuity settlements (never less
than the table guaranteed in the contract);
- -- the annuitant's age; and
- -- 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% per year. The table for Plan E is
based on an interest rate of 4%. IDS Life may, at our 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 you purchased a tax qualified
annuity, you must select 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.
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.
Amendment, distribution and assignment of contracts
Amendment of contracts
We reserve the right to amend the contracts to meet the requirements of
applicable federal or state laws or regulations. We will notify you 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 selling agent agreements
with certain broker-dealers registered under the 1934 Act. IDS Life will pay a
maximum commission of 5% of the purchase payment for the sale of a contract. In
the future, we may pay a commission on an election of a subsequent guarantee
period by an owner.
<PAGE>
Assignment of contracts
You may change ownership of your annuity at any time by filing a change of
ownership with us at our corporate office. No change of ownership will be
binding upon us until we receive and record it. We take no responsibility for
the validity of the change. If you have 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 trust 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 annuity contract assigned or
pledged is taxed like a cash withdrawal to the extent allocable to investment in
annuity contracts after Aug. 13, 1982.
Transfer of a non-tax qualified annuity 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% IRS
penalty tax for early withdrawal. The transferee's investment in the annuity
will be the value of the annuity at the time of the transfer. Consult with your
tax advisor before taking any action.
Federal tax considerations
Under current law, there is no liability for federal income tax on any increase
in the annuity'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, you should consult a tax advisor if
you have any questions about the taxation of your annuity contract.
You are not taxed on your purchase payment. Your purchase payment generally
includes purchase payments made with after-tax dollars. If the purchase payment
was made by you or on your behalf with pre-tax dollars as part of a tax
qualified retirement plan, such amounts are not considered to be part of your
investment in the contract and will be taxed when paid to you.
If you surrender part or all of your contract before the date on which you have
decided to begin to receive annuity payments, you will be taxed on the payments
which you receive, to the extent that the value of your contract exceeds your
investment in the contract, and you may have to pay an IRS penalty tax for early
withdrawal.
If you begin receiving annuity payments under a non-tax qualified annuity
contract, a portion of each payment will be subject to tax and a portion of each
payment will be considered to be part of your investment in the contract and
will not be taxed. All amounts received after your investment in the contract is
recovered will be subject to tax. If you begin receiving payments from a tax
qualified annuity, all of the payments generally will be subject to taxation
except to the extent that the contributions were made with after-tax dollars.
<PAGE>
Unlike life insurance proceeds, the death benefit under an annuity 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. The gain is subject
to income tax, not estate or inheritance tax.
Tax law requires that all non-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 non-tax qualified contract held by such entities as
corporations, partnerships or trusts generally will be treated as ordinary
income received during that year. However, if the trust was set up for the
benefit of a natural person only, the income will continue to be tax-deferred.
If you receive amounts from your contract before reaching age 59-1/2, you may
have to pay a 10% IRS penalty on the amount includible in your ordinary income.
If you receive amounts from your SIMPLE IRA before reaching age 59-1/2,
generally the IRS 10% penalty provisions apply. However, if you receive these
amounts before age 59-1/2 and within the first two years of your participation
in the SIMPLE IRA plan, the IRS penalty will be assessed at the rate of 25%
instead of 10%. However, this penalty will not apply to any amount received:
o after you reach age 59-1/2;
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments over your life or life expectancy (or joint lives or life
expectancies of you and your designated beneficiary); or
o if it is allocable to a purchase payment before Aug. 14, 1982 (except
for contracts in tax qualified plans).
These are the major exceptions to the 10% IRS penalty tax. Additional exceptions
may apply depending upon whether or not the annuity is tax qualified. For tax
qualified contracts, other penalties apply if you surrender an annuity bought
under your plan before the plan specifies that payments can be made under the
plan.
In general, if you receive all or part of the contract value from an annuity,
withholding may be imposed against the taxable income portion of the payment.
Any withholding that is done represents a prepayment of your tax due for the
year. You take credit for such amounts on the annual tax return that you file.
If the payment is part of an annuity payment plan, the amount of withholding
generally is computed using payroll tables. You can provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
<PAGE>
If the distribution is any other type of payment (such as a partial or full
surrender), withholding is computed using 10% of the taxable portion. Similar to
above, as long as you've provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
If a distribution is taken from a contract offered under a Section 457 Plan
(deferred compensation plan of state and local governments and tax-exempt
organizations), withholding is computed using payroll methods depending upon the
type of payment.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, any payment from which
federal withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
If you receive all or part of the contract value from a tax qualified annuity
(except an IRA, SIMPLE IRA, SEP or Section 457 plan), mandatory 20% income tax
withholding generally will be imposed at the time the payment is made. In
addition, federal income tax and the 10% IRS penalty tax for early withdrawals
may apply to amounts properly includible in income. This mandatory 20% income
tax withholding will not be imposed if:
o instead of receiving the payment, you elect 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 your life or life expectancy (or joint
lives or life expectancies of you and your designated 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% income tax withholding.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may be subject to 20% income tax withholding. For taxable distributions that
are not subject to the mandatory 20% withholding, federal income tax will be
withheld from the taxable part of your distribution unless you elect otherwise.
State withholding also may be imposed on taxable distributions.
You will receive a tax statement for any year that you receive a taxable
distribution from your annuity contract according to our records.
The contract is intended to qualify as an annuity for federal income tax
purposes. To that end, the provisions of the contract are to be interpreted to
ensure or maintain such tax qualification, notwithstanding any other provisions
of the contract. We reserve the right to amend the contract to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform the contract to any applicable changes in the tax
qualification requirements. We will send you a copy of any such amendments.
<PAGE>
Our discussion of federal tax laws is based upon our understanding of these laws
as they are currently interpreted. Either federal tax laws or current
interpretations of them may change. You are urged to consult your tax advisor
concerning your specific circumstances.
The Company
Business
IDS Life is a stock insurance company organized in 1957 under the laws of the
State of Minnesota. IDS Life is a wholly owned subsidiary of American Express
Financial Corporation (AEFC), 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.
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 be 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;
<PAGE>
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 15% of assets at the time of purchase; and
o Real estate mortgages, limited to 30% of portfolio assets at the
time of acquisition.
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.
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)
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Premiums $ 206,494 $ 182,921 $ 161,530 $ 144,640 $ 127,245
Net investment 1,988,389 1,965,362 1,907,309 1,781,873 1,783,219
income
Net realized (loss) 860 (159) (4,898) (4,282) (6,737)
on investments
Other 682,618 574,341 472,035 384,105 304,344
------- ------- ------- ------- -------
Total revenues $2,878,361 $2,722,465 $ 2,535,976 $2,306,336 $ 2,208,071
--------- --------- --------- --------- ---------
Income before $ 680,911 $ 621,714 $ 560,782 $ 512,512 $ 412,726
------- ------- ------- ------- -------
income taxes
Net income $ 474,247 $ 414,576 $ 364,940 $ 336,169 $ 270,079
------- ------- ------- ------- -------
Total assets $52,974,124 $ 47,305,981 $ 42,900,078 $ 35,747,543 $33,057,753
</TABLE>
Management's discussion and analysis of consolidated financial condition and
results of operations
Results of operations
1997 compared to 1996:
Consolidated net income increased 14% to $474 million in 1997, compared to $415
million in 1996. Earnings growth resulted primarily from increases in management
fees and policyholder and contractholder charges. These increases reflect higher
average insurance and annuities in force during 1997.
Consolidated income before income taxes totaled $681 million in 1997, compared
with $622 million in 1996. In 1997, $179 million was from the life, disability
income and long-term care insurance segment, compared with $161 million in 1996
and $502 million was from the annuity segment, compared with $461 million in
1996.
<PAGE>
Total premiums received decreased to $5.2 billion in 1997, compared with $6.1
billion in 1996. This decrease is primarily due to a decrease in sales of fixed
annuities in 1997.
Total revenues increased to $2.9 billion in 1997, compared with $2.7 billion in
1996. The increase is primarily due to increases in net investment income,
policyholder and contractholder charges, and management fees. Net investment
income, the largest component of revenues, increased slightly from the prior
year, reflecting slight increases in investments owned and investment yields.
Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type policies, increased 13% to $342 million
in 1997, compared with $303 million in 1996. This increase reflects increased
total life insurance in force which grew 12% to $75 billion at Dec. 31, 1997.
Management and other fees increased 26% to $341 million in 1997, compared with
$271 million in 1996. This is primarily due to an increase in separate account
assets, which grew 25% to $23 billion at Dec. 31, 1997, due to market
appreciation and sales. The Company provides investment management services for
the mutual funds used as investment options for variable annuities and variable
life insurance. The Company also receives a mortality and expense risk fee from
the separate accounts.
Total benefits and expenses increased slightly to $2.2 billion in 1997. The
largest component of expenses, interest credited to policyholder accounts for
universal life-type insurance and investment contracts, remained steady at $1.4
billion. DAC increased to $323 million compared to $279 million in 1996. These
increases were due primarily to increased aggregate amounts in force.
1996 compared to 1995:
Consolidated net income increased 14% to $415 million in 1996, compared to $365
million in 1995. Earnings growth resulted primarily from increases in management
fees and policyholder and contractholder charges partially offset by a slight
decrease in investment margins. These increases reflect increased average
insurance and annuities in force during 1996. Investment margins were below
prior year levels primarily due to increasing interest credited rates throughout
1996.
Consolidated income before income taxes totaled $622 million in 1996, compared
with $561 million in 1995. In 1996, $161 million was from the life, disability
income and long-term care insurance segment, compared with $125 million in 1995.
In 1996, $461 million was from the annuity segment, compared with $440 million
in 1995.
Total premiums received increased to $6.1 billion in 1996, compared with $5.0
billion in 1995. This increase is primarily due to an increase in sales of
variable annuities in 1996.
Total revenues increased to $2.7 billion in 1996, compared with $2.5 billion in
1995. The increase is primarily due to increases in net investment income,
policyholder and contractholder charges, and management fees. Net investment
income, the largest component of revenues, increased from the prior year,
reflecting a slight increase in investments owned.
<PAGE>
Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type policies, increased 18% to $303 million
in 1996, compared with $256 million in 1995. This increase reflects increased
total life insurance in force which grew 13% to $67 billion at Dec. 31, 1996.
Management and other fees increased 26% to $271 million in 1996, compared with
$216 million in 1995. This is primarily due to an increase in separate account
assets, which grew 24% to $19 billion at Dec. 31, 1996, due to market
appreciation and sales. The Company provides investment management services for
the mutual funds used as investment options for variable annuities and variable
life insurance. The Company also receives a mortality and expense risk fee from
the separate accounts.
Total benefits and expenses increased slightly to $2.1 billion in 1996. The
largest component of expenses, interest credited to policyholder accounts for
universal life-type insurance and investment contracts, increased to $1.4
billion. This was due to increased aggregate amounts in force and an increase in
average interest credited rates.
Risk management
The Company primarily invests in fixed income securities over a broad range of
maturities for the purpose of providing fixed annuity clients with a competitive
rate of return on their investments while minimizing risk, and to provide a
dependable and targeted spread between the interest rate earned on investments
and the interest rate credited to clients' accounts. The Company does not invest
in securities to generate trading profits.
The Company has an investment committee that holds regularly scheduled meetings
and, when necessary, special meetings. At these meetings, the committee reviews
models projecting different interest rate scenarios and their impact on
profitability. The objective of the committee is to structure the investment
security portfolio based upon the type and behavior of products in the liability
portfolio so as to achieve targeted levels of profitability.
Rates credited to clients' accounts are generally reset at shorter intervals
than the maturity of underlying investments. Therefore, margins may be
negatively impacted by increases in the general level of interest rates. Part of
the committee's strategy includes the purchase of some types of derivatives,
such as interest rate caps and swaps, for hedging purposes. These derivatives
protect margins by increasing investment returns if there is a sudden and severe
rise in interest rates, thereby mitigating the impact of an increase in rates
credited to clients' accounts.
The amount of the fee income the Company receives is based upon the daily market
value of the separate account and mutual fund assets. As a result, the Company's
fee income could be impacted significantly by a decline in the equity markets.
Another part of the committee's strategy is to enter into index option collars
(combinations of puts and calls) for hedging purposes. These derivatives protect
fee income by providing option income when there is a significant decline in the
equity markets, which mitigates the impact of the corresponding decline in
separate account and mutual fund assets. The Company finances the cost of this
protection through selling a portion of the upside potential from an increasing
market through written options.
<PAGE>
Liquidity and capital resources
The liquidity requirements of the Company are met by funds provided by premiums,
investment income, proceeds from sales of investments as well as maturities and
periodic repayments of investment principal.
The primary uses of funds are policy benefits, commissions and operating
expenses, policy loans, dividends and investment purchases.
The Company has an available line of credit with its parent aggregating $100
million. The line of credit is used strictly as short-term sources of funds. No
borrowings were outstanding under the agreement at Dec. 31, 1997. At Dec. 31,
1997, outstanding reverse repurchase agreements totaled $163 million.
At Dec. 31, 1997, investments in fixed maturities comprised 83% of the Company's
total invested assets. Of the fixed maturity portfolio, approximately 40% is
invested in GNMA, FNMA and FHLMC mortgage-backed securities which are considered
AAA/Aaa quality.
At Dec. 31, 1997, approximately 11% of the Company's investments in fixed
maturities were below investment grade bonds. These investments may be subject
to a higher degree of risk than the investment grade issues because of the
borrower's generally greater sensitivity to adverse economic conditions, such as
recession or increasing interest rates, and in certain instances, the lack of an
active secondary market. Expected returns on below investment grade bonds
reflect consideration of such factors. The Company has identified those fixed
maturities for which a decline in fair value is determined to be other than
temporary, and has written them down to fair value with a charge to earnings.
At Dec. 31, 1997, net unrealized appreciation on fixed maturities held to
maturity included $445 million of gross unrealized appreciation and $17 million
of gross unrealized depreciation. Net unrealized appreciation on fixed
maturities available for sale included $399 million of gross unrealized
appreciation and $37 million of gross unrealized depreciation.
At Dec. 31, 1997, the Company had an allowance for losses for mortgage loans
totaling $39 million and for real estate investments totaling $6 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. The Company established an asset for guaranty association assessments
paid to those states allowing a reduction in future premium taxes over a
reasonable period of time. The asset is being amortized as premium taxes are
reduced. The Company has also estimated the potential effect of future
assessments on the Company's financial position and results of operations and
has established a reserve for such potential assessments. The Company has not
adopted Statement of Position 97-3 providing guidance when an insurer should
recognize a liability for guaranty fund assessments. The SOP is effective for
fiscal years beginning after Dec. 15, 1998. Adoption will not have a material
impact on the Company's results of operations or financial condition.
<PAGE>
In the first quarter of 1998, the Company paid a $60 million dividend to its
parent. In 1997, dividends paid to its parent were $200 million.
The National Association of Insurance Commissioners has established risk-based
capital standards to determine the capital requirements of a life insurance
company based upon the risks inherent in its operations. These standards require
the computation of a risk-based capital amount which is then compared to a
company's actual total adjusted capital. The computation involves applying
factors to various statutory financial data to address four primary risks: asset
default, adverse insurance experience, interest rate risk and external events.
These standards provide for regulatory attention when the percentage of total
adjusted capital to authorized control level risk-based capital is below certain
levels. As of Dec. 31, 1997, the Company's total adjusted capital was well in
excess of the levels requiring regulatory attention.
Year 2000 issue
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company. All of the
systems used by the Company are maintained by AEFC and are utilized by multiple
subsidiaries and affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with systems of
third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. AEFC's goal is to complete internal
remediation and testing of each system by the end of 1998 and to continue
compliance efforts through 1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third parties
whose system failures could have an impact on the Company's operations. The
potential materiality of any such impact is not known at this time.
Segment information
The Company's operations consist of two business segments: Individual and group
life, disability income and long-term care insurance; and fixed and variable
annuity products designed for individuals, pension plans, small businesses and
employer-sponsored groups. The Company is not dependent upon any single customer
and no single customer accounted for more than 10% of revenue in 1997, 1996 or
1995. Additionally, no single distributor accounted for more than 10% of
premiums received in 1997, 1996 or 1995. (See Note 10, Segment information, in
the "Notes to Consolidated Financial Statements".)
<PAGE>
Reinsurance
Reinsurance arrangements are used to reduce exposure to large losses. The
maximum amount of risk retained by the Company 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,
1997, traditional life and universal life-type insurance in force aggregated $75
billion, of which $4 billion was reinsured.
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 $27 billion at Dec. 31, 1997,
34% was invested in mortgage-backed securities, 48% in corporate and other
bonds, 14% in primary mortgage loans on real estate, 2% in policy loans and the
remaining 2% in other investments.
Competition
IDS Life is engaged in a business that is highly competitive due to the large
number of stock and mutual life insurance companies and other entities marketing
insurance products. There are over 1,700 stock, mutual and other types of
insurers in the life insurance business. Best's Insurance Reports, Life Health
edition, 1997, assigned IDS Life one of its highest classifications, A+
(Superior).
Employees
As of Dec. 31, 1997, IDS Life and its subsidiaries had 303 employees; including
245 employed at the corporate office in Minneapolis, MN, 8 employed at American
Centurion Life Assurance Company located in Albany, NY and 50 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, American Express Financial Corporation. IDS Life reimburses American
Express 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.
<PAGE>
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.
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*
David R. Hubers
Born in 1943
Director since September 1989; president and chief executive officer, AEFC,
since August 1993, and director since January 1984. Senior vice president,
Finance and chief financial officer, AEFC, from January 1984 to August 1993.
Richard W. Kling
Born in 1940
Director since February 1984; president since March 1994. Executive vice
president, Marketing and Products from January 1988 to March 1994. Senior vice
president, AEFC, since May 1994. Director of IDS Life Series Fund, Inc. and
member of the board of managers and president of IDS Life Variable Annuity Funds
A and B.
Paul F. Kolkman
Born in 1946
Director since May 1984; executive vice president since March 1994; vice
president, Finance from May 1984 to March 1994; vice president, AEFC, since
January 1987. Vice president and chief actuary of IDS Life Series Fund, Inc.
<PAGE>
James A. Mitchell
Born in 1941
Chairman of the board since March 1994; director since July 1984; chief
executive officer since November 1986; president from July 1984 to March 1994;
executive vice president, AEFC, since March 1994; director, AEFC, since July
1984; senior vice president, AEFC, from July 1984 to March 1994.
Barry J. Murphy
Born in 1951
Director and executive vice president, Client Service, since March 1994; senior
vice president, AEFC, since May 1994; senior vice president, Travel Related
Services (TRS), a subsidiary of American Express Company, from July 1992 to
April 1994; vice president, TRS, from November 1989 to July 1992.
Stuart A. Sedlacek
Born in 1957
Director and executive vice president, Assured Assets since March 1994; vice
president, AEFC, since September 1988.
Officers other than directors*
Jeffrey S. Horton
Born in 1961
Vice president and treasurer since December 1997; vice president and corporate
treasurer, AEFC, since December 1997; controller, American Express Technologies
Financial Services, AEFC, from July 1997 to December 1997; controller, Risk
Management Products, AEFC, from May 1994 to July 1997; director of finance and
analysis, Corporate Treasury, AEFC, from June 1990 to May 1994.
William A. Stoltzmann
Born in 1948
Vice president, general counsel and secretary since 1989; vice president and
assistant general counsel, AEFC, since November 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 1997 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 1997.
<PAGE>
Name of individual or Cash
number in group Position held compensation
- -------------------- -----------------------------------------------------------
Five most highly $8,616,958
compensated executive
officers as a group:
James A. Mitchell Chairman of the Board and
Chief Executive Officer
Richard W. Kling President
Pamela J. Moret Exec. Vice President, Variable
Assets
Barry J. Murphy Exec. Vice President, Client
Service
Stuart A. Sedlacek Exec. Vice President, Assured
Assets
All executive officers as $12,523,043
a group (10)
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, American Express Financial Corporation. The
percentage of shares of American Express Financial Corporation owned by any
director, and by all directors and officers of IDS Life as a group, does not
exceed 1% of the class outstanding.
Legal proceedings and opinion
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against IDS Life and its parent, AEFC. A second action was filed in
March 1997. The plaintiffs purport to represent a class consisting of all
persons who replaced existing IDS Life policies with new IDS Life policies from
and after January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and seek to establish a claims resolution facility for the
determination of individual issues.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not a party to, nor are any of its
properties the subject of, any pending legal proceedings which would have a
material adverse effect on its consolidated financial condition.
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.
<PAGE>
Experts
The consolidated financial statements of IDS Life Insurance Company at December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, appearing in this prospectus and registration statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the registration statement, and is
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
<PAGE>
Appendix A
Partial surrender illustration
Involving a surrender charge and a market value adjustment
Annuity assumptions:
Single payment $10,000
Guarantee period 10 years
Guarantee rate (ig) 6% effective annual yield
End of contract year
Contract Surrender accumulation values
year charge % if no surrenders
- --------------------------------------------------------------------------
1 8% $10,600.00
2 7 11,236.00
3 6 11,910.16
4 5 12,624.77
5 4 13,382.26
6 3 14,185.19
7 2 15,036.30
8 1 15,938.48
9 0 16,894.79
10 0 17,908.48
Partial surrender assumptions:
On the first day of your 4th contract year you request a partial surrender of:
Example I - $2,000 of your accumulation value
Example II - A $2,000 net surrender check
You may surrender 10% of $11,910.16 (end of 3rd contract year accumulation
value) without surrender charge but subject to a market value adjustment -- this
is $1,191.02
The excess market adjusted value surrendered is subject to both a 5% (4th
contract year) surrender charge and a market value adjustment.
The current rate (ic) for applicable new sales and renewals = 5.5%
The number of full years left in your guarantee period (N) = 7
The number of fractional years left in your guarantee period (t) = 0
<PAGE>
Example I - $2,000 of accumulation value surrendered
What will be your market value adjustment amount?
The market adjusted value of your $2,000 partial surrender will be:
Renewal value of accumulation value surrendered
(1 + ic + .0025)(N+t)
= $2,000 (1 + ig)7
(1 + ic + .0025)7
= $2,000 (1.06)7
(1.0575)7
= $2,033.33
The market value adjustment = the market adjusted value surrendered less the
accumulation value surrendered
$2,033.33 - $2,000 = $33.33
(NOTE: This market value adjustment is positive. In other cases the market value
adjustment may be negative.)
What will be your surrender charge amount?
The surrender charge will be 5% multiplied by the excess of the market adjusted
value over the accumulation value that may be surrendered without surrender
charge:
($2,033.33 - $1,191.02) x .05 = $42.12
What net amount will you receive?
Your contract's accumulation value will decrease by $2,000 and we will send you
a check for:
Accumulation value surrendered $2,000.00
Market value adjustment 33.33
Less surrender charge (42.12)
Net surrender amount $1,991.21
Example II - $2,000 net surrender check requested
What will be the accumulation value surrendered?
Tell us if you want a specific net surrender check amount. We will work
backwards using an involved formula to determine how much accumulation value
must be surrendered to result in a net check to you for a specific amount. For a
$2,000 net check to you, the formula results in $2,009.09 of accumulation value
to be surrendered.
<PAGE>
What will be your market value adjustment amount?
The market adjusted value is:
Renewal value of accumulation value surrendered
(1 + ic + .0025)(N+t)
= $2,009.09 (1 + ig)7
(1 + ic + .0025)7
= $2,009.09 (1.06)7
(1.0575)7
= $2,042.58
The market value adjustment = the market adjusted value surrendered less the
accumulation value surrendered
$2,042.58 - $2,009.09 = $33.49
(NOTE: This market value adjustment is positive. In other cases the market value
adjustment may be negative.)
What will be your surrender charge amount?
The surrender charge will be 5% multiplied by the excess of the market adjusted
value over the accumulation value that may be surrendered without surrender
charge:
($2,042.58 - $1,191.02) x .05 = $42.58
What net amount will you receive?
Your contract's accumulation value will decrease by $2,009.09 and we will send
you a check for:
Accumulation value surrendered $2,009.09
Market value adjustment 33.49
Less surrender charge (42.58)
Net surrender amount $2,000.00
<PAGE>
Appendix B
Market value adjustment illustration
Annuity assumptions:
Single payment $50,000
Guarantee period 10 years
Guarantee rate 6% effective annual yield
Market adjustment assumptions: These examples show how the market value
adjustment may affect your contract values. The surrenders in these examples
occur one year after the contract date. There are no previous surrenders.
The accumulation value at the end of one year is $53,000. If there aren't any
surrenders, the renewal value at the end of the 10 year guarantee period will be
$89,542.38.
The market value adjustment is based on the rate we are crediting (at the time
of your surrender) on new contracts with the same length guarantee period as the
time remaining in your guarantee period. After one year, you have 9 years left
of your 10 year 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 separately after the market value adjustment.
Surrender charge calculations are shown in Appendix A.
<TABLE>
<CAPTION>
Market adjusted value formula:
Market adjusted value = (Renewal value)
(1 + ic + .0025)(N+t)
<S> <C>
Renewal value - The accumulation value at the end of the current guarantee period
ic - The current interest rate offered for new contract sales and
renewals for the number of years remaining in the guarantee period
N - The number of complete contract years to the end of the current
guarantee period
t - The fraction of the contract year remaining to the end of the
contract year
</TABLE>
<PAGE>
Example I - Downward market value adjustment
A surrender results in a downward market value adjustment when interest rates
have increased. Assume after 1 year, we are now crediting 6.5% for a new
contract with a 9 year guarantee period. If you fully surrender, the market
adjusted value would be:
Renewal value
(1 + ic + .0025)(N+t)
= $89,542.38
(1 + .065 + .0025)9
= $49,741.36
The market value adjustment is a $3,258.64 reduction of the accumulation value:
($3,258.64) = $49,741.36 - $53,000
If you surrendered half of your contract instead of all, the market adjusted
value of the surrendered portion would be one-half that of the full surrender:
$44,771.19
$24,870.68 = (1 + .065 + .0025)9
Example II - Upward market value adjustment
A surrender results in an upward market value adjustment when interest rates
have decreased more than .25%. Assume after 1 year, we are now crediting 5.5%
for a new contract with a 9 year guarantee period. If you fully surrender, the
market adjusted value would be:
Renewal value
(1 + ic + .0025)(N+t)
= $89,542.38
(1 + .055 + .0025)9
= $54,138.38
The market value adjustment is a $1,138.38 increase of the accumulation value:
$1,138.38 = $54,138.38 - $53,000
If you surrendered half of your contract instead of all, the market adjusted
value of the surrendered portion would be one-half that of the full surrender:
$44,771.19
$27,069.19 = (1 + .055 + .0025)9
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1997 and 1996 and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997. 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, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS Life Financial Information
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1997 1996
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $9,743,410; 1996, $10,521,650) $9,315,450 $10,236,379
Available for sale, at fair value (Amortized cost:
1997, $12,515,030; 199, $11,008,622) 12,876,694 11,146,845
Mortgage loans on real estate 3,618,647 3,493,364
Policy loans 498,874 459,902
Other investments 318,591 251,465
Total investments 26,628,256 25,587,955
Cash and cash equivalents 19,686 224,603
Amounts recoverable from reinsurers 205,716 157,722
Amounts due from brokers 8,400 11,047
Other accounts receivable 37,895 44,089
Accrued investment income 357,390 343,313
Deferred policy acquisition costs 2,479,577 2,330,805
Deferred income taxes, net -- 33,923
Other assets 22,700 37,364
Separate account assets 23,214,504 18,535,160
Total assets $52,974,124 $47,305,981
========= =========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $22,009,747 $21,838,008
Universal life-type insurance 3,280,489 3,177,149
Traditional life insurance 213,676 209,685
Disability income and long-term care insurance 533,124 424,200
Policy claims and other policyholders' funds 68,345 83,634
Deferred income taxes, net 61,582 --
Amounts due to brokers 381,458 261,987
Other liabilities 345,383 332,078
Separate account liabilities 23,214,504 18,535,160
Total liabilities 50,108,308 44,861,901
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 290,847 283,615
Net unrealized gain on investments 226,359 86,102
Retained earnings 2,345,610 2,071,363
Total stockholder's equity 2,865,816 2,444,080
Total liabilities and stockholder's equity $52,974,124 $47,305,981
========= =========
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 52,473 $ 51,403 $ 50,193
Disability income and long-term care insurance 154,021 131,518 111,337
Total premiums 206,494 182,921 161,530
Policyholder and contractholder charges 341,726 302,999 256,454
Management and other fees 340,892 271,342 215,581
Net investment income 1,988,389 1,965,362 1,907,309
Net realized gain (loss) on investments 860 (159) (4,898)
Total revenues 2,878,361 2,722,465 2,535,976
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,951 26,919 29,528
Universal life-type insurance
and investment contracts 92,814 85,017 71,691
Disability income and
long-term care insurance 22,333 19,185 16,259
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance 3,946 1,859 (1,315)
Disability income and
long-term care insurance 63,631 57,230 51,279
Interest credited on universal life-type
insurance and investment contracts 1,386,448 1,370,468 1,315,989
Amortization of deferred policy acquisition costs 322,731 278,605 280,121
Other insurance and operating expenses 276,596 261,468 211,642
Total benefits and expenses 2,197,450 2,100,751 1,975,194
Income before income taxes 680,911 621,714 560,782
Income taxes 206,664 207,138 195,842
Net income $ 474,247 $ 414,576 $ 364,940
======== ======== =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss)on Retained
Stock Capital on Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
Net income -- -- -- 474,247 474,247
Change in net unrealized
gain (loss) on investments -- -- 140,257 -- 140,257
Capital contribution from parent -- 7,232 -- -- 7,232
Cash dividends -- -- -- (200,000) (200,000)
Balance, Dec. 31, 1997 $3,000 $290,847 $226,359 $2,345,610 $2,865,816
===== ======= ======= ========= ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 474,247 $ 414,576 $ 364,940
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Policy loan issuance, excluding universal
life-type insurance (54,665) (49,314) (46,011)
Policy loan repayment, excluding universal
life-type insurance 46,015 41,179 36,416
Change in amounts recoverable from reinsurers (47,994) (43,335) (34,083)
Change in other accounts receivable 6,194 (4,981) 12,231
Change in accrued investment income (14,077) 4,695 (30,498)
Change in deferred policy acquisition
costs, net (156,486) (294,755) (196,963)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 112,915 97,479 85,575
Change in policy claims and other
policyholders' funds (15,289) 27,311 6,255
Change in deferred income tax provision (benefit) 19,982 (65,609) (33,810)
Change in other liabilities 13,305 46,724 (6,548)
(Accretion of discount)
amortization of premium, net (5,649) (23,032) (22,528)
Net realized (gain) loss on investments (860) 159 4,898
Policyholder and contractholder
charges, non-cash (160,885) (154,286) (140,506)
Other, net 7,161 (10,816) 3,849
Net cash provided by (used in) operating
activities $ 223,914 $ (14,005) $ 3,217
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (1,996) $ (43,751) $ (1,007,208)
Maturities, sinking fund payments and calls 686,503 759,248 538,219
Sales 236,761 279,506 332,154
Fixed maturities available for sale:
Purchases (3,160,133) (2,299,198) (2,452,181)
Maturities, sinking fund payments and calls 1,206,213 1,270,240 861,545
Sales 457,585 238,905 136,825
Other investments, excluding policy loans:
Purchases (524,521) (904,536) (823,131)
Sales 335,765 236,912 160,521
Change in amounts due from brokers 2,647 (11,047) 7,933
Change in amounts due to brokers 119,471 140,369 (105,119)
Net cash used in investing activities (641,705) (333,352) (2,350,442)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 2,785,758 3,567,586 4,189,525
Surrenders and death benefits (3,736,242) (4,250,294) (3,141,404)
Interest credited to account balances 1,386,448 1,370,468 1,315,989
Universal life-type insurance policy loans:
Issuance (84,835) (86,501) (84,700)
Repayment 54,513 58,753 52,188
Capital contribution from parent 7,232 4,801 --
Dividends paid (200,000) (165,000) (180,000)
Net cash provided by financing activities 212,874 499,813 2,151,598
Net (decrease) increase in cash and
cash equivalents (204,917) 152,456 (195,627)
Cash and cash equivalents at
beginning of year 224,603 72,147 267,774
Cash and cash equivalents at
end of year $ 19,686 $ 224,603 $ 72,147
======= ======== ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC), American Partners
Life Insurance Company and American Express Corporation.
The Company's principal products are deferred annuities and universal
life insurance, which are issued primarily to individuals. It offers
single premium and flexible premium deferred annuities on both a fixed
and variable dollar basis. Immediate annuities are offered as well.
The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including
waiver of premium and accidental death benefits). The Company also
markets disability income and long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which vary
in certain respects from reporting practices prescribed or permitted by
state insurance regulatory authorities (see Note 4).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred taxes.
<PAGE>
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment
income over the life of the contracts and payments received as a result
of these agreements are recorded as investment income when realized.
The amortized cost of interest rate caps and floors is included in
other investments. Amounts paid or received under interest rate swap
agreements are recognized as an adjustment to investment income.
During 1997, 1996 and 1995, the Company purchased and wrote index
options to protect against significant declines in fee income as a
result of a decrease in the market value of its managed assets. These
options were marked-to-market through the income statement.
During 1997, the Company purchased and wrote index options to hedge
1998 management fee and other income from separate accounts and the
underlying mutual funds. These index options are carried at market
value and are included in other investments. Gains or losses on these
instruments are deferred and recognized in management and other fees in
the same period as the hedged fee income.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost, which
approximates fair value.
<PAGE>
Supplementary information to the consolidated statements of cash flows
for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $174,472 $317,283 $191,011
Interest on borrowings 8,213 4,119 5,524
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. Under this method, profits are recognized over
the lives of the policies in proportion to the estimated gross profits
expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
received from the variable annuity and variable life insurance separate
accounts and underlying mutual funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.The deferred acquisition costs
for most single premium deferred annuities and installment annuities are
amortized in relation to accumulation values and surrender charge revenue.
The costs for universal life-type insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits
expected to be realized on the policies. For traditional life, disability
income and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
established industry mortality tables and interest rates ranging from
5% to 9.5%, depending on year of issue.
<PAGE>
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 10% over 5
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim contuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life 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 and long-term care policies are
primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $12,061
and $33,358, respectively, receivable from American Express Financial
Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management fees from the proprietary mutual funds used as investment
options for variable annuities and variable life insurance. The
Company receives mortality and expense risk fees from the separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassification
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency oblitations $41,932 $ 2,950 $ -- $ 44,881
State and municipal obligations 9,684 568 -- 10,252
Corporate bonds and obligations 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities 1,983,188 25,976 7,911 2,001,253
--------- ------ ----- ---------
$9,315,450 $445,194 $17,233 $9,743,410
========= ======= ====== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 65,291 $ 4,154 $ -- $69,445
State and municipal obligations 11,045 1,348 -- 12,393
Corporate bonds and obligations 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities 7,130,565 160,478 6,879 7,284,164
--------- ------- ----- ---------
Total fixed maturities 12,515,030 398,741 37,077 12,876,694
Equity securities 3,000 361 -- 3,361
---------- ------- ------ ----------
$12,518,030 $399,102 $37,077 $12,880,055
========== ======= ====== ==========
</TABLE>
<PAGE>
2. Investments (continued)
-----------
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
---------- ------- ------ ----------
$10,236,379 $379,609 $94,338 $10,521,650
========== ======= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
--------- ------- ------ ---------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
---------- ------- ------ ----------
$11,011,622 $231,618 $93,087 $11,150,153
========== ======= ====== ==========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 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.
<PAGE>
Amortized Fair
Held to maturity Cost Value
---------------- --------- --------
Due in one year or less $ 356,597 $360,956
Due from one to five years 1,536,239 1,619,875
Due from five to ten years 4,337,547 4,577,552
Due in more than ten years 1,101,879 1,183,774
Mortgage-backed securities 1,983,188 2,001,253
--------- ---------
$9,315,450 $9,743,410
========= =========
Amortized Fair
Available for sale Cost Value
--------- -----
Due in one year or less $ 162,663 $ 164,012
Due from one to five years 633,339 679,561
Due from five to ten years 2,418,162 2,517,098
Due in more than ten years 2,170,301 2,231,859
Mortgage-backed securities 7,130,565 7,284,164
---------- ----------
$12,515,030 $12,876,694
========== ==========
<PAGE>
2. Investments (continued)
-----------
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $229,848, $277,527 and $333,508, respectively. Net gains and losses
on these sales were not significant. The sale of these fixed
maturities was due to significant deterioration in the issuers' credit
worthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $457,585 and gross realized gains and losses of $6,639 and $7,518,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $238,905 and gross realized gains and losses of
$571 and $16,084, respectively. Fixed maturities available for sale
were sold during 1995 with proceeds of $136,825 and gross realized
gains and losses of $nil and $5,781, respectively.
At December 31, 1997, bonds carried at $14,351 were on deposit with
various states as required by law.
At December 31, 1997, investments in fixed maturities comprised 83
percent of the Company's total invested assets. These securities are
rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $2.7 billion which are rated by American
Express Financial Corporation internal analysts using criteria similar
to Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on December 31 is as follows:
Rating 1997 1996
--------- --------- ---------
Aaa/AAA $ 9,195,619 $ 9,460,134
Aaa/AA -- 2,870
Aa/AA 232,451 241,914
Aa/A 246,792 192,631
A/A 2,787,936 2,949,895
A/BBB 1,200,345 1,034,661
Baa/BBB 5,226,616 4,531,515
Baa/BB 475,084 768,285
Below investment grade 2,465,637 2,063,096
--------- ---------
$21,830,480 $21,245,001
========== ==========
At December 31, 1997, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 14 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate are as follows:
<PAGE>
December 31, 1997 December 31, 1996
------------------------ -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------- ---------- ------------ ---------- -----------
East North Central $ 748,372 $ 32,462 $ 777,960 $ 19,358
West North Central 456,934 14,340 389,285 29,620
South Atlantic 922,172 14,619 891,852 35,007
Middle Atlantic 545,601 15,507 553,869 17,959
New England 316,250 2,136 310,177 14,042
Pacific 184,917 3,204 190,770 4,997
West South Central 125,227 -- 105,173 11,246
East South Central 60,274 -- 75,176 --
Mountain 297,545 28,717 236,597 11,401
--------- ------- --------- -------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
<PAGE>
2. Investments (continued)
-----------
December 31, 1997 December 31, 1996
------------------------ -------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
--------------- ---------- ----------- ---------- -----------
Department/retail
stores $1,189,203 $ 27,314 $1,154,179 $ 68,032
Apartments 1,089,127 16,576 1,119,352 23,246
Office buildings 716,729 34,546 611,395 27,653
Industrial buildings 295,889 21,200 296,944 6,716
Hotels/motels 101,052 -- 97,870 6,257
Medical buildings 99,979 9,748 67,178 8,289
Nursing/retirement
homes 72,359 -- 88,226 1,877
Mixed Use 71,007 -- 73,120 --
Other 21,947 1,601 22,595 1,560
--------- ------- --------- ------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds the
mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreement. 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.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $45,714 and $79,441, respectively, with allowances
of $9,812 and $16,162, respectively. During 1997 and 1996, the average
recorded investment in impaired loans was $61,870 and $74,338,
respectively.
The Company recognized $2,981, $4,889 and $5,014 of interest income
related to impaired loans for the years ended December 31, 1997, 1996
and 1995 respectively.
<PAGE>
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
------ ------ ------
Balance, January 1 $37,495 $37,340 $35,252
Provision for investment losses 8,801 10,005 15,900
Loan payoffs (3,851) (4,700) (11,900)
Foreclosures (3,800) (5,150) (1,350)
Other -- -- (562)
------ ------ -------
Balance, December 31 $38,645 $37,495 $37,340
====== ====== ======
At December 31, 1997, the Company had commitments to purchase
investments other than mortgage loans for $234,485. Commitments to
purchase investments are made in the ordinary course of business. The
fair value of these commitments is $nil.
<PAGE>
2. Investments (continued)
-----------
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
--------- --------- ---------
Interest on fixed maturities $1,692,481 $1,666,929 $1,656,136
Interest on mortgage loans 305,742 283,830 232,827
Other investment income 25,089 43,283 35,936
Interest on cash equivalents 5,914 5,754 5,363
--------- --------- ---------
2,029,226 1,999,796 1,930,262
Less investment expenses 40,837 34,434 22,953
--------- --------- ---------
$1,988,389 $1,965,362 $1,907,309
========= ========= =========
Net realized gain (loss) on investments for the years ended December 31
is summarized as follows:
1997 1996 1995
------ ----- -----
Fixed maturities $ 16,115 $ 8,736 $ 9,973
Mortgage loans (6,424) (8,745) (13,259)
Other investments (8,831) (150) (1,612)
------- ----- -------
$ 860 $ (159) $ (4,898)
======= ====== ======
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
------- ------- -------
Fixed maturities available
for sale $223,441 $(231,853) $811,649
Equity securities 53 (52) 3,118
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense consists of the following:
1997 1996 1995
Federal income taxes:
Current $176,879 $260,357 $218,040
Deferred 19,982 (65,609) (33,810)
------- -------- -------
196,861 194,748 184,230
State income taxes-current 9,803 12,390 11,612
------- ------- -------
Income tax expense $206,664 $207,138 $195,842
======= ======= =======
<PAGE>
3. Income taxes (continued)
------------
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- --------------- ---------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $238,319 35.0% $217,600 35.0% $196,274 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (10,294) (1.5) (9,636) (1.5) (8,524) (1.5)
State Taxes, net of federal
benefit 6,372 0.9 8,053 1.3 7,548 1.3
Low income housing
credits (20,705) (3.0) (5,090) (0.8) (861) (0.2)
Other, net (7,028) (1.0) (3,789) (0.7) 1,405 0.3
------- ----- ------- ---- ------- ----
Federal income taxes $206,664 30.4% $207,138 33.3% $195,842 34.9%
======= ==== ======= ==== ======= ====
</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 December 31, 1997, the Company had
a policyholders' surplus account balance of $20,114. 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 $7,040 have not been
established because no distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1997 1996
---- ----
Deferred tax assets:
Policy reserves $748,204 $724,412
Life insurance guarantee
fund assessment reserve 20,101 29,854
Other 9,589 2,763
------- -------
Total deferred tax assets 777,894 757,029
------- -------
<PAGE>
Deferred tax
liabilities:
Deferred policy acquisition costs 700,032 665,685
Unrealized gain on investments 121,885 48,486
Investments, other 17,559 8,935
------- -------
Total deferred tax liabilities 839,476 723,106
------- -------
Net deferred tax (liabilities) assets $(61,582) $ 33,923
====== ======
The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not
that the Company will realize the benefit of the deferred tax assets
and, therefore, no such valuation allowance has been established.
<PAGE>
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $1,468,677 as of
December 31, 1997 and $1,261,592 as of December 31, 1996 (see Note 3
with respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1998 in excess of approximately
$331,480 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
1997 1996 1995
---------- ---------- ----------
Statutory net income $ 379,615 $ 365,585 $ 326,799
Statutory capital and surplus 1,765,290 1,565,082 1,398,649
surplus
5. Related party transactions
--------------------------
The Company loans funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $nil and
$11,800 at December 31, 1997 and 1996, respectively. This loan can be
increased to a maximum of $75,000 and pays interest at a rate equal to
the preceding month's effective new money rate for the Company's
permanent investments. Interest income on related party loans totaled
$103, $780 and $1,371 in 1997, 1996 and 1995, respectively.
The Company purchased a five year secured note from an affiliated
company which was redeemed in 1996. The interest rate on the note was
8.42 percent. Interest income on the above note totaled $1,637 and
$1,937 in 1996 and 1995, respectively.
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $201, $174
and $155 in 1997, 1996 and 1995, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $1,245, $990 and $815, respectively.
<PAGE>
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
5. Related party transactions (continued)
--------------------------
Charges by AEFC for use of joint facilities, marketing services and
other services aggregated $414,155, $397,362 and $377,139 for 1997,
1996 and 1995, respectively. Certain of these costs are included in
deferred policy acquisition costs. In addition, the Company rents its
home office space from AEFC on an annual renewable basis.
6. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $74,730,720 and $67,274,354,
respectively, of which $4,351,904 and $3,875,921 were reinsured at the
respective year ends. The Company also reinsures a portion of the
risks assumed under disability income and long-term care policies.
Under all reinsurance agreements, premiums ceded to reinsurers amounted
to $60,495, $48,250 and $39,399 and reinsurance recovered from
reinsurers amounted to $19,042, $15,612, and $14,088 for the years
ended December 31, 1997, 1996 and 1995, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers
in jurisdictions in which the Company and its subsidiaries do business
involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. In December 1996, an
action of this type was brought against the Company and its parent,
AEFC. A second action was filed in March, 1997. The plaintiffs
purport to represent a class consisting of all persons who replaced
existing Company policies with new Company policies from and after
January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties
and alleged violations of consumer fraud statutes. Plaintiffs seek
damages in an unspecified amount and seek to establish a claims
resolution facility for the determination of individual issues. The
Company and its parent believe they have meritorious defenses to the
claims raised in the lawsuit. The outcome of any litigation cannot be
predicted with certainty. In the opinion of management, however, the
ultimate resolution of the above lawsuit and others filed against the
Company should not have a material adverse effect on the Company's
consolidated financial position.
The IRS routinely examines the Company's federal income tax returns,
and is currently auditing the Company's returns for the 1990 through
1992 tax years. Management does not believe there will be a material
adverse effect on the Company's consolidated financial position as a
result of this audit.
7. Lines of credit
---------------
The Company has an available line of credit with its parent aggregating
$100,000. The rate for the line of credit is the parent's cost of
funds, ranging from 20 to 45 basis points over the established index.
Borrowings outstanding under this agreement were $nil at
December 31, 1997 and 1996.
<PAGE>
8. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk and equity
market risk, including hedging specific transactions. The Company does
not hold derivative instruments for trading purposes. The Company
manages risks associated with these instruments as described below.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate or
equity market index. The Company is not impacted by market risk
related to derivatives held for non-trading purposes beyond that
inherent in cash market transactions. Derivatives held for purposes
other than trading are largely used to manage risk and, therefore, the
cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty, and
requiring collateral, where appropriate. A vast majority of the
Company's counterparties are rated A or better by Moody's and Standard
& Poor's.
Credit risk related to interest rate caps and floors and index options
is measured by the replacement cost of the contracts. The replacement
cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit risk.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- -------- -------- ----- ------------
Assets:
Interest rate caps $ 4,600,000 $ 24,963 $ 15,665 $ 15,665
Interest rate floors 1,000,000 1,561 4,551 4,551
Put index options 221,984 11,120 11,120 11,120
Liabilities:
Call index options 221,984 (8,273) (8,273) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (45,799) --
--------- ------ ------ ------
$29,371 $(22,736) $31,336
====== ====== ======
Notional Carrying Fair Total Credit
December 31, 1996 Amount Amount Value Exposure
Assets:
Interest rate caps $4,000,000 $ 16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Off balance sheet:
Interest rate swaps 1,000,000 -- (24,715) --
--------- ------ -------- ------
$18,268 $(12,935) $11,780
====== ====== ======
<PAGE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and
floors expire on various dates from 1998 to 2003. The interest rate
swaps expire on various dates from 2000 to 2003. All put and call
options expire in 1998.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Index options are used to manage the equity market risk related to the
fee income that the Company receives from its separate accounts and the
underlying mutual funds. The amount of the fee income received is
based upon the daily market value of the separate account and mutual
fund assets. As a result, the Company's fee income could be impacted
significantly by changing economic conditions in the equity market.
The Company entered into index option collars (combination of puts and
calls) to hedge anticipated fee income for 1998 related to separate
accounts and mutual funds which invest in equity securities. Testing
has demonstrated the impact of these instruments on the income
statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation
no longer exists, or in the event the Company disposes of the index
options collars, the instruments will be marked-to-market through the
income statement. At December 31, 1997, deferred gains on purchased
put index options were $11,120 and deferred losses on written call
index options were $8,273.
9. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations and all
non-financial instruments, such as deferred acquisition costs are
excluded. Off-balance sheet intangible assets, such as the value of
the field force, are also excluded. Management believes the value of
excluded assets and liabilities is significant. The fair value of the
Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -------- ------ ------- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $9,315,450 $9,743,410 $10,236,379 $10,521,650
Available for sale 12,876,694 12,876,694 11,146,845 11,146,845
Mortgage loans on
real estate (Note 2) 3,618,647 3,808,570 3,493,364 3,606,077
Other:
Equity securities (Note 2) 3,361 3,361 3,308 3,308
Derivative financial
instruments (Note 8) 37,644 31,336 18,268 11,780
Other 82,347 85,383 63,993 66,242
Cash and
cash equivalents (Note 1) 19,686 19,686 224,603 224,603
Separate account assets
(Note 1) 23,214,504 23,214,504 18,535,160 18,535,160
<PAGE>
Financial Liabilities
Future policy benefits
for fixed annuities 20,731,052 19,882,302 20,641,986 19,721,968
Derivative financial
instruments (Note 8) (8,273) (54,072) -- (24,715)
Separate account liabilities 21,488,282 20,707,620 17,358,087 16,688,519
</TABLE>
<PAGE>
9. Fair values of financial instruments (continued)
------------------------------------
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,185,155 and $1,112,155,
respectively, and policy loans of $93,540 and $83,867, respectively.
The fair value of these benefits is based on the status of the
annuities at December 31, 1997 and 1996. The fair value of deferred
annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in
non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in
1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $1,726,222 and $1,177,073, respectively.
10. Segment information
-------------------
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income and long-term
care insurance, and second, annuity products designed for individuals,
pension plans, small businesses and employer-sponsored groups. The
consolidated condensed statements of income for the years ended
December 31, 1997, 1996 and 1995 and total assets at December 31, 1997,
1996 and 1995 by segment are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net investment income:
Life, disability income
and long-term care insurance $ 269,874 $ 262,998 $ 256,242
Annuities 1,718,515 1,702,364 1,651,067
--------- --------- ---------
$ 1,988,389 $ 1,965,362 $ 1,907,309
========= ========= =========
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 514,838 $ 448,389 $ 384,008
Annuities 374,274 308,873 249,557
------- ------- -------
$ 889,112 $ 757,262 $ 633,565
======= ======= =======
Income before income taxes:
Life, disability income
and long-term care insurance $ 178,717 $ 161,115 $ 125,402
Annuities 501,334 460,758 440,278
Net gain (loss) on investments 860 (159) (4,898)
------- ------- -------
$ 680,911 $ 621,714 $ 560,782
======= ======= =======
<PAGE>
Total assets:
Life, disability income
and long-term care insurance $ 8,193,796 $ 7,028,906 $ 6,195,870
Annuities 44,780,328 40,277,075 36,704,208
---------- ---------- ----------
$52,974,124 $47,305,981 $42,900,078
========== ========== ==========
</TABLE>
<PAGE>
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.
11. Year 2000 Issue (unaudited)
---------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been conducted to
identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each
system by the end of 1998 and to continue compliance efforts through
1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
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 IDS Life Insurance Company requires 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 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."
The parent company of IDS Life Insurance Company maintains an insurance
policy which affords liability coverage to directors and officers of IDS Life
Insurance Company while acting in that capacity. IDS Life Insurance Company pays
its proportionate share of the premiums for the policy.
<PAGE>
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
1. - 2.Not applicable.
3.1 Copy of Certificate of Incorporation of IDS Life Insurance
Company filed electronically as Exhibit 3.1 to Post-Effective
Amendment No. 5 to Registration Statement No. 33-28976 is
incorporated herein by reference.
3.2 Copy of the Amended By-laws of IDS Life Insurance Company filed
electronically as Exhibit 3.2 to Post-Effective Amendment No. 5
to Registration Statement No. 33-28976 is incorporated herein by
reference.
3.3 Copy of Resolution of the Board of Directors of IDS Life
Insurance Company, dated May 5, 1989, establishing IDS Life
Account MGA filed electronically as Exhibit 3.3 to Post-Effective
Amendment No. 5 to Registration Statement No. 33-28976 is
incorporated herein by reference.
4.1 Copy of Non-tax qualified Group Annuity Contract, Form 30363C,
filed electronically as Exhibit 4.1 to Post-Effective Amendment
No. 5 to Registration Statement No. 33-28976 is incorporated
herein by reference.
4.2 Copy of Non-tax qualified Group Annuity Certificate, Form 30360C,
filed electronically as Exhibit 4.2 to Post-Effective Amendment
No. 5 to Registration Statement No. 33-28976 is incorporated
herein by reference.
4.3 Copy of Endorsement No. 30340C-GP to the Group Annuity Contract
filed electronically as Exhibit 4.3 to Post-Effective Amendment
No. 5 to Registration Statement No. 33-28976 is incorporated
herein by reference.
<PAGE>
4.4 Copy of Endorsement No. 30340C to the Group Annuity Certificate
filed electronically as Exhibit 4.4 to Post-Effective Amendment
No. 5 to Registration Statement No. 33-28976 is incorporated
herein by reference.
4.5 Copy of Tax qualified Group Annuity Contract, Form 30369C, filed
electronically herewith.
4.6 Copy of Tax qualified Group Annuity Certificate, Form 30368C,
filed electronically herewith.
4.7 Copy of Group IRA Annuity Contract, Form 30372C, filed
electronically herewith.
4.8 Copy of Group IRA Annuity Certificate, Form 30371C, filed
electronically herewith.
4.9 Copy of Non-tax qualified Individual Annuity Contract, Form
30365D, filed electronically herewith.
4.10 Copy of Endorsement No. 30379 to the Individual Annuity Contract,
filed electronically herewith.
4.11 Copy of Tax qualified Individual Annuity Contract, Form 30370C,
filed electronically herewith.
4.12 Copy of Individual IRA Annuity Contract, Form 30373C, filed
electronically herewith.
5. Copy of Opinion of Counsel regarding legality of Contracts, dated
Oct. 3, 1990, filed electronically as Exhibit 5 to Post-Effective
Amendment No. 5 to Registration Statement No. 33-28976 is
incorporated herein by reference.
6.-20. Not applicable.
21. Copy of List of Subsidiaries filed electronically as Exhibit 22
to Post-Effective Amendment No. 8 to Registration Statement No.
33-28976 is incorporated herein by reference.
22. Not applicable.
23. Consent of Independent Auditors, filed electronically herewith.
24.1 Power of Attorney, dated August 19, 1997, filed electronically
herewith.
24.2 Power of Attorney, dated April 9, 1998, filed electronically
herewith.
<PAGE>
25.-27. Not applicable.
(b) Financial Statement Schedules
Schedule I - Consolidated Summary of Investments Other than
Investments in Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors dated February 5, 1998.
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:
(1) 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,
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time may be deemed to be the initial bona fide offering
thereof,
(3) 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
(4) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
<PAGE>
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>
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 14th day of April, 1998.
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 14th day of April, 1998.
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/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/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
/s/ Philip C. Wentzel** Vice President and Controller
Philip C. Wentzel
<PAGE>
*Signed pursuant to Power of Attorney dated August 19, 1997, filed
electronically herewith as Exhibit 24.1 for IDS Life Insurance Company (IDS Life
Account MGA).
**Signed pursuant to Power of Attorney dated April 9, 1998, filed electronically
herewith as Exhibit 24.2 for IDS Life Insurance Company (IDS Life Account MGA).
By:
__________________________________
Bruce A. Kohn
<PAGE>
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, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, and have issued our report thereon dated
February 5, 1998 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in the index to financial
statement schedules of 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 LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------
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:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,829,112 $ 1,846,833 $ 1,829,112
States, municipalities and
political subdivisions 9,684 10,252 9,684
All other corporate bonds (b) 7,476,654 7,886,325 7,476,654
------------ ---------- ----------
Total held to maturity 9,315,450 9,743,410 9,315,450
Available for sale:
United States Government and
government agencies and
authorities (c) 6,798,425 6,944,942 6,944,942
States, municipalities and
political subdivisions 11,045 12,393 12,393
All other corporate bonds (d) 5,705,560 5,919,359 5,919,359
------------ ---------- ----------
Total available for sale 12,515,030 12,876,694 12,876,694
Mortgage loans on real estate 3,618,647 XXXXXXXXX 3,618,647
Policy loans 498,874 XXXXXXXXX 498,874
Other investments 318,591 XXXXXXXXX 318,591
------------ ----------
Total investments $ 26,266,592 $ XXXXXXXXX $ 26,628,256
============ ========== ==========
(a) - Includes mortgage-backed securities with a cost and market value of $1,787,180 and $1,801,952,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $196,008 and $199,301,
respectively.
(c) - Includes mortgage-backed securities with a cost and market value of $6,733,134 and $6,875,498,
respectively.
(d) - Includes mortgage-backed securities with a cost and market value of $397,431 and $408,667,
respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($
thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,453,441 $ 22,009,747 $ - $ 35,007 $ - $1,718,515 $ 1,720 $229,729 $262,680 N/A
Life, DI, and
Long-term Care
Insurance 1,026,136 4,027,289 - 33,338 206,494 269,874 209,955 93,002 13,916 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 2,479,577 $ 26,037,036 $ - $ 68,345 $ 206,494 $ 1,988,389 $ 211,675 $322,731 $276,596 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,398,025 $ 21,838,008 $ - $ 50,137 $ - $1,702,364 $ 2,724 $ 189,645 $ 180,942 N/A
Life, DI, and
Long-term
Care Insurance 932,780 3,811,034 - 33,497 182,921 262,998 187,486 88,960 80,526 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,330,805 $ 25,649,042 $ - $ 83,634 $ 182,921 $1,965,362 $ 190,210 $ 278,605 $ 261,468 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,227,169 $ 21,404,836 $ - $ 28,191 $ - $1,651,067 $ 2,693 $ 189,626 $ 166,191 N/A
Life, DI,
and Long-term
Care Insurance 798,556 3,613,253 - 28,132 161,530 256,242 164,749 90,495 45,451 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,025,725 $ 25,018,089 $ - $ 56,323 $ 161,530 $1,907,309 $ 167,442 $ 280,121 $ 211,642 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------------------------
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, 1997
Life insurance in force $ 73,119,122 $ 4,351,904 $ 1,611,596 $ 70,378,814 2.29%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 55,094 $ 3,124 $ 503 $ 52,473 0.96%
DI & LTC insurance 196,799 42,778 -- 154,021 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 251,893 $ 45,902 $ 503 $ 206,494 0.24%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
Life insurance in force $ 65,571,173 $ 3,875,921 $ 1,703,181 $ 63,398,433 2.69%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 54,111 $ 3,253 $ 545 $ 51,403 1.06%
DI & LTC insurance 164,561 33,043 -- 131,518 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 218,672 $ 36,296 $ 545 $ 182,921 0.30%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1995
Life insurance in force $ 57,895,180 $ 3,771,204 $ 1,788,352 $ 55,912,328 3.20%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 53,089 $ 2,648 $ (248) $ 50,193 -0.49%
DI & LTC insurance 137,016 25,679 -- 111,337 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 190,105 $ 28,327 $ (248) $ 161,530 -0.15%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------------------------------
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, 1997
- ----------------------------
Reserve for Mortgage Loans $37,495 $8,801 $0 $7,651 $38,645
Reserve for Other Investments $3,963 $2,100 $0 $0 $6,063
For the year ended
December 31, 1996
- ----------------------------
Reserve for Mortgage Loans $37,340 $10,005 $0 $9,850 $37,495
Reserve for Other Investments $4,713 ($750) $0 $0 $3,963
For the year ended
December 31, 1995
- ----------------------------
Reserve for Mortgage Loans $35,252 $15,900 $0 $13,812 $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
* 1997, 1996 and 1995 amounts represent $7,651, $9,850, and $13,812, respectively, for loan
payoffs and foreclosures.
</TABLE>
<PAGE>
IDS Life Account MGA
Registration No. 33-28976
EXHIBIT INDEX
Exhibit 4.5 Tax qualified Group Annuity Contract Form 30369C
Exhibit 4.6 Tax qualified Group Annuity Certificate Form 30368C
Exhibit 4.7 Group IRA Annuity Contract Form 30372C
Exhibit 4.8 Group IRA Annuity Certificate Form 30371C
Exhibit 4.9 Non-tax qualified Individual Annuity Contract Form 30365D
Exhibit 4.10 Endorsement No. 30379 to the Individual Annuity Contract
Exhibit 4.11 Tax qualified Individual Annuity Contract Form 30370C
Exhibit 4.12 Individual IRA Annuity Contract, Form 30373C
Exhibit 23 Consent of Independent Auditors
Exhibit 24.1 Power of Attorney dated August 19, 1997
Exhibit 24.2 Power of Attorney dated April 9, 1998
<PAGE>
GROUP ANNUITY CONTRACT
o Purchase payments are payable in a single sum.
o Annuity payments begin on the settlement date.
o This contract is nonparticipating. Dividends are not payable.
Contract Holder: Bank of New England - Old Colony, N.A., Trustee
Contract Number: 30369C-GP1
Contract Date: November 23, 1990
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.
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
certificate guarantee period.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the contract date shown above.
President:
/s/ James A. Mitchell
James A. Mitchell
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30369C
<PAGE>
CONTRACT DATA
GROUP CONTRACTHOLDER: Bank of New England - GROUP
Old Colony, N.A., CONTRACT
Trustee of the Market NUMBER: 30369C-GP1
Value Annuity Trust
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Participant's Certificate Years as measured from the
Period beginning of a Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth certificate
anniversary.
There are no surrender charges on the last day of a guarantee period.
There will never be surrender charges beyond the eighth certificate anniversary.
30369C
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Guide to Contract Provisions
Definitions Important words and meanings/Page 4
The Annuity Contract Entire contract; Modification; Incontestability;
Misstatement of birthdate/Page 6
Contractholder and Owner Contractholder; Owner's rights; Change of ownership
restricted/Page 7
Beneficiary and Payments to Who is the beneficiary; Change of beneficiary;
Beneficiary Payments to beneficiary/Page 8
Purchase Payment Payment of the purchase payment/Page 9
Accumulation Value, How the accumulation value is determined;
Cash Surrender Value, How the market adjusted value is determined; and Market Adjusted Value
Surrender of the certificate for the cash surrender value;
TSA prohibited distributions; Annual statement of
value/Page 10
Annuity Payment Plans When annuity payments begin; Different ways to receive
annuity payments/Page 14
Table of Settlement Rates Table showing monthly annuity payment amounts for the
various plans/Page 16
</TABLE>
30369C
<PAGE>
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.
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 this contract.
we, our, us
IDS Life Insurance Company
certificate date
It is the date from which certificate anniversaries, certificate years, and
certificate months are determined. The certificate date is shown under
certificate data, in the certificate.
certificate anniversary
The same day and month as the certificate date each year that the certificate
remains in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under certificate data, in the certificate.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under certificate data, in the
certificate.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the contract.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
renewal date
The first day of a renewal guarantee period. It will always be on a certificate
anniversary.
30369C
<PAGE>
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by the owner and delivered to us at our home office.
settlement
The application of the market adjusted value of a certificate to provide annuity
payments.
settlement date
The date on which annuity payments are to begin under a certificate. This date
may be changed as provided in the 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.
TSA
A Tax Sheltered Annuity as described in Section 403(b) of the Code.
30369C
<PAGE>
The Annuity Contract
What is the entire contract?
The entire contract consists of this Group 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.
In issuing the certificates, we have relied upon the applications. The
statements contained in the applications are, in the absence of fraud,
considered representations and not warranties. No statements made in connection
with the applications will be used by us to void the contract or to deny a claim
unless that statement is part of the applications.
Can this contract be modified?
This contract may be modified at any time by written agreement between the
contractholder and us. The modification must be signed by one of our corporate
officers (President, Vice President, Secretary or Assistant Secretary). No
modification will affect the amount or term of any certificates issued before
the effective date of the modification unless it is required to conform the
contract to, or give the contractholder the benefit of, any Federal or State
statutes.
We reserve the right to modify this contract to the extent necessary to qualify
a certificate issued under this contract, if purchased as part of a qualified
plan under Section 401 or 403 of the Code, or purchased as part of a deferred
compensation plan under Section 457 of the Code, as part of such a plan as
described in Sections 401, 403 or 457 of the Code or under any other applicable
section of the Code.
When will the certificate become incontestable?
After the certificate has been in force during the annuitant's lifetime for two
years from the date of issue, we cannot contest the certificate.
What if the annuitant's birthdate has been misstated?
If the annuitant's birthdate has been misstated, payments under the certificate
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.
30369C
<PAGE>
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.
Contractholder and Owner
Who is the Group Contractholder?
The group contractholder is listed on the cover 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 owners of the certificates?
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.
What are the rights of the owner if the owner is a trust or custodial account?
If the owner is a tax qualified trust or tax qualified custodial account, then
the trustees or custodians (or their successors) properly named by the trust or
custodial agreement may exercise all rights and privileges provided in the
certificate or allowed by us.
Can the ownership of the certificate be changed?
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
the applicable Sections 401, 403, 457 or other applicable sections of the Code.
However, if the owner is the trustee of a tax-qualified trust or the custodian
of a tax-qualified custodian account, the owner may transfer ownership of the
certificate to the annuitant or to a qualified successor trustee or custodian if
permitted by the Code.
Or, if the owner is a trust or custodian or an employer as part of a qualified
plan under Section 401 or 403 or a deferred compensation plan under Section 457
of the Code, the owner may transfer ownership of the certificate to the
annuitant if permitted by the Code.
Any permitted transfers must be 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 subject to any action taken or payment made by us before the
recording.
30369C
<PAGE>
Beneficiary and Payments
To Beneficiary
What death benefits are paid if the annuitant or certificate owner dies before
settlement?
If the annuitant or owner dies before settlement while the certificate is in
force, we will pay the beneficiary:
1. the greater of the market adjusted value or the purchase payment adjusted for
any surrenders (if death occurred before the annuitant attaining age 75);
otherwise
2. the market adjusted value (if death occurred on or after the annuitant's age
75).
The market adjusted value will be determined as of the date on which due proof
of death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code, and:
1. the beneficiary elects the plan within 60 days after we receive due proof of
death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides equal or substantially equal payments over a period which
does not exceed the life of the beneficiary or the life expectancy of the
beneficiary.
In this event, the reference to "annuitant" in the annuity payment plans section
will 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 survive, 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.
30369C
<PAGE>
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
owner's 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 owner's request, subject to any action taken
or payment made by us before the recording.
What is the spouse's option to continue the certificate?
If the annuitant's death occurs before the settlement date and before the
annuitant's age 70-1/2, the annuitant's spouse, if designated as sole
beneficiary, may elect in writing to postpone receipt of the death benefit and
instead continue the certificate in force. The election by the spouse must be
made within 60 days after we receive due proof of death. The certificate may be
continued in force only until the date on which the annuitant would have
attained age 70-1/2. Any annuity payment plan later elected by the spouse must
provide 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.
Purchase Payment
What is the purchase payment for a certificate?
The purchase payment for a certificate is shown under certificate data on the
certificate, It is payable to us on or before the date we deliver the
certificate. It must be paid or mailed to us at our home office or to an
authorized agent.
30369C
<PAGE>
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
How is the accumulation value determined?
On the certificate date the accumulation value of the certificate is the
purchase payment. Thereafter interest accrues from day to day for the guarantee
periods initially at the rate shown under certificate data in the certificate
and later at the renewal rate(s). These rates represent an effective annual
yield. At no time while the certificate is in force shall interest accrue at a
rate less than 3% compounded annually. The accumulation value will be adjusted
for any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of the
certificate 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 we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period a renewal guarantee period will begin. We
will notify the owner in writing 45 days before the renewal guarantee period.
Each renewal guarantee period will be one year unless the owner elects a
different length from those offered at the time. We must receive the owner's
written request at least 15 days before the renewal date. The renewal guarantee
period may never extend beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request within 45 days of
the renewal guarantee period, we will notify the owner of the renewal guarantee
rate then in effect for certificates renewing at that time. The actual renewal
guarantee rate will be determined on the renewal date.
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new certificate sales and
renewals (Form 30368) for the time remaining in the certificate's current
guarantee period; and
30369C
<PAGE>
2. the guaranteed interest rate applicable to the certificate's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of the
owner's current guarantee period.
N = the number of complete certificate years
to the end of the owner's guarantee
period.
t = the fraction of the certificate year
remaining to the end of the owner's
certificate year (for example, if 180 days
remain in a 365 day certificate year, t
would be .493)
ic = the current rate offered for new
certificate sales and renewals (Form
30368) for the number of years left in the
owner's guarantee period straight line
interpolation between whole year rates).
If N is zero, ic is the rate for one year
guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
There will be no market value adjustment made on the last day of a guarantee
period.
Can the owner request surrender of any amounts under the certificate before
settlement?
Yes. By written request to us and subject to the rules below the owner may:
1. surrender the certificate for the total cash surrender value;
2. partially surrender the certificate for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the certificate year
in which the surrender is made. The schedule of surrender charges is shown under
certificate data in the certificate.
<PAGE>
After the first certificate anniversary, surrender charges will not apply to
surrenders of amounts totalling up to 10% of the certificate accumulation value
as of the last certificate anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the certificate on the
date of surrender. The owner may surrender all or a portion of the cash
surrender value. However, the accumulation value that remains after a partial
surrender must be at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to the owner within seven days of
the receipt of the owner's written request.
Upon surrender of the certificate for the total cash surrender value, the
certificate will terminate. We may require that the owner return the certificate
to our home office before we pay the total cash surrender value.
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 annuitant has:
1. attained age 59-1/2; or
2. separated from service: or
3. dies; 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
6 months from the date we receive the owner's surrender request or the period
permitted by state insurance law, if less. If we defer payment more than 30
days, we will pay annual interest of at least 3% on the amount deferred.
30369C
<PAGE>
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 cash surrender value of the certificate. The
statement will specify the surrender charge and market value adjustment used to
determine the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify the owner 45 days before the end of a guarantee period
concerning renewal periods available and the owner's right to surrender without
a market value adjustment on the last day of the guarantee period.
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 that the owner exchange the certificate for a supplemental contract
which provides the annuity payments.
Can the owner change the settlement date?
Yes. The owner must tell us the new date by written request. If the owner
selects a new date it must be at least 30 days after we receive the owner's
written request at our home office.
The settlement date cannot be earlier or later than such date as may be required
or permitted by law or the applicable retirement plan.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the certificate anniversary nearest the annuitant's 85th birthday; or
2. the 10th certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
Plan A - This provides monthly annuity payments for the lifetime of the
annuitant. No payments will be made after the annuitant dies.
30369C
<PAGE>
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 market adjusted 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 joint
annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a
period of years. The period of years may be no less than 10 nor more
than 30.
What are the requirements for selecting a plan?
The owner may elect by written notice to us at anytime at least 30 days prior to
the settlement date to have the market adjusted value applied on the settlement
date to provide:
1. a lump sum payment as a result of a total surrender as provided under
the cash surrender value provision of the certificate; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in a accordance with the
Code. Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. any annuity payment plan selected must also, if selected by a
non-spouse beneficiary, meet the incidental death benefit
requirements under the Code.
30369C
<PAGE>
If at least 30 days before the settlement date we have not received at our home
office the owner's written request to select a plan, we will make payments
according to plan B with payments guaranteed for 10 years, unless otherwise
required by the Code.
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 cash 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.
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment Plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below. The amount of such payments under Plans A,
B, and C will depend upon the adjusted age of the annuitant on the settlement
date. The amount of such payments under plan D will depend on the adjusted age
of the annuitant and the joint annuitant on the settlement dates. Adjusted age
means the age on the annuitant's nearest birthday minus an "adjustment" based 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
30369C
<PAGE>
Amount of Each Monthly Annuity Payment Per $1,000 Applied
<TABLE>
<CAPTION>
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 4.81 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.
___________________________________________________________________________________________________________
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 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 Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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
___________________________________________________________________________________________________________
30369C
</TABLE>
<PAGE>
APPLICATION FOR GROUP ANNUITY CONTRACT
1. Full legal name of Applicant-Contractholder: Bank of New England - old
Colony, N.A., Trustee
Principal Office 58 Weybosset Street, Providence, Rhode Island 02940-9666
(Street) (City) (State) (Zip)
2. Nature of Business Trustee under Trust Agreement
dated November 20, 1990 by and between IDS Life
Insurance Company and Bank of New England Old Colony, N.A.
3. Eligibility Requirements Refer to eligibility
requirements detailed on the back of this application
4. Requested Effective Date November 23, 1990
5. Remarks: Group annuity contract is to be issued on a 'tax-qualified' basis
Form 30369C
Receipt of a current annuity prospectus is acknowledged.
Dated at Providence , State of Rhode Island , Date November 23 , 1990 .
Witness Joanne Chacon Applicant Bank of New England - Old Colony, N.A.,
Trustee
by /s/ Jim M. Nagle
Title Private Banking Officer II
30364
<PAGE>
ELIGIBILITY REQUIREMENTS
Participating Groups:
Any group may be included under the Contract as a Participating Group upon
agreement between IDS Life, the Contractholder and the Group; provided that such
inclusion is not contrary to any applicable laws or regulations. Such inclusion
shall be as evidenced by a Participating Group's application.
The Contractholder may act for and on behalf of any and all of the Participating
Groups in all matters pertaining to the Contract; and every act taken by the
Contractholder, or notice given by IDS Life to the Contractholder or by the
Contractholder to IDS Life, shall be binding on all Participating Groups.
Eligible Persons:
Each eligible Participant of a Participating Group, as defined in the
Participating Group's Application, and any other person who becomes a Member of
the Trust held by the Contractholder is eligible to apply for annuity benefits
under the Contract if, at the time of application, he or she: is within the
eligibility age limits established by IDS Life for those applying; is a resident
or citizen of the United States of America; and is not a resident of Puerto
Rico, a foreign country or a place which will not allow IDS Life to offer
annuity benefits under the Contract.
30364
<PAGE>
APPOINTMENT OF AND ACCEPTANCE
AS SUCCESSOR TRUSTEE
THIS APPOINTMENT OF AND ACCEPTANCE AS SUCCESSOR TRUSTEE, made and dated as of
the 27th day of March, 1991, by and among BANK OF NEW ENGLAND-OLD COLONY, N.A.
("Old Trustee"), CITIZENS TRUST COMPANY ("New Trustee") and IDS LIFE INSURANCE
COMPANY ("Settlor");
WHEREAS, Old Trustee currently is acting as Trustee for the benefit of
Settlor pursuant to the:
Trust u/a IDS Life Insurance Company dated November 20, 1990
k/a The Market Value Annuity Group Trust
between Old Trustee and the Settlor (the "Trust Agreement"); and
WHEREAS, Old Trustee, pursuant to said Trust Agreement, has resigned as
Trustee, and
WHEREAS, Settlor desires that New Trustee replace Old Trustee as Trustee.
NOW, THEREFORE, it is agreed as follows:
1. Settlor hereby appoints New Trustee, or if required by said Trust
Agreement, Settlor recommends that Old Trustee hereby designate New Trustee as
Successor Trustee under the Trust Agreement and Old Trustee in response to this
recommendation designates CITIZENS TRUST COMPANY.
2. New Trustee, in accordance with the provisions of said Trust Agreement,
hereby agrees to said appointment as Successor Trustee and accepts the duties,
trusts and responsibilities of the Trustee under the Trust Agreement, but shall
not be responsible for any action or any failure to take action of Old Trustee
under the Trust Agreement prior to the date hereof.
3. Old Trustee hereby assigns, transfers and conveys unto New Trustee, as
successor Trustee under the Trust Agreement, without warranty and without
recourse, all right, title and interest of Old Trustee in, to and under any and
all policies, contracts, instruments and other property, tangible as well as
intangible, held by Old Trustee under said Trust Agreement.
4. Old Trustee agrees that as of the effective date of this appointment and
acceptance Old Trustee's authority to act as Trustee under the Trust Agreement
hereby ceases and terminates and Old Trustee shall execute, acknowledge and
deliver such instruments of conveyance, and further assurance and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the New Trustee all the trusts, powers and duties under the Trust
Agreement and property held by Old Trustee under the Trust Agreement and (after
payment of or reservation for its fees, and expenses as Trustee,) shall pay
over, assign, and deliver to the New Trustee any money or other property subject
to the trusts and conditions of the Trust Agreement.
<PAGE>
5. Old Trustee is released from further responsibility under the Trust
Agreement.
6. This Appointment and Acceptance shall be effective on March 27, 1991.
IN WITNESS WHEREOF, the undersigned have caused this Appointment and
Acceptance to be executed on their behalf.
CITIZENS TRUST COMPANY Agent for
BANK OF NEW ENGLAND - OLD
COLONY, N.A. IDS LIFE INSURANCE COMPANY
Old Trustee Settlor
BY: /s/ Jim M. Nagle 3/27/91 BY: /s/ Roger P. Husemoller
Roger P. Husemoller
TITLE: Authorized Officer TITLE: Vice President -
------------------
Institutional Insurance
Products
CITIZENS TRUST COMPANY
New Trustee
BY: /s/ Richard S. Moore
TITLE: Vice President
<PAGE>
===========================================================================
Group Annuity
Certificate
===========================================================================
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
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, privileges and benefits are
governed by the provisions of the Group Contract. The Group Contract may be
inspected by the certificate owner or 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 payments 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 single purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the certificate date shown below.
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 certificate guarantee period.
President:
/s/ Richard W. Kling
Richard W. Kling
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30368C
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
ANNUITANT: John Doe
CERTIFICATE NUMBER: XXX-XXXXXX
CERTIFICATE DATE: March 18, 1991
CERTIFICATE SETTLEMENT DATE: March 18, 2021
30368C (9/90)
<PAGE>
===========================================================================
Guide to Certificate Provisions
===========================================================================
Definitions Important words and meanings/Page 3
The Annuity Contract Entire contract; Modification;
Incontestability; Misstatement of
birthdate/Page 4
Owner Owner's rights; Trust/Custodial ownership;
Change of ownership restricted/Page 4
Beneficiary and Payments to Who is the beneficiary; Change of
Beneficiary beneficiary; Payments to beneficiary/
Page 5
Purchase Payment Payment of the purchase payment/Page 5
Accumulation Value, How the accumulation value is
Cash Surrender Value, and determined; How the market adjusted
Market Adjusted Value value is determined; Surrender of the
certificate for the cash surrender value;
TSA prohibited distributions; Annual
statement of value/Page 6
Annuity Payment Plans When annuity payments begin; Different
ways to receive annuity payments/Page 8
Table of Settlement Rates Table showing monthly annuity payment
amounts for the various plans/Page 9
30368C
<PAGE>
CERTIFICATE DATA
GROUP CONTRACTHOLDER: CITIZENS BANK OF GROUP
RHODE ISLAND CONTRACT
AS TRUSTEE OF THE NUMBER: 30368C-GP1
MARKET VALUE ANNUITY
GROUP TRUST
GROUP ANNUITY CERTIFICATE OWNER: John Doe
PURCHASE PAYMENT: $100,000.00
INITIAL GUARANTEE RATE: 8.00%
INITIAL GUARANTEE PERIOD: 5 Years
ACCUMULATION VALUE AT END OF INITIAL GUARANTEE PERIOD: $146,932.81
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Contract Years as measured from the beginning of a
Period Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
30368C
<PAGE>
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth certificate
anniversary.
There are no surrender charges on the last day of a guarantee period. There will
never be surrender charges beyond the eighth certificate anniversary.
ANNUITANT: John Doe
CERTIFICATE NUMBER: XXX-XXXXXX
CERTIFICATE DATE: December 6, 1990
CERTIFICATE SETTLEMENT DATE: December 6, 2010
30368C
<PAGE>
===========================================================================
Definitions
===========================================================================
The following words are used often in this 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 this 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 this certificate.
we, our, us
IDS Life Insurance Company
certificate date
It is the date from which certificate anniversaries, certificate years, and
certificate months are determined. Your certificate date is shown under
certificate data, in the certificate.
certificate anniversary
The same day and month as the certificate date each year that the certificate
remains in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under certificate data, in the certificate.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under certificate data, in the
certificate.
30368C
<PAGE>
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the certificate.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
renewal date
The first day of a renewal guarantee period. It will always be on a certificate
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
30368C
<PAGE>
written request
A request in writing signed by you and delivered to us at our home office.
settlement
The application of the market adjusted value of a certificate to provide annuity
payments.
settlement date
The date on which annuity payments are to begin under a certificate. 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.
TSA
A Tax Sheltered Annuity as described in Section 403(b) of the Code.
30368C
<PAGE>
===========================================================================
The Annuity Contract
===========================================================================
What is the entire contract?
The entire contract consists of the Group 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.
In issuing this certificate, we have relied upon the applications. The
statements contained in the applications are, in the absence of fraud,
considered representations and not warranties. No statements made in connection
with the applications will be used by us to void the certificate or to deny a
claim unless that statement is part of the applications.
Can the contract be modified?
The 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 your
certificate unless it is required to conform the contract to any Federal or
State statutes.
We reserve the right to modify the contract to the extent necessary to qualify a
certificate issued under the contract, if purchased as part of a qualified plan
under Section 401 or 403 of the Code, or purchased as part of a deferred
compensation plan under Section 457 of the Code, as part of such a plan as
described in Sections 401, 403 or 457 of the Code or under any other applicable
section of the Code.
When will the certificate become incontestable?
After this certificate has been in force during the annuitant's lifetime for two
years from the date of issue, we cannot contest the certificate.
30368C
<PAGE>
What if the annuitant's birthdate has been misstated?
If the annuitant's birthdate has been misstated, payments under this certificate
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 this contract?
This 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.
30368C
<PAGE>
===========================================================================
Owner
===========================================================================
What are your rights as owner of this certificate?
As long as the annuitant is living and unless otherwise provided in the
contract, you may exercise all rights and privileges in the contract or allowed
by us.
What are your rights as owner if you are a trust or custodial account?
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodians (or their successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
certificate or allowed by us.
Can you change the ownership of this certificate?
This 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 the applicable Sections 401, 403, 457, or other applicable sections of the
Code.
However, if you are the trustee of a tax-qualified trust or the custodian of a
tax-qualified custodial account, you may transfer ownership of this certificate
to the annuitant or to a qualified successor trustee or custodian if permitted
by the Code.
Or, if you are a trust or custodian or an employer as part of a qualified plan
under Section 401 or 403 or a deferred compensation plan under Section 457 of
the Code, you may transfer ownership of this certificate to the annuitant if
permitted by the Code.
Any permitted transfers must be 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 subject to any action taken or payment made by us before the
recording.
30368C
<PAGE>
===========================================================================
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:
1. the greater of the market adjusted value or the purchase payment
adjusted for any surrenders (if death occurred before the annuitant's
attaining age 75); otherwise
2. the market adjusted value (if death occurred on or after age 75).
The market adjusted value will be determined as of the date on which due proof
of death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code, and:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary. In this event, the reference to "annuitant" in the
annuity payment plans section will 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 survive, 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.
30368C
<PAGE>
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?
If the annuitant's death occurs before the settlement date and before the
annuitant's age 70 1/2, the annuitant's spouse, if designated as sole
beneficiary, may elect in writing to postpone receipt of the death benefit and
instead continue this certificate in force. The election by the spouse must be
made within 60 days after we receive due proof of death. The certificate may be
continued in force only until the date on which the annuitant would have
attained age 70 1/2. Any annuity payment plan later elected by the spouse must
provide 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.
===========================================================================
Purchase Payment
===========================================================================
What is the purchase payment for this certificate?
The purchase payment for this certificate is shown under certificate data. It is
payable to us on or before the date we deliver this certificate. It must be paid
or mailed to us at our home office or to an authorized agent.
30368C
<PAGE>
===========================================================================
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
===========================================================================
How is the accumulation value determined?
On the certificate date, the accumulation value of this certificate is the
purchase payment. Thereafter, interest accrues from day to day for the guarantee
period at the rate shown under certificate data. This rate represents an
effective annual yield. At no time while the certificate is in force shall
interest accrue at a rate less than 3% compounded annually. The accumulation
value will be adjusted for any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of this
certificate at the time that any applicable premium taxes not previously
deducted are payable.
If a tax is payable at the time of your purchase payment and we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period, a renewal guarantee period will begin. We
will notify you in writing 45 days before the renewal guarantee period. Each
renewal guarantee period will be one year unless you elect a different length
from those offered at the time. We must receive your written request at least 15
days before the renewal date. The renewal guarantee period may never extend
beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request, within 45 days of
the renewal guarantee period, we will notify you of the renewal guarantee rate
then in effect for certificates renewing at that time. The actual renewal
guarantee rate will be determined on the renewal date.
30368C
<PAGE>
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new certificate sales
and renewals (Form 30368) for the time remaining in your certificate's
current guarantee period; and
2. the guaranteed interest rate applicable to your certificate's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of your
current guarantee period.
N = the number of complete certificate years
to the end of your guarantee period.
t = the fraction of the certificate year
remaining to the end of your certificate
year (for example, if 180 days remain in a
365 day certificate year, t would be .493)
ic = the current rate offered for new
certificate sales and renewals (Form
30368) for the number of years left in
your guarantee period (straight line
interpolation between whole year rates).
If N is zero, ic is the rate for one
year guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
30368C
<PAGE>
There will be no market value adjustment made on the last day of a guarantee
period.
Can you request surrender of any amounts under this certificate before
settlement?
Yes. By written request to us and subject to the rules below you may:
1. surrender this certificate for the total cash surrender value;
2. partially surrender this certificate for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the certificate year
in which the surrender is made. The schedule of surrender charges is shown under
certificate data.
After the first certificate anniversary, surrender charges will not apply to
surrenders of amounts totaling up to 10% of the certificate accumulation value
as of the last certificate anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the certificate on the
date of surrender. You may surrender all or a portion of the cash surrender
value. However, the accumulation value that remains after a partial surrender
must be at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to you within seven days of the
receipt of your written request.
Upon surrender of this certificate for the total cash surrender value, this
certificate will terminate. We may require that you return this certificate to
our home office before we pay the total cash surrender value.
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:
30368C
<PAGE>
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
6 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 30 days, we will
pay annual interest of at least 3% on the amount deferred.
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 cash surrender value of this certificate. The
statement will specify the surrender charge and market value adjustment used to
determine the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify you 45 days before the end of a guarantee period concerning
renewal periods available and your right to surrender without a market value
adjustment on the last day of your guarantee period.
30368C
<PAGE>
==========================================================================
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 that you 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 30 days after we receive your written request at our home office.
The settlement date cannot be earlier or later than such date as may be required
or permitted by law or the applicable retirement plan.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the certificate anniversary nearest the annuitant's 85th birthday; or
2. the 10th certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
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 market adjusted
value applied under this plan by the amount of the monthly annuity payment.
30368C
<PAGE>
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 joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a period of
years. The period of years may be no less than 10 nor more than 30.
What are the requirements for selecting a plan?
You may elect by written notice to us at any time at least 30 days prior to the
settlement date, to have the market adjusted value applied on the settlement
date to provide:
1. lump-sum payment as a result of a total surrender as provided under
cash surrender value provision of this certificate; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in accordance with the
Code.
Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no
longer than the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. any annuity payment plan selected must also, if selected by a
non-spouse beneficiary, meet the incidental death benefit
requirements under the Code.
If at least 30 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 10 years, unless otherwise required by the
Code.
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 cash surrender value.
30368C
<PAGE>
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.
30368C
<PAGE>
===========================================================================
Table of Settlement Rates
===========================================================================
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment Plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below. The amount of such payments under Plans A,
B, and C will depend upon the adjusted age of the annuitant on the settlement
date. The amount of such payments under plan D will depend on the adjusted age
of the annuitant and the joint annuitant on the settlement dates. Adjusted age
means the age on the annuitant's nearest birthday minus an "adjustment" based on
the calendar year of birth of the annuitant as follows:
Calendar Calendar
Year of Year of
Annuitant's Adjust- Annuitant's Adjust-
Birth ment Birth ment
- ----- ---- ----- ----
Prior to 1920 0 1945 through 1949 6
1920 through 1924 1 1950 through 1959 7
1925 through 1929 2 1960 through 1969 8
1930 through 1934 3 1970 through 1979 9
1935 through 1939 4 1980 through 1989 10
1940 through 1944 5 After 1989 11
30368C
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
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 4.81 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
- -----------------------------------------------------------------------------------------------------------------------------------
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 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.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Plan E Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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>
30368C
<PAGE>
===========================================================================
Group Annuity
Certificate
===========================================================================
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This certificate is nonparticipating. Dividends are not payable.
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
30368C
<PAGE>
GROUP IRA ANNUITY CONTRACT
o Purchase payments are payable in a single sum.
o Annuity payments begin on the settlement date.
o This contract is nonparticipating. Dividends are not payable.
Contract Holder: Bank of New England - Old Colony, N.A., Trustee
Contract Number: 30372C-GP1
Contract Date: November 23, 1990
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.
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 certificate
guarantee period.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the contract date shown above.
President:
/s/ James A. Mitchell
James A. Mitchell
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30372C
<PAGE>
CONTRACT DATA
GROUP CONTRACTHOLDER: Bank of New England - GROUP
Old Colony, N.A., CONTRACT
Trustee of the Market NUMBER: 30372C-GP1
Value Annuity Trust
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Participant's Certificate Years as measured from the
Period beginning of a Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth certificate
anniversary.
There are no surrender charges on the last day of a guarantee period.
There will never be surrender charges beyond the eighth certificate anniversary.
30372C
<PAGE>
Guide to Contract Provisions
Definitions
Important words and meanings/Page 4
The Annuity Contract
Entire contract; Modification; Incontestability; Misstatement of birthdate or
sex/Page 6
Contractholder and Owner
Contractholder; Owner's rights; Owner's right to examine certificate for 7 days;
Change of ownership; /Page 7
Beneficiary and Payments to Beneficiary
Who is the beneficiary; Change of beneficiary; Payments to beneficiary/Page 9
Purchase Payment
Payment of the purchase payment/Page 11
Accumulation Value, Cash Surrender Value, and Market Adjusted Value How the
accumulation value is determined; Surrender of the certificate for the cash
surrender value; How the market adjusted value is determined; Annual statement
of value/Page 12
Annuity Payment Plans
When annuity payments begin; Different ways to receive annuity payments/Page 16
Table of Settlement Rates
Table showing monthly annuity payment amounts for the various plans/Page 18
30372C
<PAGE>
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.
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 this contract.
we, our, us
IDS Life Insurance Company
certificate date
It is the date from which certificate anniversaries, certificate years, and
certificate months are determined. The certificate date is shown under
certificate data, in the certificate.
certificate anniversary
The same day and month as the certificate date each year that the certificate
remains in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under certificate data, in the certificate.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under certificate data, in the
certificate.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the contract.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
renewal date
The first day of a renewal guarantee period. It will always be on a certificate
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
30372C
<PAGE>
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by the owner and delivered to us at our home office.
settlement
The application of the market adjusted value of a certificate to provide annuity
payments.
settlement date
The date on which annuity payments are to begin under a certificate. This date
may be changed as provided in the contract.
Code
The Internal Revenue Code of 1986, as amended, and all related laws and
regulations which are in effect during the term of the contract.
IRA
An Individual Retirement Annuity as described in Section 408 of the Code.
30372C
<PAGE>
The Annuity Contract
What is the entire contract?
The entire contract consists of this Group Contract, the application of the
Group Contractholder, which is attached to the Group Contract, and the
enrollment applications. The Group Contract is for the exclusive benefit of the
IRA annuitants and beneficiaries.
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.
In issuing the certificates, we have relied upon the applications. The
statements contained in the applications are, in the absence of fraud,
considered representations and not warranties. No statements made in connection
with the applications will be used by us to void the contract or to deny a claim
unless that statement is part of the applications.
Can this contract be modified?
This contract may be modified at any time by written agreement between the
contractholder and us. The modification must be signed by one of our corporate
officers (President, Vice President, Secretary or Assistant Secretary). No
modification will affect the amount of term of any certificates issued before
the effective date of the modification unless it is required to conform the
contract to, or give the contractholder the benefit of, any Federal or State
statutes.
We reserve the right to modify the contract to the extent necessary to qualify a
certificate issued under the contract as an IRA as described in Section 408 of
the Code or in any other applicable section of the Code.
When will the certificate become incontestable?
After the certificate has been in force during the annuitant's lifetime for two
years from the date of issue, we cannot contest the certificate.
What if the annuitant's birthdate or sex has been misstated?
If the annuitant's birthdate or sex has been misstated, payments under the
certificate 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.
30372C
<PAGE>
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.
Contractholder and Owner
Who is the Group Contractholder?
The group contractholder is listed on the cover 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 owners of the certificates?
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.
What is the certificate owner's right to examine the certificate for seven days?
If for any reason the owner is not satisfied with the certificate, the owner may
return it to us or our agent within seven days after the owner receives it. We
will then cancel the certificate and refund all purchase payments the owner
made. The certificate will then be considered void from the start.
What are the owner's rights if the owner is a trust or custodial account?
If the owner is a tax qualified trust or tax qualified custodial account, then
the owner's trustees or custodians (or their successors) properly named by the
trust or custodial agreement may exercise all rights and privileges provided in
the certificate or allowed by us. The owner owns the certificate for the
exclusive benefit of the annuitant or his or her beneficiary.
Can ownership of the certificate be changed?
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
Section 408 of the Code or under any other applicable section of the Code. The
owner's interest in the certificate may be transferred to the owner's former
spouse, if any, under a divorce decree or written instrument incident to such
divorce.
However, if the owner is the trustee of a tax-qualified trust or the custodian
of a tax-qualified custodial account, the owner may transfer ownership of the
certificate to the annuitant or to a qualified successor trustee or custodian.
30372C
<PAGE>
Any permitted transfers must be 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 subject to any action taken or payment made by us before the
recording.
Beneficiary and Payments to Beneficiary
What death benefits are paid if the annuitant or certificate owner dies before
settlement?
If the annuitant or owner dies before settlement while the certificate is in
force, we will pay the beneficiary:
1. the greater of the market adjusted value or the purchase payment
adjusted for surrenders (if death occurred before the annuitant's
attaining age 75); otherwise
2. the market adjusted value (if death occurred on or after the
annuitant's age 75).
The market adjusted value will be determined as of the date on which due proof
of death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant. The beneficiary may elect to receive payment anytime
within 5 years after the date of death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code and:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than:
a. one year after the date of death, in the case of a non-spouse
beneficiary;
or
b. the date on which the annuitant would have attained age 70-1/2 if
later than one year after the date of death, in case of a spouse
beneficiary; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary.
In this event, the reference to "annuitant" in the annuity payment plans section
will apply to the beneficiary.
30372C
<PAGE>
To whom are death benefits payable?
Benefits will be paid equally to all primary beneficiaries surviving the
annuitant. If none survive, 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.
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
owner's 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 owner's request, subject to any action taken
or payment made by us before the recording.
What is the spouse's option to continue the certificate?
If the owner's death occurs prior to the settlement date, the owner's spouse, if
designated as sole beneficiary, may elect in writing to forego receipt of the
death benefit and instead continue the certificate in force as its owner. The
election by the spouse must be made within 60 days after we receive due proof of
death. In this event, the settlement date may not be later than the April 1
following the calendar year in which the spouse attains age 70-1/2.
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.
Purchase Payment
What is the purchase payment for a certificate?
The purchase payment for a certificate is shown under certificate data on the
certificate. It is a rollover IRA contribution or a combination rollover and
active IRA contribution as defined in and limited by the Code. It is payable to
us on or before the date we deliver the certificate. It must be paid or mailed
to us at our home office or to an authorized agent.
30372C
<PAGE>
Accumulation Value
Cash Surrender Value
Market Adjusted Value
How is the accumulation value determined?
On the certificate date the accumulation value of the certificate is the
purchase payment. Thereafter interest accrues from day to day for the guarantee
periods initially at the rate shown under certificate data in the certificate
and later at the renewal rate(s). These rates represent an effective annual
yield. At no time while the certificate is in force shall interest accrue at a
rate less than 3% compounded annually. The accumulation value will be adjusted
for any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of the
certificate 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 we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period a renewal guarantee period will begin. We
will notify the owner in writing 45 days before the renewal guarantee period.
Each renewal guarantee period will be one year unless the owner elects a
different length from those offered at the time. We must receive the owner's
written request at least 15 days before the renewal date. The renewal guarantee
period may never extend beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request within 45 days of
the renewal guarantee period, we will notify the owner of the renewal guarantee
rate then in effect for certificates renewing at that time. The actual renewal
guarantee rate will be determined on the renewal date.
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new certificate sales and
renewals (Form 30371) for the time remaining in the certificate's
current guarantee period; and
2. the guaranteed interest rate applicable to the certificate's current
guarantee period.
30372C
<PAGE>
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025) (N + t)
where: renewal value = the accumulation value at the end of the
owner's current guarantee period.
N = the number of complete certificate years
to the end of the owner's guarantee
period.
t = the fraction of the certificate year
remaining to the end of the owner's
certificate year (for example, if 180 days
remain in a 365 day certificate year, t
would be .493)
ic = the current rate offered for new
certificate sales and renewals (Form
30371) for the number of years left in the
owner's guarantee period (straight line
interpolation between whole year rates).
If N is zero, ic is the rate for one year
guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
There will be no market value adjustment made on the last day of a guarantee
period.
Can the owner request surrender of any amounts under the certificate before
settlement?
Yes. By written request to us and subject to the rules below the owner may:
1. surrender the certificate for the total cash surrender value;
2. partially surrender the certificate for a part of the cash surrender
value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the certificate year
in which the surrender is made. The schedule of surrender charges is shown under
certificate data in the certificate.
30372C
<PAGE>
After the first certificate anniversary, surrender charges will not apply to
surrenders of amounts totalling up to 10% of the certificate accumulation value
as of the last certificate anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the certificate on the
date of surrender. The owner may surrender all or a portion of the cash
surrender value. However the accumulation value that remains after a partial
surrender must be at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to the owner within seven days of
the receipt of the owner's written request.
Upon surrender of the certificate for the total cash surrender value, the
certificate will terminate. We may require that the owner return the certificate
to our home office before we pay the total cash surrender value.
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
6 months from the date we receive the owner's surrender request or the period
permitted by state insurance law, if less. If we defer payment more than 30
days, we will pay annual interest of at least 3% on the amount deferred.
Will the owner receive information about the certificate values?
Yes. Separate records are maintained for the interest of each IRA participant.
At least once a year we will send the owner a statement showing both the
accumulation value and the cash surrender value of the certificate. The
statement will specify the surrender charge and market value adjustment used to
determine the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify the owner 45 days before the end of a guarantee period
concerning renewal periods available and the owner's right to surrender without
a market value adjustment on the last day of the guarantee period.
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 that the owner exchange the certificate for a supplemental contract
which provides the annuity payments.
30372C
<PAGE>
Can the owner change the settlement date?
Yes. The owner must tell us the new date by written request. If the owner
selects a new date it must be at least 30 days after we receive the owner's
written request at our home office.
The settlement date cannot be later than the later of:
1. the April 1 following the calendar year in which the annuitant attains
age
70-1/2; or
2. such other date, provided the Code allows the owner to satisfy the
minimum distribution requirements of Section 408(b)(3) of the Code with
respect to the certificate through a means other than settlement of the
certificate, including the ability to satisfy such distribution
requirements from other individual retirement accounts and/or individual
retirement annuities that the owner may own.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the certificate anniversary nearest the annuitant's 85th birthday; or
2. the 10th certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
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 market adjusted 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 joint
annuitant.
30372C
<PAGE>
Plan E - This provides monthly fixed dollar annuity payments for a
period of years. The period of years may be no less than 10 nor more
than 30.
What are the requirements for selecting a plan?
The owner may elect by written notice to us at anytime at least 30 days prior to
the settlement date to have the market adjusted value applied on the settlement
date to provide:
1. a lump sum payment as a result of a total surrender as provided under
the cash surrender value provision of the certificate; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in accordance with the
Code. Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no longer than
the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. in the case of a non-spouse beneficiary, payments must be such that
at least 50% of the present value of the certificate is expected to
be distributed within the life expectancy of the annuitant.
If at least 30 days before the settlement date we have not received at our home
office the owner's written request to select a plan, we will make payments
according to plan B with payments guaranteed of 10 years, unless otherwise
required by the Code.
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 cash surrender value.
30372C
<PAGE>
Table of Settlement Rates
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment Plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below. The amount of such payments under Plans A,
B, and C will depend upon the sex and the adjusted age of the annuitant on the
settlement date. The amount of such payments under plan D will depend on the sex
and the adjusted age of the annuitant and the joint annuitant on the settlement
dates. Adjusted age means the age on the annuitant's nearest birthday minus an
"adjustment" based 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
30372C
<PAGE>
<TABLE>
<CAPTION>
Amount of Each Monthly Annuity Payment Per $1,000 Applied
Plan A Plan B Plan C Plan D - Joint and Survivor
Adjusted Age of Female Joint Annuitant
Life 5 Years 10 Years 15 Years With Adj.
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. M = Male F = Female
</TABLE>
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.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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>
30372C
<PAGE>
APPOINTMENT OF AND ACCEPTANCE
AS SUCCESSOR TRUSTEE
THIS APPOINTMENT OF AND ACCEPTANCE AS SUCCESSOR TRUSTEE, made and dated as
of the 27th day of March, 1991, by and among BANK OF NEW ENGLAND-OLD COLONY,
N.A. ("Old Trustee"), CITIZENS TRUST COMPANY ("New Trustee") and IDS LIFE
INSURANCE COMPANY ("Settlor");
WHEREAS, Old Trustee currently is acting as Trustee for the benefit of
Settlor pursuant to the:
Trust u/a IDS Life Insurance Company dated November 20, 1990 k/a The
Market Value Annuity Group Trust
between Old Trustee and the Settlor (the "Trust Agreement"); and
WHEREAS, Old Trustee, pursuant to said Trust Agreement, has resigned as
Trustee, and
WHEREAS, Settlor desires that New Trustee replace Old Trustee as Trustee.
NOW, THEREFORE, it is agreed as follows:
1. Settlor hereby appoints New Trustee, or if required by said Trust
Agreement, Settlor recommends that Old Trustee hereby designate New Trustee as
Successor Trustee under the Trust Agreement and Old Trustee in response to this
recommendation designates CITIZENS TRUST COMPANY.
2. New Trustee, in accordance with the provisions of said Trust Agreement,
hereby agrees to said appointment as Successor Trustee and accepts the duties,
trusts and responsibilities of the Trustee under the Trust Agreement, but shall
not be responsible for any action or any failure to take action of Old Trustee
under the Trust Agreement prior to the date hereof.
3. Old Trustee hereby assigns, transfers and conveys unto New Trustee, as
successor Trustee under the Trust Agreement, without warranty and without
recourse, all right, title and interest of Old Trustee in, to and under any and
all policies, contracts, instruments and other property, tangible as well as
intangible, held by Old Trustee under said Trust Agreement.
4. Old Trustee agrees that as of the effective date of this appointment and
acceptance Old Trustee's authority to act as Trustee under the Trust Agreement
hereby ceases and terminates and Old Trustee shall execute, acknowledge and
deliver such instruments of conveyance, and further assurance and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the New Trustee all the trusts, powers and duties under the Trust
Agreement and property held by Old Trustee under the Trust Agreement and (after
payment of or reservation for its fees, and expenses as Trustee,) shall pay
over, assign, and deliver to the New Trustee any money or other property subject
to the trusts and conditions of the Trust Agreement.
30372C
<PAGE>
5. Old Trustee is released from further responsibility under the Trust
Agreement.
6. This Appointment and Acceptance shall be effective on March 27, 1991.
IN WITNESS WHEREOF, the undersigned have caused this Appointment and
Acceptance to be executed on their behalf.
CITIZENS TRUST COMPANY Agent for
BANK OF NEW ENGLAND - OLD COLONY, IDS LIFE INSURANCE
N.A COMPANY
Old Trustee Settlor
BY: /s/ Jim M. Nagle 3/27/91 BY: /s/ Roger P. Husemoller
Roger P. Husemoller
TITLE: Authorized Officer TITLE: Vice President -
------------------
Institutional
Insurance Products
CITIZENS TRUST COMPANY
New Trustee
BY: /s/ Richard S. Moore
TITLE: Vice President
30372C
<PAGE>
APPLICATION FOR GROUP ANNUITY CONTRACT
1. Full legal name of Applicant-Contractholder: Bank of New England -
Old Colony, N.A.,
Trustee
Principal Office 58 Weybosset Street, Providence, Rhode Island 02940-9666
(Street) (City) (State) (Zip)
2. Nature of Business Trustee under Trust
Agreement dated November 20, 1990 by and
between IDS Life Insurance Company and Bank
of New England - Old Colony, N.A.
3. Eligibility Requirements Refer to
eligibility requirements detailed
on the back of this application.
4. Requested Effective Date November 23, 1990
5. Remarks: This group annuity contract is to be issued on an 'IRA' basis
Form 30372C
Receipt of a current annuity prospectus is acknowledged.
Dated at Providence , State of Rhode Island ,
Date November 23 , 1990 .
Witness /s/ Joanne Chaco'n Applicant Bank of New England - Old Colony, N.A.
Trustee
by /s/ Jim M. Nagle
Title Private Banking Officer II
30364
<PAGE>
ELIGIBILITY REQUIREMENTS
Participating Groups:
Any group may be included under the Contract as a Participating Group upon
agreement between IDS Life, the Contractholder and the Group; provided that such
inclusion is not contrary to any applicable laws or regulations. Such inclusion
shall be as evidenced by a Participating Group's application.
The Contractholder may act for and on behalf of any and all of the Participating
Groups in all matters pertaining to the Contract; and every act taken by the
Contractholder, or notice given by IDS Life to the Contractholder or by the
Contractholder to IDS Life, shall be binding on all Participating Groups.
Eligible Persons:
Each eligible Participant of a Participating Group, as defined in the
Participating Group's Application, and any other person who becomes a Member of
the Trust held by the Contractholder is eligible to apply for annuity benefits
under the Contract if, at the time of application, he or she: is within the
eligibility age limits established by IDS Life for those applying; is a resident
or citizen of the United States of America; and is not a resident of Puerto
Rico, a foreign country or a place which will not allow IDS Life to offer
annuity benefits under the Contract.
30364
===========================================================================
Group IRA
Annuity Certificate
===========================================================================
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
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, privileges and benefits are
governed by the provisions of the Group Contract. The Group Contract may be
inspected by the certificate owner or 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 payments 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 single purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the certificate date shown below.
THIS 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 certificate guarantee period.
NOTICE OF YOUR RIGHT TO EXAMINE THIS CERTIFICATE FOR SEVEN DAYS. If for any
reason you are not satisfied with this certificate, return it to us or our agent
within seven 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:
/s/ Richard W. Kling
Richard W. Kling
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
ANNUITANT: John Doe
CERTIFICATE NUMBER: XXX-XXXXXX
CERTIFICATE DATE: March 18, 1991
CERTIFICATE SETTLEMENT DATE: March 18, 2021
30371C (9/90)
<PAGE>
===========================================================================
Guide to Certificate Provisions
===========================================================================
<TABLE>
<CAPTION>
<S> <C>
Definitions Important words and meanings/Page 3
The Annuity Contract Entire contract; Modification; Incontestability;
Misstatement of birthdate or sex/Page 4
Owner Owner's rights; Trust/Custodial ownership;
Change of ownership; Assignment/Page 4
Beneficiary and Payments Who is the beneficiary; Change of beneficiary;
to Beneficiary Payments to beneficiary/Page 5
Purchase Payment Payment of the purchase payment/Page 5
Accumulation Value, How the accumulation value is determined; Cash Surrender
Value, Surrender of the certificate for the cash and Market Adjusted Value
surrender value; How the market adjusted value
is determined; Annual statement of value/Page 6-7
Annuity Payment Plans When annuity payments begin; Different ways to
receive annuity payments/Page 8
Table of Settlement Rates Table showing monthly annuity payment amounts
for the various plans/Page 9
30371C
</TABLE>
<PAGE>
CERTIFICATE DATA
GROUP CONTRACTHOLDER: CITIZENS BANK OF GROUP
RHODE ISLAND CONTRACT
AS TRUSTEE OF THE NUMBER: 30371C-GP1
MARKET VALUE ANNUITY
GROUP TRUST
GROUP ANNUITY CERTIFICATE OWNER: John Doe
PURCHASE PAYMENT: $100,000.00
INITIAL GUARANTEE RATE: 8.00%
INITIAL GUARANTEE PERIOD: 5 Years
ACCUMULATION VALUE AT END OF INITIAL GUARANTEE PERIOD: $146,932.81
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Contract Years as measured from the beginning of a
Period Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
30371C
<PAGE>
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth
certificate anniversary.
There are no surrender charges on the last day of a guarantee period. There will
never be surrender charges beyond the eighth certificate anniversary.
ANNUITANT: John Doe
CERTIFICATE NUMBER: XXX-XXXXXX
CERTIFICATE DATE: December 6, 1990
CERTIFICATE SETTLEMENT DATE: December 6, 2010
30371C
<PAGE>
===========================================================================
Definitions
===========================================================================
The following words are used often in this 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 this certificate.
we, our, us
IDS Life Insurance Company
certificate date
It is the date from which certificate anniversaries, certificate years, and
certificate months are determined. Your certificate date is shown under
certificate data, in the certificate.
certificate anniversary
The same day and month as the certificate date each year that the certificate
remains in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under certificate data, in the certificate.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under certificate data, in the
certificate.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the certificate.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
30371C
<PAGE>
renewal date
The first day of a renewal guarantee period. It will always be on a certificate
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by you and delivered to us at our home office.
settlement
The application of the market adjusted value of a certificate to provide annuity
payments.
settlement date
The date on which annuity payments are to begin under a certificate. 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.
IRA
An Individual Retirement Annuity as described in Section 408 of the Code.
30371C
<PAGE>
===========================================================================
The Annuity Contract
===========================================================================
What is the entire contract?
The entire contract consists of the Group Contract, the application of the Group
Contractholder, which is attached to the Group Contract, and the enrollment
application. The Group Contract is for the exclusive benefit of the IRA
annuitants and beneficiaries.
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.
In issuing this certificate, we have relied upon the applications. The
statements contained in the applications are, in the absence of fraud,
considered representations and not warranties. No statements made in connection
with the applications will be used by us to void the certificate or to deny a
claim unless that statement is part of the applications.
Can the contract be modified?
The 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 your
certificate unless it is required to conform the contract to any Federal or
State statutes.
We reserve the right to modify the contract to the extent necessary to qualify a
certificate issued under the contract as an IRA as described in Section 408 of
the Code or in any other applicable section of the Code.
When will the certificate become incontestable?
After this certificate has been in force during the annuitant's lifetime for two
years from the date of issue, we cannot contest the certificate.
30371C
<PAGE>
What if the annuitant's birthdate or sex has been misstated?
If the annuitant's birthdate or sex has been misstated, payments under this
certificate 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.
What laws govern this contract?
This 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>
===========================================================================
Owner
===========================================================================
What are your rights as owner of this certificate?
As long as the annuitant is living and unless otherwise provided in the
contract, you may exercise all rights and privileges in the contract or allowed
by us. Your entire interest as owner is non-forfeitable.
What are your rights as owner if you are a trust or custodial account?
If you are a tax qualified trust or tax qualified custodial account, then your
trustees or custodians (or their successors) properly named by your trust or
custodial agreement may exercise all rights and privileges provided in this
certificate or allowed by us. You own this certificate for the exclusive benefit
of the annuitant and his or her beneficiary.
Can you change the ownership of this certificate?
This 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 Section 408 of the Code or under any other applicable section of the Code.
Your interest in this certificate may be transferred to your former spouse, if
any, under a divorce decree or a written instrument incident to such divorce.
However, if you are the trustee of a tax-qualified trust or the custodian of a
tax-qualified custodial account, you may transfer ownership of this certificate
to the annuitant or to a qualified successor trustee or custodian.
Any permitted transfers must be 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 subject to any action taken or payment made by us before the
recording.
30371C
<PAGE>
===========================================================================
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:
1. the greater of the market adjusted value or the purchase payment
adjusted for any surrenders (if death occurred before the annuitant's
attaining age 75); otherwise
2. the market adjusted value (if death occurred on or after age 75).
The market adjusted value will be determined as of the date on which due proof
of death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant. The beneficiary may elect to receive payment any time
within 5 years after the date of death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code and:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than:
a. one year after the date of death, in the case of a non-spouse
beneficiary; or
b. the date on which the annuitant would have attained age 70 1/2 if
later than one year after the date of death, in case of a spouse
beneficiary; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary.
In this event, the reference to "annuitant" in the annuity payment plans section
will apply to the beneficiary.
30371C
<PAGE>
To whom are the death benefits payable?
Benefits will be paid equally to all primary beneficiaries surviving the
annuitant. If none survive, 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.
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?
If the annuitant's death occurs before the settlement date, the annuitant's
spouse, if designated as sole beneficiary, may elect in writing to forego
receipt of the death benefit and instead continue this certificate in force as
its owner and annuitant. The election by the spouse must be made within 60 days
after we receive due proof of death. In this event, the settlement date may not
be later than the April 1 following the calendar year in which the spouse
attains age 70 1/2.
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.
30371C
<PAGE>
===========================================================================
Purchase Payment
===========================================================================
What is the purchase payment for this certificate?
The purchase payment for this certificate is shown under certificate data. It is
a rollover IRA contribution or a combination rollover and active IRA
contribution as defined in and limited by the Code. It is payable to us on or
before the date we deliver this certificate. It must be paid or mailed to us at
our home office or to an authorized agent.
30371C
<PAGE>
===========================================================================
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
===========================================================================
How is the accumulation value determined?
On the certificate date the accumulation value of this certificate is the
purchase payment. Thereafter interest accrues from day to day for the guarantee
period at the rate shown under certificate data. This rate represents an
effective annual yield. At no time while the certificate is in force shall
interest accrue at a rate less than 3% compounded annually. The accumulation
value will be adjusted for any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of this
certificate at the time that any applicable premium taxes not previously
deducted are payable.
If a tax is payable at the time of your purchase payment and we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period, a renewal guarantee period will begin. We
will notify you in writing 45 days before the renewal guarantee period. Each
renewal guarantee period will be one year unless you elect a different length
from those offered at the time. We must receive your written request at least 15
days before the renewal date. The renewal guarantee period may never extend
beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request, within 45 days of
the renewal guarantee period, we will notify you of the renewal guarantee rate
then in effect for certificates renewing at that time. The actual renewal
guarantee rate will be determined on the renewal date.
30371C
<PAGE>
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new certificate sales and
renewals (Form 30371) for the time remaining in your certificate's
current guarantee period; and
2. the guaranteed interest rate applicable to your certificate's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of your
current guarantee period.
N = the number of complete certificate years
to the end of your guarantee period.
t = the fraction of the certificate year
remaining to the end of your certificate
year (for example, if 180 days remain in a
365 day certificate year, t would be .493)
ic = the current rate offered for new
certificate sales and renewals (Form
30371) for the number of years left in
your guarantee period (straight line
interpolation between whole year rates).
If N is zero, ic is the rate for one year
guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
30371C
<PAGE>
There will be no market value adjustment made on the last day of a guarantee
period.
Can you request surrender of any amounts under this certificate before
settlement?
Yes. By written request to us and subject to the rules below you may:
1. surrender this certificate for the total cash surrender value;
2. partially surrender this certificate for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the certificate year
in which the surrender is made. The schedule of surrender charges is shown under
certificate data.
After the first certificate anniversary, surrender charges will not apply to
surrenders of amounts totaling up to 10% of the certificate accumulation value
as of the last certificate anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the certificate on the
date of surrender. You may surrender all or a portion of the cash surrender
value. However, the accumulation value that remains after a partial surrender
must be at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to you within seven days of the
receipt of your written request.
Upon surrender of this certificate for the total cash surrender value, this
certificate will terminate. We may require that you return this certificate to
our home office before we pay the total cash surrender value.
30371C
<PAGE>
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
6 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 30 days, we will
pay annual interest of at least 3% on the amount deferred.
Will you receive information about your certificate values?
Yes. Separate records are maintained for the interest of each IRA participant.
At least once a year we will send you a statement showing both the accumulation
value and the cash surrender value of this certificate. The statement will
specify the surrender charge and market value adjustment used to determine the
cash surrender value. This statement will be based on any laws or regulations
that apply.
We will also notify you 45 days before the end of a guarantee period concerning
renewal periods available and your right to surrender without a market value
adjustment on the last day of your guarantee period.
30371C
<PAGE>
===========================================================================
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 that you 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 30 days after we receive your written request at our home office.
The settlement date cannot be later than the later of:
1. the April 1 following the calendar year in which the annuitant attains
age 70 1/2; or
2. such other date, provided the Code allows you to satisfy the minimum
distribution requirements of Section 408(b)(3) of the Code with respect
to this certificate through a means other than settlement of this
certificate, including the ability to satisfy such distribution
requirements from other individual retirement accounts and/or individual
retirement annuities that you may own.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the certificate anniversary nearest the annuitant's 85th birthday; or
2. the 10th certificate anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
Plan A - This provides monthly annuity payments for the lifetime of the
annuitant. No payments will be made after the annuitant dies.
30371C
<PAGE>
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 market adjusted
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 joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a period of
years. The period of years may be no less than 10 nor more than 30.
What are the requirements for selecting a plan?
You may elect by written notice to us at any time at least 30 days before the
settlement date to have the market adjusted value applied on the settlement date
to provide:
1. a lump sum payment as a result of a total surrender as provided under
the cash surrender value provision of this certificate; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in accordance with the
Code.
Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. in the case of a non-spouse beneficiary, payments must be such
that at least 50% of the present value of the certificate is
expected to be distributed within the life expectancy of the
annuitant.
30371C
<PAGE>
If at least 30 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 10 years, unless otherwise required by the
Code.
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 cash 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.
30371C
<PAGE>
===========================================================================
Table of Settlement Rates
===========================================================================
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment Plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below. The amount of such payments under Plans A,
B, and C will depend upon the sex and the adjusted age of the annuitant on the
settlement date. The amount of such payments under plan D will depend on the sex
and the adjusted age of the annuitant and the joint annuitant on the settlement
date. Adjusted age means the age on the annuitant's nearest birthday minus an
"adjustment" based on the calendar year of birth of the annuitant as follows:
Calendar Calendar
Year of Year of
Annuitant's Adjust- Annuitant's Adjust-
Birth ment Birth ment
- ----- ---- ----- ----
Prior to 1920 0 1945 through 1949 6
1920 through 1924 1 1950 through 1959 7
1925 through 1929 2 1960 through 1969 8
1930 through 1934 3 1970 through 1979 9
1935 through 1939 4 1980 through 1989 10
1940 through 1944 5 After 1989 11
30371C
<PAGE>
<TABLE>
<CAPTION>
Amount of Each Monthly Annuity Payment Per $1,000 Applied
Plan A Plan B Plan C Plan D - Joint and Survivor
Adjusted Age of Female Joint Annuitant
Life 5 Years 10 Years 15 Years With Adj.
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. M = Male F = Female
</TABLE>
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.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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>
30371C
<PAGE>
===========================================================================
Group IRA
Annuity Certificate
===========================================================================
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This certificate is nonparticipating. Dividends are not payable.
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
30371C
<PAGE>
===========================================================================
Individual
Annuity
Contract
===========================================================================
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
single purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the contract date shown below.
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 contract 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 which you have made. This
contract will then be considered void from the start.
President:
/s/ Richard W. Kling
Richard W. Kling
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30365D
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
- - Individual Annuity Contract
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
ANNUITANT: John Doe
CONTRACT NUMBER: XXX-XXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30365D (3/91)
<PAGE>
===========================================================================
Guide to Contract Provisions
===========================================================================
Definitions Important words and meanings/Page 3
The Annuity Contract Entire contract; Incontestability;
Misstatement of birthdate or sex/Page 4
Owner Owner's rights; Change of ownership;
Assignment/Page 4
Beneficiary and Payments to Who is the beneficiary; Change of
Beneficiary beneficiary; Payments to beneficiary/Page
5
Purchase Payment Payment of the purchase payment/Page 5
Accumulation Value, How the accumulation value is determined;
Cash Surrender Value, and Surrender of the contract for the cash
Market Adjusted Value surrender value; How the market adjusted
value is determined; Annual statement of
value/Page 6
Annuity Payment Plans When annuity payments begin; Different
ways to receive annuity payments/Page 8
Table of Settlement Rates Table showing monthly annuity payment
amounts for the various plans/Page 9
30365D
<PAGE>
CONTRACT DATA
CONTRACT OWNER: John Doe
PURCHASE PAYMENT: $5,000.00
INITIAL GUARANTEE RATE: 7%
INITIAL GUARANTEE PERIOD: 5 Years
ACCUMULATION VALUE AT END OF INITIAL GUARANTEE PERIOD: $7,012.76
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Contract Years as measured from the beginning of a
Period Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth contract
anniversary.
There are no surrender charges on the last day of a guarantee period. There will
never be surrender charges beyond the eighth contract anniversary.
30365D
<PAGE>
ANNUITANT: John Doe
CONTRACT NUMBER: XXXX-XXXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30365D
<PAGE>
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, our, us
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 under contract data.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under contract data.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under contract data.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the contract.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
30365D
<PAGE>
renewal date
The first day of a renewal guarantee period. It will always be on a contract
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by you and delivered to us at our home office.
settlement
The application of the market adjusted value of the 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.
30365D
<PAGE>
===========================================================================
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.
In issuing this contract, we have relied upon the application. The statements
contained in the application are considered representations and not warranties.
No statements made in connection with the application will be used by us to void
the contract or to deny a claim unless that statement is part of the
application.
When will this contract become incontestable?
This contract is incontestable from its date of issue.
What if the annuitant's birthdate or sex has been misstated?
If the annuitant's birthdate or sex has been misstated, payments under this
contract 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.
What laws govern this contract?
This 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.
===========================================================================Owner
===========================================================================
What are your rights as owner of this contract?
30365D
<PAGE>
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.
How can you change ownership for this contract?
You can change the ownership of this contract 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?
Yes. While the annuitant is living, you can assign this contract or any interest
in it. 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 contract. Any amounts
payable to the assignee will be paid in a single sum.
A copy of any assignment must be submitted to us at our home office. Any
assignment is subject to any action taken or payment made by us before the
assignment was recorded at our home office. We are not responsible for the
validity of any assignment.
30365D
<PAGE>
===========================================================================
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 due proof of
death is received at our home office.
The above described payment will also be made 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 joint owner elects to continue this
contract.
Unless you have provided otherwise during the lifetime of the annuitant, the
beneficiary may elect by written request to have the amount payable applied
under the terms of the annuity payment plans section of this contract provided:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than one year after we receive due proof of
death; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary.
In this event, the references to "annuitant" in the annuity payment plans
section of this contract will 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 survive, 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.
30365D
<PAGE>
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?
If the owner's death occurs prior to the settlement date, the owner's spouse, if
designated as sole beneficiary, may elect in writing to forego receipt of the
death benefit and instead continue this contract in force as its owner. The
election by the spouse must be made within 60 days after we receive due proof of
death.
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.
===========================================================================
Purchase Payment
===========================================================================
What is the purchase payment for this contract?
The purchase payment for this contract is shown under contract data. It is
payable to us on or before the date we deliver this contract. It must be paid or
mailed to us at our home office or to an authorized agent.
30365D
<PAGE>
===========================================================================
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
===========================================================================
How is the accumulation value determined?
On the contract date, the accumulation value of this contract is the purchase
payment. Thereafter, interest accrues from day to day for the guarantee period
at the rate shown under contract data. This rate represents an effective annual
yield. At no time while the contract is in force shall interest accrue at a rate
less than 3% compounded annually. The accumulation value will be adjusted for
any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of this
contract at the time that any applicable premium taxes not previously deducted
are payable.
If a tax is payable at the time of your purchase payment and we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period, a renewal guarantee period will begin. We
will notify you in writing 45 days before the renewal guarantee period. Each
renewal guarantee period will be one year unless you elect a different length
from those offered at the time. We must receive your written request at least 15
days before the renewal date. The renewal guarantee period may never extend
beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request, within 45 days of
the renewal guarantee period, we will notify you of the renewal guarantee rate
then in effect for contracts renewing at that time. The actual renewal guarantee
rate will be determined on the renewal date.
30365D
<PAGE>
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new contract sales and
renewals (Form 30365) for the time remaining in your contract's current
guarantee period; and
2. the guaranteed interest rate applicable to your contract's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of your
current guarantee period.
N = the number of complete contract years to
the end of your guarantee period.
t = the fraction of the contract year
remaining to the end of your contract year
(for example, if 180 days remain in a 365
day contract year, t would be .493)
ic = the current rate offered for new contract
sales and renewals (Form 30365) for the
number of years left in your guarantee
period (straight line interpolation
between whole year rates). If N is
zero, ic is the rate for one year
guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
30365D
<PAGE>
There will be no market value adjustment made on the last day of a guarantee
period.
Can you request surrender of any amounts under this contract before settlement?
Yes. By written request to us and subject to the rules below you may:
1. surrender this contract for the total cash surrender value;
2. partially surrender this contract for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the contract year in
which the surrender is made. The schedule of surrender charges is shown under
contract data.
After the first contract anniversary, surrender charges will not apply to
surrenders of amounts totaling up to 10% of the contract accumulation value as
of the last contract anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the contract on the date
of surrender. You may surrender all or a portion of the cash surrender value.
However, the accumulation value that remains after a partial surrender must be
at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to you within seven days of the
receipt of your written request.
Upon surrender of this contract for the total cash surrender value, this
contract will terminate. We may require that you return this contract to our
home office before we pay the total cash surrender value.
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
6 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 30 days, we will
pay annual interest of at least 3% on the amount deferred.
30365D
<PAGE>
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 cash surrender value of this contract. The statement
will specify the surrender charge and market value adjustment used to determine
the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify you 45 days before the end of a guarantee period concerning
renewal periods available and your right to surrender without a market value
adjustment on the last day of your guarantee period.
30365D
<PAGE>
===========================================================================
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 that you 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. However, the settlement date
cannot be later than the later of:
1. the contract anniversary nearest the annuitant's 85th birthday; or
2. the 10th contract anniversary.
Also, if you select a new date, it must be at least 30 days after we receive
your written request at our home office.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
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 market adjusted
value applied under this plan by the amount of the monthly annuity payment.
30365D
<PAGE>
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 joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a period of
years. The period of years may be no less than 10 nor more than 30.
What are the requirements for selecting a plan?
By written request to us at least 30 days before the settlement date, you may
select the plan or change to another plan. If at least 30 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 cash 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.
30365D
<PAGE>
===========================================================================
Table of Settlement Rates
===========================================================================
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below.
The amount of such payments under plans A, B, and C will depend on the sex and
the adjusted age of the annuitant on the settlement date. The amount of such
payments under plan D will depend on the sex and the adjusted age of the
annuitant and the joint annuitant on the settlement date.
Adjusted age means the age on the annuitant's nearest birthday minus an
"adjustment" based on the calendar year of the birth of the annuitant as
follows:
Calendar Calendar
Year of Year of
Annuitant's Adjust- Annuitant's Adjust-
Birth ment Birth ment
- ----- ---- ----- ----
Prior to 1920 0 1945 through 1949 6
1920 through 1924 1 1950 through 1959 7
1925 through 1929 2 1960 through 1969 8
1930 through 1934 3 1970 through 1979 9
1935 through 1939 4 1980 through 1989 10
1940 through 1944 5 After 1989 11
30365D
<PAGE>
<TABLE>
<CAPTION>
Amount of Each Monthly Annuity Payment Per $1,000 Applied
Plan A Plan B Plan C Plan D - Joint and Survivor
Adjusted Age of Female Joint Annuitant
Life 5 Years 10 Years 15 Years With Adj.
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. M = Male F = Female
</TABLE>
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.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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>
30365D
<PAGE>
===========================================================================
Individual Annuity Contract
===========================================================================
- - Individual Annuity Contract.
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
30365D
<PAGE>
===================================================================
Annuity
Endorsement
===================================================================
This endorsement is made a part of the annuity contract to which it is attached.
It changes certain terms and provisions of this contract.
===================================================================
The Annuity Contract
===================================================================
Delete:
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.
In issuing this contract, we have relied upon the application. The statements
contained in the application are considered representations and not warranties.
No statements made in connection with the application will be used by us to void
the contract or to deny a claim unless that statement is part of the
application.
Replace with:
What is the entire contract?
This contract form is 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.
Delete:
What if the annuitant's birthdate or sex has been misstated?
<PAGE>
If the annuitant's birthdate or sex has been misstated, payments under this
contract 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.
Replace with:
What if benefits are based on incorrect data?
If the amount of benefits is determined by data as to a person's age or sex that
is incorrect, benefits will be recalculated on the basis of the correct data.
Any underpayments made by us will be made up immediately. Any overpayments made
by us will be subtracted from the future payments.
This endorsement is issued and executed as of the contract date.
IDS Life Insurance Company
Secretary
/s/ William A. Stoltzmann
William A. Stoltzmann
30379 (7/96)
<PAGE>
Individual
Annuity
Contract
===========================================================================
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
single purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the contract date shown below.
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
contract 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 which you have made. This contract
will then be considered void from the start.
President:
/s/ Richard W. Kling
Richard W. Kling
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30370C
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
- - Individual Annuity Contract
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
ANNUITANT: John Doe
CONTRACT NUMBER: XXX-XXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30370C (3/91)
<PAGE>
===========================================================================
Guide to Contract Provisions
===========================================================================
Definitions Important words and meanings/Page 3
The Annuity Contract Entire contract; Modification;
Incontestability; Misstatement of
birthdate/Page 4
Owner Owner's rights; Trust/Custodial ownership;
Change of ownership restricted/Page 4
Beneficiary and Payments to Who is the beneficiary; Change of
Beneficiary beneficiary; Payments to beneficiary/Page
5
Purchase Payment Payment of the purchase payment/Page 5
Accumulation Value, How the accumulation value is
Cash Surrender Value, and determined; How the market adjusted
Market Adjusted Value value is determined; Surrender of the
contract for the cash surrender value; TSA
prohibited distributions; Annual
statement of value/Page 6
Annuity Payment Plans When annuity payments begin; Different
ways to receive annuity payments/Page 8
Table of Settlement Rates Table showing monthly annuity payment
amounts for the various plans/Page 9
30370C
<PAGE>
CONTRACT DATA
CONTRACT OWNER: John Doe
PURCHASE PAYMENT: $5,000.00
INITIAL GUARANTEE RATE: 7%
INITIAL GUARANTEE PERIOD: 5 Years
ACCUMULATION VALUE AT END OF INITIAL GUARANTEE PERIOD: $7,012.76
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Contract Years as measured from the beginning of a
Period Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth contract
anniversary.
There are no surrender charges on the last day of a guarantee period. There will
never be surrender charges beyond the eighth contract anniversary.
30370C
<PAGE>
ANNUITANT: John Doe
CONTRACT NUMBER: XXXX-XXXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30370C
<PAGE>
===========================================================================
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, our, us
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 under contract data.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under contract data.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under contract data.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the contract.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
30370C
<PAGE>
renewal date
The first day of a renewal guarantee period. It will always be on a contract
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by you and delivered to us at our home office.
settlement
The application of the market adjusted value of the contract to provide annuity
payments.
settlement date
The date on which annuity payments are to begin under the contract. 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.
TSA
A Tax-Sheltered Annuity as described in Section 403(b) of the Code.
30370C
<PAGE>
===========================================================================
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.
In issuing this contract, we have relied upon the application. The statements
contained in the application are considered representations and not warranties.
No statement made in connection with the application will be used by us to void
the contract or to deny a claim unless that statement is part of the
application.
Can the contract be modified?
We reserve the right to modify the contract to the extent necessary to qualify
the contract, if purchased as part of a qualified plan under Section 401 or 403
of the Code, or if purchased as part of a deferred compensation plan under
Section 457 of the Code, as part of such plan described in Sections 401, 403 or
457 of the Code or under any other applicable section of the Code.
When will this contract become incontestable?
This contract is incontestable from its date of issue.
What if the annuitant's birthdate has been misstated?
If the annuitant's birthdate has been misstated, payments under this contract
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.
30370C
<PAGE>
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.
===========================================================================
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.
What are your rights as owner if you are a trust or custodial account?
If you are a tax-qualified trust or tax-qualified custodial account, then your
trustees or custodians (or their successors), properly named by your trust or
custodial agreement, may exercise all rights and privileges provided in this
contract or allowed by us.
Can you change ownership of this contract?
This 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
the applicable Sections 401, 403, 457, or other applicable sections of the Code.
However, if you are the trustee of a tax-qualified trust or the custodian of a
tax-qualified custodial account, you may transfer ownership of this contract to
the annuitant or to a qualified successor trustee or custodian if permitted by
the Code.
Or, if you are a trust or custodian or an employer as part of a qualified plan
under Section 401 or 403 or a deferred compensation plan under Section 457 of
the Code, you may transfer ownership of this contract to the annuitant if
permitted by the Code.
Any permitted transfer must be 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 subject to any action taken or payment made by us before the recording.
30370C
<PAGE>
===========================================================================
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 due proof of
death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code, and:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than one year after the date of death; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary.
In this event, the references to "annuitant" in the annuity payment plans
section will 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 survive, 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.
30370C
<PAGE>
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?
If the annuitant's death occurs before the settlement date and before the
annuitant's age 70 1/2, the annuitant's spouse, if designated as sole
beneficiary, may elect in writing to postpone receipt of the death benefit and,
instead, continue this contract in force. The election by the spouse must be
made within 60 days after we receive due proof of death. The contract may be
continued in force only until the date on which the annuitant would have
attained age 70 1/2. Any annuity payment plan later elected by the spouse must
provide 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.
===========================================================================
Purchase Payment
===========================================================================
What is the purchase payment for this contract?
The purchase payment for this contract is shown under contract data. It is
payable to us on or before the date we deliver this contract. It must be paid or
mailed to us at our home office or to an authorized agent.
30370C
<PAGE>
===========================================================================
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
===========================================================================
How is the accumulation value determined?
On the contract date, the accumulation value of this contract is the purchase
payment. Thereafter, interest accrues from day to day for the guarantee period
at the rate shown under contract data. This rate represents an effective annual
yield. At no time while the contract is in force shall interest accrue at a rate
less than 3% compounded annually. The accumulation value will be adjusted for
any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of this
contract at the time that any applicable premium taxes not previously deducted
are payable.
If a tax is payable at the time of your purchase payment and we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period, a renewal guarantee period will begin. We
will notify you in writing 45 days before the renewal guarantee period. Each
renewal guarantee period will be one year unless you elect a different length
from those offered at the time. We must receive your written request at least 15
days before the renewal date. The renewal guarantee period may never extend
beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request, within 45 days of
the renewal guarantee period, we will notify you of the renewal guarantee rate
then in effect for contracts renewing at that time. The actual renewal guarantee
rate will be determined on the renewal date.
30370C
<PAGE>
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new contract sales and
renewals (Form 30370) for the time remaining in your contract's current
guarantee period; and
2. the guaranteed interest rate applicable to your contract's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of your
current guarantee period.
N = the number of complete contract years to
the end of your guarantee period.
t = the fraction of the contract year
remaining to the end of your contract year
(for example, if 180 days remain in a 365
day contract year, t would be .493)
ic = the current rate offered for new contract
sales and renewals (Form 30370) for the
number of years left in your guarantee
period (straight line interpolation
between whole year rates). If N is
zero, ic is the rate for one year
guarantee periods.
30370C
<PAGE>
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
There will be no market value adjustment made on the last day of a guarantee
period.
Can you request surrender of any amounts under this contract before settlement?
Yes. By written request to us and subject to the rules below you may:
1. surrender this contract for the total cash surrender value;
2. partially surrender this contract for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the contract year in
which the surrender is made. The schedule of surrender charges is shown under
contract data.
After the first contract anniversary, surrender charges will not apply to
surrenders of amounts totaling up to 10% of the contract accumulation value as
of the last contract anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the contract on the date
of surrender. You may surrender all or a portion of the cash surrender value.
However, the accumulation value that remains after a partial surrender must be
at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to you within seven days of the
receipt of your written request.
Upon surrender of this contract for the total cash surrender value, this
contract will terminate. We may require that you return this contract to our
home office before we pay the total cash surrender value.
30370C
<PAGE>
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
6 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 30 days, we will
pay annual interest of at least 3% on the amount deferred.
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 cash surrender value of this contract. The statement
will specify the surrender charge and market value adjustment used to determine
the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify you 45 days before the end of a guarantee period concerning
renewal periods available and your right to surrender without a market value
adjustment on the last day of your guarantee period.
30370C
<PAGE>
===========================================================================
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 that you 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 30 days after we receive your written request at our home office.
The settlement date cannot be earlier or later than such date as may be required
or permitted by law or the applicable retirement plan.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the contract anniversary nearest the annuitant's 85th birthday; or
2. the 10th contract anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
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 market adjusted
value applied under this plan by the amount of the monthly annuity payment.
30370C
<PAGE>
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 joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a period of
years. The period of years may be no less than 10 nor more than 30.
What are the requirements for selecting a plan?
You may elect by written notice to us at any time at least 30 days prior to the
settlement date to have the market adjusted value applied on the settlement date
to provide:
1. a lump-sum payment as a result of a total surrender as provided under
the cash surrender value provision of this contract; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in accordance with the
Code.
Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. any annuity payment plan selected must also, if selected by a
non-spouse beneficiary, meet the incidental death benefit
requirements under the Code.
If, at least 30 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 10 years, unless otherwise
required by the Code.
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 cash surrender value.
30370C
<PAGE>
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.
30370C
<PAGE>
===========================================================================
Table of Settlement Rates
===========================================================================
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below.
The amount of such payments under plans A, B, and C will depend on the adjusted
age of the annuitant on the settlement date. The amount of such payments under
plan D will depend on the adjusted age of the annuitant and the joint annuitant
on the settlement date. Adjusted age means the age on the annuitant's nearest
birthday minus an "adjustment" based on the calendar year of the birth of the
annuitant as follows:
Calendar Calendar
Year of Year of
Annuitant's Adjust- Annuitant's Adjust-
Birth ment Birth ment
- ----- ---- ----- ----
Prior to 1920 0 1945 through 1949 6
1920 through 1924 1 1950 through 1959 7
1925 through 1929 2 1960 through 1969 8
1930 through 1934 3 1970 through 1979 9
1935 through 1939 4 1980 through 1989 10
1940 through 1944 5 After 1989 11
30370C
<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
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 4.81 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.
- ----------------------------------------------------------------------------------------------------------------------------------
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 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.
</TABLE>
- -------------------------------------------------------------------------------
Plan E Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000
Applied
- -------------------------------------------------------------------------------
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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
- ------------------------------------------------------------------------------
30370C
<PAGE>
===========================================================================
Individual Annuity
Contract
===========================================================================
- - Individual Annuity Contract.
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
30370C
<PAGE>
===========================================================================
Individual
Annuity
Contract IRA
===========================================================================
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
single purchase payment.
Signed for and issued by IDS Life Insurance Company, Minneapolis, Minnesota, as
of the contract date shown below.
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 contract 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 which you have made. This
contract will then be considered void from the start.
President:
/s/ Richard W. Kling
Richard W. Kling
Secretary:
/s/ William A. Stoltzmann
William A. Stoltzmann
30373C
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
- - Individual Annuity Contract
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
ANNUITANT: John Doe
CONTRACT NUMBER: XXX-XXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30373C (3/91)
<PAGE>
===========================================================================
Guide to Contract Provisions
===========================================================================
Definitions Important words and meanings/Page 3
The Annuity Contract Entire contract; Modification;
Incontestability; Misstatement of
birthdate or sex/Page 4
Owner Owner's rights; Trustee/Custodial
ownership; Change of ownership restricted;
Page 4
Beneficiary and Payments to Who is the beneficiary; Change of
Beneficiary beneficiary; Payments to beneficiary/Page
5
Purchase Payment Payment of the purchase payment/Page 5
Accumulation Value, How the accumulation value is determined;
Cash Surrender Value, and How the market adjusted value is
Market Adjusted Value determined; Surrender of the contract for
the cashsurrender value; Annual
statement of value/Page 6
Annuity Payment Plans When annuity payments begin; Different
ways to receive annuity payments/Page 8
Table of Settlement Rates Table showing monthly annuity payment
amounts for the various plans/Page 9
30373C
<PAGE>
CONTRACT DATA
CONTRACT OWNER: John Doe
PURCHASE PAYMENT: $5,000.00
INITIAL GUARANTEE RATE: 7%
INITIAL GUARANTEE PERIOD: 5 Years
ACCUMULATION VALUE AT END OF INITIAL GUARANTEE PERIOD: $7,012.76
Surrender Charge Percentage
(Applied to Market Adjusted Value Surrendered)
Guarantee Contract Years as measured from the beginning of a
Period Guarantee Period
1 2 3 4 5 6 7 8
1 Year 1%
2 Years 2% 1%
3 Years 3% 2% 1%
4 Years 4% 3% 2% 1%
5 Years 5% 4% 3% 2% 1%
6 Years 6% 5% 4% 3% 2% 1%
7 Years 7% 6% 5% 4% 3% 2% 1%
8 Years 8% 7% 6% 5% 4% 3% 2% 1%
9 Years 8% 7% 6% 5% 4% 3% 2% 1%
10 Years 8% 7% 6% 5% 4% 3% 2% 1%
For renewal guarantee periods, the surrender charge percentages will be based on
the lesser of:
1. The length of the new guarantee period, or
2. The number of years remaining until the eighth contract
anniversary.
There are no surrender charges on the last day of a guarantee period. There will
never be surrender charges beyond the eighth contract anniversary.
30373C
<PAGE>
ANNUITANT: John Doe
CONTRACT NUMBER: XXXX-XXXXXXX
CONTRACT DATE: March 18, 1991
CONTRACT SETTLEMENT DATE: March 18, 2021
30373C
<PAGE>
===========================================================================
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, our, us
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 under contract data, in the
contract.
contract anniversary
The same day and month as the contract date each year that the contract remains
in force.
initial guarantee period
The period during which the initial guarantee rate will be credited. It is shown
under contract data.
initial guarantee rate
The rate of interest credited to the purchase payment as described in the
accumulation value section. It is shown under contract data.
renewal guarantee period
A renewal guarantee period will begin at the end of each guarantee period. It is
determined in accordance with the terms of the contract.
renewal guarantee rate
The rate of interest credited to the renewal value as described in the
accumulation value section.
30373C
<PAGE>
renewal date
The first day of a renewal guarantee period. It will always be on a contract
anniversary.
current rate
The applicable interest rate contained in a schedule of rates established by us
from time to time for various guarantee periods.
accumulation value
The value of the purchase payment plus interest credited, adjusted for any
surrenders.
market adjusted value
The accumulation value adjusted by the market adjusted value formula.
market value adjustment
The market adjusted value minus the accumulation value.
renewal value
The accumulation value at the end of the guarantee period.
cash surrender value
The market adjusted value less any applicable surrender charge.
written request
A request in writing signed by you and delivered to us at our home office.
settlement
The application of the market adjusted value of the 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.
IRA
An Individual Retirement Annuity as described in Section 408 of the Code.
30373C
<PAGE>
===========================================================================
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.
In issuing this contract, we have relied upon the application. The statements
contained in the application are considered representations and not warranties.
No statements made in connection with the application will be used by us to void
the contract or to deny a claim unless that statement is part of the
application.
Can this contract be modified?
We reserve the right to modify the contract to the extent necessary to qualify
it as an IRA as described in Section 408 of the Code or in any other applicable
section of the Code.
When will this contract become incontestable?
This contract is incontestable from its date of issue.
What if the annuitant's birthdate or sex has been misstated?
If the annuitant's birthdate or sex has been misstated, payments under this
contract 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.
What laws govern this contract?
This 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.
30373C
<PAGE>
===========================================================================
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 the contract or allowed
by us. Your entire interest as owner is nonforfeitable.
What are your rights as owner if you are a trust or custodial account?
If you are a tax-qualified trust or tax-qualified custodial account, then your
trustees or custodians (or their successors), properly named by your trust or
custodial agreement, may exercise all rights and privileges provided in this
contract or allowed by us. You own this contract for the exclusive benefit of
the annuitant and his or her beneficiary.
Can you change the ownership of this contract?
This 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
Section 408 of the Code or under any other applicable section of the Code. Your
interest in this contract may be transferred to your former spouse, if any,
under a divorce decree or a written instrument incident to such divorce.
However, if you are the trustee of a tax-qualified trust or the custodian of a
tax-qualified custodial account, you may transfer ownership of this contract to
the annuitant or to a qualified successor trustee or custodian.
Any permitted transfers must be 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 subject to any action taken or payment made by us before the
recording.
30373C
<PAGE>
===========================================================================
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 due proof of
death is received at our home office.
The above amount will be payable in a lump sum upon receipt of due proof of
death of the annuitant. The beneficiary may elect to receive payment anytime
within 5 years after the date of death of the annuitant.
Instead of a lump sum, payment may be made under an annuity payment plan
provided amounts are calculated in accordance with the Code and:
1. the beneficiary elects the plan within 60 days after we receive due
proof of death; and
2. payments begin no later than:
a. one year after the date of death, in the case of a non-spouse
beneficiary; or
b. the date on which the annuitant would have attained age 70 1/2 if
later than one year after the date of death, in case of a spouse
beneficiary; and
3. the plan provides equal or substantially equal payments over a period
which does not exceed the life of the beneficiary or the life expectancy
of the beneficiary.
In this event, the references to "annuitant" in the annuity payment plans
section will apply to the beneficiary.
30373C
<PAGE>
To whom are the death benefits payable?
Benefits will be paid equally to all primary beneficiaries surviving the
annuitant. If none survive, 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.
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?
If the annuitant's death occurs before the settlement date, the annuitant's
spouse, if designated as sole beneficiary, may elect in writing to forego
receipt of the death benefit and, instead, continue this contract in force as
its owner and annuitant. The election by the spouse must be made within 60 days
after we receive due proof of death. In this event, the settlement date may not
be later than the April 1 following the calendar year in which the spouse
attains age 70 1/2.
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.
30373C
<PAGE>
===========================================================================
Purchase Payment
===========================================================================
What is the purchase payment for this contract?
The purchase payment for this contract is shown under contract data. It is a
rollover IRA contribution or a combination rollover and active IRA contribution
as defined in and limited by the Code. It is payable to us on or before the date
we deliver this contract. It must be paid or mailed to us at our home office or
to an authorized agent.
30373C
<PAGE>
===========================================================================
Accumulation Value,
Cash Surrender Value,
Market Adjusted Value
===========================================================================
How is the accumulation value determined?
On the contract date, the accumulation value of this contract is the purchase
payment. Thereafter, interest accrues from day to day for the guarantee period
at the rate shown under contract data. This rate represents an effective annual
yield. At no time while the contract is in force shall interest accrue at a rate
less than 3% compounded annually. The accumulation value will be adjusted for
any amounts surrendered.
Are there premium tax charges?
We reserve the right to deduct an amount from the accumulation value of this
contract at the time that any applicable premium taxes not previously deducted
are payable.
If a tax is payable at the time of your purchase payment and we choose to not
deduct it at that time, we further reserve the right to deduct it at a later
date.
How are renewal guarantee periods determined?
At the end of any guarantee period, a renewal guarantee period will begin. We
will notify you in writing 45 days before the renewal guarantee period. Each
renewal guarantee period will be one year unless you elect a different length
from those offered at the time. We must receive your written request at least 15
days before the renewal date. The renewal guarantee period may never extend
beyond the settlement date.
The accumulation value on the renewal date will be equal to the accumulation
value at the end of the guarantee period just ending. This value will earn
interest at the renewal guarantee rate. Upon written request, within 45 days of
the renewal guarantee period, we will notify you of the renewal guarantee rate
then in effect for contracts renewing at that time. The actual renewal guarantee
rate will be determined on the renewal date.
30373C
<PAGE>
What is the market adjusted value and how is it determined?
The market adjusted value is the accumulation value on any date before the end
of the current guarantee period adjusted by a formula. The formula adjustment
reflects the relationship between:
1. the interest rate we are then crediting for new contract sales and
renewals (Form 30373) for the time remaining in your contract's current
guarantee period; and
2. the guaranteed interest rate applicable to your contract's current
guarantee period.
The market adjusted value may be more or less than the accumulation value.
The market adjusted value formula is as follows:
market adjusted value = renewal value
(1 + ic + .0025)(N + t)
where: renewal value = the accumulation value at the end of your
current guarantee period.
N = the number of complete contract years to
the end of your guarantee period.
t = the fraction of the contract year
remaining to the end of your contract year
(for example, if 180 days remain in a 365
day contract year, t would be .493)
ic = the current rate offered for new contract
sales and renewals (Form 30373) for the
number of years left in your guarantee
period (straight line interpolation
between whole year rates). If N is
zero, ic is the rate for one year
guarantee periods.
The market value adjustment is as follows:
market value adjustment = market adjusted value - accumulation value
30373C
<PAGE>
There will be no market value adjustment made on the last day of a guarantee
period.
Can you request surrender of any amounts under this contract before settlement?
Yes. By written request to us and subject to the rules below you may:
1. surrender this contract for the total cash surrender value;
2. partially surrender this contract for a part of the cash surrender value.
How is the cash surrender value determined?
The cash surrender value is the market adjusted value less a surrender charge.
The surrender charge is based on the amount surrendered and the contract year in
which the surrender is made. The schedule of surrender charges is shown under
contract data.
After the first contract anniversary, surrender charges will not apply to
surrenders of amounts totaling up to 10% of the contract accumulation value as
of the last contract anniversary.
What are the rules for a surrender or partial surrender?
The amount surrendered and any applicable market value adjustment or surrender
charge will be deducted from the accumulation value of the contract on the date
of surrender. You may surrender all or a portion of the cash surrender value.
However, the accumulation value that remains after a partial surrender must be
at least $2,000. Any partial surrender must be at least $250.
The surrender payment will normally be mailed to you within seven days of the
receipt of your written request.
Upon surrender of this contract for the total cash surrender value, this
contract will terminate. We may require that you return this contract to our
home office before we pay the total cash surrender value.
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
6 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 30 days, we will
pay annual interest of at least 3% on the amount deferred.
30373C
<PAGE>
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 cash surrender value of this contract. The statement
will specify the surrender charge and market value adjustment used to determine
the cash surrender value. This statement will be based on any laws or
regulations that apply.
We will also notify you 45 days before the end of a guarantee period concerning
renewal periods available and your right to surrender without a market value
adjustment on the last day of your guarantee period.
30373C
<PAGE>
===========================================================================
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 that you 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 30 days after we receive your written request at our home office.
The settlement date cannot be later than the later of:
1. the April 1 following the calendar year in which the annuitant attains
age 70 1/2; or
2. such other date, provided the Code allows you to satisfy the minimum
distribution requirements of Section 408(b)(3) of the Code with respect
to this contract through a means other than settlement of this contract,
including the ability to satisfy such distribution requirements from
other individual retirement accounts and/or individual retirement
annuities that you may own.
Notwithstanding either of the above, the settlement date cannot be later than
the later of:
1. the contract anniversary nearest the annuitant's 85th birthday; or
2. the 10th contract anniversary.
What are the annuity payment plans?
There are different ways to receive annuity payments. We call these plans.
Plan A - This provides monthly annuity payments for the lifetime of the
annuitant. No payments will be made after the annuitant dies.
30373C
<PAGE>
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 market adjusted
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 joint annuitant.
Plan E - This provides monthly fixed dollar annuity payments for a period of
years. The period of years may be no less than 10 nor more than 30.
What are the requirements for selecting a plan?
You may elect by written notice to us at anytime at least 30 days prior to the
settlement date to have the market adjusted value applied on the settlement date
to provide:
1. a lump-sum payment as a result of a total surrender as provided under
the cash surrender value provision of this contract; or
2. one of the annuity payment plans shown herein. Amounts payable under any
such annuity payment plan will be calculated in accordance with the
Code.
Any such annuity payment plan must be provided:
a. in equal or substantially equal payments over a period no longer
than the life of the annuitant or over 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, or the life
expectancy of the annuitant and a joint annuitant.
c. in the case of a non-spouse beneficiary, payments must be such
that at least 50% of the present value of the contract is
expected to be distributed within the life expectancy of the
annuitant.
30373C
<PAGE>
If, at least 30 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 10 years, unless otherwise
required by the Code.
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 cash 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.
30373C
<PAGE>
===========================================================================
Table of Settlement Rates
===========================================================================
What will be the amount of the monthly annuity payments?
The amount of each monthly annuity payment for each $1,000 of market adjusted
value applied under any payment plan will be based on our Table of Settlement
Rates in effect at the time of the first payment. The amounts will not be less
than those shown in the table below.
The amount of such payments under plans A, B, and C will depend on the sex and
the adjusted age of the annuitant on the settlement date. The amount of such
payments under plan D will depend on the sex and the adjusted age of the
annuitant and the joint annuitant on the settlement date.
Adjusted age means the age on the annuitant's nearest birthday minus an
"adjustment" based on the calendar year of the birth of the annuitant as
follows:
Calendar Calendar
Year of Year of
Annuitant's Adjust- Annuitant's Adjust-
Birth ment Birth ment
- ----- ---- ----- ----
Prior to 1920 0 1945 through 1949 6
1920 through 1924 1 1950 through 1959 7
1925 through 1929 2 1960 through 1969 8
1930 through 1934 3 1970 through 1979 9
1935 through 1939 4 1980 through 1989 10
1940 through 1944 5 After 1989 11
30373C
<PAGE>
<TABLE>
<CAPTION>
Amount of Each Monthly Annuity Payment Per $1,000 Applied
Plan A Plan B Plan C Plan D - Joint and Survivor
Adjusted Age of Female Joint Annuitant
Life 5 Years 10 Years 15 Years With Adj.
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. M = Male F = Female
</TABLE>
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.
<TABLE>
<CAPTION>
Plan E - Dollar Amount of Each Monthly Fixed Dollar Annuity Payment Per $1,000 Applied
<S> <C> <C> <C> <C> <C>
Years Monthly Years Monthly Years Monthly
Payable Payment Payable Payment Payable 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>
30373C
<PAGE>
===========================================================================
Individual Annuity
Contract IRA
===========================================================================
- - Individual Annuity Contract.
- - Purchase payment is payable in a single sum.
- - Annuity payments to begin on the settlement date.
- - This contract is nonparticipating. Dividends are not payable.
AMERICAN
EXPRESS
Financial
Advisors
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
30373C
<PAGE>
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 5, 1998 with respect to the consolidated
financial statements and schedules of IDS Life Insurance Company included in
Post-Effective Amendment No. 10 to the Registration Statement (Form S-1, No.
33-28976) and related Prospectus of IDS Life Account MGA for the registration of
market value adjusted annuity contract interests to be offered by IDS Life
Insurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 14, 1998
<PAGE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants 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 Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
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 Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value 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
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
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,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any 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 for existing or future products of existing separate accounts (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>
Dated the 19th day of August, 1997.
/s/ David R. Hubers August 15, 1997
- -------------------------------------
David R. Hubers
Director
/s/ Richard W. Kling August 18, 1997
------------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman August 19, 1997
- -------------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell August 15, 1997
- -------------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy August 14, 1997
- -------------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek August 19, 1997
- -------------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion August 14, 1997
- -------------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
<PAGE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as principal financial officer and
controller, respectively, of IDS Life Insurance Company on behalf of the below
listed registrants 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 Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
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 Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Insurance Company
Portfolio Guaranteed Term Annuity 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
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,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as his attorney-in-fact and agent, to sign for him in
his name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products of existing separate accounts (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>
Dated the 9th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- -------------------------------------
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ Philip C. Wentzel April 9, 1998
- -------------------------------------
Philip C. Wentzel
Vice President and Controller
