<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 12 TO
FORM S-6
File No. 33-11165
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: IDS Life Variable Life Separate Account
B. Name of depositor IDS LIFE INSURANCE COMPANY
C. Complete address of depositor's principal executive offices:
IDS Tower, Minneapolis, Minnesota 55440-0010
D. Name and complete address of agent for service:
Copies to:
Mary Ellyn Minenko, Esq.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
E. Title and amount of securities being registered:
Flexible Premium Variable Life Insurance Policy
F. Proposed maximum aggregate offering price to the public of the
securities being registered.
Registration of Indefinite Amount of Securities Pursuant
to Rule 24f-2 under the Investment Company Act of 1940.
G. Amount of initial filing fee: NA
Registrant's Rule 24f-2 Notice for its most recent fiscal year
was filed on or about February 25, 1994.
H. It is proposed that this filing will become effective (check
appropriate space)
immediately upon filing pursuant to paragraph (b) of Rule 486
X on April 29, 1994, pursuant to paragraph (b) of Rule 486
60 days after filing pursuant to paragraph (a) of Rule 486
on (date) pursuant to paragraph (a) of Rule 486<PAGE>
PAGE 2
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
1.............................Cover Page; The variable account
2.............................IDS Life
3.............................Not applicable
4.............................Distribution of the policy
5.............................The variable account
6.............................The variable account
7.............................Not applicable
8.............................Not applicable
9.............................Not applicable
10............................Surrender charge; Total surrenders;
Partial surrenders; Taxation of
policy proceeds; Reinstatement;
Transfers between the fixed account
and the subaccounts; Grace period;
Voting rights; Substitution of
investments; Payment of premiums;
The fixed account; Allocation of
premiums; Transfers between the
fixed account and the subaccounts;
Right to examine policy
11............................The fund; The trusts
12............................The fund; The trusts; Cover page
13............................Loads, fees, and charges
14............................Purchasing your policy; Application
15............................Premiums; Payment of premiums;
Transfers between the fixed account
and the subaccounts; The fund, The
trusts
16............................Premiums; Payment of premiums;
Transfers between the fixed account
and the subaccounts; The fund; The
trusts
17............................Two ways to request a transfer, loan
or surrender; Policy surrenders
18............................The fund; The trusts
19............................Reports
20............................Not applicable
21............................Policy loans; Two ways to request a
transfer, loan or surrender
22............................Not applicable
23............................Management of IDS Life
24............................Policy value; Death benefits; Payment
of policy proceeds
25............................IDS Life
26............................Not applicable
27............................IDS Life
28............................Management of IDS Life
29............................Ownership
30............................Not applicable
31............................Not applicable
32............................Not applicable
33............................Not applicable<PAGE>
PAGE 3
34............................Not applicable
35............................Not applicable
36............................Not applicable
37............................Not applicable
38............................Distribution of the policy
39............................IDS Life; Distribution of the policy
40............................Not applicable
41............................Distribution of the policy; IDS Life
42............................Management of IDS Life
43............................Not applicable
44............................Premiums; Transfers between the fixed
account and subaccounts; Subaccount
values
45............................Not applicable
46............................Subaccount values
47............................Not applicable
48............................IDS Life
49............................Not applicable
50............................Not applicable
51............................The variable account
52............................Substitution of investments
53............................IDS Life's tax status
54............................Not applicable
55............................Not applicable
56............................Not applicable
57............................Not applicable
58............................Not applicable
59............................Not applicable
<PAGE>
PAGE 4
Flexible Premium Variable Life Insurance Policy
Prospectus April 29, 1994
The Flexible Premium Variable Life Insurance Policy described in
this prospectus is designed to provide life insurance coverage on
the insured named in the policy and flexibility of premium payments
and death benefits. This flexibility allows you to meet changing
insurance needs with a single insurance policy. The policy is
intended to qualify as a life insurance policy under Sections 72,
101 and 7702 of the Internal Revenue Code.
You may allocate policy value to one or more of seven subaccounts
of IDS Life Variable Life Separate Account. Five subaccounts
invest in the portfolios of IDS Life Series Fund: Equity, Income,
Money Market, Managed and Government Securities. Two subaccounts
invest in the Smith Barney Shearson Stripped ("Zero Coupon") U.S.
Treasury Securities Fund, Series A. There is no guaranteed minimum
policy value with respect to the subaccounts, and you bear the
entire investment risk. You may also allocate policy value to the
fixed account which earns at least a guaranteed minimum interest
rate. The fixed account is the general investment account of IDS
Life.
You may withdraw a portion of the policy's cash surrender value
after the first policy year or surrender it in full at any time for
its cash surrender value. Surrender charges are described under
"Loads, fees and charges". You may also take out policy loans.
The frequency of and amount of premium payments are flexible,
subject to certain restrictions and conditions. Payment of the
scheduled premium will not necessarily keep a policy from lapsing
if the cash surrender value is less than the amount needed to pay
the monthly deduction (see "Loads, fees and charges"). However, a
policy will not lapse if the premiums needed to keep the death
benefit guarantee in effect are paid. The death benefit guarantee
may remain in effect until the insured reaches attained insurance
age 70 or the policy has been in effect for five years, whichever
is later.
This prospectus contains detailed information about these and other
policy features, including certain restrictions and limitations
that apply. This prospectus also discusses how the investment
return earned by the policy can affect the policy's death benefit
and cash surrender value.
As in the case of other life insurance policies, it may not be
advantageous to purchase flexible premium variable life insurance
as a replacement for, or in addition to an existing flexible
premium variable or other life insurance policy.
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy
Issued and sold by: IDS Life Insurance Company, IDS Tower 10,
Minneapolis, MN 55440-0010 Telephone: (612) 671-3131
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PAGE 5
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED OR PRECEDED BY THE
PROSPECTUS OF THE IDS LIFE SERIES FUND, INC. AND OF THE SMITH
BARNEY SHEARSON STRIPPED ("ZERO COUPON") U.S. TREASURY SECURITIES
FUND, SERIES A. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE
REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IDS LIFE IS NOT A BANK, AND THE SECURITIES IT OFFERS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
PAGE 6
Table of contents
Key terms
The policy in brief
The variable account
The fund
Equity Portfolio
Income Portfolio
Money Market Portfolio
Managed Portfolio
Government Securities Portfolio
Portfolio objectives
Relationship between portfolios and subaccounts
Rates of return of the fund and subaccounts
The trusts
Objectives and major investments
Estimated rates of return
Trust maturity
Roles of Smith Barney Shearson and IDS Life
The fixed account
Purchasing your policy
Application
Right to examine policy
Premiums
Loads, fees and charges
Premium expense charge
Monthly deduction
Note for Massachusetts and Montana residents
Surrender charge
Partial surrender fee
Mortality and expense risk charge
Transaction charge
Fund investment management fee
Death benefit guarantee
Grace period
Reinstatement
Policy value
Fixed account value
Subaccount values
Death benefits
Change in death benefit option
Changes in specified amount
Misstatement of age or sex
Suicide
Beneficiary
Transfers between the fixed account and subaccounts
Fixed account transfer policies
Minimum transfer amounts
Maximum transfer amounts
Maximum number of transfers per year
Two ways to request a transfer, loan or surrender
Automated transfers
Automated dollar-cost averaging
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PAGE 7
Policy loans
Policy surrenders
Total surrenders
Partial surrenders
Allocations of partial surrenders
Effects of partial surrenders
Taxes
Optional insurance benefits
Waiver of monthly deduction
Accidental death benefit
Other insured rider
Children's insurance rider
Payment of policy proceeds
Federal taxes
IDS Life's tax status
Taxation of policy proceeds
Modified endowment contracts
Other tax considerations
IDS Life
Management of IDS Life
Smith Barney Shearson Inc.
Other information
Substitution of investments
Voting rights
Reports
Policy illustrations
<PAGE>
PAGE 8
Key terms
Accumulation unit: An accounting unit used to calculate the policy
value of the subaccounts prior to the insured's death. It is a
measure of the net investment results of each of the subaccounts.
Attained insurance age: The insured's insurance age plus the number
of policy anniversaries since the policy date. Attained insurance
age changes only on a policy anniversary.
Cash surrender value: Proceeds received if the policy is
surrendered in full or matures, equal to the policy value minus
indebtedness, minus any applicable surrender charges.
Code: The Internal Revenue Code of 1986, as amended.
Close of business: Closing time of the New York Stock Exchange,
normally 3 p.m., Central time.
Death benefit guarantee: A feature of the policy guaranteeing that
the policy will not lapse before the insured's attained insurance
age 70 (or five policy years, if later). The guarantee is in
effect if, on each monthly anniversary, total premiums paid, minus
any partial surrenders and any indebtedness, equal or exceed the
total required minimum monthly premium payments specified in the
policy.
Fixed account: The general investment account of IDS Life. The
fixed account is made up of all of IDS Life's assets other than
those held in any separate account.
Fixed account value: The portion of the policy value that is
allocated to the fixed account, including indebtedness.
Fund: IDS Life Series Fund, Inc., a diversified open-end management
investment company intended to meet a wide range of investment
goals with its five separate portfolios: Equity Portfolio, Income
Portfolio, Money Market Portfolio, Managed Portfolio and Government
Securities Portfolio. Each of five subaccounts of the variable
account invests in a specific one of these portfolios.
IDS Life: In this prospectus, "we," "us," "our," and "IDS Life"
refer to IDS Life Insurance Company.
Indebtedness: All existing loans on the policy plus interest that
has either been accrued or added to the policy loan.
Insurance age: The age of the insured, based upon his or her
nearest birthday on the date of the application.
Insured: The person whose life is insured by the policy.
Maturity date: The insured's attained insurance age 100, if living.
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PAGE 9
Minimum monthly premium: A monthly premium amount specified in
the policy that determines the total payment required to keep the
death benefit guarantee in effect. The initial minimum monthly
premium, determined by IDS Life when the policy is issued, depends
on the insured's sex, insurance age, rate classification, optional
insurance benefits added by rider, and the initial specified
amount. An increase or decrease in specified amount, or the
addition, change or termination of a policy rider will change the
minimum monthly premium.
Monthly date: The same day each month as the policy date. If there
is no monthly date in a calendar month, the monthly date is the
first day of the next calendar month.
Net amount at risk: A portion of the death benefit, equal to the
total current death benefit minus the policy value. This is the
amount to which cost of insurance rates are applied in determining
the monthly cost of insurance.
Net premium: The portion of a premium that is credited to the
policy, equal to the premium you pay minus a charge of 2.5% to
cover sales loads and a charge of 2.5% to cover state premium
taxes.
Owner: The entity to which, or individual to whom, the policy is
issued, or to whom ownership is subsequently transferred. In the
prospectus "you" and "your" refer to the owner.
Policy anniversary: The same day and month as the policy date each
year the policy remains in force.
Policy date: The date the policy is issued and from which policy
anniversaries, policy years and policy months are determined.
Policy value: The sum of the fixed account value plus the variable
account value.
Proceeds: The amount payable under the policy as follows:
o Upon death of the insured, proceeds will be the death
benefit under the death benefit option in effect as of
the date of the insured's death, minus any indebtedness.
o On the maturity date, proceeds will be the cash surrender
value.
o On surrender of the policy prior to the maturity date,
the proceeds will be the cash surrender value.
Rate classification: A group of insureds that IDS Life expects will
have similar mortality experience.
Scheduled premium: A premium, selected by the owner at the time of
application, of a level amount, at a fixed interval of time.
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PAGE 10
Specified amount: An amount used to determine the death benefit and
the proceeds payable upon death. Under Option 1, it is the death
benefit originally applied for. Under Option 2, it is the initial
net amount at risk. The initial specified amount is shown in your
policy.
Subaccount(s): One or more of the investment divisions of the
variable account, each of which invests in a particular fund
portfolio or trust.
Surrender charge: A contingent deferred issue and administrative
expense charge and a contingent deferred sales charge assessed
against the policy value at the time of surrender during the first
10 years of the policy and for 10 years after an increase in
coverage.
Trust: One of two unit investment trusts, both of which are part of
Smith Barney Shearson Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, Series A. Two subaccounts of the variable account
invest in these trusts, which contain certain debt obligations of
the United States.
Valuation date: A normal business day, Monday through Friday, on
which the New York Stock Exchange is open. The value of each
subaccount is set at the close of business on each valuation date.
Valuation period: The interval commencing at the close of business
on each valuation date and ending at the close of business on the
next valuation date.
Variable account: IDS Life Variable Life Separate Account
consisting of subaccounts, each of which invests in a particular
mutual fund portfolio or unit investment trust. The policy value
in each subaccount depends on the performance of the particular
portfolio or trust.
Variable account value: The sum of the values that are allocated to
the subaccounts of the variable account.
The policy in brief
The Flexible Premium Variable Life Insurance Policy (the policy) is
designed to provide insurance protection on the life of the insured
and to build cash value. Like other life insurance, the policy
provides a death benefit that is payable to the beneficiary upon
the insured's death. Unlike traditional, fixed-premium life
insurance, the policy allows you, as the owner, to allocate your
premiums (payments), or transfer policy value, to:
The variable account, consisting of subaccounts, each of which
invests in a mutual fund portfolio or unit investment trust
with a particular investment objective. You may direct
premiums to any or all of seven of these subaccounts. Your
policy's value may increase or decrease daily, depending on
the investment return. No minimum amount is guaranteed, as it
would be in a traditional life insurance policy. (p.9)
<PAGE>
PAGE 11
The fixed account, which earns interest at rates that are
adjusted periodically by IDS Life. This rate will never be
lower than 4.5%. (p.15)
The fund: Five subaccounts of the variable account invest in IDS
Life Series Fund, Inc., a series mutual fund of which IDS Life is
investment manager. The fund includes Equity, Income, Money
Market, Managed and Government Securities portfolios. (p.10)
The trusts: Two subaccounts of the variable account invest in units
of the Smith Barney Shearson Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, Series A, a series of unit investment trusts.
(p.13)
Purchasing your policy: To apply, send a completed application and
premium payment to IDS Life's home office. For your application to
be accepted, you will need to meet certain conditions stated in the
application form and to supply medical and other evidence that the
person you propose to insure (yourself or someone else) is
insurable according to our underwriting rules. (p.16)
Right to examine policy: You may return your policy for any reason
and receive a full refund of your premiums by mailing us the policy
and a written request for cancellation within a specified period.
(p.16)
Premiums: In applying for your policy, you state how much you
intend to pay, and whether you will pay quarterly, semiannually or
annually. You may also make additional, unscheduled premium
payments in any amount from $25 to $500,000. We may refuse
premiums in order to comply with the Code. (p.17)
Loads, fees and charges: Your policy is subject to the following
charges, which compensate IDS Life for administering and
distributing the policy as well as paying policy benefits and
assuming related risks:
o Premium expense charge -- 2.5% sales charge and 2.5% premium tax
charge for a total of 5% of each premium payment. This charge pays
some distribution expenses and state and local premium taxes.
o Monthly deduction -- charged against the value of your policy
each month, covering the cost of insurance, certain administrative
expenses, a death benefit guarantee charge and optional insurance
benefits.
o Surrender charge -- applies if you surrender your policy for its
full cash value, or the policy lapses, during the first 10 years
and for 10 years after requesting an increase in the specified
amount (the minimum death benefit specified in your application).
The surrender charge consists of a deferred charge for costs of
issuing the policy and a deferred sales charge. It is based on the
initial specified amount and on any increase in the specified
amount.
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PAGE 12
o Partial surrender fee -- applies if you surrender part of the
value of your policy; equals $25 or 2% of the amount surrendered,
if less.
o Mortality and expense risk charge -- applies only to the
subaccounts; equals, on an annual basis, 0.9% of the average daily
net asset value of the subaccounts.
o Transaction charge -- applies only to subaccounts that invest in
the trusts; equals, on an annual basis, 0.25% of their average
daily net asset value.
o Fund investment management fee -- applies only to the fund
portfolios; equals, on an annual basis, 0.5% of the average daily
net assets of the Money Market Portfolio and 0.7% of the average
daily net assets of the other portfolios. (p.22)
Death benefit guarantee: Your policy will not lapse regardless of
investment performance if the death benefit guarantee is in effect.
To keep the death benefit guarantee in effect, you must pay the
minimum monthly premiums specified in the policy. The death
benefit guarantee applies only until the insured reaches attained
insurance age 70 or the policy has been in effect for five years,
whichever is later. (p.22)
Grace period: If the cash surrender value of your policy becomes
less than the amount needed to pay the monthly deduction, and the
death benefit guarantee is not in effect, you will have 61 days to
pay a premium that raises the cash surrender value to an amount
sufficient to pay the monthly deduction. If you don't, the policy
will lapse. (p.23)
Reinstatement: If your policy lapses, it can be reinstated within
five years, if you make certain payments, and present evidence
satisfactory to IDS Life that the insured remains insurable. The
death benefit guarantee cannot be reinstated. (p.23)
Death benefits: Your policy's death benefit can never be less than
the specified amount in your policy application, unless you change
that amount or your policy has outstanding indebtedness. The
relationship between the policy value and the death benefit depends
on which of two options you choose:
o Option 1 level amount: The death benefit is the greater of the
specified amount or a percentage of policy value.
o Option 2 variable amount: The death benefit is the greater of
the specified amount plus the policy value, or a percentage of
policy value.
You may change the death benefit option or specified amount within
certain limits; doing so will generally affect policy charges.
(p.28)
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PAGE 13
Transfers between the fixed account and subaccounts: You may, at
no charge, transfer policy value from one subaccount to another or
between subaccounts and the fixed account. (Certain restrictions
apply to transfers involving the fixed account.) You can request
up to five transfers per year by phone or mail. You can also
arrange for automated transfers on a monthly, quarterly, semiannual
or annual basis. (p.31)
Policy loans: You may borrow against your policy's cash surrender
value. A policy loan, even if repaid, can have a permanent effect
on the death benefit and policy value. A loan may also have tax
consequences if your policy lapses or you surrender it. (p.34)
Policy surrenders: You may cancel the policy while the insured is
living and receive its cash surrender value. The cash surrender
value is the policy value minus indebtedness, minus any applicable
surrender charges. (p.36)
Exchange right: For two years after the policy is issued, you can
exchange it for one that provides benefits that do not vary with
the investment return of the subaccounts. Because the policy
itself offers a fixed return option, all you need do is transfer
all of the policy value in the subaccounts to the fixed account.
(p.37)
Payment of policy proceeds: Proceeds will be paid when you
surrender the policy, the insured dies or the policy matures, which
occurs when the insured reaches attained insurance age 100. You or
the beneficiary may choose whether payment is to be made in a lump
sum or under one or more of certain options. (p.40)
Federal taxes: The death benefit is not considered part of the
beneficiary's income and thus is not subject to federal income
taxes. Part or all of any proceeds received through full or
partial surrender, maturity, lapse, policy loan or assignment of
policy value may be subject to federal income tax as ordinary
income. Proceeds other than death benefits from certain policies,
classified as "modified endowments," are taxed differently from
proceeds of conventional life insurance contracts and may also be
subject to an additional 10% IRS penalty tax if you are younger
than 59 1/2. A policy is considered to be a modified endowment if
it was applied for or materially changed after June 21, 1988, and
premiums paid in the early years exceed certain modified endowment
limits. (p.43)
The variable account
You can direct your premiums to any or all of seven subaccounts of
the variable account. Five of these invest in portfolios of IDS
Life Series Fund, Inc.:
Subaccount invests exclusively in shares of
U Equity Portfolio
V Income Portfolio
W Money Market Portfolio
X Managed Portfolio
Y Government Securities Portfolio<PAGE>
PAGE 14
Two subaccounts invest in units of the Smith Barney Shearson
Stripped ("Zero Coupon") U.S. Securities Fund, Series A, unit
investment trusts:
Subaccount invests in a trust with maturity date of
1995V Nov. 15, 1995
2004V Nov. 15, 2004
The variable account was established on Oct. 16, 1985, under
Minnesota law and is registered as a single unit investment trust
under the Investment Company Act of 1940. Such registration does
not involve any SEC supervision of the account's management or
investment practices or policies.
The variable account meets the definition of a "separate account"
under federal securities laws. Income, capital gains or capital
losses of each subaccount are credited to or charged against the
assets of that subaccount alone. No subaccount will be charged
with liabilities of any other subaccount or of any other business
conducted by IDS Life.
At all times IDS Life will maintain assets in the subaccounts with
total market value at least equal to the reserves and other
liabilities required to cover insurance benefits under all
contracts participating in the subaccount.
The fund
IDS Life Series Fund, Inc., a Minnesota corporation, is a
diversified, open-end management investment company incorporated on
May 8, 1985. The fund consists of five portfolios:
Equity Portfolio
Objective: capital appreciation. Invests primarily in common
stocks listed on national securities exchanges and other securities
convertible into common stock.
Income Portfolio
Objective: to maximize current income while attempting to conserve
the value of the investment and to continue the high level of
income for the longest period of time. At least 50% of net assets
will normally be invested in high-quality, lower-risk corporate
bonds, unrated corporate bonds believed to have the same investment
qualities, and government bonds. Other investments may include
lower-rated corporate bonds, bonds and common stocks sold together
as a unit, preferred stock and foreign securities.
Money Market Portfolio
Objective: to provide maximum current income consistent with
liquidity and conservation of capital. Invests in relatively
short-term money market securities, such as marketable debt
securities issued or guaranteed as to principal and interest by the
U.S. government or its agencies or instrumentalities, bank
certificates of deposit, bankers' acceptances, letters of credit
and high-grade commercial paper. <PAGE>
PAGE 15
Managed Portfolio
Objective: to maximize total investment return through a
combination of capital appreciation and current income. If the
investment manager believes the stock market will be moving higher,
it can emphasize stocks that offer potential for appreciation. At
other times, the manager may increase the portfolio's holdings in
bonds and money-market securities providing high current income.
Government Securities Portfolio
Objective: to provide a high current return and safety of
principal. Invests primarily in debt obligations issued or
guaranteed as to principal and interest by the U.S. government, its
agencies and instrumentalities.
Portfolio objectives
Portfolio objectives can be changed only if holders of a majority
of outstanding shares agree. Because portfolio investments are
subject to the risk of changing economic conditions and the ability
of the investment manager to anticipate such changes, there can be
no guarantee that the investment objectives of a portfolio will be
achieved.
Relationship between portfolios and subaccounts
Shares of each portfolio are sold to the appropriate subaccount at
net asset value without a sales charge. Dividends and capital gain
distributions from a portfolio are reinvested at net asset value
without a sales charge and retained as an asset of the appropriate
subaccount. Portfolio shares will be redeemed by the appropriate
subaccount, without fee to the subaccount, to the extent necessary
to make death benefit or other payments under the policy.
Portfolio shares are sold only to fund life insurance benefits
under variable life insurance policies issued by IDS Life and IDS
Life Insurance Company of New York. Currently shares are sold only
to:
o the respective subaccounts of the variable account;
o IDS Life Variable Account for Smith Barney Shearson;
o IDS Life of New York Account 7; and
o IDS Life of New York Account 8.
Also, there are additional subaccounts of the variable account,
which fund other insurance policies issued by IDS Life and are not
discussed here.
Shares may, in the future, be sold to other separate accounts to
fund benefits of other variable life insurance policies and
variable annuity contracts.
IDS Life acts as the investment manager of the fund and receives a
fee for its services as described under "Loads, fees and charges."
IDS Trust Company acts as custodian of the fund's investments.
<PAGE>
PAGE 16
Detailed information about the fund, its investment objectives,
policies and risks, and its five separate investment portfolios may
be found in its prospectus.
Diversification: The Internal Revenue Service (IRS) has issued
final regulations relating to the diversification requirements
under Section 817(h) of the Code. Each fund portfolio intends to
comply with these requirements.
Ownership rules: The U.S. Treasury and the IRS have indicated they
may provide additional guidance concerning how many subaccounts may
be offered and how many exchanges among subaccounts may be allowed
before the owner is considered to have investment control and thus
is currently taxed on income earned within subaccount assets. We
do not know at this time what the additional guidance will be or
when action will be taken. We reserve the right to modify the
policy, as necessary, to ensure that the owner will not be subject
to current taxation as the owner of the subaccount assets.
Rates of return of the fund and subaccounts
This section presents actual rates of return first for the five
portfolios of the fund, and then for the five corresponding
subaccounts. Rates of return are different in the two cases
because those of the subaccounts reflect additional expenses. All
expenses mentioned in the section are explained fully under "Loads,
fees and charges."
Rates of return of fund portfolios
In the following table are average annual rates of return based on
the actual investment performance of the fund portfolios after
deduction of applicable portfolio expenses (including the
investment management fees) for the periods indicated. These rates
do not reflect expenses that apply to the subaccounts or the policy
and therefore do not illustrate how actual investment performance
will affect policy benefits. Moreover, these rates of return are
not an estimate or guarantee of future performance.
Period ending 12/31/93
Portfolio 1 year 3 years 5 years Since inception*
Equity 13.36% 25.63% 18.46% 13.63%
Income 14.78 13.25 11.45 8.80
Money Market 2.66 3.87 5.65 5.81
Managed 19.87 20.45 19.86 14.83
Government Securities 12.10 11.65 11.23 8.37
*The portfolios of the fund commenced operations on January 20,
1986.
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PAGE 17
Rates of return of subaccounts
Average annual rates of return in the following table reflect all
expenses incurred by the portfolios and charges against the
subaccounts (including the mortality and expense risk charge). The
rates do not reflect the premium expense charge, surrender charge
or monthly deduction.
<TABLE><CAPTION>
Subaccount Investment 1 year 3 years 5 years Since inception*
<S> <C> <C> <C> <C> <C>
U Equity 12.35% 24.51% 17.30% 11.23%
V Income 13.89 12.28 10.48 8.86
W Money Market 1.73 2.94 4.70 4.84
X Managed 18.80 19.37 18.58 13.35
Y Government Securities 11.17 10.68 10.25 8.58
*The subaccounts commenced operations on June 17, 1987.
</TABLE>
The trusts
Smith Barney Shearson Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, Series A is a series of unit investment trusts.
Currently two are available for investment, one maturing in 1995
and one in 2004.
Objectives and major investments
The objective of each trust is to provide safety of capital and
income through investment in a portfolio consisting primarily of:
o bearer debt obligations issued by the United States that
have been stripped of their unmatured interest coupons,
o coupons stripped from debt obligations of the United
States, and
o receipts and certificates for such stripped debt
obligations and coupons.
Each trust will also contain a Treasury note or notes providing
interest income to pay anticipated expenses of the trust.
U.S. Treasury securities that have been stripped of their unmatured
interest coupons are essentially bonds or notes that pay no
interest. For this reason they are purchased at a deep discount
from their face value and, if held to maturity, return the full
face value.
Before maturity, the value of trust units will be more volatile
than would the value of units of a trust containing unstripped U.S.
Treasury securities of comparable maturities. The value may affect
death benefits and policy value, which will fluctuate accordingly.
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Estimated rates of return
Because amounts invested in stripped U.S. Treasury securities will
grow to their face values if held to maturity, we can estimate the
compound rate of growth to maturity, based on certain assumptions
about trust expenses. The net rate of return to maturity is
calculated based on the estimated compound rate of growth in the
units and these charges. Since the value of the trusts' units will
vary daily, reflecting the market value of the underlying
securities, the compound rate of growth to maturity and net rate of
return to maturity will also vary daily. Estimated net rates of
return from March 31, 1994 to maturity for the two trusts, taking
account of anticipated expenses are:
Trust maturity date Net rate of return to maturity
Nov. 15, 1995 4.93%
Nov. 15, 2004 7.11%
Rates of return to owners will be less than rates of return for
trust units themselves because the units are held in subaccounts of
the variable account, which are subject to policy charges not
reflected in the above estimates. (See "Loads, fees, and charges"
for a full discussion of applicable charges.)
Trust maturity
On the maturity date of a particular trust, the policy value
allocated to the subaccount that invests in the trust will
automatically be reallocated to Subaccount W, which invests in the
Money Market Portfolio, unless you give us other directions in
writing at least seven days before the maturity date. We will
notify you in writing 30 days before the trust matures.
Roles of Smith Barney Shearson and IDS Life
Smith Barney Shearson sponsors the trusts and sells units to the
subaccounts. Because each trust invests in a specified portfolio,
there is no investment manager.
The price of each trust's units includes a transaction charge, paid
directly by IDS Life to Smith Barney Shearson out of IDS Life's
general account assets. This charge is limited by agreement
between IDS Life and Smith Barney Shearson and will not be greater
than that ordinarily paid by a dealer for similar securities. We
will seek reimbursement for the amounts paid through a daily asset
charge, described under "Loads, fees and charges."
Trust units will be sold to the extent necessary for IDS Life to
provide benefits and make reallocation under the policies. Units
will be sold to Smith Barney Shearson, which has undertaken to
maintain a secondary market in units of the trusts.
IDS Life and Smith Barney Shearson reserve the right to discontinue
the sale of new units of a trust and to create additional trusts in
the future.
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More detailed information may be found in the current prospectus
for the Smith Barney Shearson Stripped ("Zero Coupon") U.S.
Treasury Securities Fund, Series A.
The fixed account
You can allocate premiums to the fixed account or transfer policy
value from the subaccounts to the fixed account (with certain
restrictions, explained in "Transfers between the fixed account and
subaccounts").
The fixed account is the general investment account of IDS Life.
It includes all assets owned by IDS Life other than those in the
variable account and other separate accounts. Subject to
applicable law, IDS Life has sole discretion to decide how assets
of the fixed account will be invested.
Placing policy value in the fixed account does not entitle you to
share in the fixed account's investment experience, nor does it
expose you to the account's investment risk. Instead, IDS Life
guarantees that the policy value you place in the fixed account
will accrue interest at an effective annual rate of at least 4.5%,
independent of the actual investment experience of the account.
IDS Life bears the full investment risk for amounts allocated to
the fixed account.
IDS Life is not obligated to credit interest at any rate higher
than 4.5%, although we may do so at our sole discretion. In recent
years interest was credited as follows:
1987 8.5 to 9.25%
1988 8.0 to 9.25%
1989 8.25 to 9.5%
1990 8.25 to 9.2%
1991 7.55 to 8.55%
1992 6.5 to 8.05%
1993 5.7 to 7.4%
These rates are not indicative of future interest rates. The rate
of return to you as owner will be less than the rate credited
because policy charges (described under "Loads, fees and charges")
reduce your net return.
Interest in excess of 4.5% will not be credited on any portion of
policy value in the fixed account against which you have a policy
loan outstanding.
Because of exemptive and exclusionary provisions, interests in the
fixed account have not been registered under the Securities Act of
1933, and the fixed account has not been registered as an
investment company under the Investment Company Act of 1940.
Accordingly, neither the fixed account nor any interests in it are
subject to the provisions of these Acts, and the staff of the SEC
<PAGE>
PAGE 20
has not reviewed the disclosures in this prospectus relating to the
fixed account. Disclosures regarding the fixed account may,
however, be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Purchasing your policy
Application
To apply for coverage, complete an application and send it with
your premium payment to IDS Life's home office. In your
application, you:
o select a specified amount of insurance;
o select a death benefit option;
o designate a beneficiary; and
o state how premiums are to be allocated among the fixed
account and/or the subaccounts.
Insurability: Before issuing your policy, IDS Life requires
satisfactory evidence of the insurability of the person whose life
you propose to insure (yourself or someone else). Our underwriting
department will review your application and any medical information
or other data required to determine whether the proposed individual
is insurable under our underwriting rules. Your application may be
declined if IDS Life determines the individual is not insurable and
any premium you have paid will be returned.
Age limit: IDS Life generally will not issue a policy to persons
over the insurance age of 75. It may, however, do so at its sole
discretion.
Rate classification: The rate classification is based on the
insured's health, occupation, or other relevant underwriting
standards. This classification will affect your monthly deduction
and may affect the cost of certain optional insurance benefits.
(See "Loads, fees and charges" and "Optional insurance benefits.")
Other conditions: In addition to proving insurability, you and the
insured must also meet certain conditions, stated in the
application form, before coverage will become effective and your
policy will be delivered to you.
Death of the insured: If the insured dies before the policy is
issued and:
o if all conditions stated in the application have not been
met, IDS Life's sole liability will be to return the
premium paid plus any interest earned.
o if all conditions stated in the application have been
met, IDS Life's liability will be the lesser of the death
benefit applied for or $150,000.
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Incontestability: IDS Life will have two years from the effective
date of your policy to contest the truth of statements or
representations in your application. After the policy has been in
force during the insured's lifetime for two years from the policy
date, IDS Life cannot contest the policy.
Right to examine policy
You may return your policy for any reason, and receive a full
refund of all premiums paid. To do so you must mail or deliver the
policy to IDS Life or your IDS financial planner, with a written
request for cancellation, by the latest of:
o the 10th day after you receive it;
o the 10th day after IDS Life mails or personally delivers a
written notice of withdrawal right; or
o the 45th day after you sign your application.
On the date your request is postmarked or received, the policy will
immediately be considered void from the start.
Premiums
Payment of premiums:
In applying for your policy, you decide how much you intend to pay
and how often you will make payments. During the first several
policy years, IDS Life requires that premiums sufficient to keep
the death benefit guarantee in effect be paid to keep the policy in
force.
You may schedule payments annually, semiannually, or quarterly.
(Payment at any other interval must be approved by IDS Life.) This
premium schedule is shown in your policy.
The scheduled premium serves only as an indication of your intent
as to the frequency and amount of future premium payments. You may
skip scheduled premium payments at any time if your cash surrender
value is sufficient to pay the monthly deduction, or if the death
benefit guarantee will remain in effect.
You may also change the amount and frequency of scheduled premium
payments by written request. IDS Life reserves the right to limit
the amount of such changes. Any change in the premium amount is
subject to applicable tax laws and regulations.
Although you have flexibility in paying premiums, the amount and
frequency of your payments will affect the policy value, cash
surrender value and length of time your policy will remain in
force, as well as affect whether the death benefit guarantee
remains in effect.
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Premium limitations:
You may make unscheduled premium payments at any time and in any
amount from $25 to $500,000. IDS Life reserves the right to limit
the number and amount of unscheduled premium payments.
Also, in order to receive favorable tax treatment under the Code,
premiums paid during the life of the policy must not exceed certain
limitations. To comply with the Code, IDS Life can either refuse
excess premiums as they are paid, or refund excess premiums with
interest no later than 60 days after the end of the policy year in
which they were paid.
Allocation of premiums:
Until your application is approved by IDS Life, we hold all
premiums in the fixed account, and we credit interest on the net
premiums (gross premiums minus premium expense charge) at the
current fixed account rate. As of the date your application is
approved, we will allocate the net premiums plus accrued interest
to the account(s) you have selected in your application. At that
time, we will begin to assess the various loads, fees, charges and
expenses.
Any amount allocated to a subaccount is converted into accumulation
units of that subaccount, as explained under "Policy value."
Similarly, when transferring value between subaccounts,
accumulation units in one subaccount are converted into a cash
value, which is then converted into accumulation units of the
second subaccount.
Your ability to allocate policy value to the trusts may be limited
by the availability of trust units.
Loads, fees and charges
Policy charges compensate IDS Life for:
o providing the insurance benefits of the policy;
o administering the policy;
o assuming certain risks in connection with the policy; and
o distributing the policy.
Some of these charges are deducted from your premium payments.
Others are deducted periodically from your policy value in the
fixed and/or subaccounts. You may also be assessed a charge if you
surrender your policy or the policy lapses.
Premium expense charge
We deduct this charge from each premium payment. The amount
remaining after the deduction, called the net premium, is credited
to the account(s) you have selected. The premium expense charge
has two parts:
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PAGE 23
Sales charge: 2.5% of each premium payment. Partially compensates
IDS Life for expenses in distributing the policy, including agents'
commissions, advertising and printing of prospectuses and sales
literature. (These expenses also may be partially compensated by
the contingent deferred sales charge, discussed under "Surrender
charge," below.)
Premium tax charge: 2.5% of each premium payment. Compensates
IDS Life for paying taxes imposed by certain states and
governmental subdivisions on premiums received by insurance
companies. All policies in all states are charged the average rate
of 2.5% even though state premium taxes vary from 2% to 3.5%. This
2.5% rate may be different than the actual premium tax IDS Life
expects to pay in your state.
Monthly deduction
On each monthly date we deduct from the value of your policy in the
fixed and/or subaccounts an amount equal to the sum of:
1. the cost of insurance for the policy month;
2. the policy fee shown in your policy;
3. the death benefit guarantee charge shown in your policy;
and
4. charges for any optional insurance benefits provided by
rider for the policy month.
Each of the four components is explained below.
You specify, in your policy application, what percentage of the
monthly deduction from 0% to 100% will be taken from the fixed
account and from each of the subaccounts. You may change these
percentages for future monthly deductions by written request.
Monthly deductions will be taken from the fixed account and the
subaccounts on a pro rata basis if:
o you do not specify the accounts from which the monthly
deduction is to be taken;
o the value in the fixed account or any subaccount is
insufficient to pay the portion of the monthly deduction you
have specified; or
o you purchased the policy in Texas.
If the cash surrender value of your policy is not enough to cover
the monthly deduction on a monthly anniversary, the policy may
lapse. However, the policy will not lapse if the death benefit
guarantee is in effect. (See "Death benefit guarantee"; also
"Grace period" and "Reinstatement" at the end of this section on
policy costs.)
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Components of the monthly deduction:
1. Cost of insurance: primarily, the cost of providing the death
benefit under your policy, which depends on:
o the amount of the death benefit;
o the policy value; and
o the statistical risk that the insured will die in a
given period.
The cost of insurance for a policy month is calculated as:
[a x (b - c)] + d
where:
(a) is the monthly cost of insurance rate, which reflects the
insured's statistical mortality risk, based on his or her sex,
attained insurance age (age at last policy anniversary) and rate
classification. Generally the cost of insurance rate will increase
as the insured's attained insurance age increases.
Rates are set by IDS Life, based on its expectations as to future
mortality experience. We may change the rates from time to time;
any change will apply to all individuals of the same rate
classification. However, rates will not exceed the Guaranteed
Maximum Monthly Cost of Insurance Rates shown in your policy, which
are based on the 1980 Commissioners Standard Ordinary Smoker and
Nonsmoker Mortality Tables, Age Nearest Birthday.
Policies purchased on or after May 1, 1991 with an initial
specified amount of $350,000 or greater qualify for lower cost of
insurance rates than policies purchased with a specified amount
less than $350,000. In addition, all policies purchased on or
after May 1, 1993 (October 1, 1993 for policies purchased in New
Jersey) qualify for lower cost of insurance rates than policies
purchased earlier.
(b) is the death benefit on the monthly date divided by 1.0036748
(which reduces IDS Life's net amount at risk, solely for computing
the cost of insurance, by taking into account assumed monthly
earnings at an annual rate of 4.5%);
(c) is the policy value on the monthly date. At this point, the
policy value has been reduced by the policy fee, death benefit
guarantee charge and any charges for optional riders;
(d) is any flat extra insurance charges assessed as a result of
special underwriting considerations.
Note for Massachusetts and Montana residents
Please disregard all policy provisions in this prospectus that are
based on the sex of the insured. The policy will be issued on a
unisex basis. Also disregard references to mortality tables; the
<PAGE>
PAGE 25
tables will be replaced with an 80% male, 20% female blend of the
1980 Commissioners Standard Ordinary Smoker and Non-Smoker
Mortality Tables, Age Nearest Birthday.
2. Policy fee: $5 per month. Waived for policies purchased on or
after May 1, 1991 with an initial specified amount of $350,000 or
more. This charge reimburses IDS Life for expenses of
administering the policy, such as processing claims, maintaining
records, making policy changes and communicating with owners. IDS
Life does not expect to make any profit on this charge. We reserve
the right to change the charge in the future, but guarantee that
it will never exceed $7.50 per month.
3. Death benefit guarantee charge: 1 cent per $1,000 of the current
specified amount and 1 cent per $1,000 of coverage under any other
insured rider. This charge compensates IDS Life for the risk
assumed in providing the death benefit guarantee. The charge is
included in the monthly deduction in the first five policy years or
until the insured's attained insurance age 70, whichever is later.
The charge will not be deducted if the death benefit guarantee is
no longer in effect. For any policy month in which the monthly
deduction is paid by a waiver of monthly deduction rider, the
minimum monthly premium will be zero. (See "Death benefit
guarantee," later in this section for an explanation of the minimum
monthly premium and "Other insured rider," under "Optional
insurance benefits.")
4. Optional insurance benefit charges: charges for any optional
benefits added to the policy by rider. See "Optional insurance
benefits."
Surrender charge
If you surrender your policy or the policy lapses during the first
10 policy years and in the 10 years following an increase in
specified amount a surrender charge will be assessed. The
surrender charge is the sum of two parts:
Contingent deferred issue and administrative expense charge:
Reimburses IDS Life for costs of issuing the policy, such as
processing the application (primarily underwriting) and setting up
computer records. IDS Life does not expect to make a profit on
this charge. For the initial specified amount, this charge is $4
per thousand dollars of initial specified amount. It remains level
during the first five policy years and then decreases monthly until
it is zero at the end of 10 policy years. If the specified amount
of the policy is increased, an additional charge will apply. The
additional charge will be $4 per thousand dollars of increase in
specified amount. It remains level during the first five years
following the effective date of the increase and then decreases
monthly until it is zero at the end of the 10th year following the
increase.
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Contingent deferred sales charge:
Partially compensates IDS Life for expenses of distributing the
policy, including IDS financial planners' commissions, advertising
and printing the prospectus and sales literature. For the initial
specified amount, this charge is the sum of 27.5% of premium
payments up to a maximum amount shown in the policy plus 6.5% of
all other premium payments. The maximum amount shown in the policy
will be based on the insured's insurance age, sex, rate
classification and initial specified amount. If the specified
amount of the policy is increased, an additional charge will apply.
The additional charge will be 6.5% of all premium payments
attributable to the increase. Premiums attributable to the
increase are calculated as
a x (b + c)
where:
(a) is the amount of the increase in the specified amount divided
by the total specified amount after the increase;
(b) is the policy value on the date of the increase; and
(c) is all premium payments paid on or after the date of the
increase.
Maximum surrender charge:
The total surrender charge is subject to an overall upper limit or
"maximum surrender charge." The "maximum surrender charge" for the
initial specified amount will be shown in the policy. It is based
on the insured's insurance age, sex, rate classification and
initial specified amount. The "maximum surrender charge" for the
initial specified amount will remain level during the first five
policy years and then decrease monthly until it is zero at the end
of 10 policy years. If the specified amount is increased, an
"additional maximum surrender charge" will apply. The "additional
maximum surrender charge" will be shown in a revised policy. It
will be based on the insured's attained insurance age, sex, rate
classification and the amount of the increase. The "additional
maximum surrender charge" will remain level during the first five
years following the effective date of the increase and then
decrease monthly until it is zero at the end of the 10th year
following the increase.
If premium payments are equal to or somewhat higher than the
premiums needed to keep the death benefit guarantee in effect, for
several years the surrender charge will generally be the charge
described in the "Contingent deferred issue and administrative
expense charge" and "Contingent deferred sales charge" sections
above. After that, the "Maximum surrender charge" will generally
apply. If premium payments are paid at a significantly higher
level, the "Maximum surrender charge" will generally apply in all
years.
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Partial surrender fee
If you surrender part of the value of your policy, you will be
charged $25 (or 2% of the amount surrendered, if less). This fee
is guaranteed not to increase for the duration of your policy. IDS
Life does not expect to make a profit on this fee.
Mortality and expense risk charge
This charge applies only to the subaccounts and not to the fixed
account. It is equal, on an annual basis, to 0.9% of the daily net
asset value of the subaccounts -- a level guaranteed for the life
of the policy. Computed daily, the charge compensates IDS Life
for:
o Mortality risk -- the risk that the cost of insurance
charge will be insufficient to meet actual claims.
o Expense risk -- the risk that the policy fee and the
contingent deferred issue and administrative expense
charge (described above) may be insufficient to cover the
cost of administering the policy.
IDS Life may profit from the mortality and expense risk charge.
Any such profit would be available to IDS Life for any proper
corporate purpose including, among others, payment of sales and
distribution expenses, which we do not expect to be covered by the
sales and surrender charges discussed earlier. Any further deficit
will have to be made up from IDS Life's general assets.
Transaction charge
IDS Life makes a daily charge against the assets of the two
subaccounts that invest in the trusts. This charge is intended to
reimburse us for the transaction fee we pay from our general
account assets to Smith Barney Shearson on the sale of the trust
units to the subaccounts.
The asset charge is equivalent to an effective annual rate of 0.25%
of the value of the subaccounts investing in the trusts. This
amount may be increased in the future but will not exceed an
effective annual rate of 0.5% of the value of these subaccounts.
The charge will be based on our costs (taking into account the
interest we lose on the amounts paid to Smith Barney Shearson). We
do not expect to profit from this transaction charge.
Fund investment management fee
IDS Life receives a fee for its services as investment manager of
the fund. The fund also reimburses IDS Life for certain
nonadvisory expenses, such as custodian and trustee fees,
registration fees for shares, postage, fidelity and security bond
costs, legal fees and other miscellaneous fees and charges.
This fee is deducted from the fund portfolios daily and paid to IDS
Life monthly.
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The investment management fee equals, on an annual basis:
o Money Market Portfolio -- 0.5% of aggregate average daily
net assets
o Equity, Income, Managed and Government Securities Portfolios
-- 0.7% of aggregate average daily net assets
Other information on charges
IDS Life may reduce or eliminate various fees and charges when we
incur lower sales costs and/or perform fewer administrative
services than usual. The two most common cases are:
o Policies made available by an employer to a group of
employees.
o Policies purchased on or after May 1, 1991 with an initial
specified amount of $350,000 or greater.
Death benefit guarantee
Your policy will remain in force even if the cash surrender value
is insufficient to cover the monthly deduction if you have paid the
minimum monthly premiums shown in the policy. Although the minimum
premium is specified as a monthly amount, you may pay on any
schedule you choose, as long as:
the sum of premiums paid - partial surrenders - outstanding
indebtedness
equals or exceeds
minimum monthly premium x number of months since policy date
(including the current month)
This guarantee applies only until the insured reaches attained
insurance age 70 or the policy has been in force for five years,
whichever is later. For factors affecting the minimum monthly
premium, see "Changes in specified amount" under "Death benefit"
and "Optional insurance benefits."
If, on a monthly date, you have not paid enough premiums to keep
the death benefit guarantee in effect, we will mail a notice to
your last known address, asking you to pay a premium sufficient to
bring your total up to the required minimum. If you do not pay
this amount within 61 days, your policy will lapse (terminate) if
the cash surrender value is less than the amount needed to pay the
monthly deduction. Although the policy can be reinstated as
explained below, the death benefit guarantee cannot be reinstated.
Grace period
If on a monthly date the cash surrender value of your policy is
less than the amount needed to pay the next monthly deduction, your
policy will still remain in force for at least 61 days.
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IDS Life will mail a notice to your last known address, requesting
payment of a premium that will raise the cash surrender value to an
amount sufficient to cover the next three monthly deductions. If
we receive this premium before the end of the 61-day grace period,
we will use the payment to cover all monthly deductions and any
other charges then due. Any balance will be added to the policy
value and allocated in the same manner as other premium payments.
If you do not pay the premium, the policy will lapse without value,
unless the death benefit guarantee described above is in effect.
If a policy lapses with outstanding indebtedness, any excess of the
outstanding indebtedness over the premium paid generally will be
taxable to the owner. (See"Federal taxes.") If the insured dies
during the grace period, any overdue monthly deductions will be
deducted from the death benefit.
Reinstatement
Your policy may be reinstated within five years after it lapses,
unless you surrendered it for cash. To reinstate, IDS Life will
require:
o a written request;
o evidence satisfactory to IDS Life that the insured remains
insurable;
o payment of a premium that will keep the policy in force for
at least three months;
o payment of the monthly deductions that were not collected
during the grace period; and
o payment or reinstatement of any indebtedness.
The effective date of a reinstated policy will be the monthly date
on or next following the day IDS Life accepts your application for
reinstatement. The suicide period (see "Death benefits") will
apply from the effective date of reinstatement. Surrender charges
will also be reinstated.
IDS Life will have two years from the effective date of
reinstatement to contest the truth of statements or representations
in the reinstatement application.
Policy value
The value of your policy is the sum of values in the fixed account
and each subaccount of the variable account.
Fixed account value
The value in the fixed account on the policy date (when the policy
is issued) equals the portion of your initial net premium that you
have allocated to the fixed account, plus interest accrued before
the policy date, minus the portion of the monthly deduction for the
first policy month that you have allocated to the fixed account. <PAGE>
PAGE 30
On any later date, the value in the fixed account equals:
o the value on the previous monthly date; plus
o net premiums allocated to the fixed account since the last
monthly date; plus
o any transfers to the fixed account from the subaccounts,
including loan transfers, since the last monthly date; plus
o accrued interest on all of the above; minus
o any transfers from the fixed account to the subaccounts,
including loan repayment transfers, since the last monthly
date; minus
o any partial surrenders or partial surrender fees allocated
to the fixed account since the last monthly date; minus
o interest on any transfers or partial surrenders, from the
date of the transfer or surrender to the date of
calculation; minus
o any portion of the monthly deduction for the coming month
that is allocated to the fixed account if the date of
calculation is a monthly date.
Subaccount values
The value in each subaccount changes daily, depending on the
investment performance of the fund portfolio or trust in which that
subaccount invests and on other factors detailed below. There is
no guaranteed minimum subaccount value. You as owner bear the
entire investment risk.
Calculation of subaccount value: The value of each subaccount on
each valuation date equals:
o the value of the subaccount on the preceding valuation date,
multiplied by the net investment factor for the current valuation
period (explained below); plus
o net premiums received and allocated to the subaccount during the
current valuation period; plus
o any transfers to the subaccount (from the fixed account or
other subaccounts, including loan repayment transfers) during the
period; minus
o any transfers from the subaccount including loan transfers
during the current valuation period; minus
o any partial surrenders and partial surrender fees allocated to
the subaccount during the period; minus
o any portion of the monthly deduction allocated to the subaccount
during the period.
The net investment factor measures the investment performance of a
subaccount from one valuation period to the next. Because
performance may fluctuate, the value of a subaccount may increase
or decrease from day to day.
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PAGE 31
Accumulation units: The policy value allocated to each subaccount
is converted into accumulation units. Each time you direct a
premium payment or transfer policy value into one of the
subaccounts, a certain number of accumulation units are credited to
your policy for that subaccount. Conversely, each time you take a
partial surrender or transfer value out of a subaccount, a certain
number of accumulation units are subtracted.
Accumulation units are the true measure of investment value in each
subaccount. For subaccounts investing in the fund portfolios,
they're related to, but not the same as, the net asset value of the
corresponding fund portfolio. The dollar value of each
accumulation unit can rise or fall daily, depending on the
investment performance of the underlying fund portfolio, on any
change in the value of trust units, and on certain charges. Here's
how unit values are calculated:
Number of units: To calculate the number of units for a particular
subaccount, we divide your investment (net premium or transfer
amount) by the current accumulation unit value.
Accumulation unit value: The current value for each subaccount
equals the last value times the current net investment factor.
Net investment factor: Determined at the end of each valuation
period, this factor equals (a (divided by) b) - c, where:
(a) equals:
o net asset value per share of the portfolio or value of a unit of
the trust; plus
o per-share amount of any dividend or capital gain distribution
made by the relevant fund portfolio to the subaccount; plus
o any credit or minus any charge for reserves to cover any tax
liability resulting from the investment operations of the
subaccount.
(b) equals:
o net asset value per share of the portfolio or value of a unit of
the trust at the end of the preceding valuation period; plus
o any credit or minus any charge for reserves to cover any tax
liability in the preceding valuation period.
(c) is a percentage factor representing the mortality and expense
risk charge and, for the two subaccounts investing in the trusts,
the transaction charge, as described in "Loads, fees and charges,"
above.
Factors that affect subaccount accumulation units:
Accumulation units may change in two ways; in number and in value.
Here are the factors that influence those changes:
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The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the subaccounts;
o transfers into or out of the subaccount(s);
o partial surrenders and partial surrender fees;
o surrender charges; and/or
o monthly deductions
Accumulation unit values may fluctuate due to:
o changes in underlying fund portfolio(s) net asset value or the
value of the trusts;
o dividends distributed to the subaccount(s);
o capital gains or losses of underlying fund portfolios;
o fund portfolio operating expenses;
o mortality and expense risk fees; and/or
o the transaction charge for subaccounts investing in the trust.
Death benefits
When you purchase your policy, you decide on the minimum amount of
protection you want for the beneficiary if the insured dies. This
amount is called the specified amount. Your policy's death benefit
can never be less than this amount unless you change it or unless
your policy has an outstanding indebtedness.
You also choose one of two death benefit options, which determines
how the policy's value will affect the amount paid to the
beneficiary if the insured dies while the policy is in force:
Option 1 (level amount): Under this option, the policy's value is
part of the specified amount. The Option 1 death benefit is the
greater of:
o the specified amount on the date of the insured's death; or
o the applicable percentage of the policy value on the date of
death, if death occurs on a valuation date, or on the next
valuation date following the date of death. (See table
below.)
Thus the death benefit remains level -- at the specified amount --
as long as the applicable percentage of policy value is less than
or equal to that amount. Only when the applicable percentage of
policy value exceeds the specified amount will the death benefit
vary with the policy value. After attained insurance age 40, the
applicable percentage decreases as the insured's age increases.
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Applicable percentage table
Insured's Applicable Insured's Applicable
attained percentage of attained percentage of
insurance policy insurance policy
age value age value
40 or younger 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75-95 105
55 150 96 104
56 146 97 103
57 142 98 102
58 138 99 101
59 134 100 100
60 130
Option 2 (variable amount): Under this option, the policy value is
added to the specified amount. The Option 2 death benefit is the
greater of:
o the policy value plus the specified amount; or
o the applicable percentage of policy value (from the
preceding table) on the date of death, if death occurs on a
valuation date, or on the next valuation date following the
date of death.
Under Option 2 the death benefit will always vary as the policy
value varies. The death benefit will equal the sum of the
specified amount plus the policy value until the applicable
percentage of the policy value exceeds that sum.
Examples: Option 1 Option 2
specified amount $100,000 $100,000
policy value $5,000 $5,000
death benefit $100,000 $105,000
policy value increases to $8,000 $8,000
death benefit $100,000 $108,000
policy value decreases to $3,000 $3,000
death benefit $100,000 $103,000
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If you want to have premium payments and favorable investment
performance reflected partly in the form of an increasing death
benefit, you should consider Option 2. If you are satisfied with
the specified amount of insurance protection and prefer to have
premium payments and favorable investment performance reflected to
the maximum extent in the policy value, you should consider Option
1. Under Option 1, the cost of insurance is lower because IDS
Life's net amount at risk is generally lower; for this reason the
monthly deduction is less, and a larger portion of your premiums
and investment returns is retained in the policy value.
Change in death benefit option
You may make a written request to change the death benefit option
once per policy year. A change in the death benefit option also
will change the specified amount. You do not need to provide
additional evidence of insurability.
If you change from Option 1 to Option 2: The specified amount will
decrease by an amount equal to the policy value on the effective
date of the change. You cannot change from Option 1 to Option 2 if
the resulting specified amount would fall below the minimum
specified amount (currently $50,000 for the first two policy years,
$40,000 in years three through 10 and $25,000 thereafter).
The minimum specified amount for policies purchased on or after May
1, 1991 with an initial specified amount of $350,000 or more is
$350,000 in the first policy year, $325,000 in years two to five,
$300,000 in years six to 10 and $275,000 thereafter.
If you change from Option 2 to Option 1: The specified amount will
increase by an amount equal to the policy value on the effective
date of the change.
An increase or decrease in specified amount resulting from a change
in the death benefit option will affect the monthly deduction
because the cost of insurance and the death benefit guarantee
charge both depend upon the specified amount. The charge for
certain optional insurance benefits may also change. The surrender
charge, however, will not be affected.
Changes in specified amount
Subject to certain limitations, you may make a written request to
increase or decrease the specified amount once each policy year
after the first. Changes in specified amount may have tax
implications, discussed in the section "Modified endowment
contracts" under "Federal taxes."
Increases: If you increase the specified amount, additional
evidence of insurability that is satisfactory to IDS Life may be
required. The effective date of the increase will be the monthly
anniversary on or next following our approval of the increase. The
increase may not be less than $10,000, and no increase will be
permitted after the insured's attained insurance age 75.
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An increase in the specified amount will have the following effects
on policy charges:
o Your monthly deduction will increase because the cost of
insurance and the death benefit guarantee charge both depend
upon the specified amount.
o Charges for certain optional insurance benefits will
increase.
o The minimum monthly premium will increase if the death
benefit guarantee is in effect.
o The surrender charge will increase.
At the time of the increase in specified amount, the cash surrender
value of your policy must be sufficient to pay the monthly
deduction on the next monthly anniversary. The increased surrender
charge will reduce the cash surrender value. If the remaining cash
surrender value is not sufficient to cover the monthly deduction,
we will require you to pay additional premiums within the 61-day
grace period. If you do not, the policy will lapse unless the
death benefit guarantee is in effect. Because the minimum monthly
premium will increase, additional premiums may also be required to
keep the death benefit guarantee in effect.
Decreases: Any decrease in specified amount will take effect on the
monthly anniversary on or next following our receipt of your
written request. The specified amount remaining after the decrease
may not be less than the minimum specified amount (currently
$50,000 for the first two policy years, $40,000 in years three
through 10, and $25,000 thereafter). If, following a decrease in
specified amount, the policy would no longer qualify as life
insurance under federal tax law, the decrease may be limited to the
extent necessary to meet these requirements.
The minimum specified amount for policies purchased on or after May
1, 1991 with an initial specified amount of $350,000 or more is
$350,000 in the first policy year, $325,000 in years two to five,
$300,000 in years six to 10 and $275,000 thereafter.
A decrease in specified amount will affect your costs as follows:
o Your monthly deduction will decrease because the cost of
insurance and the death benefit guarantee charge both depend
upon the specified amount.
o Charges for certain optional insurance benefits will
decrease.
o The minimum monthly premium will decrease if the death
benefit guarantee is in effect.
o The surrender charge will not change.
No surrender charge is imposed when you request a decrease in the
specified amount.
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Decreases in the specified amount will be deducted from the current
specified amount in this order:
1. First from the portion due to the most recent increase;
2. Next from portions due to the next most recent increases
successively; and
3. Then from the initial specified amount when the policy was
issued.
This procedure may affect the cost of insurance if different rate
classifications have been applied to the current specified amount.
The rate classification applicable to the most recent increase in
the specified amount will be eliminated first, then the rate
classification applicable to the next most recent increase, and so
on.
Misstatement of age or sex
If the insured's age or sex has been misstated, the proceeds
payable upon death will be:
o the policy value on the date of death; plus
o the amount of insurance that would have been purchased by
the cost of insurance deducted for the policy month
during which death occurred, if that cost had been
calculated using rates for the correct age and sex; minus
o the amount of any outstanding indebtedness on the date of
death.
Suicide
Suicide by the insured, whether sane or insane, within two years
from the policy date is not covered by the policy. If suicide
occurs, the only amount payable to the beneficiary will be the
premiums paid, minus the amount of any outstanding indebtedness.
In Colorado and North Dakota, the suicide period is shortened to
one year. In Missouri, IDS Life must prove that the insured
intended to commit suicide at the time he or she applied for
coverage.
Beneficiary
Initially the beneficiary will be the person you designate in your
application for the policy. You may change the beneficiary by
giving written notice to IDS Life, subject to requirements and
restrictions stated in the policy. If you do not designate a
beneficiary, or if the designated beneficiary dies before the
insured, the beneficiary will be you or your estate.
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Transfers between the fixed account and subaccounts
You may transfer policy values from one subaccount to another or
between subaccounts and the fixed account. For most transfers, if
we receive your request before the close of business, we will
process it that day. Requests received after the close of business
will be processed the next business day. There is no charge for
transfers. Before transferring policy value, you should consider
the risks involved in switching investments.
We may suspend or modify the transfer privilege at any time.
Transfers involving the fixed account are subject to the
restrictions below.
Fixed account transfer policies
o Transfers from the fixed account must be made during a 30-day
period starting on a policy anniversary, except for automated
transfers, which can be set up for monthly, quarterly or semiannual
transfer periods.
o If we receive your request to transfer funds from the fixed
account within 30 days before the policy anniversary, the transfer
will become effective on the anniversary.
o If we receive your request on or within 30 days after the policy
anniversary, the transfer will be effective on the day we receive
it.
o We will not accept requests for transfers from the fixed account
at any other time.
o If you have made a transfer from the fixed account to one or more
subaccounts, you may not make a transfer from any subaccount back
to the fixed account until the next policy anniversary. We will
waive this limitation once during the first two policy years if you
exercise the policy's right to exchange provision. See "Exchange
right."
Minimum transfer amounts
From a subaccount to another subaccount or the fixed account: For
mail and phone transfers, $250 or the entire subaccount balance,
whichever is less. For automated transfers, $50.
From the fixed account to a subaccount: $250 or the entire fixed
account balance minus any outstanding indebtedness, whichever is
less. For automated transfers, $50.
Maximum transfer amounts
From a subaccount to another subaccount or the fixed account: None.
From the fixed account to a subaccount: Entire fixed account
balance minus any outstanding indebtedness.
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Maximum number of transfers per year
Five for mail and phone transfers. Twelve for automated transfers.
Two ways to request a transfer, loan or surrender
Provide your name, policy number, Social Security Number or
Taxpayer Identification Number when you request a transfer.
1 By letter
Regular mail:
IDS Life Insurance Company
P.O. Box 499
Minneapolis MN 55440-0499
Express mail:
IDS Life Insurance Company
733 Marquette Ave.
Minneapolis MN 55402
2 By phone
Call between 7 a.m. and 6 p.m. Central Time:
1-800-437-0602 (toll free) or
(612) 671-4738 (Minneapolis/St. Paul area)
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
o We answer phone requests promptly, but you may experience delays
when call volume is unusually high. If you are unable to get
through, use mail procedure as an alternative.
o We will honor any telephone transfer or surrender request
believed to be authentic and will use reasonable procedures to
confirm that they are. These include asking identifying questions
and tape recording calls. As long as the procedures are followed,
neither IDS Life nor its affiliates will be liable for any loss
resulting from fraudulent requests.
o Telephone transfers are automatically available. You may request
that telephone transfers not be authorized from your account by
writing IDS Life.
Automated transfers
In addition to written and phone requests, you can arrange to have
policy value transferred from one account to another automatically.
Your financial planner can help you set up an automated transfer.
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Automated transfer policies:
o Minimum automated transfer: $50
o Frequency: monthly, quarterly, semiannually or annually
o Only one automated transfer arrangement can be in effect at any
time. Policy values may be transferred to one or more subaccounts
and the fixed account but can be transferred from only one account.
o You can start or stop this service by written request. You must
allow seven days for us to change any instructions that are
currently in place.
o Automated transfers from the fixed account may not exceed an
amount that, if continued, would deplete the fixed account within
12 months.
o If you have made a transfer from the fixed account to one or more
subaccounts, you may not make a transfer from any subaccount back
to the fixed account until the next policy anniversary.
o If your request is submitted with an application for a policy, it
will not take effect until the policy is issued.
o If the value of the account from which policy value is being
transferred is less than the $50 minimum, the transfer arrangement
will automatically be stopped.
o Automated transfers are subject to all other policy provisions
and terms including provisions relating to the transfer of money
between the fixed account and the subaccounts.
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost
averaging -- investing a fixed amount at regular intervals. For
example, you might have a set amount transferred monthly from a
relatively conservative subaccount to a more aggressive one, or to
several others.
This systematic approach can help you benefit from fluctuations in
accumulation unit value, caused by fluctuations in the market
value(s) of the underlying fund portfolio. Since you invest the
same amount each period, you automatically acquire more units when
the market value falls, fewer units when it rises. The potential
effect is to lower your average cost per unit and increase your
long-term return.
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How dollar-cost averaging works
Amount Accumulation Number of units
Month invested unit value purchased
Jan $100 $20 5.00
Feb 100 16 6.25
Mar 100 9 11.25
Apr 100 5 20.00
May 100 7 14.29
June 100 10 10.00
July 100 15 6.67
Aug 100 20 5.00
Sept 100 17 5.88
Oct 100 12 8.33
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more units
when the per unit market price is low
(arrow in table pointing to August) and fewer units when the per
unit market price is high.
You have paid an average price of only $10.81 per unit over the 10
months, while the average market price actually was $13.10.
Dollar-cost averaging does not guarantee that any subaccount will
gain in value, nor will it protect against a decline in value if
market prices fall. However, if you can continue to invest
regularly throughout changing market conditions, it can be an
effective strategy to help meet your long-term goals.
Policy loans
You may borrow against your policy by written or telephone request.
(See chart under "Transfers between the fixed account and
subaccounts" for address and phone numbers for your requests.) A
loan request received before close of business will be processed
the same day. A request received after close of business will be
processed the following business day.
Interest rate: 6.1% payable in advance, which is equivalent to a
6.5% effective rate. For policies purchased on or after May 1,
1993 (October 1, 1993 for New Jersey), we expect to reduce the loan
interest rate after a policy's 10th anniversary to 4.3% payable in
advance, equivalent to a 4.5% effective rate.
Minimum loan: $500 ($200 for Connecticut residents) or the
remaining loan value, whichever is less.
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Maximum loan:
o In Texas, 100% of the policy value in the fixed account,
minus a pro rata portion of surrender charges.
o In Virginia, 90% of the policy value minus surrender
charges.
o In all other states, 85% of the policy value minus surrender
charges.
We will compute the maximum loan value as of the end of the
valuation period during which we receive your loan request. In
doing so, we will deduct from the loan value interest for the
period until the next policy anniversary.
Payment of loaned funds: Generally, we will pay loans within seven
days after we receive your request (with certain exceptions -- see
"Deferral of payments," under "Payment of policy proceeds").
Allocation of loans to accounts: If you do not specify whether the
loan is to come from the fixed account or the subaccounts, it will
be made from the subaccounts and the fixed account in proportion to
their values, minus indebtedness. When a loan is made from a
subaccount, accumulation units are redeemed and the proceeds
transferred into the fixed account. We will credit the loaned
amount with 4.5% annual interest.
Repayments: Loan repayments will be allocated to subaccounts and/or
the fixed account using the premium allocation percentages in
effect unless you tell us otherwise. Repayments must be in amounts
of at least $25.
Overdue interest: If accrued interest is not paid when due, we will
increase the amount of indebtedness in the fixed account to cover
the amount due. Interest added to a policy loan will be charged
the same interest rate as the loan itself. We will take such
interest from the fixed account and/or subaccounts, using the
monthly deduction allocation percentages. If the value in the
fixed account or any subaccount is not enough to pay the interest
so allocated, all of the interest will be taken from all of the
accounts in proportion to their value, minus indebtedness.
Effects of policy loans: If you do not repay your loan, it will
reduce the death benefit and policy value. Even if you do repay
it, your loan can have a permanent effect on death benefits and
policy values, because money borrowed against the subaccounts will
not share in the investment results of the relevant portfolio(s) or
trusts(s).
Taxes: If your policy lapses or you surrender it with an
outstanding indebtedness, and the amount of outstanding
indebtedness plus the cash surrender value is more than the sum of
premiums you paid, you will generally be liable for taxes on the
excess. (See "Federal taxes.")
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Policy surrenders
You may surrender your policy in full or in part by written or
telephone request. (See chart under "Transfers between the fixed
account and subaccounts.") A surrender request received before
close of business will be processed the same day. A request
received after close of business will be processed the following
business day. We may require that you return your policy.
We will normally process your payment within seven days; however,
we reserve the right to defer payment (see "Deferral of payments,"
under "Payment of policy proceeds").
Total surrenders: If you surrender your policy totally, you receive
its cash surrender value -- the policy value minus outstanding
indebtedness and applicable surrender charges (see "Loads, fees and
charges). We will compute the value of each subaccount as of the
end of the valuation period during which your request is received.
Partial surrenders: After the first policy year, you may surrender
any amount from $500 up to 85% of the policy's cash surrender
value. (Partial surrenders by telephone are limited to $25,000.)
You will be charged a partial surrender fee, described under
"Loads, fees and charges."
Allocation of partial surrenders: Unless you specify otherwise, IDS
Life will make partial surrenders from the fixed account and
subaccounts in proportion to their values at the end of the
valuation period during which your request is received. In
determining these proportions, we first subtract the amount of any
outstanding indebtedness from the fixed account value.
Effects of partial surrenders:
o The policy value will be reduced by the amount of the partial
surrender and fee.
o The death benefit will be reduced by the amount of the partial
surrender and fee, or, if the death benefit is based on the
applicable percentage of policy value, by an amount equal to the
applicable percentage times the amount of the partial surrender.
o A partial surrender may terminate the death benefit guarantee.
The surrender amount is deducted from total premiums paid, which
may reduce the total below the level required to keep the death
benefit guarantee in effect.
o If Option 1 is in effect, the specified amount will be reduced by
the amount of the partial surrender and fee. IDS Life will deduct
this decrease from the current specified amount in this order:
1. First from the specified amount provided by the most recent
increase;
2. Next from the next most recent increases successively;
3. Then from the initial specified amount when the policy was
issued.
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Because they reduce the specified amount, partial surrenders may
affect the cost of insurance. IDS Life will not allow a partial
surrender if it would reduce the specified amount below the
required minimum. (See "Decreases" under "Death benefits.")
o If Option 2 is in effect, a partial surrender does not affect the
specified amount.
Taxes: Upon surrender, you will generally be liable for taxes on
any excess of the cash surrender value plus outstanding
indebtedness over the premium paid. (See "Federal taxes.")
Exchange right
For two years after the policy is issued, you can exchange it for
one that provides benefits that do not vary with the investment
return of the subaccounts. Because the policy itself offers a
fixed return option, all you need to do is transfer all of the
policy value in the subaccounts to the fixed account. We will
automatically credit all future premium payments to the fixed
account unless you request a different allocation.
Such transfer will not count against the five-transfers-per-year
limit. Also, any restrictions on transfers into the fixed account
will be waived.
There will be no effect on the policy's death benefit, specified
amount, net amount at risk, rate classification(s) or issue age.
Only the method of funding the policy value will be affected.
Paid-up insurance option
You may request that the cash surrender value of the policy be used
to purchase an amount of paid-up insurance. Your request may be
made in writing during the 30 days before any policy anniversary.
The paid-up insurance policy will take effect as of the policy
anniversary and will mature on the original policy's maturity date.
You will forfeit all rights to make future premium payments, and
all riders will terminate.
The amount and cash surrender value of the paid-up insurance will
be based on the cost of insurance rates guaranteed in the policy
and on the fixed account guaranteed interest rate. The paid-up
policy's death benefit amount, minus its cash surrender value,
cannot be greater than your current policy's death benefit, minus
its policy value, (both as of the date of the paid-up policy's
purchase). The amount of paid-up insurance will remain level and
will not be less than required by law.
Any cash surrender value that is not used to purchase the paid-up
insurance amount will be paid to you. At any time before the
insured's death, you may surrender the paid-up insurance for its
cash surrender value.
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Optional insurance benefits
You may choose to add the following benefits to your policy, in the
form of riders (if certain requirements are met):
Waiver of monthly deduction (WMD): Under WMD, we will waive the
monthly deduction if the insured becomes totally disabled for six
months or longer prior to the attained insurance age 60 policy
anniversary. The waiver will not start until the disability has
continued for at least six months; however, once it starts, monthly
deductions taken from policy values during the six-month waiting
period will be credited back to the policy, using the premium
allocation percentage then in effect. Monthly deductions will then
be waived as long as the insured remains disabled. For any month
in which the monthly deduction is covered by this rider, the
minimum monthly premium needed to keep the death benefit guarantee
in effect will be zero.
During disability the specified amount cannot be increased, the
death benefit option cannot be changed to Option 1 and any benefits
provided by riders cannot be increased.
Accidental death benefit (ADB): ADB provides an additional death
benefit if the insured's death is caused by accidental injury prior
to the insured's attained insurance age 70 policy anniversary.
Other insured rider (OIR): OIR provides a level, adjustable death
benefit on the life of each other insured covered. The minimum
face amount that can be issued to each other insured is $25,000.
OIR does not develop policy value.
Coverage under OIR will terminate on the earliest of the following:
o The monthly anniversary date on or next following receipt of a
written request to end coverage.
o The date the basic policy matures, is surrendered or terminates
for any reason other than the insured's death.
o 31 days after the insured's death. No charge is made for
coverage during this period.
o The date of conversion of the coverage to an individual life
insurance policy on the life of the other insured. OIR is
convertible to any level benefit, level premium whole life or
flexible premium adjustable whole life insurance policy offered
by us at the time of conversion.
o The date the other insured attains insurance age 100.
If the other insured's age or sex has been misstated, the amount
payable upon his or her death will be the amount of insurance that
would have been purchased by the cost of the OIR for the policy
month during which death occurred, had the cost been calculated
using rates for the correct age and sex.
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Children's insurance rider (CIR): Each unit of CIR provides $1,000
level term insurance on each eligible child. To be eligible,
children must:
o be insurable children, stepchildren or legally adopted children
of the insured;
o be named in the application for this rider;
o be members of the primary insured's household (actually living
with the insured) at the time of application; and
o be at least 15 days old and have not passed their 19th
birthday.
After the CIR is issued, it automatically insures children born to,
legally adopted by, or who become stepchildren of the insured after
the date of the CIR application, if they are at least 15 days old
and have not passed their 19th birthday. The maximum number of
units for one family is 10.
Insurance under CIR expires on the earlier of the child's 22nd
birthday or the primary insured's attained insurance age 65 policy
anniversary. If the primary insured parent dies, the insurance on
each child will be changed to paid-up term insurance, which will
provide the same coverage as provided under the CIR and will expire
at the same time coverage under the CIR would have expired.
The coverage provided on each child may be converted, without
evidence of insurability, to level premium whole life or flexible
premium adjustable whole life insurance within 31 days before or
after the earlier of the child's 22nd birthday or the primary
insured's attained insurance age 65 policy anniversary. Up to five
times the amount of insurance on each child may be converted.
Payment of policy proceeds
Proceeds will be paid when:
o you surrender the policy;
o the insured dies; or
o the policy maturity date is reached, which occurs when
the insured reaches attained insurance age 100.
All proceeds will be paid by check. We will compute the amount of
the death benefit and pay it in a single sum unless you select one
of the payment options below. We will pay interest at a rate not
less than 4% per year on single sum death proceeds, from the date
of the insured's death to the settlement date (the date on which
proceeds are paid in a lump sum or first placed under a payment
option).
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Payment options:
During the insured's lifetime, you may request in writing that we
pay policy proceeds under one or more of the three payment options
below. (The beneficiary may also select a payment option, unless
you say that he or she can't.) You decide how much of the proceeds
will be placed under each option (minimum: $5,000). Any such
amount will be transferred to IDS Life's general account. Unless
we agree otherwise, payments under all options must be made to a
natural person.
You may also, by written request, change a prior choice of payment
option, or elect a payment option other than the three below if we
agree.
If you elect a payment option for pre-death proceeds, payments
under this option may be subject to federal income tax as ordinary
income. If you elect Option A, the full pre-death proceeds will be
taxed as a full surrender or maturity as described in "Taxation of
policy proceeds" and may also be subject to an additional 10%
penalty tax if the policy is a modified endowment. The interest
paid under Option A will be ordinary income subject to income tax
in the year earned. The interest payments will not be subject to
the 10% penalty tax.
If you elect Option B or Option C for payment of pre-death
proceeds, any indebtedness at the time of election will be taxed as
a partial surrender as described in "Taxation of policy proceeds"
and may also be subject to an additional 10% penalty tax if the
policy is a modified endowment. The remainder of the proceeds will
be used to make payments under the option elected. A portion of
each payment will be taxed as ordinary income, and a portion of
each payment will be considered a return of the investment in the
policy and will not be taxed. An owner's investment in the policy
is described in "Taxation of policy proceeds." All payments made
after the investment in the policy is fully recovered will be
subject to tax. Amounts paid under Option B or Option C that are
subject to tax may also be subject to an additional 10% penalty tax
(see "Penalty tax").
Death benefit proceeds applied to any payment option are not
considered part of the beneficiary's income and thus are not
subject to federal income tax. Payments of interest under Option A
will be ordinary income subject to tax. Under Option B or Option
C, a portion of each payment will be ordinary income, subject to
tax and a portion of each payment will be considered a return of
the beneficiary's investment in the policy. The beneficiary's
investment in the policy is the death benefit proceeds applied to
the payment option. All payments made after the investment in the
policy is fully recovered will be subject to tax.
<PAGE>
PAGE 47
Option A -- Interest payments: We will pay interest on any proceeds
placed under this option at a rate of 4% per year compounded
annually, at regular intervals and for a period that is agreeable
to both you and us. At the end of any payment interval, you may
withdraw proceeds in amounts of at least $100. At any time, you
may withdraw all of the proceeds that remain, or you may place them
under a different payment option approved by us.
Option B -- Payments for a specified period: We will make fixed
monthly payments for any number of years you specify. Here are
examples of monthly payments for each $1,000 placed under this
option:
Payment period Monthly payment per $1,000
(years) placed under Option B
5 $18.32
10 10.06
15 7.34
20 6.00
25 5.22
30 4.72
Monthly amounts for other payment periods will be furnished at your
request, free of charge.
Option C -- Lifetime income: We will make monthly payments for the
life of the person (payee) who is to receive the income. Payment
will be guaranteed for 10, 15 or 20 years.
The amount of each monthly payment per $1,000 placed under this
option will be based on the table of settlement rates in effect at
the time of the first payment. The amount depends on the sex and
adjusted age of the payee on that date. Adjusted age means the age
of the payee (on the payee's nearest birthday) minus an adjustment
as follows:
Calendar year of Adjustment Calendar year of Adjustment
payee's birth payee's birth
Before 1920 0 1945-1949 6
1920-1924 1 1950-1959 7
1925-1929 2 1960-1969 8
1930-1934 3 1970-1979 9
1935-1939 4 1980-1989 10
1940-1944 5 After 1989 11
The amount of each monthly payment per $1,000 placed under this
option will not be less than amounts shown in the next table.
Monthly amounts for any adjusted age not shown will be furnished at
your request, without charge.
<PAGE>
PAGE 48
Adjusted
age Life income per $1,000 with
payee payments guaranteed for
10 years 15 years 20 years
Male Female Male Female Male Female
50 $4.81 $4.47 $4.74 $4.45 $4.65 $4.40
55 5.20 4.80 5.09 4.74 4.94 4.67
60 5.70 5.22 5.51 5.12 5.25 4.98
65 6.35 5.77 5.98 5.58 5.54 5.32
70 7.14 6.50 6.47 6.12 5.77 5.63
75 8.00 7.40 6.87 6.64 5.91 5.85
Deferral of payments:
We reserve the right to defer payments of cash surrender value,
policy loans, or variable death benefits in excess of the specified
amount if:
o the payments derive from a premium payment made by a check that
has not cleared the banking system (good payment has not been
collected);
o the NYSE is closed (other than customary weekend and holiday
closings);
o in accordance with SEC rules, trading on the NYSE is restricted
or, because of an emergency, it is not practical to dispose of
securities held in the subaccount or determine the value of the
subaccount's net assets.
Any loans or surrenders from the fixed account may be delayed up to
six months from the date we receive the request. If we postpone
the payment of surrender proceeds more than 30 days, we will be pay
you interest on the amount surrendered at an annual rate of 3% for
the period of postponement.
Federal taxes
The following is a general discussion of the policy's federal
income tax implications. It is not intended as tax advice.
Because the effect of taxes on the value and benefits of your
policy depends on your individual situation as well as IDS Life's
tax status, YOU SHOULD CONSULT A TAX ADVISER TO FIND OUT HOW THESE
GENERAL CONSIDERATIONS APPLY TO YOU. The discussion is based on
our understanding of federal income tax laws as currently
interpreted by the Internal Revenue Service (IRS); both the laws
and their interpretation may change. IDS Life reserves the right
to change the policy in order to assure that it will continue to
qualify as life insurance for tax purposes.
IDS Life's tax status
IDS Life is taxed as a life insurance company under the Code. For
federal income tax purposes, the subaccounts are considered a part
of IDS Life, although their operations are treated separately in
<PAGE>
PAGE 49
accounting and financial statements. Investment income from the
subaccounts is reinvested and becomes part of the subaccounts'
value. This investment income, including realized capital gains,
is not taxed to IDS Life, and therefore no charge is made against
the subaccounts for our federal income taxes. IDS Life reserves
the right to make such a charge in the future if there is a change
in the tax treatment of variable life insurance contracts or in IDS
Life's tax status as we currently understand it.
Taxation of policy proceeds
The death benefit is not considered part of the beneficiary's
income and thus is not subject to federal income taxes.
Part or all of any pre-death proceeds received through full
surrender or maturity, lapse, partial surrender, policy loan or
assignment of policy value, or payment options may be subject to
federal income tax as ordinary income. (See the following table.)
In some cases the tax liability depends on whether the policy is a
modified endowment (explained following the table). The taxable
amount may also be subject to an additional 10 % penalty tax if the
policy is a modified endowment.
Source of proceeds Taxable portion of pre-death proceeds
Full surrender/maturity: Amount received plus any
indebtedness, minus your
investment in the policy.*
Lapse: Any outstanding indebtedness minus
your investment in the policy.*
Partial surrenders Lesser of:
(modified endowments): the amount received or policy
value minus your investment in the
policy.*
Policy loans and Lesser of:
assignments the amount of the loan/assignment
(modified endowments): or policy value minus your
investment in the policy.*
Partial surrenders Generally, if the amount received
(other policies): is greater than your investment in
the policy,* the amount in excess
of your investment is taxable.
However, during the first 15
policy years, a different amount
may be taxable if the partial
surrender results in or is
necessitated by a reduction in
benefits.
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PAGE 50
Policy loans and None
assignments
(other policies):
Payment options: If proceeds of the policy will be
paid under one of the payment
options, see the "Payment option"
section for tax information.
* The owner's investment is equal to premiums paid, minus the
nontaxable portion of any previous partial surrenders, plus the
taxable portion of any previous policy loans.
Modified endowment contracts
In 1988 Congress created a new class of life insurance policies
called "Modified Endowment Contracts," which are taxed differently
from conventional life insurance contracts. Policies applied for,
or materially changed, on or after June 21, 1988, are considered to
be modified endowments if premiums paid in the first seven years of
the policy, or the first seven years following a material change,
exceed certain limits. (Also, any life insurance policy received in
exchange for a modified endowment is itself a modified endowment.)
We have established procedures for monitoring whether a contract
may become a modified endowment contract.
Modified endowment limits are calculated when the policy is issued,
and are based on the benefits provided and on the risk
classification of the insured. They are later recalculated if
certain increases or reductions in benefits occur.
Increases in benefits: Limits are recalculated when an increase is
considered a "material change," as are most increases requested by
the owner, such as an increase in specified amount, addition of a
rider benefit, or an increase in an existing rider benefit.
(Automatic increases under the terms of the policy, such as an
increase in death benefit due to operation of the applicable
percentage table described in the "Death benefits" section or to
policy value growth under Option 2, are generally not considered
material changes.) A policy becomes a modified endowment if
premiums paid in the early years following a material change exceed
the recalculated limits.
Reductions in benefits: When benefits are reduced within seven
years after issue or after the most recent material change, the
limits are recalculated as if the reduced level of benefits had
always been in effect. In most cases, this recalculation will
further restrict the amount of premium that can be paid without
exceeding modified endowment limits. If premiums already paid
exceed the recalculated limits, the policy becomes a modified
endowment even if no further premiums are paid.
Distributions affected: Modified endowment rules apply to
distributions in the year the policy becomes a modified endowment
<PAGE>
PAGE 51
and in all subsequent years. In addition, the rules apply to
distributions taken two years before the policy becomes a modified
endowment, which are presumed to be taken in anticipation of that
event.
Serial purchase of modified endowments: All modified endowments
issued by the same insurer (or affiliated companies of the insurer)
to the same owner during any calendar year are treated as one
policy in determining the amount of any loan or distribution that
is taxable.
Penalty tax: If a policy is a modified endowment, the taxable
portion of pre-death proceeds from a full surrender, maturity,
lapse, partial surrender, policy loan or assignment of policy
value, or certain payment options may be subject to a 10% penalty
tax unless:
o the distribution occurs after the owner attains age
59-1/2;
o the distribution is attributable to the owner becoming
disabled (within the meaning of Code Section 72(m)(7); or
o the distribution is part of a series of substantially
equal periodic payments made at least once a year over
the life (or life expectancy) of the owner or over the
joint lives (or life expectancies) of the owner and the
owner's beneficiary.
Other tax considerations
Interest paid on policy loans: If the loan is used for personal
purposes, such interest is not tax-deductible. Other rules apply
if the loan is used for trade or business or investment purposes,
or if the policy is owned by a business or a corporation.
Policy changes: Changing ownership, exchanging or assigning the
policy may have tax consequences, depending on the circumstances.
Other taxes: Federal estate tax, state and local estate tax,
inheritance tax, gift tax and other tax consequences of ownership
or receipt of policy proceeds will also depend on the
circumstances.
Qualified retirement plans: The policy may be used in conjunction
with certain qualified plans. Since the rules governing such use
are complex, a purchaser should consult a competent pension
consultant.
On July 6, 1983, the Supreme Court held in Arizona Governing
Committee v. Norris that optional annuity benefits provided under
an employee's deferred compensation plan could not, under Title VII
of the Civil Rights Act of 1964, vary between men and women on the
basis of sex. Since the policy's cost of insurance rates and
purchase rates for certain settlement options distinguish between
men and women, employers and employee organizations should consult
with legal counsel before purchasing the policy for any
employment-related insurance or benefit program.
<PAGE>
PAGE 52
IDS Life
IDS Life is a stock life insurance company organized under the laws
of the State of Minnesota in 1957. Our address is IDS Tower 10,
Minneapolis, MN 55440-0010.
IDS Life conducts a conventional life insurance business in the
District of Columbia and all states except New York. A wholly
owned subsidiary of IDS Life, IDS Life Insurance Company of New
York, conducts a substantially identical business in New York.
IDS Life has been in the variable annuity business since 1968 and
has sold a number of different variable annuity contracts and
variable life insurance policies, utilizing other separate
accounts, unit investment trusts and mutual funds.
Ownership
IDS Life is a wholly owned subsidiary of IDS Financial Corporation;
IDS Financial Corporation, a Delaware corporation, is a wholly
owned subsidiary of American Express Company.
State regulation
IDS Life is subject to the laws of Minnesota governing insurance
companies and to regulation by the Minnesota Department of
Commerce. In addition, IDS Life is subject to regulation under the
insurance laws of other jurisdictions in which it may operate. An
annual statement in a prescribed form is filed with Minnesota's
Department of Commerce and in each state in which IDS Life does
business. IDS Life's books and accounts are subject to review by
the Minnesota Department of Commerce at all times, and a full
examination of its operations is conducted periodically. Such
regulation does not, however, involve any supervision of management
or investment practices or policies.
Distribution of the policy
IDS Life is the sole distributor of the policy. IDS Life is
registered as a broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of Securities
Dealers, Inc. (NASD). Representatives of IDS Life are licensed
insurance and annuity agents, and are registered with the NASD as
representatives of IDS Life.
IDS Life pays its representatives a commission of up to 50% of the
initial minimum monthly premium (annualized) when the policy is
sold, plus 3% of all premiums in excess of 12 times the minimum
monthly premium. At the end of policy years one through 10, IDS
Life pays a service fee not greater than 0.3% of the policy value,
net of indebtedness. Additional commissions are paid if an
increase in coverage occurs. IDS Life also pays approximately 27%
of the total representative's commission to the division and
district sales managers of the selling representative.
<PAGE>
PAGE 53
Legal proceedings
As an insurance company, IDS Life is involved in a number of items
of litigation. We believe that these items are not material and we
do not expect to incur significant losses resulting from the
litigation.
Experts
The financial statement of IDS Life and of the segregated asset
subaccounts of IDS Life Variable Life Separate account for Flexible
Premium Variable Life Insurance appearing in this prospectus have
been audited by Ernst & Young, independent auditors, as set forth
in their reports thereon appearing elsewhere herein, and are
included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
Actuarial matters included in the prospectus have been examined by
Timothy V. Bechtold, F.S.A., M.A.A.A., Vice President, Insurance
Product Development, as stated in his opinion filed as an exhibit
to the Registration Statement.
Management of IDS Life
Directors
Louis C. Fornetti, 44
Director since March 1994; senior vice president and director, IDS,
since February 1985.
David R. Hubers, 51
Director since September 1989; president and chief executive
officer, IDS, since August 1993, and director, IDS, since January
1984. Senior vice president, finance and chief financial officer,
IDS, from January 1984 to August 1993.
Richard W. Kling, 53
Director since February 1984; president since March 1994.
Executive vice president, Marketing and Products from January 1988
to March 1994. Vice President, IDS, since January 1988. Director
of IDS Life Series Fund, Inc. and manager of IDS Life Variable
Annuity Funds A & B.
Paul F. Kolkman, 47
Director since May 1984; executive vice president since March 1994;
vice president, Finance from May 1984 to March 1994; vice
president, IDS, since January 1987.
Peter A. Lefferts, 52
Director and executive vice president, Marketing since March 1994;
senior vice president and director, IDS, since February 1986.
<PAGE>
PAGE 54
Janis E. Miller, 42
Director and executive vice president, Variable Assets since March
1994; vice president, IDS, since June 1990. Director, Mutual Funds
Product Development and Marketing, IDS, from May 1987 to May 1990.
Director of IDS Life Series Fund, Inc. and manager of IDS Life
Variable Annuity Funds A & B.
James A. Mitchell, 52
Chairman of the board since March 1994; director since July 1984;
chief executive officer since November 1986; president from July
1984 to March 1994; executive vice president, IDS, since March
1994; director, IDS, since July 1984; senior vice president, IDS,
from July 1984 to March 1994.
Barry J. Murphy, 43
Director and executive vice president, Client Service since March
1994; senior vice president, Operations, Travel Related Services
(TRS), a subsidiary of American Express Company, since July 1992;
vice president, TRS, from November 1989 to July 1992; chief
operating officer, TRS, from March 1988 to November 1989.
Stuart A. Sedlacek, 36
Director and executive vice president, Assured Assets since March
1994; vice president, IDS, since September 1988.
Melinda S. Urion, 40
Director and controller since September 1991; executive vice
president since March 1994; vice president and treasurer from
September 1991 to March 1994; vice president, IDS, since September
1991; chief accounting officer, IDS, from July 1988 to September
1991.
Officers Other Than Directors
Morris Goodwin Jr., 42
Vice president and treasurer since March 1994; vice president and
corporate treasurer, IDS, since July 1989; chief financial officer
and treasurer, IDS Bank & Trust, from January 1988 to July 1989.
William A. Stoltzmann, 45
Vice president, general counsel and secretary since 1985.
The address for all of the directors and principal officers is:
IDS Tower 10, Minneapolis, MN 55440-0010.
The officers, employees and sales force of IDS Life are bonded, in
the amount of $10 million, by virtue of a blanket fidelity bond
issued by United Pacific Insurance Company to IDS Life's parent,
IDS Financial Corporation. An additional $12 million in fidelity
coverage is extended by a second policy issued by Lloyd's of London
to the directors, officers and employees of IDS Life. An
additional $10 million in fidelity coverage is extended by a third
policy issued by Federal Insurance Company to the directors,
officers and employees of IDS Life.
<PAGE>
PAGE 55
Smith Barney Shearson Inc.
Smith Barney Shearson, sponsor of the trusts, a Delaware
corporation and a subsidiary of The Travelers Inc., is engaged in
the underwriting, securities and commodities brokerage business,
and is a member of the NYSE, other major securities exchanges and
commodity exchanges, and the National Association of Securities
Dealers, Inc. In July 1993, Primerica Corporation and its
subsidiary, Smith Barney, Harris Upham & Co. Incorporated, acquired
the assets of the domestic retail brokerage and asset management
businesses of Shearson Lehman Brothers Inc., previously the sponsor
of the trusts. In January 1994, Primerica Corporation completed a
merger with The Travelers Corporation, and they became The
Travelers Inc. The sponsor sponsors seven open-end investment
companies and three closed-end investment companies as well as a
variety of unit investment trusts. The sponsor has acted as
principal underwriter and managing underwriter of other investment
companies. The sponsor, in addition to participating as a member
of various selling groups or as an agent of other investment
companies, executes orders on behalf of investment companies for
the purchase and sale of securities of such companies and sells
securities to such companies in its capacity as a broker or dealer
in securities.
Other information
A registration statement has been filed with the Securities and
Exchange Commission (SEC) under the Securities Act of 1933, as
amended. For further information concerning the policy, its
separate account (the variable account) and IDS Life, please refer
to the registration statement, as amended, with exhibits.
Substitution of investments
If shares of any fund portfolio or trust units are unavailable for
purchase by the appropriate subaccount or if, in the judgment of
IDS Life's management, further investment in such shares is no
longer appropriate, shares of another registered, open-end
management investment company or unit investment trust may be
substituted.
If deemed by IDS Life to be in the best interest of persons having
voting rights under the policy, the variable account may be
operated as a management company under the Investment Company Act
of 1940, or it may be deregistered under the Act if such
registration is no longer required.
In the event of any such substitution or change, IDS Life may,
without the consent or approval of owners, amend the policy and
take whatever action is necessary and appropriate. However, no
such substitution or change will be made without any necessary
approval of the SEC or state insurance departments. IDS Life will
notify owners within five days of any substitution or change.
<PAGE>
PAGE 56
Voting rights
All shares issued by the fund are the same class (kind) -- capital
stock. They are fully paid and nonassessable and can be redeemed
or transferred. They can be issued as full shares or fractions.
All shares have equal voting rights; a fraction of a share has the
same kind of rights and privileges as a full share.
Each of the fund's five portfolios issues its own series of common
stock. The shares of each portfolio represent an interest only in
that portfolio's assets (and profits or losses) and in the event of
liquidation, each share of a portfolio would have the same rights
to dividends and assets as every other share of that portfolio.
Each share of a portfolio has one vote. On some issues, such as
election of directors, all shares of the fund vote together as one
series. When electing directors, all shares have cumulative voting
rights. Cumulative voting means that shareholders are entitled to
a number of votes equal to the number of shares they hold
multiplied by the number of directors to be elected, and they have
the right to divide votes among candidates.
On an issue affecting only one portfolio -- for example, a
fundamental investment restriction pertaining only to that
portfolio -- its shares vote as a separate series. If shareholders
of a particular portfolio vote approval of the Investment
Management and Services Agreement, the agreement becomes effective
with respect to that portfolio, whether or not it is approved by
shareholders of the other portfolios.
IDS Life is the owner of all fund shares and as such holds all
voting rights. However, IDS Life will vote the shares of each
portfolio in accordance with instructions received from owners. If
we do not receive timely instructions from you, we will vote your
shares in the same proportion as the shares for which instructions
are received. Fund shares that are not otherwise attributable to
owners will also be voted by IDS Life in the same proportion as
those shares in that subaccount for which instructions are
received.
We determine the number of fund shares in each subaccount for which
you may give instructions by applying your percentage interest in
the subaccount to the total number of votes attributable to the
subaccount. The number will be determined as of a date chosen by
IDS Life, but not more than 60 days before the meeting of the fund.
Fractional votes are counted. You will receive notice of each
shareholder meeting, together with any proxy solicitation materials
and a statement of the number of votes for which you are entitled
to give instructions.
<PAGE>
PAGE 57
If required by state insurance officials, IDS Life may disregard
voting instructions that would change the goals of one or more of
the fund's portfolios, or would result in approval or disapproval
of an investment advisory contract. In addition, IDS Life itself
may disregard voting instructions that would require changes in the
investment policy or investment adviser of one or more of the
fund's portfolios, if IDS Life reasonably disapproves such changes
in accordance with applicable federal regulations. If IDS Life
does disregard voting instructions, it will, in its next report to
owners, advise them of that action and the reasons for it.
Generally, ownership of units of a unit investment trust does not
involve the exercise of voting rights. However, unit holders in
the trusts may vote for removal of the trustee or for amendment or
termination of the trust indenture. In the event of such a vote,
IDS Life, as the owner of the units, would solicit voting
instructions from owners under the same procedures used for votes
affecting the fund.
Reports
At least once a year IDS Life will mail to you, at your last known
address of record, a report containing all information required by
law or regulation, including a statement showing the current policy
value.
Policy illustrations
The following tables illustrate how policy values, cash surrender
values and death benefits may change with the investment experience
of the subaccount. The tables show how these amounts might vary,
for a 35-year-old male nonsmoker, under Death Benefit Option 1, if:
o the annual rate of return of the fund is 0%, 6% or 12%.
o cost of insurance rates and policy fees are -- current rates
and fees for policies purchased on or after May 1, 1993
(October 1, 1993 for New Jersey) -- current rates and fees
for policies purchased before May 1, 1993 (October 1, 1993
for New Jersey) -- guaranteed rates and fees .
Any such illustration involves a number of detailed assumptions
(see chart, "Understanding the illustrations"). To the extent that
your own circumstances differ from those assumed in the
illustrations, your expected results would also differ.
Upon request, you will be furnished with comparable tables
illustrating death benefits, policy values, and cash surrender
values based on the actual age of the person you propose to insure
and on an initial specified amount and premium payment schedule.
In addition, after you have purchased a policy, you may request
illustrations based on policy values at the time of request.
<PAGE>
PAGE 58
Understanding the illustrations:
Rates of return: assumed to be uniform, gross, after-tax, annual
rates of 0%, 6%, or 12% for the fund. Results would differ
depending on allocations among the subaccounts, if returns averaged
0%, 6% and 12% for the fund as a whole but differed across
portfolios.
Insured: assumed to be a male insurance age 35, in a standard rate
classification, qualifying for the nonsmoker rate. Results would
be lower if the insured were in a substandard rate classification
or did not qualify for the non-smoker rate.
Premiums: A $900 premium is assumed to be paid in full at the
beginning of each policy year. Results would differ if premiums
were paid on a different schedule.
Policy loans and partial withdrawals: It is assumed that none have
been made. (Since indebtedness is assumed to be zero, the cash
surrender value in all cases equals the policy value minus the
surrender charge.)
Effect of expenses and charges: The net investment return of the
subaccounts, shown in the tables, is lower than the gross,
after-tax return of the fund because expenses paid by the fund and
charges made against the subaccounts have been deducted. These
include:
o the daily investment management fee paid by the fund, assumed to
be equivalent to an annual rate of 0.6% of the fund's aggregate
average daily net assets;
o the daily mortality and expense risk charge, equivalent to 0.9%
of the daily net asset value of the subaccounts annually; and
o an annual charge of 0.1% of the fund's aggregate average daily
net assets for direct expenses incurred by the fund.
The latter charge is capped by IDS Life at 0.1%, even though actual
expenses have been higher, ranging from 0.6% to 0.8% of the average
daily net assets of the different portfolios in the year ended
April 30, 1993. Although IDS Life reserves the right to
discontinue capping these expenses, our present intent is to
continue the cap indefinitely until actual expenses are less than
the cap. Should IDS Life discontinue the cap prior to that time,
the policy values and death benefits in the tables generally would
be less.
After deduction of the above expenses and charges, the illustrated
gross annual investment rates of return of 0%, 6%, and 12%
correspond to approximate net annual rates of -1.59%, 4.32%, and
10.22%, respectively.
Taxes: Results shown in the tables reflect the fact that IDS Life
does not currently charge the subaccounts for federal income tax.
If such a charge is taken in the future, the portfolios will have
to earn more than they do now in order to produce the death
benefits and policy values illustrated.
<PAGE>
PAGE 59
<TABLE><CAPTION>
Illustration Policies purchased on or after May 1, 1993
_____________________________________________________________________________________________________________________________
Initial specified amount $100,000 Male age 35 Current costs assumed
Death benefit Option 1 nonsmoker annual premium $900
_____________________________________________________________________________________________________________________________
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return Of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 $100,000 $100,000 $100,000 $ 605 $ 648 $ 691 $ 0 $ 1 $ 44
2 1,937 100,000 100,000 100,000 1,202 1,326 1,455 475 598 727
3 2,979 100,000 100,000 100,000 1,779 2,022 2,285 993 1,236 1,499
4 4,073 100,000 100,000 100,000 2,336 2,737 3,190 1,491 1,893 2,346
5 5,222 100,000 100,000 100,000 2,873 3,473 4,177 1,972 2,572 3,276
6 6,428 100,000 100,000 100,000 3,392 4,230 5,255 2,671 3,509 4,534
7 7,694 100,000 100,000 100,000 3,892 5,010 6,434 3,352 4,470 5,894
8 9,024 100,000 100,000 100,000 4,371 5,812 7,722 4,011 5,451 7,362
9 10,420 100,000 100,000 100,000 4,827 6,632 9,128 4,647 6,452 8,948
10 11,886 100,000 100,000 100,000 5,257 7,471 10,662 5,257 7,471 10,662
11 13,425 100,000 100,000 100,000 5,663 8,329 12,338 5,663 8,329 12,338
12 15,042 100,000 100,000 100,000 6,043 9,207 14,172 6,043 9,207 14,172
13 16,739 100,000 100,000 100,000 6,396 10,104 16,178 6,396 10,104 16,178
14 18,521 100,000 100,000 100,000 6,720 11,018 18,375 6,720 11,018 18,375
15 20,392 100,000 100,000 100,000 7,013 11,948 20,779 7,013 11,948 20,779
16 22,356 100,000 100,000 100,000 7,272 12,894 23,413 7,272 12,894 23,413
17 24,419 100,000 100,000 100,000 7,495 13,852 26,301 7,495 13,852 26,301
18 26,585 100,000 100,000 100,000 7,678 14,820 29,467 7,678 14,820 29,467
19 28,859 100,000 100,000 100,000 7,815 15,794 32,940 7,815 15,794 32,940
20 31,247 100,000 100,000 100,000 7,901 16,770 36,753 7,901 16,770 36,753
age 60 45,102 100,000 100,000 100,000 7,405 21,540 62,448 7,405 21,540 62,448
age 65 62,785 100,000 100,000 127,948 4,791 25,684 104,875 4,791 25,684 104,875
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values will be different if premiums are paid in
different amounts or with a different frequency.
The above hypothetical investment results are illustrative only and should not be deemed a representation of past or future
investment results. Actual investment results may be more or less than those shown. The death benefit, policy value and cash
surrender value would be different from those shown if returns averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual policy years. No representation can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
<PAGE>
PAGE 60
Illustration Policies purchased before May 1, 1993
_____________________________________________________________________________________________________________________________
Initial specified amount $100,000 Male age 35 Current costs assumed
Death benefit Option 1 nonsmoker annual premium $900
_____________________________________________________________________________________________________________________________
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
_____________________________________________________________________________________________________________________________
1 $ 945 $100,000 $100,000 $100,000 $ 605 $ 648 $ 691 $ 0 $ 1 $ 44
2 1,937 100,000 100,000 100,000 1,202 1,326 1,455 475 598 727
3 2,979 100,000 100,000 100,000 1,779 2,022 2,285 993 1,236 1,499
4 4,073 100,000 100,000 100,000 2,336 2,737 3,190 1,491 1,893 2,346
5 5,222 100,000 100,000 100,000 2,873 3,473 4,177 1,972 2,572 3,276
6 6,428 100,000 100,000 100,000 3,380 4,218 5,243 2,660 3,498 4,522
7 7,694 100,000 100,000 100,000 3,869 4,986 6,409 3,329 4,446 5,868
8 9,024 100,000 100,000 100,000 4,329 5,766 7,674 3,969 5,406 7,314
9 10,420 100,000 100,000 100,000 4,772 6,571 9,061 4,591 6,391 8,880
10 11,886 100,000 100,000 100,000 5,186 7,390 10,570 5,186 7,390 10,570
11 13,425 100,000 100,000 100,000 5,572 8,224 12,217 5,572 8,224 12,217
12 15,042 100,000 100,000 100,000 5,931 9,075 14,016 5,931 9,075 14,016
13 16,739 100,000 100,000 100,000 6,253 9,932 15,974 6,253 9,932 15,974
14 18,521 100,000 100,000 100,000 6,548 10,809 18,120 6,548 10,809 18,120
15 20,392 100,000 100,000 100,000 6,807 11,694 20,464 6,807 11,694 20,464
16 22,356 100,000 100,000 100,000 7,030 12,589 23,030 7,030 12,589 23,030
17 24,419 100,000 100,000 100,000 7,207 13,486 25,834 7,207 13,486 25,834
18 26,585 100,000 100,000 100,000 7,337 14,384 28,904 7,337 14,384 28,904
19 28,859 100,000 100,000 100,000 7,412 15,274 32,264 7,412 15,274 32,264
20 31,247 100,000 100,000 100,000 7,420 16,146 35,942 7,420 16,146 35,942
age 60 45,102 100,000 100,000 100,000 6,601 20,390 60,812 6,601 20,390 60,812
age 65 62,785 100,000 100,000 124,315 3,230 23,445 101,900 3,230 23,445 101,900
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values will be different if premiums are paid in
different amounts or with a different frequency.
The above hypothetical investment results are illustrative only and should not be deemed a representation of past or future
investment results. Actual investment results may be more or less than those shown. The death benefit, policy value and cash
surrender value would be different from those shown if returns averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual policy years. No representation can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
<PAGE>
PAGE 61
Illustration
_____________________________________________________________________________________________________________________________
Initial specified amount $100,000 Male age 35 Guaranteed costs assumed
Death benefit Option 1 nonsmoker annual premium $900
_____________________________________________________________________________________________________________________________
Premium Death benefit (1)(2) Policy value (1)(2) Cash surrender value (1)(2)
accumulated assuming hypothetical gross assuming hypothetical gross assuming hypothetical gross
End of with annual annual investment return of annual investment return of annual investment return of
policy interest
year at 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
_____________________________________________________________________________________________________________________________
1 $ 945 $100,000 $100,000 $100,000 $ 605 $ 648 $ 660 $ 0 $ 1 $ 12
2 1,937 100,000 100,000 100,000 1,172 1,295 1,388 445 568 661
3 2,979 100,000 100,000 100,000 1,720 1,959 2,180 934 1,173 1,394
4 4,073 100,000 100,000 100,000 2,248 2,640 3,042 1,403 1,796 2,198
5 5,222 100,000 100,000 100,000 2,757 3,341 3,982 1,856 2,440 3,081
6 6,428 100,000 100,000 100,000 3,236 4,050 4,996 2,515 3,329 4,275
7 7,694 100,000 100,000 100,000 3,697 4,780 6,104 3,156 4,239 5,564
8 9,024 100,000 100,000 100,000 4,129 5,520 7,306 3,769 5,159 6,945
9 10,420 100,000 100,000 100,000 4,544 6,282 8,622 4,364 6,102 8,441
10 11,886 100,000 100,000 100,000 4,932 7,057 10,053 4,932 7,057 10,053
11 13,425 100,000 100,000 100,000 5,291 7,845 11,614 5,291 7,845 11,614
12 15,042 100,000 100,000 100,000 5,624 8,647 13,317 5,624 8,647 13,317
13 16,739 100,000 100,000 100,000 5,920 9,454 15,169 5,920 9,454 15,169
14 18,521 100,000 100,000 100,000 6,189 10,276 17,197 6,189 10,276 17,197
15 20,392 100,000 100,000 100,000 6,422 11,105 19,411 6,422 11,105 19,411
16 22,356 100,000 100,000 100,000 6,609 11,931 21,822 6,609 11,931 21,822
17 24,419 100,000 100,000 100,000 6,760 12,764 24,463 6,760 12,764 24,463
18 26,585 100,000 100,000 100,000 6,866 13,596 27,353 6,866 13,596 27,353
19 28,859 100,000 100,000 100,000 6,915 14,416 30,512 6,915 14,416 30,512
20 31,247 100,000 100,000 100,000 6,898 15,215 33,965 6,898 15,215 33,965
age 60 45,102 100,000 100,000 100,000 5,674 18,740 57,045 5,674 18,740 57,045
age 65 62,785 100,000 100,000 116,888 1,599 20,552 95,188 1,599 20,552 95,188
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $900 premium is paid at the beginning of each policy year. Values will be different if premiums are paid in
different amounts or with a different frequency.
The above hypothetical investment results are illustrative only and should not be deemed a representation of past or future
investment results. Actual investment results may be more or less than those shown. The death benefit, policy value and cash
surrender value would be different from those shown if returns averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual policy years. No representation can be made that these hypothetical rates of return
can be achieved for any one year or sustained over any period of time.
</TABLE>
<PAGE>
PAGE 62
Annual Financial Information
Report of Independent Auditors
The Board of Directors IDS Life Insurance Company
We have audited the accompanying individual and combined statements
of net assets of the segregated asset subaccounts of IDS Life
Variable Life Separate Account for Flexible Premium Variable Life
Insurance as of December 31, 1993, and the related statements of
operations and changes in net assets for each of the three years in
the period then ended. These financial statements are the
responsibility of the management of IDS Life Insurance Company.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation by the underlying affiliated
mutual fund and unit investment trusts of securities owned at
December 31, 1993. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the individual and combined
financial position of IDS Life Variable Life Separate Account for
Flexible Premium Variable Life Insurance at December 31, 1993 and
the individual and combined results of its operations and the
changes in its net assets for each of the three years in the period
then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Minneapolis, Minnesota
March 18, 1994
<PAGE>
PAGE 63
<TABLE><CAPTION>
IDS Life Variable Life Separate Account -- Flexible Premium Variable Life Subaccounts
Statements of Net Assets Dec. 31, 1993
Segregated Asset Subaccounts
Assets U V W X Y
<S> <C> <C> <C> <C> <C>
Investments in shares of mutual fund portfolios
and units of the trusts, at market value:
IDS Life Series
Fund Equity Portfolio --
5,278,982 shares at
net asset value of
$20.73 per share
(cost $85,536,184)..... $109,417,325 $ -- $ -- $ -- $ --
IDS Life Series Fund
Income Portfolio --
2,215,591 shares at net
asset value of $10.43
per share (cost
$21,578,697)........... -- 23,099,381 -- -- --
IDS Life Series Fund
Money Market Portfolio
- -- 3,967,550 shares at
net asset value of
$1.00 per share
(cost $3,967,417)...... -- -- 3,967,438 -- --
IDS Life Series Fund
Managed Portfolio --
6,542,131 shares at net
asset value of $15.94
per share
(cost $90,097,146)..... -- -- -- 104,311,461 --
IDS Life Series Fund
Government Securities
Portfolio -- 551,044
shares at net asset
value of $10.71 per
share (cost $5,556,208). -- -- -- -- 5,903,479
Smith Barney Shearson
Stripped ("Zero Coupon")
U.S. Treasury Securities
Fund, Series A 1995
Trust -- 1,215,600 units
at net asset value of
$0.93 per unit
(cost $847,398)......... -- -- -- -- --
Smith Barney Shearson
Stripped ("Zero Coupon")
U.S.Treasury Securities
Fund, Series A 2004
Trust -- 14,406,076 units
at net asset value of
$0.52 per unit
(cost $5,255,082)....... -- -- -- -- --
109,417,325 23,099,381 3,967,438 104,311,461 5,903,479
Dividends receivable.... -- 127,288 8,721 -- 27,779
Accounts receivable from
IDS Life for contract
purchase payments....... 155,479 50,764 -- 208,821 34,365
Receivable from mutual
fund portfolios and the
trusts for redemptions.. -- -- 12,581 -- --
Total assets............ 109,572,804 23,277,433 3,988,740 104,520,282 5,965,623
</TABLE> <PAGE>
PAGE 64
<TABLE><CAPTION>
Statements of Net Assets Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
Assets 1995V 2004V Account
<S> <C> <C> <C> <C>
Investments in shares of mutual fund portfolios
and units of the trusts, at market value:
IDS Life Series
Fund Equity Portfolio --
5,278,982 shares at
net asset value of
$20.73 per share
(cost $85,536,184)..... $ -- $ -- $109,417,325
IDS Life Series Fund
Income Portfolio --
2,215,591 shares at net
asset value of $10.43
per share (cost
$21,578,697)........... -- -- 23,099,381
IDS Life Series Fund
Money Market Portfolio
- -- 3,967,550 shares at
net asset value of
$1.00 per share
(cost $3,967,417)...... -- -- 3,967,438
IDS Life Series Fund
Managed Portfolio --
6,542,131 shares at net
asset value of $15.94
per share
(cost $90,097,146)..... -- -- 104,311,461
IDS Life Series Fund
Government Securities
Portfolio -- 551,044
shares at net asset
value of $10.71 per
share (cost $5,556,208). -- -- 5,903,479
Shearson Lehman Brothers
Stripped ("Zero Coupon")
U.S. Treasury Securities
Fund, Series A 1995
Trust -- 1,215,600 units
at net asset value of
$0.93 per unit
(cost $847,398)......... 1,127,672 -- 1,127,672
Shearson Lehman Brothers
Stripped ("Zero Coupon")
U.S.Treasury Securities
Fund, Series A 2004
Trust -- 14,406,076 units
at net asset value of
$0.52 per unit
(cost $5,255,082)....... -- 7,441,255 7,441,255
1,127,672 7,441,255 255,268,011
Dividends receivable.... -- -- 163,788
Accounts receivable from
IDS Life for contract
purchase payments....... 9,764 5,950 465,143
Receivable from mutual
fund portfolios and the
trusts for redemptions.. -- -- 12,581
Total assets............ 1,137,436 7,447,205 255,909,523
<PAGE>
PAGE 65
Statements of Net Assets (continued) Dec. 31, 1993
Segregated Asset Subaccounts
Liabilities U V W X Y
Payable to IDS Life for:
Mortality and expense
risk fee................ 162,441 17,046 3,043 153,847 4,442
Transaction charge...... -- -- -- -- --
Contract terminations... -- -- 12,581 -- --
Payable to mutual fund
portfolios and the trust
for investments
purchased............... 155,479 161,006 5,678 208,821 57,702
Total liabilities....... 317,920 178,052 21,302 362,668 62,144
Net assets applicable
to Variable Life contracts
in accumulation period..$109,254,884 $23,099,381 $3,967,438 $104,157,614 $5,903,479
Accumulation units
outstanding............. 54,422,093 13,255,311 2,911,403 45,869,757 3,444,125
Net asset value per
accumulation unit....... $2.01 $1.74 $1.36 $2.27 $1.71
See accompanying notes to financial statements.
Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
Liabilities 1995V 2004V Account
Payable to IDS Life for:
Mortality and expense
risk fee................ 852 5,626 347,297
Transaction charge...... 237 1,563 1,800
Contract terminations... -- -- 12,581
Payable to mutual fund
portfolios and the trust
for investments
purchased............... 9,764 5,950 604,400
Total liabilities....... 10,853 13,139 966,078
Net assets applicable
to Variable Life contracts
in accumulation period.. $1,126,583 $7,434,066 $254,943,445
Accumulation units
outstanding............. 655,567 3,410,206
Net asset value per
accumulation unit....... $1.72 $2.18
See accompanying notes to financial statements.
<PAGE>
PAGE 66
IDS Life Variable Life Separate Account -- Flexible Premium Variable Life Subaccounts
Statements of Operations Dec. 31, 1993
Segregated Asset Subaccounts
U V W X Y
Investment income (loss):
Dividend income from
mutual fund portfolios...$ 2,317,662 $1,222,509 $ 103,803 $ 7,255,056 $ 314,966
Expenses:
Mortality and expense
risk fee (Note 3)........ 736,850 156,515 35,692 693,795 44,107
Transaction charge
(Note 6)................. -- -- -- -- --
Total expenses........... 736,850 156,515 35,692 693,795 44,107
Investment income
(loss) -- net............ 1,580,812 1,065,994 68,111 6,561,261 270,859
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales of
investments in mutual fund
portfolios and in the trusts:
Proceeds from sales...... 824,122 851,169 2,093,868 387,697 654,074
Cost of investments sold. 679,089 786,183 2,093,843 354,103 601,305
Net realized gain on
investments.............. 145,033 64,986 25 33,594 52,769
Net change in unrealized
appreciation or
depreciation of
investments.............. 9,696,478 904,140 (28) 7,262,233 144,644
Net gain (loss) on
investments.............. 9,841,511 969,126 (3) 7,295,827 197,413
Net increase in net
assets resulting from
operations...............$11,422,323 $2,035,120 $68,108 $13,857,088 $468,272
See accompanying notes to financial statements.
Statements of Operations Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
1995V 2004V Account
Investment income (loss):
Dividend income from
mutual fund portfolios...$ -- $ -- $ 11,213,996
Expenses:
Mortality and expense
risk fee (Note 3)........ 9,514 57,478 1,733,951
Transaction charge
(Note 6)................. 2,643 15,966 18,609
Total expenses........... 12,157 73,444 1,752,560
Investment income
(loss) -- net............ (12,157) (73,444) 9,461,436
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales of
investments in mutual fund
portfolios and in the trusts:
Proceeds from sales...... 187,563 855,479 5,853,972
Cost of investments sold. 136,695 594,947 5,246,165
Net realized gain on
investments.............. 50,868 260,532 607,807
Net change in unrealized
appreciation or
depreciation of
investments.............. 19,493 882,823 18,909,783
Net gain (loss) on
investments.............. 70,361 1,143,355 19,517,590
Net increase in net
assets resulting from
operations............... $58,204 $1,069,911 $28,979,026
See accompanying notes to financial statements.<PAGE>
PAGE 67
Statements of Operations Dec. 31, 1992
Segregated Asset Subaccounts
U V W X Y
Investment income (loss):
Dividend income from
mutual fund portfolios.. $1,892,298 $899,958 $ 131,483 $5,926,903 $ 214,281
Expenses:
Mortality and expense
risk fee (Note 3)....... 401,356 102,770 35,728 422,054 29,155
Transaction charge
(Note 6)................ -- -- -- -- --
Total expenses.......... 401,356 102,770 35,728 422,054 29,155
Investment income
(loss) -- net........... 1,490,942 797,188 95,755 5,504,849 185,126
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales
of investments in mutual
fund portfolios and in
the trusts:
Proceeds from sales..... 844,301 1,010,899 1,881,833 742,517 387,012
Cost of investments
sold.................... 710,460 968,156 1,881,853 676,187 367,453
Net realized gain on
investments............. 133,841 42,743 (20) 66,330 19,559
Net change in unrealized
appreciation or
depreciation of
investments............. 3,154,481 139,034 37 (712,491) 19,724
Net gain (loss) on
investments............. 3,288,322 181,777 17 (646,161) 39,283
Net increase in net
assets resulting from
operations.............. $4,779,264 $ 978,965 $95,772 $4,858,688 $224,409
See accompanying notes to financial statements.
Statements of Operations Dec. 31, 1992
Combined
Segregated Asset Subaccounts Variable
1995V 2004V Account
Investment income (loss):
Dividend income from
mutual fund portfolios.. $ -- $ -- $ 9,064,923
Expenses:
Mortality and expense
risk fee (Note 3)....... 7,956 41,044 1,040,063
Transaction charge
(Note 6)................ 2,210 11,400 13,610
Total expenses.......... 10,166 52,444 1,053,673
Investment income
(loss) -- net........... (10,166) (52,444) 8,011,250
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales
of investments in mutual
fund portfolios and in
the trusts:
Proceeds from sales..... 90,386 577,417 5,534,365
Cost of investments
sold.................... 66,475 445,324 5,115,908
Net realized gain on
investments............. 23,911 132,093 418,457
Net change in unrealized
appreciation or
depreciation of
investments............. 41,201 332,980 2,974,966
Net gain (loss) on
investments............. 65,112 465,073 3,393,423
Net increase in net
assets resulting from
operations.............. $54,946 $412,629 $11,404,673
See accompanying notes to financial statements.<PAGE>
PAGE 68
Statements of Operations Dec. 31,1991
Segregated Asset Subaccounts
U V W X Y 1991V*
Investment income (loss):
Dividend income from
mutual fund portfolios... $95,890 $542,309 $ 174,931 $1,784,848 $118,537 $ --
Expenses:
Mortality and expense
risk fee (Note 3)........ 216,778 61,532 29,156 262,540 15,539 4,000
Transaction charge
(Note 6)................. -- -- -- -- -- 1,111
Total expenses........... 216,778 61,532 29,156 262,540 15,539 5,111
Investment income
(loss) -- net............ (120,888) 480,777 145,775 1,522,308 102,998 (5,111)
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales of
investments in mutual
fund portfolios and in
the trusts:
Proceeds from sales...... 1,237,226 480,810 1,393,554 537,224 314,703 577,205
Cost of investments
sold..................... 996,831 471,510 1,393,548 465,519 301,736 478,629
Net realized gain on
investments.............. 240,395 9,300 6 71,705 12,967 98,576
Net change in unrealized
appreciation or
depreciation of
investments.............. 11,465,508 462,920 (39) 6,154,336 149,854 (68,758)
Net gain (loss) on
investments.............. 11,705,903 472,220 (33) 6,226,041 162,821 29,818
Net increase in net assets
resulting from
operations...............$11,585,015 $952,997 $145,742 $7,748,349 $265,819 $ 24,707
* For the period from Jan. 1, 1991 to Nov. 15, 1991, date of maturity of securities in 1991 Trust.
See accompanying notes to financial statements.
Statements of Operations Dec. 31,1991
Combined
Segregated Asset Subaccounts Variable
1995V 2004V Account
Investment income (loss):
Dividend income from
mutual fund portfolios...$ -- $ -- $2,716,515
Expenses:
Mortality and expense
risk fee (Note 3)........ 6,878 28,388 624,811
Transaction charge
(Note 6)................. 1,911 7,886 10,908
Total expenses........... 8,789 36,274 635,719
Investment income
(loss) -- net............ (8,789) (36,274) 2,080,796
Realized and Unrealized Gain (Loss) on Investments -- net
Realized gain on sales of
investments in mutual
fund portfolios and in
the trusts:
Proceeds from sales...... 107,255 644,304 5,292,281
Cost of investments
sold..................... 83,506 523,945 4,715,224
Net realized gain on
investments.............. 23,749 120,359 577,057
Net change in unrealized
appreciation or
depreciation of
investments.............. 94,278 517,312 18,775,411
Net gain (loss) on
investments.............. 118,027 637,671 19,352,468
Net increase in net assets
resulting from
operations............... $109,238 $601,397 $21,433,264
* For the period from Jan. 1, 1991 to Nov. 15, 1991, date of maturity of securities in 1991 Trust.
See accompanying notes to financial statements.
<PAGE>
PAGE 69
IDS Life Variable Life Separate Account -- Flexible Premium Variable Life Subaccounts
Statements of Changes in Net Assets Year ended Dec. 31, 1993
Segregated Asset Subaccounts
Operations U V W X Y
Investment income
(loss) -- net......... $1,580,812 $1,065,994 $68,111 $6,561,261 $270,859
Net realized gain on
investments........... 145,033 64,986 25 33,594 52,769
Net change in
unrealized appreciation
or depreciation of
investments........... 9,696,478 904,140 (28) 7,262,233 144,644
Net increase in net
assets resulting from
operations............ 11,422,323 2,035,120 68,108 13,857,088 468,272
Contract Transactions
Variable life contract
purchase payments..... 32,464,306 6,060,987 1,554,484 25,900,710 1,749,312
Net transfers*........ 16,961,735 4,584,703 (789,340) 20,407,541 583,218
Transfers for policy
loans................. (1,694,630) (401,220) (134,351) (1,551,680) (104,939)
Policy charges
(Note 3).............. (9,014,789) (1,763,330) (518,029) (7,618,154) (523,818)
Contract terminations:
Surrender benefits
(Note 7).............. (4,699,668) (915,691) (205,110) (4,918,800) (209,353)
Death benefits........ (96,332) (40,471) (907) (170,109) (114)
Increase (decrease)
from contract
transactions.......... 33,920,622 7,524,978 (93,253) 32,049,508 1,494,306
Net assets at
beginning of year..... 63,911,939 13,539,283 3,992,583 58,251,018 3,940,901
Net assets at end
of year............... $109,254,884 $23,099,381 $3,967,438 $104,157,614 $5,903,479
Statements of Changes in Net Assets Year ended Dec. 31, 1993
Combined
Segregated Asset Subaccounts Variable
Operations 1995V 2004V Account
Investment income
(loss) -- net......... $(12,157) $(73,444) $ 9,461,436
Net realized gain on
investments........... 50,868 260,532 607,807
Net change in
unrealized appreciation
or depreciation of
investments........... 19,493 882,823 18,909,783
Net increase in net
assets resulting from
operations............ 58,204 1,069,911 28,979,026
Contract Transactions
Variable life contract
purchase payments..... 222,148 1,487,027 69,438,974
Net transfers*........ 61,241 893,963 42,703,061
Transfers for policy
loans................. (21,869) (107,415) (4,016,104)
Policy charges
(Note 3).............. (83,410) (511,774) (20,033,304)
Contract terminations:
Surrender benefits
(Note 7).............. (81,621) (537,137) (11,567,380)
Death benefits........ -- (4,485) (312,418)
Increase (decrease)
from contract
transactions.......... 96,489 1,220,179 76,212,829
Net assets at
beginning of year..... 971,890 5,143,976 149,751,590
Net assets at end
of year............... $1,126,583 $7,434,066 $254,943,445
<PAGE>
PAGE 70
Statement of Changes in Net Assets (continued) Year ended Dec. 31, 1993
Segregated Asset Subaccounts
Accumulation Unit Activity U V W X Y 1995V 2004V
Units outstanding at
beginning of year..... 35,764,760 8,848,353 2,980,646 30,474,795 2,556,038 598,401 2,841,540
Contract purchase
payments.............. 17,974,062 3,595,255 1,149,908 12,553,727 1,042,048 131,096 707,564
Net transfers*........ 9,237,097 2,669,509 (584,109) 9,754,851 345,119 36,430 426,766
Deductions for policy
loans................. (940,191) (240,726) (99,408) (754,930) (61,875) (12,976) (56,159)
Deductions for policy
charges............... (5,003,599) (1,050,173) (383,329) (3,709,711) (312,977) (49,288) (245,309)
Contract terminations:
Surrender benefits..... (2,558,225) (543,579) (151,638) (2,364,877) (124,154) (48,096) (262,055)
Death benefits......... (51,811) (23,328) (667) (84,098) (74) -- (2,141)
Units outstanding at
end of year -- 54,422,093 13,255,311 2,911,403 45,869,757 3,444,125 655,567 3,410,206
*Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life's Fixed Account.
See accompanying notes to financial statements.
<PAGE>
PAGE 71
IDS Life Variable Life Separate Account -- Flexible Premium Variable Life Subaccounts
Statements of Changes in Net Assets Year ended Dec. 31, 1992
Segregated Asset Subaccounts
Operations U V W X Y
Investment income
(loss) -- net......... $1,490,942 $ 797,188 $ 95,755 $ 5,504,849 $ 185,126
Net realized gain
on investments........ 133,841 42,743 (20) 66,330 19,559
Net change in unrealized
appreciation or
depreciation of
investments........... 3,154,481 139,034 37 (712,491) 19,724
Net increase in net
assets resulting from
operations............ 4,779,264 978,965 95,772 4,858,688 224,409
Contract Transactions
Variable life contract
purchase payments..... 23,236,690 4,085,437 1,842,613 17,439,530 1,260,401
Net transfers*........ 9,216,089 1,710,222 (833,994) 6,369,564 829,269
Transfers for policy
loans................. (766,712) (210,589) (112,799) (1,003,174) (47,091)
Policy charges
(Note 3).............. (6,240,625) (1,221,927) (514,947) (5,392,129) (368,014)
Contract terminations:
Surrender benefits
(Note 7).............. (1,726,671) (278,322) (243,054) (1,884,376) (125,779)
Death benefits........ (85,146) (98,470) (1,794) (161,093) (30,037)
Increase (decrease) from
contract transactions.. 23,633,625 3,986,351 136,025 15,368,322 1,518,749
Net assets at beginning
of year................ 35,499,050 8,573,967 3,760,786 38,024,008 2,197,743
Net assets at end of
year................... $63,911,939 $13,539,283 $3,992,583 $58,251,018 $3,940,901
Statements of Changes in Net Assets Year ended Dec. 31, 1992
Combined
Segregated Asset Subaccounts Variable
Operations 1995V 2004V Account
Investment income
(loss) -- net......... $(10,166) $(52,444) $ 8,011,250
Net realized gain
on investments........ 23,911 132,093 418,457
Net change in unrealized
appreciation or
depreciation of
investments........... 41,201 332,980 2,974,966
Net increase in net
assets resulting from
operations............ 54,946 412,629 11,404,673
Contract Transactions
Variable life contract
purchase payments..... 164,767 968,987 48,998,425
Net transfers*........ 64,326 380,504 17,735,980
Transfers for policy
loans................. (8,689) (18,788) (2,167,842)
Policy charges
(Note 3).............. (67,593) (385,465) (14,190,700)
Contract terminations:
Surrender benefits
(Note 7).............. (58,186) (123,929) (4,440,317)
Death benefits........ -- (38,414) (414,954)
Increase (decrease) from
contract transactions.. 94,625 782,895 45,520,592
Net assets at beginning
of year................ 822,319 3,948,452 92,826,325
Net assets at end of
year................... $971,890 $5,143,976 $149,751,590
<PAGE>
PAGE 72
Statements of Changes in Net Assets (continued) Year ended Dec. 31, 1992
Segregated Asset Subaccounts
Accumulation Unit Activity U V W X Y 1995V 2004V
Units outstanding at
beginning of year...... 20,712,984 6,087,763 2,876,374 21,753,138 1,504,235 538,045 2,360,034
Contract purchase
payments............... 14,835,029 2,797,018 1,391,749 9,888,570 853,787 105,085 572,920
Net transfers*......... 5,831,590 1,203,837 (627,777) 3,608,328 583,466 41,614 243,401
Deductions for policy
loans.................. (484,769) (144,801) (85,406) (569,015) (32,629) (5,372) (10,419)
Deductions for policy
charges................ (3,981,775) (834,389) (388,578) (3,055,172) (248,958) (43,161) (228,070)
Contract terminations:
Surrender benefits..... (1,098,991) (190,763) (184,347) (1,060,613) (83,580) (37,810) (73,759)
Death benefits......... (49,308) (70,312) (1,369) (90,441) (20,283) -- (22,567)
Units outstanding at
end of year............ 35,764,760 8,848,353 2,980,646 30,474,795 2,556,038 598,401 2,841,540
* Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life's Fixed Account.
See accompanying notes to financial statements.
<PAGE>
PAGE 73
IDS Life Variable Life Separate Account -- Flexible Premium Variable Life Subaccounts
Statements of Changes in Net Assets Year ended Dec. 31, 1991
Segregated Asset Subaccounts
Operations U V W X Y 1991V*
Investment income
(loss) -- net..... $ (120,888) $ 480,777 $ 145,775 $ 1,522,308 $ 102,998 $(5,111)
Net realized gain
on investments.... 240,395 9,300 6 71,705 12,967 98,576
Net change in unrealized
appreciation or
depreciation of
investments....... 11,465,508 462,920 (39) 6,154,336 149,854 (68,758)
Net increase in
net assets
resulting from
operations........ 11,585,015 952,997 145,742 7,748,349 265,819 24,707
Contract Transactions
Variable life
contract purchase
payments.......... 10,305,396 2,279,219 1,507,324 11,488,751 627,874 74,800
Net transfers**... 4,162,303 942,239 (71,526) 3,617,235 223,459 (541,042)
Transfers for
policy loans...... (601,669) (199,888) (72,482) (762,663) (48,299) (8,136)
Policy charges
(Note 3).......... (3,208,652) (842,838) (406,210) (3,666,157) (210,704) (40,359)
Contract terminations:
Surrender benefits
(Note 7).......... (1,251,436) (246,660) (100,160) (1,189,492) (46,006) (17,539)
Death benefits.... (44,028) (30,274) (16,096) (107,904) -- --
Increase (decrease)
from contract
transactions...... 9,361,914 1,901,798 840,850 9,379,770 546,324 (532,276)
Net assets at
beginning of year..14,552,121 5,719,172 2,774,194 20,895,889 1,385,600 507,569
Net assets at end
of year...........$35,499,050 $8,573,967 $3,760,786 $38,024,008 $2,197,743 $ --
Accumulation Unit Activity
Units outstanding
at beginning of
year.............. 13,993,438 4,645,535 2,220,552 15,648,585 1,095,927 401,781
Contract purchase
payments.......... 7,562,926 1,747,223 1,176,508 7,505,442 472,743 57,616
Net transfers**... 2,901,145 707,439 (55,851) 2,331,108 165,671 (408,507)
Deductions for
policy loans...... (448,357) (154,479) (57,399) (499,951) (36,891) (6,380)
Deductions for
policy charges.... (2,370,729) (647,541) (316,942) (2,393,566) (159,258) (31,030)
Contract terminations:
Surrender
benefits.......... (893,315) (187,283) (78,146) (766,609) (33,957) (13,480)
Death benefits..... (32,124) (23,131) (12,348) (71,871) -- --
Units outstanding
at end of year.....20,712,984 6,087,763 2,876,374 21,753,138 1,504,235 --
* For the period from Jan. 1, 1991 to Nov. 15, 1991, date of maturity of securities in 1991 Trust.
** Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life's Fixed Account.
See accompanying notes to financial statements.
<PAGE>
PAGE 74
Statements of Changes in Net Assets Year ended Dec. 31, 1991
Combined
Segregated Asset Subaccounts Variable
Operations 1995V 2004V Account
Investment income
(loss) -- net..... $(8,789) $(36,274) $ 2,080,796
Net realized gain
on investments.... 23,749 120,359 577,057
Net change in unrealized
appreciation or
depreciation of
investments....... 94,278 517,312 18,775,411
Net increase in
net assets
resulting from
operations........ 109,238 601,397 21,433,264
Contract Transactions
Variable life
contract purchase
payments.......... 135,569 735,653 27,154,586
Net transfers**... 8,546 187,419 8,528,633
Transfers for
policy loans...... (17,690) (51,116) (1,761,943)
Policy charges
(Note 3).......... (55,816) (250,161) (8,680,897)
Contract terminations:
Surrender benefits
(Note 7).......... (48,883) (108,343) (3,008,519)
Death benefits.... -- (127) (198,429)
Increase (decrease)
from contract
transactions...... 21,726 513,325 22,033,431
Net assets at
beginning of year.. 691,355 2,833,730 49,359,630
Net assets at end
of year........... $822,319 $3,948,452 $92,826,325
Accumulation Unit Activity
Units outstanding
at beginning of
year.............. 520,294 2,019,601
Contract purchase
payments.......... 97,691 493,302
Net transfers**... 6,670 127,122
Deductions for
policy loans...... (12,798) (35,328)
Deductions for
policy charges.... (40,035) (170,734)
Contract terminations:
Surrender
benefits........... (33,777) (73,851)
Death benefits..... -- (78)
Units outstanding
at end of year..... 538,045 2,360,034
* For the period from Jan. 1, 1991 to Nov. 15, 1991, date of maturity of securities in 1991 Trust.
** Includes transfer activity from (to) other subaccounts and transfers from (to) IDS Life's Fixed Account.
See accompanying notes to financial statements.
</TABLE> <PAGE>
PAGE 75
Notes to Financial Statements
1. Organization
IDS Life Variable Life Separate Account (the Variable Account) was
established on Oct. 16, 1985 as a segregated asset account of IDS
Life Insurance Company (IDS Life) under Minnesota law and is
registered as a single unit investment trust under the Investment
Company Act of 1940. Operations of the Variable Account commenced
on Jan. 20, 1986.
The Variable Account is comprised of various subaccounts. The
assets of each subaccount of the Variable Account are not
chargeable with liabilities arising out of the business conducted
by any other Subaccount, Account or by IDS Life. The assets of the
Variable Account shall be available, however, to cover the
liabilities of IDS Life to the extent the assets of the Variable
Account exceed its liabilities arising under the policies supported
by it. Flexible Premium Variable Life policy owners allocate their
premium payment to one or more of the seven subaccounts which are
used in connection with those policies. Such funds are then
invested in shares of five portfolios of IDS Life Series Fund, Inc.
(the mutual fund) or in units of two Trusts of Smith Barney
Shearson, formerly Shearson Lehman Brothers, Stripped ("Zero
Coupon") U.S. Treasury Securities Fund, Series A (individually, a
Trust or collectively, the Trusts).
The mutual fund, which commenced operations Jan. 20, 1986, is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. Funds are
allocated to the subaccounts which are used in connection with
Flexible Premium Variable Life policies: Subaccount U invests in
the shares of the Equity Portfolio; Subaccount V invests in the
shares of the Income Portfolio; Subaccount W invests in the shares
of the Money Market Portfolio; Subaccount X invests in the shares
of the Managed Portfolio; and Subaccount Y invests in the shares of
the Government Securities Portfolio. The Trusts, which commenced
operations Aug. 4, 1986, are registered under the Investment
Company Act of 1940 as a unit investment trust. Funds allocated to
Subaccount 1991V were invested in units of the 1991 Trust;
Subaccount 1995V invests in units of the 1995 Trust; and Subaccount
2004V invests in units of the 2004 Trust. The 1991 Trust matured
on Nov. 15, 1991, and is no longer available for investment.
IDS Life serves as manager, investment adviser and distributor for
the Variable Account and the underlying mutual fund. Smith Barney
Shearson Inc. (formerly Shearson Lehman Brothers Inc.) serves as
sponsor for the Trusts.
2. Summary of Significant Accounting Policies
Investments in Mutual Fund Investments in shares of the mutual fund
portfolios are stated at market value which is the net asset value
per share as determined by the respective portfolios. Investment
transactions are accounted for on the date the shares are purchased
and sold. The cost of investments sold and redeemed is determined
<PAGE>
PAGE 76
on the average cost method. Dividend distributions received from
the portfolios are reinvested, net of any expenses payable to IDS
Life, in additional shares of the portfolios and are recorded as
income by the subaccounts on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the
accompanying financial statements represents the subaccounts' share
of the portfolios' undistributed net investment income,
undistributed realized gain or loss and the unrealized appreciation
or depreciation on their investment securities.
Investments in Trusts
Investments in units of the Trusts are stated at market value which
is the net asset value per unit as determined by the respective
trust. Investment transactions are accounted for on the date the
units are purchased and sold. The cost of investments sold and
redeemed is determined on the average cost method.
Unrealized appreciation or depreciation of investments in the
accompanying financial statements represents the subaccounts' share
of the Trusts' undistributed net investment income, undistributed
realized gain or loss and the unrealized appreciation or
depreciation on their investment securities.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Variable Account
is treated as part of IDS Life for federal income tax purposes.
Under existing federal income tax law, no income taxes are payable
with respect to any investment income of the Variable Account.
3. Mortality and Expense Risk Fee and Policy Charges
IDS Life makes contractual assurances to the Variable Account that
possible future adverse changes in administrative expenses and
mortality experience of the policy owners and beneficiaries will
not affect the Variable Account. The mortality and expense risk
fee paid to IDS Life is computed daily and is equal, on an annual
basis, to 0.9 percent of the daily net asset value of the Variable
Account. A monthly deduction is made for the cost of insurance,
the policy fee, the cost of any riders and the death benefit
guarantee charge for the Policy month. The cost of insurance for
the Policy month is determined on the monthly date by determining
the net amount at risk, as of that day, and by then applying the
cost of insurance rates to the net amount at risk which IDS Life is
assuming for the succeeding month. The monthly deduction will be
taken from the subaccounts as specified in the application for the
Policy.
Currently IDS Life deducts a policy fee of $5 per month. This
charge reimburses IDS Life for expenses incurred in administering
the Policy, such as processing claims, maintaining records,
making Policy changes and communicating with owners of Policies.
IDS Life does not anticipate that it will make any profit on this
charge. IDS Life reserves the right to change this charge in the
future, but guarantees that it will never exceed $7.50 per month.
<PAGE>
PAGE 77
4. Death Benefit Guarantee Charge and Optional Insurance Benefit
Charge
For each Policy month the death benefit guarantee is in effect, IDS
Life deducts a charge of $.01 per $1,000 of the current Specified
Amount and $.01 per $1,000 coverage under the other insured rider
to compensate it for the risk assumed in providing the death
benefit guarantee.
Each month IDS Life deducts charges for any optional insurance
benefits added to the Policy by rider.
5. Premium Expense Charge
IDS Life deducts a sales charge and a charge for premium taxes from
each premium payment. The total of these charges is called the
premium expense charge.
A sales charge of 2.5 percent of each premium payment will be
deducted to compensate IDS Life for expenses relating to the
distribution of the Policy, including agents' commissions,
advertising, and the printing of the prospectuses and sales
literature. In addition, IDS Life may charge a contingent
deferred sales charge if the Policy is surrendered or lapses.
The Policy provides that a charge of 2.5 percent of each premium
payment will be deducted to cover the premium taxes assessed by the
various states. Premium taxes vary from state to state. This
charge is the average rate which IDS Life expects to pay on
premiums from all states.
6. Transaction Charge
IDS Life makes a daily charge against the assets of each subaccount
investing in the Trusts. This charge is intended to reimburse IDS
Life for the transaction charge paid directly by IDS Life to Smith
Barney Shearson Inc. on the sale of the Trust units to the
Variable Account. IDS Life pays these amounts from its general
account assets. The amount of the asset charge is equivalent to
an effective annual rate of 0.25 percent of the account value
invested in the Trusts. This amount may be increased in the future
but in no event will it exceed an effective annual rate of 0.5
percent of the account value. The charge will be cost-based
(taking into account a loss of interest) with no anticipated
element of profit for IDS Life.
7. Surrender Charge
There are surrender charges for full surrender in the first 10
years of the policy and for 10 years following an increase in
specified amount. They are generally level for 5 years and
decreasing the next 5 years. The surrender charge
<PAGE>
PAGE 78
is based on the specified amount, the Insured's issue age, sex and
smoker class and the total gross premium paid. Charges by IDS
Life for surrenders are not available on an individual segregated
asset account basis. Charges for all segregated asset accounts
amounted to $4,408,562 in 1993, $3,649,836 in 1992 and $3,264,084
in 1991. Such charges are not an expense of the subaccounts or
Variable Account. They are deducted from contract surrender
benefits paid by IDS Life.
8. Investment Transactions
The subaccounts' purchases of portfolio shares or trust units (net
of charges), including reinvestment of dividend distributions,
were as follows:
<TABLE><CAPTION>
Year Ended Dec. 31,
Subaccount Investment 1993 1992 1991
<S> <C> <C> <C> <C>
U Equity Portfolio................. $36,394,018 $26,011,554 $10,542,133
V Income Portfolio................. 9,442,140 5,794,439 2,863,385
W Money Market Portfolio........... 2,068,726 2,113,613 2,380,179
X Managed Portfolio................ 39,065,458 21,646,797 11,623,783
Y Government Securities Portfolio.. 2,419,239 2,090,887 964,025
1991V 1991 Trust....................... -- -- 39,317
1995V 1995 Trust....................... 272,050 174,952 120,345
2004V 2004 Trust....................... 2,004,344 1,309,080 1,122,456
$91,665,975 $59,141,322 $29,655,623
/TABLE
<PAGE>
PAGE 79
<TABLE><CAPTION>
Condensed Financial Information (unaudited) Period from
June 17 to
Year Ended Dec. 31, Dec. 31,
1993 1992 1991 1990 1989 1988 1987*
<S> <C> <C> <C> <C> <C> <C> <C>
Subaccount U (Equity)
Accumulation unit value at beginning of
period.................................... $1.79 $1.71 $1.04 $1.10 $0.90 $0.83 $1.00
Accumulation unit value at end of period.. $2.01 $1.79 $1.71 $1.04 $1.10 $0.90 $0.83
Number of accumulation units outstanding
at end of period (000 omitted)............ 54,422 35,765 20,713 13,993 9,013 5,110 1,602
Subaccount V (Income)
Accumulation unit value at beginning of
period.................................... $1.53 $1.41 $1.23 $1.17 $1.06 $0.99 $1.00
Accumulation unit value at end of period.. $1.74 $1.53 $1.41 $1.23 $1.17 $1.06 $0.99
Number of accumulation units outstanding
at end of period (000 omitted)............ 13,255 8,848 6,088 4,646 3,207 1,423 267
Subaccount W (Money Market)
Accumulation unit value at beginning of
period.................................... $1.34 $1.31 $1.25 $1.17 $1.08 $1.03 $1.00
Accumulation unit value at end of period.. $1.36 $1.34 $1.31 $1.25 $1.17 $1.08 $1.03
Number of accumulation units outstanding
at end of period (000 omitted)............ 2,911 2,981 2,876 2,221 1,497 562 192
Subaccount X (Managed)
Accumulation unit value at beginning of
period.................................... $1.91 $1.75 $1.34 $1.25 $0.97 $0.90 $1.00
Accumulation unit value at end of period.. $2.27 $1.91 $1.75 $1.34 $1.25 $0.97 $0.90
Number of accumulation units outstanding
at end of period (000 omitted)............ 45,870 30,475 21,753 15,649 10,496 8,247 3,550
Subaccount Y (Government Securities)
Accumulation unit value at beginning of
period.................................... $1.54 $1.46 $1.26 $1.20 $1.05 $1.00 $1.00
Accumulation unit value at end of period.. $1.71 $1.54 $1.46 $1.26 $1.20 $1.05 $1.00
Number of accumulation units outstanding
at end of period (000 omitted)............ 3,444 2,556 1,504 1,096 491 271 55
Subaccount 1991V**
Accumulation unit value at beginning of
period.................................... -- -- $1.26 $1.17 $1.06 $1.01 $1.00
Accumulation unit value at end of period.. -- -- -- $1.26 $1.17 $1.06 $1.01
Number of accumulation units outstanding
at end of period (000 omitted)............ -- -- -- 402 376 94 21
Subaccount 1995V
Accumulation unit value at beginning of
period.................................... $1.62 $1.53 $1.33 $1.22 $1.07 $1.00 $1.00
Accumulation unit value at end of period.. $1.72 $1.62 $1.53 $1.33 $1.22 $1.07 $1.00
Number of accumulation units outstanding
at end of period (000 omitted)............ 656 598 538 520 510 251 47
Subaccount 2004V
Accumulation unit value at beginning of
period.................................... $1.81 $1.67 $1.40 $1.37 $1.12 $0.99 $1.00
Accumulation unit value at end of period.. $2.18 $1.81 $1.67 $1.40 $1.37 $1.12 $0.99
Number of accumulation units outstanding
at end of period (000 omitted)........... 3,410 2,842 2,360 2,020 1,588 735 251
*Operations commenced on June 17, 1987.
**For the period June 17, 1987 to Nov. 15, 1991, date of maturity of securities in the 1991 Trust.
/TABLE
<PAGE>
PAGE 80
IDS Life Financial Information
The financial statements shown below are those of the insurance
company and not those of the Fund. They are included in the
prospectus for the purpose of informing investors as to the
financial condition of the insurance company and its ability to
carry out its obligations under the variable annuity contracts.
IDS Life Insurance Company
<TABLE><CAPTION>
Consolidated Balance Sheets Dec. 31, 1993 Dec. 31, 1992
Assets (Thousands)
______________________________________________________________________________________________________________________________
<S> <C> <C>
Investments
Fixed maturities (Fair value: 1993, $20,425,979; 1992, $17,896,374) $19,392,424 $17,185,879
Mortgage loans on real estate (Fair value: 1993, $2,125,686; 1992, $1,785,970) 2,055,450 1,688,490
Policy loans 350,501 320,016
Other investments 56,307 51,955
______________________________________________________________________________________________________________________________
Total investments 21,854,682 19,246,340
______________________________________________________________________________________________________________________________
Cash and cash equivalents 146,281 73,563
Receivables:
Reinsurance 55,298 -
Amounts due from brokers 5,719 20,202
Other accounts receivable 21,459 20,095
Premiums due 1,329 1,361
______________________________________________________________________________________________________________________________
Total receivables 83,805 41,658
______________________________________________________________________________________________________________________________
Accrued investment income 307,177 285,120
Deferred policy acquisition costs 1,652,384 1,440,875
Other assets 21,730 18,672
Assets held in segregated asset accounts, primarily common stocks at market 8,991,694 6,189,545
______________________________________________________________________________________________________________________________
Total assets $33,057,753 $27,295,773
______________________________________________________________________________________________________________________________
Liabilities and Stockholder's Equity
______________________________________________________________________________________________________________________________
Liabilities:
Fixed annuities - future policy benefits $18,492,135 $16,342,419
Universal life-type insurance - future policy benefits 2,753,455 2,567,687
Traditional life-type insurance - future policy benefits 210,205 210,886
Disability income, health and long-term care insurance - future policy benefits 185,272 104,896
Policy claims and other policyholders' funds 44,516 49,899
Deferred federal income taxes 43,620 87,913
Amounts due to brokers 351,486 258,654
Other liabilities 292,024 235,509
Liabilities related to segregated asset accounts 8,991,694 6,189,545
______________________________________________________________________________________________________________________________
Total liabilities 31,364,407 26,047,408
______________________________________________________________________________________________________________________________
Stockholder's equity:
Capital stock, $30 per value per share; 100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 222,000 22,000
Net unrealized appreciation on equity securities 114 214
Retained earnings 1,468,232 1,223,151
______________________________________________________________________________________________________________________________
Total stockholder's equity 1,693,346 1,248,365
______________________________________________________________________________________________________________________________
Total liabilities and stockholder's equity $33,057,753 $27,295,773
Commitments and contingencies (Note 6)
______________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 81
<TABLE><CAPTION>
Consolidated Statements of Income Years ended Dec. 31,
1993 1992 1991
(Thousands)
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Revenues:
Premiums
Traditional life insurance $ 48,137 $ 49,719 $ 49,706
Disability income and long-term care insurance 79,108 64,660 52,632
__________________________________________________________________________________________________________________________________
127,245 114,379 102,338
Policyholder and contractholder charges 184,205 156,368 137,202
Management and other fees 120,139 84,591 61,142
Net investment income 1,783,219 1,616,821 1,422,866
Net loss on investments (6,737) (3,710) (5,837)
__________________________________________________________________________________________________________________________________
Total revenues 2,208,071 1,968,449 1,717,711
__________________________________________________________________________________________________________________________________
Benefits and expenses:
Death and other benefits - traditional life insurance 32,136 34,139 30,170
Death and other benefits - universal life-type insurance
and investment contracts 49,692 42,174 38,529
Death and other benefits - disability income, health and
long-term care insurance 13,148 10,701 8,242
Decrease in liabilities for future policy benefits -
traditional life insurance (4,513) (5,788) (6,425)
Increase in liabilities for future policy benefits -
disability income, health and long-term care insurance 32,528 27,172 19,700
Interest credited on universal life-type insurance and investment contracts 1,218,647 1,188,379 1,098,281
Amortization of deferred policy acquisition costs 211,733 140,159 116,078
Other insurance and operating expenses 241,974 215,692 153,669
__________________________________________________________________________________________________________________________________
Total benefits and expenses 1,795,345 1,652,628 1,458,244
__________________________________________________________________________________________________________________________________
Income before income taxes 412,726 315,821 259,467
Income taxes 142,647 104,651 77,430
__________________________________________________________________________________________________________________________________
Net income $ 270,079 $ 211,170 $ 182,037
__________________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 82
<TABLE><CAPTION>
Consolidated Statements of Cash Flows Years ended Dec. 31,
1993 1992 1991
(Thousands)
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 270,079 $ 211,170 $ 182,037
Adjustments to reconcile net income to net cash provided by operating activities:
Issuance - policy loans, excluding universal life-type insurance (35,886) (32,881) (29,309)
Repayment - policy loans, excluding universal life-type insurance 29,557 26,750 19,928
Change in reinsurance receivable (55,298) - -
Change in other accounts receivable (1,364) (4,772) (1,558)
Change in accrued investment income (22,057) (15,853) (26,022)
Change in deferred policy acquisition costs, net (211,509) (229,252) (175,442)
Change in liabilities for future policy benefits for traditional life, disability
income, health and long-term care insurance 79,695 21,384 13,275
Change in policy claims and other policyholders' funds (5,383) (1,347) 11,801
Change in deferred federal income taxes (44,237) (30,385) (29,207)
Change in other liabilities 56,515 88,997 45,323
Amortization of premium (accretion of discount), net (27,438) (4,289) 19,726
Net loss on investments 6,737 3,710 5,837
Premiums related to universal life-type insurance 397,883 312,621 264,504
Surrenders and death benefits related to universal life-type insurance (255,133) (166,162) (109,307)
Interest credited to account balances related to universal life-type insurance 156,885 161,873 160,585
Policyholder and contractholder charges, non-cash (115,140) (100,975) (96,211)
Other, net (1,907) (10,647) 2,258
__________________________________________________________________________________________________________________________________
Net cash provided by operating activities $ 221,999 $ 229,942 $ 258,218
__________________________________________________________________________________________________________________________________
Cash flows from investing activities:
Acquisition of investments, excluding policy loans $(7,102,546) $(7,001,348) $(5,518,481)
Maturities, sinking fund payments and calls of investments, excluding policy loans 3,931,819 2,700,479 838,589
Sale of investments, excluding policy loans 613,571 1,073,950 2,274,401
Change in amounts due from brokers 14,483 289,335 (134,312)
Change in amounts due to brokers 92,832 42,182 72,382
__________________________________________________________________________________________________________________________________
Net cash used in investing activities (2,449,841) (2,895,402) (2,467,421)
__________________________________________________________________________________________________________________________________
Cash flows from financing activities:
Considerations received related to investment contracts 2,843,668 2,821,069 2,316,333
Surrenders and death benefits related to investment contracts (1,765,869) (1,168,633) (871,808)
Interest credited to account balances related to investment contracts 1,071,917 1,026,506 937,696
Issuance - universal life-type insurance policy loans (70,304) (72,007) (76,010)
Repayment - universal life-type insurance policy loans 46,148 40,351 31,860
Capital contribution from parent 200,000 - -
Cash dividend to parent (25,000) (20,000) (20,000)
__________________________________________________________________________________________________________________________________
Net cash provided by financing activities 2,300,560 2,627,286 2,318,071
__________________________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents 72,718 (38,174) 108,868
Cash and cash equivalents at beginning of year 73,563 111,737 2,869
__________________________________________________________________________________________________________________________________
Cash and cash equivalents at end of year $ 146,281 $ 73,563 $ 111,737
__________________________________________________________________________________________________________________________________
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
PAGE 83
Notes to Consolidated Financial Statements ($ Thousands)
Dec. 31, 1993, 1992, 1991
1. Summary of significant accounting policies
Nature of business
IDS Life Insurance Company (the Company) is engaged in the
insurance and annuity business. The Company sells various forms of
fixed and variable individual life insurance, group life insurance,
individual and group disability income insurance, long-term care
insurance, and single and installment premium fixed and variable
annuities.
Basis of presentation
The Company is a wholly owned subsidiary of IDS Financial
Corporation (IDS), which is a wholly owned subsidiary of American
Express Company. The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries, IDS Life Insurance Company of New York and American
Enterprise Life Insurance Company. All material intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authorities.
Also, the consolidated financial statements are presented on a
historical cost basis without adjustment of the net assets
attributable to the 1984 acquisition of IDS by American Express
Company.
Investments
Investments in fixed maturities are carried at cost, adjusted where
appropriate for amortization of premiums and accretion of
discounts. Mortgage loans on real estate are carried principally
at the unpaid principal balances of the related loans. Policy
loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related
policies. Other investments include interest rate caps, real
estate and equity securities. When evidence indicates a decline,
which is other than temporary, in the underlying value or earning
power of individual investments, such investments are written down
to the estimated realizable value by a charge to income. Equity
securities are carried at market value and the related net
unrealized appreciation or depreciation is reported as a credit or
charge to stockholder's equity.
The Company has the ability and the intent to recover the costs of
these investments by holding them for the foreseeable future. The
ability to hold investments to scheduled maturity dates is
dependent on, among other things, annuity contract owners
maintaining their annuity contracts in force.
The Company will implement, effective January 1, 1994, Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under the new rules,
debt securities that the Company has both the positive intent and
<PAGE>
PAGE 84
1. Summary of significant accounting policies (continued)
ability to hold to maturity will be carried at amortized cost.
Debt securities that the Company does not have the positive intent
and ability to hold to maturity and all marketable equity
securities will be classified as available-for-sale and carried at
fair value. Unrealized gains and losses on securities classified
as available-for-sale will be carried as a separate component of
stockholder's equity. The effect of the new rules will be to
increase stockholder's equity by approximately $181 million, net of
taxes, as of January 1, 1994, but the new rules will have no
material impact on the Company's results of operations.
Realized investment gain or loss is determined on an identified
cost basis.
Interest rate cap contracts are purchased to reduce the Company's
exposure to rising interest rates which would increase the cost of
future policy benefits for interest sensitive products. Costs
are amortized over the lives of the agreements and benefits are
recognized when realized.
Prepayments are anticipated on certain investments in
mortgage-backed securities in determining the constant effective
yield used to recognize interest income. Prepayment estimates
are based on information received from brokers who deal in
mortgage-backed securities.
Statement of cash flows
The Company considers investments with a maturity at the date of
their acquisition of three months or less to be cash equivalents.
These securities are carried principally at amortized cost which
approximates fair value.
Supplementary information to the consolidated statement of cash
flows for the years ended Dec. 31 is summarized as follows:
1993 1992 1991
___________________________________________________________________
Cash paid during the year for:
Income taxes $188,204 $140,445 $111,809
Interest on borrowings 2,661 1,265 108
___________________________________________________________________
Recognition of profits on annuity contracts and insurance policies
The Company issues single premium deferred annuity contracts that
provide for a service fee (surrender charge) at annually decreasing
rates upon withdrawal of the annuity accumulation value by the
contract owner. No sales fee is deducted from the contract
considerations received on these contracts ("no load" annuities).
Single premium deferred annuities issued prior to 1980 had a sales
fee and no surrender charge. All of the Company's single premium
deferred annuity contracts provide for crediting the contract
owners' accumulations at specified rates of interest. Such rates
are revised by the Company from time to time based on changes in
the market investment yield rates for fixed-income securities.
<PAGE>
PAGE 85
1. Summary of significant accounting policies (continued)
Profits on single premium deferred annuities and installment
annuities are recognized by the Company over the lives of the
contracts and represent the excess of investment income earned
from investment of contract considerations over interest credited
to contract owners and other expenses.
The retrospective deposit method is used in accounting for
universal life-type insurance. This method recognizes profits over
the lives of the policies in proportion to the estimated gross
profits expected to be realized.
Premiums on traditional life, disability income, health and
long-term care insurance policies are recognized as revenue when
collected or due, and related benefits and expenses are associated
with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association
is accomplished by means of the provision for future policy
benefits and the deferral and subsequent amortization of policy
acquisition costs.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales
compensation, policy issue costs, underwriting and certain sales
expenses, have been deferred on insurance and annuity contracts.
The deferred acquisition costs for single premium deferred
annuities and installment annuities are amortized based upon
surrender charge revenue and a portion of the excess of investment
income earned from investment of the contract considerations over
the interest credited to contract owners. The costs for universal
life-type insurance are amortized over the lives of the policies as
a percentage of the estimated gross profits expected to be
realized on the policies. For traditional life, disability income,
health and long-term care insurance policies, the costs are
amortized over an appropriate period in proportion to premium
revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance, single premium
deferred annuities and installment annuities are accumulation
values.
Liabilities for fixed annuities in a benefit status are based on
the Progressive Annuity Table with interest at 5 percent, the 1971
Individual Annuity Table with interest at 7 percent or 8.25
percent, or the 1983a Table with various interest rates ranging
from 5.5 percent to 9.5 percent, depending on year of issue.
Liabilities for future benefits on traditional life insurance have
been computed principally by the net level premium method, based on
anticipated rates of mortality (approximating the 1965-1970 Select
and Ultimate Basic Table for policies issued after 1980 and the
1955-1960 Select and Ultimate Basic Table for policies issued prior
to 1981), policy persistency derived from Company experience data
(first year rates ranging from approximately 70 percent to 90
percent and increasing rates thereafter), and estimated future
investment yields of 4 percent for policies issued before 1974 and
<PAGE>
PAGE 86
1. Summary of significant accounting policies (continued)
5.25 percent for policies issued from 1974 to 1980. Cash value
plans issued in 1980 and later assume future investment rates that
grade from 9.5 percent to 5 percent over 20 years. Term insurance
issued from 1981 to 1984 assumes an 8 percent level investment rate
and term insurance issued after 1984 assumes investment rates that
grade from 10 percent to 6 percent over 20 years.
Liabilities for future disability income policy benefits have been
computed principally by the net level premium method, based on the
1964 Commissioners Disability Table with the 1958 Commissioners
Standard Ordinary Mortality Table at 3 percent interest for 1980
and prior, 8 percent interest for persons disabled from 1981 to
1991 and 6 percent interest for persons disabled after 1991.
Liabilities for future benefits on long-term care insurance have
been computed principally by the net level premium method, using
morbidity rates based on the 1985 National Nursing Home Survey and
mortality rates based on the 1983a Table. The interest rate basis
is 9.5 percent grading to 7 percent over ten years for policies
issued from 1989 to 1992, 7.75 percent grading to 7 percent over
four years for policies issued after 1992, 8 percent for claims
incurred in 1989 to 1991 and 6 percent for claims incurred after
1991.
At Dec. 31, 1993 and 1992, the carrying amount and fair value of
fixed annuities future policy benefits, after excluding life
insurance-related contracts carried at $913,127 and $834,909, were
$17,579,008 and $15,507,510, and $16,881,747 and $14,867,066,
respectively. The fair value is net of policy loans of $59,132 and
$51,394 at Dec. 31, 1993 and 1992, respectively. The fair value of
these benefits is based on the status of the annuities at Dec. 31,
1993 and 1992. The fair value of deferred annuities is estimated
as the carrying amount less any surrender charges and related
loans. The fair value for annuities in non-life contingent payout
status is estimated as the present value of projected benefit
payments at the rate appropriate for contracts issued in 1993 and
1992.
Reinsurance
The maximum amount of life insurance risk retained by the Company
on any one life is $750 of life and waiver of premium benefits plus
$50 of accidental death benefits. The maximum amount of disability
income risk retained by the Company on any one life is $6 of
monthly benefit for benefit periods longer than three years. The
excesses are reinsured with other life insurance companies on a
yearly renewable term basis. Graded premium whole life policies
and long term care are primarily reinsured on a coinsurance basis.
In 1993 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 113, "Accounting and Reporting for Reinsurance
of Short-Duration and Long-Duration Contracts." Under SFAS No.
113, amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance receivables. Prior to 1993,
these amounts were recorded as a reduction of the liability for
future insurance policy benefits. The cost of reinsurance is
accounted for over the period covered by the reinsurance contract.
<PAGE>
PAGE 87
1. Summary of significant accounting policies (continued)
Federal income taxes
The Company's taxable income is included in the consolidated
federal income tax return of American Express Company. The Company
provides for income taxes on a separate return basis, except that,
under an agreement between IDS and American Express Company, tax
benefit is recognized for losses to the extent they can be used on
the consolidated tax return. It is the policy of IDS and its
subsidiaries that IDS will reimburse a subsidiary for any tax
benefit.
Included in other liabilities at Dec. 31, 1993 and 1992 are $14,709
and $18,181, respectively, payable to IDS for federal income taxes.
Segregated asset account business
The segregated asset account assets and liabilities represent funds
held for the exclusive benefit of the variable annuity and variable
life insurance contract owners. The Company receives investment
management and mortality and expense assurance fees from the
variable annuity and variable life insurance mutual funds and
segregated asset accounts. The Company also deducts a monthly cost
of insurance charge and receives a minimum death benefit guarantee
fee and issue and administrative fee from the variable life
insurance segregated asset accounts.
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the segregated asset
accounts will not be affected by future variations in the actual
life expectancy experience of the annuitants and the beneficiaries
from the mortality assumptions implicit in the annuity contracts.
The Company makes periodic fund transfers to, or withdrawals from,
the segregated asset accounts for such actuarial adjustments for
variable annuities that are in the benefit payment period. The
Company guarantees, for the variable life insurance policyholders,
the cost of the contractual insurance rate and that the death
benefit will never be less than the death benefit at the date of
issuance.
At Dec. 31, 1993 and 1992 the fair value of liabilities related to
segregated asset accounts was $8,305,209 and $5,727,402,
respectively. The fair value of these liabilities at Dec. 31, 1993
and 1992 is estimated as the carrying amount less variable
insurance contracts carried at $346,276 and $226,946, respectively,
and surrender charges, if applicable.
Reclassification
Certain 1992 and 1991 amounts have been reclassified to conform to
the 1993 presentation.
2. Investments
Market values of investments in fixed maturities represent quoted
market prices and estimated fair values when quoted prices are not
available. Estimated fair values are determined by established
procedures involving, among other things, review of market indices,
<PAGE>
PAGE 88
2. Investments (continued)
price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial
files.
Net gain (loss) on investments for the years ended Dec. 31 is
summarized as follows:
<TABLE><CAPTION>
1993 1992 1991
________________________________________________________________________________________________
<S> <C> <C> <C>
Fixed maturities $ 5,460 $ 14,474 $ 22,750
Mortgage loans (11,422) (5,004) (1,064)
Other investments (6,606) (8,265) (5,695)
(12,568) 1,205 15,991
Net (increase) decrease in allowance for losses 5,831 (4,915) (21,828)
$ (6,737) $ (3,710) $ (5,837)
________________________________________________________________________________________________
Changes in net unrealized appreciation
(depreciation) of investments for the years
ended Dec. 31 are summarized as follows:
1993 1992 1991
________________________________________________________________________________________________
Fixed maturities $323,060 $(128,683) $861,355
Equity securities (156) 300 418
________________________________________________________________________________________________
Fair values of and gross unrealized gains
and losses on investments in fixed maturities
carried at amortized cost at Dec. 31 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
1993 Cost Gains Losses Value
________________________________________________________________________________________________
U.S. Government agency obligations $ 63,532 $ 3,546 $ 1,377 $ 65,701
State and municipal obligations 11,072 2,380 - 13,452
Corporate bonds and obligations 9,362,074 768,747 45,706 10,085,115
Mortgage-backed securities 9,978,523 341,067 57,879 10,261,711
19,415,201 1,115,740 104,962 20,425,979
Less allowance for losses 22,777 - 22,777 -
$19,392,424 $1,115,740 $ 82,185 $20,425,979
________________________________________________________________________________________________
Gross Gross
Amortized Unrealized Unrealized Fair
1992 Cost Gains Losses Value
________________________________________________________________________________________________
U.S. Government agency obligations $ 36,753 $ 3,658 $ 4 $ 40,407
State and municipal obligations 11,234 1,542 - 12,776
Corporate bonds and obligations 7,688,190 431,781 104,707 8,015,264
Mortgage-backed securities 9,487,601 377,539 37,213 9,827,927
17,223,778 814,520 141,924 17,896,374
Less allowance for losses 37,899 - 37,899 -
$17,185,879 $ 814,520 $104,025 $17,896,374
________________________________________________________________________________________________
The amortized cost and fair value of investments in fixed maturities at Dec. 31, 1993 by
contractual maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
Amortized Fair
Cost Value
________________________________________________________________________________________________
Due in one year or less $ 89,160 $ 90,928
Due from one to five years 1,430,756 1,532,298
Due from five to ten years 5,488,955 5,924,580
Due in more than ten years 2,427,807 2,616,462
Mortgage-backed securities 9,978,523 10,261,711
$19,415,201 $20,425,979
________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 89
2. Investments (continued)
Proceeds from sales of investments in fixed maturities during 1993
and 1992 were $482,523 and $996,619, respectively. During 1993 and
1992, gross gains of $48,499 and $94,915, respectively, and gross
losses of $43,039 and $80,441, respectively, were realized on those
sales.
At Dec. 31, 1993, the amount of net unrealized appreciation on
equity securities included $160 of gross unrealized appreciation,
$nil of gross unrealized depreciation and deferred tax credits of
$46. At Dec. 31, 1992, the amount of net unrealized appreciation
on equity securities included $328 of gross unrealized
appreciation, $12 of gross unrealized depreciation and deferred tax
credits of $102. The fair value of equity securities was $1,900
and $2,005 at Dec. 31, 1993 and 1992, respectively.
Included in other investments at Dec. 31, 1993 are interest rate
caps at amortized cost of $26,923 with a fair value of $14,201.
These interest rate caps carry a notional amount of $4,400,000 and
expire on various dates from 1994 to 1998.
At Dec. 31, 1993, bonds carried at $4,184 were on deposit with
various states as required by law.
Net investment income for the years ended Dec. 31 is summarized as
follows:
<TABLE><CAPTION>
1993 1992 1991
______________________________________________________________________________________
<S> <C> <C> <C>
Interest on fixed maturities $1,589,802 $1,449,234 $1,279,317
Interest on mortgage loans 175,063 148,693 122,723
Other investment income 29,345 24,281 20,005
Interest on cash equivalents 2,137 5,363 8,729
1,796,347 1,627,571 1,430,774
Less investment expenses 13,128 10,750 7,908
______________________________________________________________________________________
$1,783,219 $1,616,821 $1,422,866
______________________________________________________________________________________
</TABLE>
At Dec. 31, 1993, investments in fixed maturities comprised 89
percent of the Company's total invested assets. These securities
are rated by Moody's and Standard & Poor's (S&P), except for
approximately $2.1 billion which is rated by IDS internal analysts
using criteria similar to Moody's and S&P. A summary of
investments in fixed maturities by rating on Dec. 31 is as follows:
<TABLE><CAPTION>
Dec. 31, Dec. 31,
Rating 1993 1992
________________________________________________________________________
<S> <C> <C>
Aaa/AAA $ 9,959,884 $ 9,480,345
Aa/AA 258,659 219,370
Aa/A 160,638 109,806
A/A 2,021,177 1,735,750
A/BBB 654,949 447,592
Baa/BBB 3,936,366 3,352,192
Baa/BB 717,606 392,361
Below investment grade 1,705,922 1,486,362
________________________________________________________________________
$19,415,201 $17,223,778
________________________________________________________________________
</TABLE>
<PAGE>
PAGE 90
2. Investments (continued)
At Dec. 31, 1993, 99 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of
any other issuer are greater than 1 percent of the Company's total
investments in fixed maturities.
At Dec. 31, 1993, approximately 9.4 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate at Dec. 31, 1993 and 1992 are as follows:
<TABLE><CAPTION>
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
______________________________________________________________________________________
<S> <C> <C> <C> <C>
East North Central $ 552,150 $ 20,933 $ 484,808 $ 21,728
West North Central 361,704 16,746 357,388 14,327
South Atlantic 452,679 52,440 320,593 32,022
Middle Atlantic 260,239 41,090 188,294 56,816
New England 155,214 17,620 114,170 24,677
Pacific 120,378 15,492 89,636 5,148
West South Central 43,948 525 46,296 716
East South Central 73,748 - 83,994 10,085
Mountain 70,410 14,594 26,906 8,882
______________________________________________________________________________________
2,090,470 179,440 1,712,085 174,401
Less allowance for losses 35,020 - 23,595 -
______________________________________________________________________________________
$2,055,450 $179,440 $1,688,490 $174,401
______________________________________________________________________________________
Dec. 31, 1993 Dec. 31, 1992
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
______________________________________________________________________________________
Apartments $ 744,788 $ 79,153 $ 541,855 $ 70,198
Department/retail stores 624,651 65,402 504,331 74,671
Office buildings 234,042 15,583 327,216 12,950
Industrial buildings 217,648 9,279 203,361 15,150
Nursing/retirement homes 83,768 917 56,431 716
Hotels/motels 33,138 - 34,631 716
Medical buildings 30,429 5,954 23,006 -
Residential 78 - 6,618 -
Other 121,928 3,152 14,636 -
______________________________________________________________________________________
2,090,470 179,440 1,712,085 174,401
Less allowance for losses 35,020 - 23,595 -
______________________________________________________________________________________
$2,055,450 $179,440 $1,688,490 $174,401
______________________________________________________________________________________
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds
the mortgage document, which gives the right to take possession of
the property if the borrower fails to perform according to the
terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage
interest rates currently offered for mortgages of similar
maturities. Commitments to purchase mortgages are made in the
ordinary course of business. The fair value of the mortgage
commitments is $nil.
<PAGE>
PAGE 91
3. Income taxes
The Company qualifies as a life insurance company for federal
income tax purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance
companies.
Income tax expense consists of the following:
<TABLE><CAPTION>
1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Federal income taxes:
Current $180,558 $130,998 $104,292
Deferred (44,237) (30,385) (29,207)
_______________________________________________________________________________
136,321 100,613 75,085
State income taxes-Current 6,326 4,038 2,345
_______________________________________________________________________________
Income tax expense $142,647 $104,651 $ 77,430
_______________________________________________________________________________
</TABLE>
Increases (decreases) to the federal tax provision applicable to
pre-tax income based on the statutory rate are attributable to:
<TABLE><CAPTION>
1993 1992 1991
_________________________________________________________________________________________________________
Provision Rate Provision Rate Provision Rate
_________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based on
the statutory rate $144,454 35.0% $107,379 34.0% $88,219 34.0%
Increases (decreases) are attributable to:
Tax-excluded interest and dividend income (11,002) (2.7) (8,209) (2.6) (9,496) (3.7)
Other, net 2,869 0.7 1,443 0.4 (3,638) (1.4)
_________________________________________________________________________________________________________
Federal income taxes $136,321 33.0% $100,613 31.8% $75,085 28.9%
_________________________________________________________________________________________________________
</TABLE>
A portion of life insurance company income earned prior to 1984 was
not subject to current taxation but was accumulated, for tax
purposes, in a "policyholders' surplus account." At Dec. 31, 1993,
the Company had a policyholders' surplus account balance of
$19,032. The policyholders' surplus account is only taxable if
dividends to the stockholder exceed the stockholder's surplus
account or if the Company is liquidated. Deferred income taxes of
$6,661 have not been established because no distributions of such
amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of Dec. 31 are as follows:
<TABLE><CAPTION>
Deferred tax assets: 1993 1992
______________________________________________________________________________________
<S> <C> <C>
Policy reserves $453,436 $356,712
Life insurance guarantee fund assessment reserve 35,000 21,794
______________________________________________________________________________________
Total deferred tax assets 488,436 378,506
______________________________________________________________________________________
Deferred tax liabilities:
______________________________________________________________________________________
Deferred policy acquisition costs 509,868 446,579
Investments 10,105 2,435
Other 12,083 17,405
______________________________________________________________________________________
Total deferred tax liabilities 532,056 466,419
______________________________________________________________________________________
Net deferred tax liabilities $ 43,620 $ 87,913
______________________________________________________________________________________
/TABLE
<PAGE>
PAGE 92
4. Stockholder's equity
Retained earnings available for distribution as dividends to parent
are limited to the Company's surplus as determined in accordance
with accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $922,246 as
of Dec. 31, 1993 and $685,103 as of Dec. 31, 1992 (see Note 3 with
respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1994 in excess of
approximately $259,063 would require approval of the Department of
Commerce of the State of Minnesota.
Statutory net income for 1993, 1992 and 1991 and stockholder's
equity as of Dec. 31, 1993, 1992 and 1991 are summarized as
follows:
<TABLE><CAPTION>
1993 1992 1991
___________________________________________________________________________________
<S> <C> <C> <C>
Statutory net income $ 275,015 $180,296 $200,704
Statutory stockholder's equity 1,157,022 714,942 551,939
___________________________________________________________________________________
</TABLE>
Dividends paid to IDS were $25,000 in 1993, $20,000 in 1992 and
$20,000 in 1991.
5. Related party transactions
The Company has loaned funds or agreed to loan funds to IDS under
two separate loan agreements. The balance of the first loan was
$75,000 and $nil at Dec. 31, 1993 and 1992, respectively. This
loan can be increased to a maximum of $100,000 and pays interest at
a rate equal to the preceding month's effective new money rate for
the Company's permanent investments. It is collateralized by
equities valued at $96,790 at Dec. 31, 1993. The second loan was
used to fund the construction of the IDS Operations Center. This
loan had an outstanding balance of $84,588 and $85,278 at Dec. 31,
1993 and 1992, respectively. The loan is secured by a first lien
on the IDS Operations Center property and has an interest rate of
9.89 percent. The Company also has a loan to an affiliate which
was used to fund construction of the IDS Learning Center. At Dec.
31, 1993 and 1992, the balance outstanding was $22,573 and $22,755,
respectively. The loan is secured by a first lien on the IDS
Learning Center property and has an interest rate of 9.82 percent.
Interest income on the above loans totaled $11,116, $10,711 and
$14,783 in 1993, 1992 and 1991, respectively.
The Company purchased a five year secured note from an affiliated
company which had an outstanding balance of $27,222 and $31,111 at
Dec. 31, 1993 and 1992, respectively. The note bears a market
interest rate, revised semi-annually, which at Dec. 31, 1993 was
8.42 percent.
The Company has a reinsurance agreement whereby it assumed 100
percent of a block of single premium life insurance business from
an affiliated company. The accompanying consolidated balance sheet
at Dec. 31, 1993 and 1992 includes $759,714 and $746,060,
respectively, of future policy benefits related to this agreement.
<PAGE>
PAGE 93
5. Related party transactions (continued)
The accompanying consolidated statement of income includes revenue
from policyholder charges of $21, $109 and $243, and expenses of
$4,931, $5,897 and $6,445 related to this agreement for 1993, 1992
and 1991, respectively.
The Company has a reinsurance agreement to cede 50 percent of its
long-term care insurance business to an affiliated company. The
accompanying consolidated balance sheet at Dec. 31, 1993 includes
$44,086 of reinsurance receivables related to this agreement.
Liabilities for future policy benefits were reduced by $27,028 at
Dec. 31, 1992 for the effect of this agreement. Premiums ceded
amounted to $16,230, $12,499 and $6,365 and reinsurance recovered
from reinsurers amounted to $404, $250 and $187 for the years ended
Dec. 31, 1993, 1992 and 1991, respectively.
The Company participates in the retirement plan of IDS which covers
all permanent employees age 21 and over who have met certain
employment requirements. The benefits are based on the number of
years the employee participates in the plan, their final average
monthly salary, the level of social security benefits the employee
is eligible for and the level of vesting the employee has earned in
the plan. IDS' policy is to fund retirement plan costs accrued
subject to ERISA and federal income tax considerations. The
Company's share of the total net periodic pension cost was $nil in
1993, 1992 and 1991.
The Company also participates in defined contribution pension plans
of IDS which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of
either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1993,
1992 and 1991 were $2,008, $1,826 and $1,682, respectively.
The Company participates in defined benefit health care plans of
IDS that provide health care and life insurance benefits to retired
employees and retired financial planners. The plans include
participant contributions and service-related eligibility
requirements. Upon retirement, such employees are considered to
have been employees of IDS. IDS expenses these benefits and
allocates the expenses to its subsidiaries. Accordingly, costs of
such benefits to the Company are included in employee compensation
and benefits and cannot be identified on a separate company basis.
Charges by IDS for use of joint facilities and other services
aggregated $243,346, $204,675 and $174,500 for 1993, 1992 and 1991,
respectively. Certain of these costs are included in deferred
policy acquisition costs. In addition, the Company rents its home
office space from IDS on an annual renewable basis. Such rentals
aggregated $4,513, $4,074 and $3,469 for 1993, 1992 and 1991,
respectively.
Certain commission and marketing services expenses are allocated to
the Company by its affiliates. The expenses for 1993, 1992 and
1991 were $127,000, $110,064 and $95,367, respectively. Certain of
the costs assessed to the Company are included in deferred policy
acquisition costs.
<PAGE>
PAGE 94
6. Commitments and contingencies
At Dec. 31, 1993 and 1992, traditional life insurance and universal
life-type insurance in force aggregated $46,125,515 and
$40,904,345, respectively, of which $3,038,426 and $2,937,590 were
reinsured at the respective year ends. The Company also reinsures
a portion of the risks assumed under disability income policies.
Under the agreements, premiums ceded to reinsurers amounted to
$28,276, $24,222 and $16,908 and reinsurance recovered from
reinsurers amounted to $3,345, $6,766 and $6,447 for the years
ended Dec. 31, 1993, 1992 and 1991.
Reinsurance contracts do not relieve the Company from its primary
obligation to policyholders.
The Company is a defendant in various lawsuits, none of which, in
the opinion of the Company counsel, will result in a material
liability.
The Company received the revenue agent's report for the tax years
1984 through 1986 in February 1992, and has settled on all agreed
audit issues. The Company will protest the remaining open issues
and, while the outcome of the appeal is not known at this time,
management does not believe there will be any material impact as a
result of this audit.
7. Lines of credit
The Company has available lines of credit with two banks
aggregating $75,000 at 45 to 80 basis points over the banks' cost
of funds or equal to the prime rate, depending on which line of
credit agreement is used. Borrowings outstanding under these
agreements were $1,519 and $nil at Dec. 31, 1993 and 1992,
respectively.
8. Segment information
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income, health and
long-term care insurance, and second, annuity products designed for
individuals, pension plans, small businesses and employer-sponsored
groups. The consolidated statement of income for the years ended
Dec. 31, 1993, 1992 and 1991 and total assets at Dec. 31, 1993,
1992 and 1991 by segment are summarized as follows:
<PAGE>
PAGE 95
8. Segment information (continued)
<TABLE><CAPTION>
1993 1992 1991
___________________________________________________________________________________________________________
<S> <C> <C> <C>
Net investment income:
Life, disability income, health and long-term care insurance $ 250,224 $ 246,676 $ 233,828
Annuities 1,532,995 1,370,145 1,189,038
___________________________________________________________________________________________________________
$ 1,783,219 $ 1,616,821 $ 1,422,866
___________________________________________________________________________________________________________
Premiums and other considerations:
Life, disability income and long-term care insurance $ 281,284 $ 250,386 $ 220,754
Annuities 143,876 104,952 79,928
___________________________________________________________________________________________________________
$ 425,160 $ 355,338 $ 300,682
___________________________________________________________________________________________________________
Income before income taxes:
Life, disability income, health and long-term care insurance $ 104,127 $ 96,215 $ 90,050
Annuities 315,336 223,316 175,254
Net loss on investments (6,737) (3,710) (5,837)
___________________________________________________________________________________________________________
$ 412,726 $ 315,821 $ 259,467
___________________________________________________________________________________________________________
Total assets:
Life, disability income, health and long-term care insurance $ 4,810,145 $ 4,093,778 $ 3,670,197
Annuities 28,247,608 23,201,995 18,888,612
___________________________________________________________________________________________________________
$33,057,753 $27,295,773 $22,558,809
___________________________________________________________________________________________________________
</TABLE>
Allocations of net investment income and certain general expenses
are based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits
by segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
<PAGE>
PAGE 96
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS
Life Insurance Company (a wholly owned subsidiary of IDS Financial
Corporation) as of December 31, 1993 and 1992, and the related
consolidated statements of income and cash flows for each of the
three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of IDS Life Insurance Company at December 31, 1993 and
1992, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
ERNST & YOUNG
February 3, 1994
Minneapolis, Minnesota
<PAGE>
PAGE 97
(REG2)
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby
undertakes to file with the Securities and Exchange Commission such
supplementary and periodic information, documents, and reports as
may be prescribed by any rule or regulation of the Commission
hereto or hereafter duly adopted pursuant to authority conferred in
that section.
RULE 484 UNDERTAKING
The By-Laws of IDS Life Insurance Company provide that:
The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party, by reason of the fact that he is
or was a Manager of Variable Annuity Funds A and B, director,
officer, employee or agent of this Corporation, or is or was
serving at the direction of the Corporation as a Manager of
Variable Annuity Funds A and B, director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, to any threatened, pending or completed action,
suit or proceeding, wherever brought, to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or
hereafter amended, provided that this Article shall not indemnify
or protect any such Manager of Variable Annuity Funds A and B,
director, officer, employee or agent against any liability to the
Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of his duties or by reason of his
reckless disregard of his obligations and duties.
Insofar as indemnification for liability 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.
<PAGE>
PAGE 98
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 12 TO
REGISTRATION STATEMENT NO. 33-11165
This Post-Effective Amendment No. 12 to Registration Statement
No. 33-11165 comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 58 pages.
The undertaking to file reports.
The signatures.
The following exhibits:
1. A. Copies of all exhibits required by paragraph A of
instructions for Exhibits in Form N-8B-2 to the
Registration Statement.
(1) (a) Resolution of Board of Directors of IDS Life
Insurance Company establishing the Trust,
adopted May 9, 1985, is filed electronically
herewith.
(b) Resolution of Board of Directors of IDS Life
Insurance Company reconstituting the Trust,
adopted October 16, 1985, is filed
electronically herewith.
(2) Not applicable.
(3) (a) Not applicable.
(b) (1) Form of Division Sales Manager's
Employment Agreement incorporated by
reference to Registrant's original
Registration Statement for the Variable
Account on Form N-8B-2 (File No. 811-4298;
May 10, 1985).
(2) Form of District Sales Manager's Agreement
incorporated by reference to Registrant's
original Registration Statement for the
Variable Account on Form N-8B-2 (File No.
811-4298; May 10, 1985).
(3) Form of Sales Representative's Agreement
incorporated by reference to Registrant's
original Registration Statement for the
Variable Account on Form N-8B-2 (File No.
811-4298; May 10, 1985).
<PAGE>
PAGE 99
(4) Form of Representative's Employment
Agreement incorporated by reference to
Registrant's original Registration
Statement for the Variable Account on Form
N-8B-2 (File No. 811-4298; May 10, 1985).
(c) Schedules of Sales Commissions incorporated by
reference to Registrant's original Registration
Statement for the Variable Account on Form N-
8B-2 (File No. 811-4298; May 10, 1985).
(4) Not applicable.
(5) Flexible Premium Variable Life Insurance Policy
filed with the Original Registration Statement (File
No. 33-11165) on December 31, 1986 and incorporated
herein by reference.
(6) (a) Certificate of Incorporation of IDS Life
Insurance Company, dated July 23, 1957, is
filed electronically herewith as Exhibit
1.A.(6)(a).
(b) Amended By-Laws of IDS Life Insurance Company,
is filed electronically herewith as Exhibit
1.A.(6)(b).
(7) Not applicable.
(8) (a) Form of Investment Management and Services
Agreement between IDS Life and IDS Life Series
Fund, Inc. is incorporated by reference to
Registrant's original Registration Statement
for the Variable Account on Form N-8B-2 (File
No. 811-4298; May 10, 1985).
(b) Form of Investment Advisory Agreement between
IDS Life and IDS Financial Services Inc.
relating to the Variable Accounts is
incorporated by reference to Registrant's
original Registration Statement for the
Variable Account on Form N-8B-2 (File No. 811-
4298; May 10, 1985).
(9) None.
(10) Application form for the Flexible Premium Variable
Life Insurance Policy filed electronically as
Exhibit 1.A.(10) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-11165
is incorporated herein by reference.
(11) IDS Life Insurance Company's Description of Transfer
and Redemption Procedures and Method of Conversion
to Fixed Benefit Policies filed electronically as
Exhibit 1.A.(11) to Registrant's Form N-8B-2 with
Post-Effective Amendment No. 11, File No. 33-11165
is incorporated herein by reference.<PAGE>
PAGE 100
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
2. Opinion of Counsel and consent to its use as to the legality
of the securities registered was filed with Registrant's 24F-2
notice on or about February 25, 1994.
3. No financial statement will be omitted from the prospectus
pursuant to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable.
6. Opinion of Timothy V. Bechtold, F.S.A., M.A.A.A., is filed
electronically herewith as Exhibit 6 to Registrant's Post-
Effective Amendment No. 12, File No. 33-11165.
7. (a) Written consent of William A. Stoltzmann, dated June 5,
1987, filed electronically as Exhibit 3 to Registrant's
Form N-8B-2 with Post-Effective Amendment No. 11, File
No. 33-11165 is incorporated herein by reference.
(b) Written consent of Timothy Bechtold, F.S.A., M.A.A.A. is
filed electronically herewith as Exhibit No. 7(b) to
Registrant's Post-Effective Amendment No. 12, File No.
33-11165.
(c) Written consent of Ernst & Young is filed electronically
herewith as Exhibit No. 7(c) to Registrant's Post-
Effective Amendment No. 12, File No. 33-11165.
(d) Directors' Power of Attorney to sign amendments to this
Registration Statement dated March 31, 1994, is filed
electronically herewith.
<PAGE>
PAGE 101
POWER OF ATTORNEY
Each person whose signature appears in Post-Effective Amendment No.
12 to Registrant's Registration Statement No. 33-11165 thereby
constitutes and appoints William A. Stoltzmann, Colleen Curran and
Mary Ellyn Minenko, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution, for
him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them or their or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
<PAGE>
PAGE 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 IDS Life Insurance Company on behalf
of the Registrant, certifies that it meets requirements for
effectiveness of this Amendment to its Registration Statement
pursuant to Rule 486(b) under the Securities Act of 1933 and 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 28th day of
April, 1994.
IDS Life Variable Life Separate Account
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By/s/ Richard W. Kling*
Richard W. Kling
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following Officers
and Directors of IDS Life Insurance Company in the capacities
indicated on the 28th day of April, 1994:
Signature Title
/s/ James A. Mitchell* Chairman of the Board
James A. Mitchell and Chief Executive
Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Louis C. Fornetti* Director
Louis C. Fornetti
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Peter A. Lefferts* Director and Executive Vice
Peter A. Lefferts President, Marketing
<PAGE>
PAGE 103
/s/ Janis E. Miller* Director and Executive Vice
Janis E. Miller President, Variable Assets
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Melinda S. Urion* Director, Executive Vice
Melinda S. Urion President and Controller
*Signed pursuant to Power of Attorney dated March 31, 1994, filed
electronically herewith as Exhibit No. 7(d) to Registration
Statement No. 33-11165.
By:
Mary Ellyn Minenko
<PAGE>
PAGE 1
EXHIBIT INDEX
Exhibit 1.A.(1)(a) Resolution of Board of Directors of IDS Life
Insurance Company establishing the Trust,
adopted May 9, 1985
Exhibit 1.A.(1)(b) Resolution of Board of Directors of IDS Life
Insurance Company reconstituting the Trust,
adopted October 16, 1985
Exhibit 1.A.(6)(a) Certificate of Incorporation of IDS Life
Insurance Company, dated July 23, 1957
Exhibit 1.A.(6)(b) Amended By-Laws of IDS Life Insurance Company
Exhibit 6. Opinion of Timothy V. Bechtold, F.S.A., M.A.A.A.
Exhibit 7.(b) Written consent of Timothy Bechtold, F.S.A.,
M.A.A.A.
Exhibit 7.(c) Written consent of Ernst & Young
Exhibit 7.(d) Directors' Power of Attorney to sign amendments to
this Registration Statement dated March 31, 1994
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS
MAY 9, 1985
A meeting of the Board of Directors of IDS Life Insurance Company,
a Minnesota corporation, was held at 1:30 p.m., on Thursday, May 9,
1985, at the offices of the Corporation, IDS Tower, Minneapolis,
Minnesota, pursuant to notice duly given.
Mr. James A. Mitchell, President, called the meeting to order and
presided as Chairman, Mr. Paul D. Sabby, Assistant Secretary of the
Corporation, acted as Secretary of the meeting.
The Chairman stated that the first item of business was the
establishment of five separate accounts to invest in portfolios of
IDS Life Series Fund, Inc., and, after discussion the following
resolutions were duly adopted:
WHEREAS, This Board of Directors has determined that it is
desireable for the Corporation to provide for the acquisition
of shares of the Portfolios of IDS Life Series Fund, Inc.
under its variable life policies, now, therefore, be it
RESOLVED, That the five separate accounts set forth below are
hereby established in accordance with Section 61A.14,
Minnesota Statutes:
IDS Life Account P to invest in shares of the Equity
Portfolio of IDS Life Series Fund, Inc.
IDS Life Account Q, to invest in shares of the Income
Portfolio of IDS Life Series Fund, Inc.
IDS Life Account R to invest in shares of the Moneymarket
Portfolio of IDS Life Series Fund, Inc.
IDS Life Account S to invest in shares of the Managed
Portfolio of IDS Life Series Fund, Inc.
IDS Life Account T to invest in shares of the Government
Securities Portfolio of IDS Life Series Fund, Inc.
RESOLVED FURTHER, That the proper officers of the Corporation
are hereby authorized and directed to accomplish all filings
and registrations necessary to carry the foregoing into
effect.
The Chairman stated that the next item to consider was approval of
authorization of officers to open and maintain an account with
Merrill Lynch Commodities for the purchase and sale of commodities
and commodity
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
SPECIAL MEETING OF THE BOARD OF DIRECTORS
A special meeting of the Board of Directors of IDS Life Insurance
Company, a Minnesota corporation, was held at the offices of the
corporation, IDS Tower, Minneapolis, Minnesota, on October 16, 1985
at 10:30 a.m.
All directors were present except Paul F. Kolkman, James A.
Mitchell, the Chairman of the meeting, announced that a quorum of
the directors was present, and that the meeting was ready to
proceed with its business.
The Chairman stated that the purpose of the meeting was the
establishment of the separate account named IDS Life Variable Life
Separate Account by the reconstituting of the Separate Accounts P,
Q, R, S and T. Upon motion duly made, seconded and unanimously
passed, the following resolution was duly adopted:
WHEREAS, This Board of Directors has determined that it is
desirable for the Corporation to provide for the acquisition
of shares of the portfolios of IDS Life Series Fund, Inc.
under its variable life policies; and,
WHEREAS, the Corporation has previously established five
separate accounts, IDS Life Accounts P, Q, R, S and T, which
accounts have not been funded. Now, therefore, be it
RESOLVED, That the five separate accounts, IDS Life Accounts
P, Q, R, S and T, established in accordance with Section
61A.14, Minnesota Statutes at a meeting of the Board of
Directors of the Corporation on May 9, 1985, are hereby
collectively reconstituted as IDS Life Variable Life Separate
Account (comprised currently of five subaccounts) which the
Board establishes as a Successor Issuer under Rule 414 of the
Securities Act of 1933:
Subaccount P to invest in shares of the Equity Portfolio of
IDS Life Series Fund, Inc.
Subaccount Q, to invest in shares of the Income Portfolio of
IDS Life Series Fund, Inc.
Subaccount R to invest in shares of the Moneymarket Portfolio
of IDS Life Series Fund, Inc.
Subaccount S to invest in shares of the Managed Portfolio of
IDS Life Series Fund, Inc.
Subaccount T to invest in shares of the Government Securities
Portfolio of IDS Life Series Fund, Inc.; and
<PAGE>
PAGE 1
CERTIFICATE OF INCORPORATION
OF
IDS LIFE INSURANCE COMPANY
We, the undersigned, for the purpose of forming an insurance
corporation under and pursuant to the provisions of the Minnesota
Statutes, Chapter 300 relating thereto, and of any amendments
thereof, do hereby associate ourselves as a body corporate and do
hereby adopt the following Articles of Incorporation:
ARTICLE I
The name of this Corporation shall be IDS Life Insurance
Company.
ARTICLE II
The purposes of and general nature of its business shall be:
(a) To engage in the general business of a life insurance
company, and to effect all forms, types, variations and
combinations of life insurance, endowment or annuity
contracts or policies, on a group or individual basis,
for the payment of money in a single sum or in
installments upon the contingencies of death, disability
or survivorship. To provide in such policies or
contracts supplemental thereto, for additional benefits
in the event of the death of the insured by accidental
means, total and permenent [sic] disability of the
insured, or specific dismemberment or disablement
suffered by the insured.
(b) To engage in the general business of an accident and
health insurance company, for the purpose of effecting
insurance against loss or damage by the sickness, bodily
injury or death by accident of the assured or his
dependents, on a group or individual basis; to effect all
forms, types, variations and combinations of policies or
contracts of insurance providing for indemnities in the
event of death, sickness or disability.
(c) To effect contracts of reinsurance or co-insurance of any
individual or group risk underwritten by this
Corporation, to reinsure risks of this Corporation or any
part thereof with any other company or to reinsure the
whole of or any portion of the risks of any other
company.
(d) To effect all other contracts of insurance authorized by
clauses (4) and (5)(a) of subdivision 1 of Section 60.29
of Minnesota Statutes.
(e) To have one or more offices and to conduct business in
this state or elsewhere.
<PAGE>
PAGE 2
(f) To acquire, hold and dispose of shares of stock, notes,
bonds or other evidences of indebtedness or securities of
any other corporation or corporations.
(g) To transact all business and to do all other things
necessary or incidental to the foregoing purposes.
ARTICLE III
The duration of this Corporation shall be perpetual.
ARTICLE IV
The principal place of transacting the business of this
Corporation shall be the City of Minneapolis, State of Minnesota.
ARTICLE V
2/9/72
10/18/85
The capital stock of this Corporation shall consist of One
Hundred Thousand (100,000) shares of stock with a par value of
Thirty Dollars ($30.00) per share. The amount of stated capital of
this Corporation shall be Three Million Dollars ($3,000,000).
ARTICLE VI
(1) The general management of this Corporation shall be
vested in a Board of Directors.
(2) The names and post office addresses of the members of the
first Board of Directors are respectively as follows:
Joseph M. Fitzsimmons 800 Investors Building
Minneapolis 2, Minnesota
John W. McCartin 800 Investors Building
Minneapolis 2, Minnesota
Virgil C. Sullivan 800 Investors Building
Minneapolis 2, Minnesota
A. Edward Archibald 800 Investors Building
Minneapolis 2, Minnesota
Harold E. Miller, M.D. 1531 Medical Arts Building
Minneapolis 2, Minnesota
Said named Directors shall serve as such until the first
annual meeting of the shareholders of the Corporation and until
their successors have been duly elected and qualified.
ARTICLE VII
The first Board of Directors of this Corporation shall have
full power and authority to make and adopt By-Laws for the
government of this Corporation and its affairs as they may deem
advisable or necessary and as shall not be inconsistent with the <PAGE>
PAGE 3
provisions of these Articles. The By-Laws may be amended or
altered by the shareholders at any regular or special meeting
called therefor.
ARTICLE VIII
These Articles of Incorporation may be amended by the
affirmative vote of the holders of a majority of the voting power
of the capital stock.
ARTICLE IX
The first meeting of the Corporation shall be a meeting of the
Incorporators and Subscribers to the capital stock of the
Corporation. Three days' written notice of such meeting shall be
given unless there is a written Waiver of Notice.
ARTICLE X
The names and post office addresses of the Incorporators are
as follows:
Lloyd J. Muehlberg 800 Investors Building
Minneapolis 2, Minnesota
Joseph F. Grinnell 800 Investors Building
Minneapolis 2, Minnesota
Edward M. Burke 800 Investors Building
Minneapolis 2, Minnesota
IN TESTIMONY WHEREOF we have set our hands this 23rd day of July,
1957.
IN PRESENCE OF: Lloyd J. Muehlberg
M. Gould Joseph F. Grinnell
D. Fairchild Edward M. Burke
State of Minnesota )
) SS.
County of Hennepin )
On this 23rd day of July, 1957, before me, a Notary Public,
personally appeared Lloyd J. Muehlberg, Joseph F. Grinnell, and
Edward M. Burke, to me known to be the persons named in and who
executed the foregoing instrument, and they acknowledged to me that
they executed the same as their free act and deed and for the uses
and purposes therein expressed.
(Notarial seal) Helen M. Bochnak
Helen M. Bochnak
Notary Public, Hennepin County, Minn.
My Commission Expired Nov. 12, 1958
<PAGE>
PAGE 4
APPROVAL OF COMMISSIONER OF INSURANCE
The foregoing Certificate of Incorporation of Investors
Syndicate Life Insurance and Annuity Company is hereby approved
this 24th day of July, 1957.
Cyril C. Sheehan
Commissioner of Insurance
State of Minnesota
J.O.M.
<PAGE>
PAGE 1
AMENDED BY-LAWS OF IDS LIFE INSURANCE COMPANY
ARTICLE I
OFFICES
Section 1. The principal place of transacting the business of
this Corporation shall be in the City of Minneapolis, State of
Minnesota.
Section 2. The Corporation may also have offices at such
other places, within or without the State, as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. All meetings of stockholders for the election of
Directors shall be held at the principal office of the Corporation
in the City of Minneapolis, Minnesota. Meetings of stockholders
for any other purpose may be held at such place, within or without
the State of Minnesota, and at such time as may be designated in
the call and notice thereof.
Section 2. The annual meeting of stockholders for the
election of Directors and the transaction of such other business as
may properly come before the meeting shall be held on the Wednesday
following the first Tuesday on or after the nineteenth day of April
in each year, at 10:30 o'clock A.M. Election of Directors shall be
by plurality vote.
Section 3. In the event the stockholders shall fail to hold
an annual meeting at the time specified therefor in Section 2 of
this Article, or the Directors are not elected thereat, Directors
may be elected at a special meeting held for that purpose upon call
and notice as hereinafter provided for a special meeting of
stockholders.
Section 4. Special meetings of stockholders may be called for
any purpose or purposes at any time by the President, the
Secretary, the Board of Directors, any two or more members of the
Board of Directors or in the manner hereinafter provided by one or
more stockholders holding not less than one-tenth of the issued and
outstanding stock entitled to vote. Upon request in writing by
registered mail or delivered in person to the President, any Vice
President, or Secretary, by any person or persons entitled to call
a meeting of stockholders, such officer shall forthwith cause
notice to be given to the stockholders entitled to vote at a
special meeting of stockholders to be held at such time and place
as such officer shall fix, not less than ten pr more than sixty
days after the receipt of such request. Any such request shall
state the purpose or purposes of the proposed meeting.
<PAGE>
PAGE 2
Section 5. Written notice of each meeting of stockholders,
stating the time and place, and in case of a special meeting the
purpose thereof, shall be served upon or mailed to each stockholder
of record entitled to vote thereat at such address as appears on
the stock register of the Corporation, at least ten days before
such meeting.
Section 6. Notice of the time, place and purpose of any
meeting of shareholders, whether required by statute, by the
Articles of Incorporation or by these By-Laws, may be waived in
writing by any stockholder. Such waiver may be given before or
after the meeting, and shall be filed with the Secretary or entered
upon the records of the meeting.
Section 7. Business transacted at all special meetings shall
be confined to the objects stated in the call.
Section 8. The presence, at any meeting of stockholders, in
person or by proxy of the holders of a majority of the stock
entitled to vote thereat shall constitute a quorum for the
transaction of business, except as otherwise provided by statute.
If, however, a quorum shall not be present at any meeting of the
stockholders, the stockholders present in person or by proxy shall
have power to adjourn the meeting from time to time, until a quorum
shall be present. If any meeting of stockholders be adjourned to
another time or place, whether for lack of quorum or otherwise, no
notice as to such adjourned meeting need be given other than by an
announcement, giving the time and place thereof, at the meeting at
which the adjournment is taken. At such adjourned meeting at which
a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed.
The stockholders present at a duly called or held meeting at which
a quorum is present may continue to transact business until final
adjournment, notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.
Section 9. At each meeting of the stockholders, every
stockholder of record at the date fixed by the Board of Directors
as the record date for the determination of the persons entitled to
vote at a meeting of stockholders, or, of not date has been fixed,
then at the date of the meeting, shall be entitled at such meeting
to one vote for each share having voting power standing in his name
on the books of the Corporation. A stockholder may cast his vote
or votes in person or by proxy. The appointment of a proxy shall
be in writing filed with the Secretary at or before the meeting.
<PAGE>
PAGE 3
ARTICLE III
BOARD OF DIRECTORS
Section 1. The number of directors which shall constitute the
whole Board shall not be less than three nor more than fourteen, as
the stockholders may from time to time determine. The President of
the Corporation shall be a Director. Directors shall be elected at
the annual meeting of the stockholders of the Corporation, except
that if the number of directors is increased at any time other than
at an annual meeting of stockholders, an additional Director or
Directors to fill the places on the Board created by any such
increase may be elected at a special meeting of stockholders called
for that purpose. Each Director shall be elected to serve until
the next annual meeting of the stockholders and until his successor
shall be elected and shall quality.
Section 2. Vacancies in the Board of Directors, not to exceed
one-third of the members of the Board in any one year, shall be
filled by the remaining members of the Board, though less than a
quorum, and each person so elected shall be a Director until his
successor is elected by the stockholders who may make such election
at their next annual meeting or at any special meeting called for
that purpose. A vacancy in the Board of Directors, which cannot be
filled by the remaining members of the Board, shall be filled by
the stockholders at any special meeting called for that purpose.
Section 3. The Board of Directors shall have the general
management, control and supervision of all business and affairs of
the Corporation, and shall fix and change, as it may from time to
time determine, by majority vote, the compensation to be paid
Directors, officers and agents of the Corporation, and do all such
lawful acts and things as are not by statue [sic] or by the
Articles of Incorporation or by the By-Laws directed or required to
be exercised or done by the stockholders.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 1. The Board of Directors may, by affirmative action
of the entire Board, designate two or more of their number, one of
which shall be the President, to constitute an Executive Committee,
which, to the extent determined by affirmative action of the entire
Board, shall have and exercise the authority of the Board in the
management of the business or the Corporation. Any such Executive
Committee shall act only in the interval between meetings of the
Board, and shall be subject at all times to the control and
direction of the Board. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board.
<PAGE>
PAGE 4
ARTICLE V
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. The annual meeting of the Board of Directors of
the Corporation shall be held at its principal office in the City
of Minneapolis, Minnesota, as soon as practicable after the final
adjournment of the annual meeting of the stockholders in each year,
and no notice of such meeting shall be necessary to the newly
elected Directors in order to legally constitute the meeting
provided a quorum shall be present; except, however, that such
meeting may be held at such other place, whether in this state or
elsewhere, as a majority of the Board of Directors may have
previously determined.
Section 2. Regular meetings of the Board of Directors may be
held without notice at such time and place either within or without
the State of Minnesota, as shall from time to time have been
previously determined by the Board.
Section 3. Special meetings of the Board may be called by the
President on two days notice to each Director, either personally or
by mail or telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the
written request of two Directors. Any Directors may, in writing,
either before or after the meeting, waive notice thereof; and,
without notice, any Director by his attendance at and participation
in the action taken at the meeting shall be deemed to have waived
notice.
Section 4. At all meetings of the Board of Directors, a
majority of the Directors shall be necessary and sufficient to
constitute a quorum for the transaction of business; and the acts
of a majority of the Directors present at a meeting at which a
quorum is present shall be the acts of the Board of Directors. If
a quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to
time, until a quorum shall be present. No notice of an adjourned
meeting, whether for lack of quorum or otherwise, need be given
other than by announcement, giving the time and place thereof, at
the meeting at which the adjournment is taken.
Section 5. Any action, which might be taken at a meeting of
the Board of Directors, may be taken without a meeting if done in
writing signed by all of the Directors.
<PAGE>
PAGE 5
ARTICLE VI
NOTICES
Section 1. Whenever under the provisions of statutes or of
the Articles of Incorporation or of the By-Laws, notice is required
to be given to any Directors or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in
writing by depositing the same in a post office or letter box, in a
postpaid sealed wrapper, addressed to such Director or stockholder
at such address as appears on the stock register or books of this
Corporation, or, in default of address appearing in the stock
register of the Corporation or any known address, to such Director
or stockholder at the Main Post Office in the City of Minneapolis,
Minnesota, and such notice shall be deemed to be given at the time
when the same shall thus be mailed.
ARTICLE VII
OFFICERS
Section 1. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents
(the number thereof to be determined by the Board of Directors), a
Treasurer, a Secretary, a Medical Director, and such Assistant
Treasurers, Assistant Secretaries, and such other officers as the
Board of Directors may deem necessary. All officers of the
Corporation shall exercise such powers and perform such duties and
shall be set forth in these By-Laws and as shall be determined from
time to time by the Board of Directors or by the President. Any
two of the offices, except those of President and Vice President,
Treasurer and Assistant Treasurer, and Secretary and Assistant
Secretary may be held by the same person.
Section 2. The Board of Directors, at its annual meeting,
shall elect a Chairman of the Board, a President, a Secretary, a
Treasurer, a Medical Director and such Executive Vice Presidents or
Senior Vice Presidents as the Board shall determine. Only the
Chairman of the Board and the President need be a member of the
Board. The President, or his designee, may appoint any other
officers permitted by Section 1 of this Article.
Section 3. The officers of the Corporation shall, except in
the event of death, resignation, or removal by the Board of
Directors, hold office until their successors are chosen and
quality in their stead. Any officer elected by the Board of
Directors may be removed at any time by the Board of Directors with
or without cause; such removal, however, shall be without prejudice
to the contract rights, if any, of the person so removed. When a
vacancy for any reason occurs among the officers, the Board of
Directors shall have the power to elect a successor to fill such
vacancy for the unexpired term.
<PAGE>
PAGE 6
Section 4. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the stockholders and of the Board
of Directors, and will perform such other duties as are assigned to
him by the Board of Directors.
Section 5. President. The President shall be the chief
executive officer of the Corporation. He shall have general and
active supervision and direction over the business affairs of the
Corporation and over its several officers, subject to the control
of the Board of Directors whose policies he shall execute. He
shall see that all lawful orders and resolutions of the Board of
Directors and of the Executive Committee are carried into effect
and he shall make or cause to be made timely and appropriate
reports to the Board of Directors of all matters which in the
interest of the Corporation are required to be brought to their
notice. He shall be a member of the Executive Committee and shall
preside at its meetings and he shall ex officio be a member of all
standing committees or other committees as may be from time to time
constituted or appointed by the Board of Directors.
Section 6. Secretary. The Secretary shall attend all
meetings of the Board of Directors and of the stockholders and
record their proceedings in a book to be kept for that purpose, and
shall perform like duties for the Executive Committee when
required. In case the Secretary shall be absent from any meeting,
the Chairman of the meeting may appoint a temporary secretary to
act at such meeting. The Secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special
meetings of the Board of Directors. He shall have the custody of
the stock register, minute books and the seal of the Corporation,
and shall make such reports and perform such other duties as are
incident to this office or are properly required of him by the
Board of Directors.
Section 7. Treasurer. The Treasurer, unless otherwise
ordered by the Board of Directors, shall have the custody of all
the funds and securities of the Corporation, and shall deposit all
monies and valuables in the name of and to the credit of the
Corporation in such banks or depositories as the Board of Directors
may designate, and shall keep regular books of account, and shall
have custody of the books and records incident to his office and
such as the Board of Directors may direct, and he shall have such
other powers and shall perform such other duties as are incident to
his office or which are properly required of him by the Board of
Directors.
Section 8. Medical Director. The Medical Director shall,
under the direction of the Board of Directors, appoint all medical
examiners for this Corporation and shall have such other powers and
shall perform such other duties as are incident to his office or
which are properly required of him by the Board of Directors. In
his absence or inability to act, an assistant, designated by the
Executive Committee, may act for and in his stead.
Section 9. The powers and duties of all other officers shall
be such as are usual in like corporations under the direction and
control of the Board of Directors.
<PAGE>
PAGE 7
ARTICLE VIII
CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATE
Section 1. The Board of Directors may fix a time, not less
than twenty nor more than forty days preceding the date of any
meeting of stockholders, as a record date for the determination of
the stockholders entitled to notice of any to vote at such meeting,
and in such case by stockholders of record on the date so fixed, or
their legal representatives, shall be entitled to notice of and to
vote at such meeting, notwithstanding any transfer of any shares on
the books of the Corporation after any record date so fixed. The
Board of Directors may close the books of the Corporation against
transfers of shares during the whole or any part of such period.
Section 2. The Board of Directors may fix a time not
exceeding forty days preceding the date fixed for the payment of
any dividend or distribution, or the date for the allotment of
rights, or, subject to contract rights with respect thereto, the
date when any change or conversion or exchange of shares shall be
made or go into effect, as a record date for the determination of
the stockholders entitled to receive payment of any such dividend,
distribution or allotment of rights or to exercise rights in
respect to any such change, conversion or exchange of shares, and
in such case only stockholders of record on the date so fixed shall
be entitled to receive payment of such dividend, distribution or
allotment of rights or to exercise such rights of change,
conversion or exchange of shares, as the case may be,
notwithstanding any transfer of any shares on the books of the
Corporation after any record date fixed as aforesaid. The Board of
Directors may close the books of the Corporation against the
transfer of shares during the whole or any part of such period.
ARTICLE IX
MISCELLANEOUS
Section 1. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof, and, accordingly, shall not be found to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of the
State of Minnesota.
Section 2. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party, by reason of the
fact that he is or was a Manager of Variable Annuity Funds A and B,
director, officer, employee or agent of this Corporation, or is or
was serving at the direction of the Corporation as a Manager of
Variable Annuity Finds A and B, director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, to any threatened, pending or completed action,
suit or proceeding, wherever brought, to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or
<PAGE>
PAGE 8
hereafter amended, provided that this Article shall not indemnify
or protect any such Manager of Variable Annuity Funds A and B,
director, officer, employee or agent against any liability to the
Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of his duties or by reason of his
reckless disregard of his obligations and duties.
ARTICLE X
LOST STOCK CERTIFICATES
Section 1. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation
alleged to have been destroyed or lost upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed, and the Board of Directors, when
authorizing such issue of a new certificate or certificates, may,
in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond
in such sum as it may direct, to indemnify the Corporation against
any claim arising from the issues of such new certificate.
ARTICLE XI
POLICIES, CONTRACTS AND CONVEYANCES
Section 1. Subject to the provisions of Section 2 of the
Article, the President or any Vice President may with the Secretary
or any Assistant Secretary, sign, cause the corporate seal to be
affixed thereto when necessary, acknowledge and deliver all
conveyances, contracts, deeds, notes, mortgages, satisfactions,
leases, assignments, licenses, transfers, powers of attorney,
certificates for shares of stock, and all other similar and
dissimilar instruments.
The Board of Directors may by resolution authorize any officer or
officers alone or with another officer or officers, to sign, or
counter-sign, cause the corporate seal to be affixed thereto when
necessary, acknowledge and deliver any written instrument, or class
of written instruments, for and on behalf of this Corporation.
Section 2. All insurance, annuity or endowment policies or
contracts issued by this Corporation and all reinsurance agreements
of this Corporation shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary. The
signature of any of said officers, on the foregoing or any other
instrument may be a facsimile signature, if the same is
countersigned by an officer or employee duly authorized by the
Board of Directors or Executive Committee of this Corporation to
counter-sign the same.
<PAGE>
PAGE 9
Section 3. All checks, demands for money, and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as may from time to time be authorized by
the Board of Directors.
ARTICLE XII
AMENDMENTS OF BY-LAWS
Section 1. These By-Laws may be altered at any regular
meeting of the stockholders, or at any special meeting of the
stockholders at which a quorum is present or represented, provided
notice of the proposed alternation is contained in the notice of
such meeting, by the affirmative vote of the holders of a majority
of the shares issued and outstanding and entitled to vote at such
meeting and present or represented thereat.
<PAGE>
PAGE 1
April 27, 1994
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440
Gentlemen:
This opinion is furnished in connection with post-effective
Amendment No. 12 to the registration by IDS Life Insurance Company
of a Flexible Premium Variable Life Insurance Policy ("the Policy")
under the Securities Act of 1933, File #33-11165. The prospectus
included on Form S-6 in the post-effective amendment to the
registration statement describes the Policy. I am familiar with
the Policy, the post-effective amendment, the registration
statement and the exhibits thereto. In my opinion, the
illustrations of Death Benefits, Policy Values, and Surrender
Values included in the section of the prospectus entitled
"Illustrations", under the assumptions stated in that section, are
consistent with the provisions of the Policy.
I hereby consent to the use of this opinion as an exhibit to the
registration statement and to the reference to my name under the
heading "Experts" in this prospectus.
Very Truly Yours,
Timothy V. Bechtold, F.S.A., M.A.A.A.
Vice President - Insurance Product Development
<PAGE>
PAGE 1
CONSENT OF ACTUARY
The Board of Directors
IDS Life Insurance Company
I consent to the reference to me under the caption "Experts" and to
the use of my opinion dated April 27, 1994 on the Illustrations
used by IDS Life Insurance Company in the Prospectus for the
Flexible Premium Variable Life Insurance Policy offered by IDS Life
Insurance Company as part of post-effective Amendment #12 to the
Registration Statement being filed under the Securities Act of
1933.
Timothy V. Bechtold, F.S.A., M.A.A.A.
Vice President - Insurance Product Development
Minneapolis, Minnesota
April 27, 1994
<PAGE>
PAGE 1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
and to the use of our report dated February 3, 1994 on the
consolidated financial statements of IDS Life Insurance Company and
our report dated March 18, 1994 on the financial statements of IDS
Life Variable Life Separate Account for Flexible Premium Variable
Life Insurance to be offered by IDS Life Insurance Company, in
Post-Effective Amendment No. 12 to the Registration Statement (Form
S-6 No. 33-11165) being filed under the Securities Act of 1933 and
the Investment Company Act of 1940.
Ernst & Young
Minneapolis, Minnesota
April 28, 1994
<PAGE>
PAGE 1
IDS LIFE INSURANCE COMPANY
DIRECTORS POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of the below listed unit
investment trusts that previously have filed registration
statements and amendments thereto pursuant to the requirements of
the Securities Act of 1933 and the Investment Company Act of 1940
with the Securities and Exchange Commission:
<TABLE><CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Variable and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H and N
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract
(Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Market Value Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Preferred Choice Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
IDS Life Single Premium Variable Life 2-97637 811-4298
IDS Life Variable Account for Smith Barney Shearson
LifeVest Single Premium Variable Life 33-5210 811-4652
IDS Life Account SBS
IDS Life Symphony Annuity 33-40779 812-7731
IDS Life Account RE
IDS Life Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn
Minenko and Colleen Curran or either one of them, as her or his
attorney-in-fact and agent, to sign for her or him in her or his
name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration
statements (with all exhibits and other documents required or
desirable in connection therewith) other documents, and amendments
thereto and to file such filings, applications, periodic reports,
registration statements other documents, and amendments thereto
with the Securities and Exchange Commission, and any necessary
states, and grants to any or all of them the full power and
authority to do and perform each and every act required or
necessary in connection therewith.
<PAGE>
PAGE 2
Dated the 31st day of March, 1994.
/s/ Louis C. Fornetti /s/ Janis E. Miller
Louis C. Fornetti Janis E. Miller
/s/ David R. Hubers /s/ James A. Mitchell
David R. Hubers James A. Mitchell
/s/ Richard W. Kling /s/ Barry J. Murphy
Richard W. Kling Barry J. Murphy
/s/ Paul F. Kolkman /s/ Stuart A. Sedlacek
Paul F. Kolkman Stuart A. Sedlacek
/s/ Peter A. Lefferts /s/ Melinda S. Urion
Peter A. Lefferts Melinda S. Urion
