SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Registration Statement to
FORM S-6
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 10, Minneapolis, Minnesota 55440-0010
D. Name and complete address of agent for service:
Mary Ellyn Minenko, Esq.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
E. Title of securities being registered:
Flexible Premium Variable Life Insurance Policy
F. Approximate date of proposed public offering: as soon as practicable
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant Section 8(a) may
determine.
<PAGE>
(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.
REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
The sponsoring insurance company represents that the fees and charges deducted
under the contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
Prospectus
_____________________, 1999
Flexible Premium Variable Life Insurance Policy
IDS Life Variable Life Separate Account
Issued and sold by: IDS Life Insurance Company
IDS Tower 10,
Minneapolis, MN 55440
Telephone: 800-862-7919
Web site address: http://www.americanexpress.com/advisors
This prospectus contains information about the life insurance policy that you
should know before investing. You also will receive prospectuses for the
underlying funds that are investment options under your policy. Please read all
prospectuses carefully and keep them for future reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
An investment in this annuity is not a deposit of a bank or financial
institution and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. An investment in this policy
involves investment risk including possible loss of principal.
<PAGE>
Table of contents
Key terms
The policy in brief
The variable account
The funds
IDS Life Series Fund Equity Portfolio
IDS Life Series Fund Income Portfolio
IDS Life Series Fund Money Market Portfolio
IDS Life Series Fund Managed Portfolio
IDS Life Series Fund Government Securities Portfolio
IDS Life Series Fund International Equity Portfolio
IDS Life Series Fund Equity Income Portfolio
AIM V.I. Growth and Income Fund
Putnam VT New Opportunities Fund-Class IA Shares
Putnam VT High Yield Fund - Class IB Shares
Warburg Pincus Trust/Small Company Growth Portfolio
American Century VP Value
Templeton International Fund - Class C
Fund objectives
Relationship between funds and subaccounts
Rates of return of the funds and subaccounts
The fixed account
Purchasing your policy
Application
Right to examine policy
Premiums
Keeping the policy in force
No lapse guarantee
Grace period
Reinstatement
Loads, fees and charges
Premium expense charge
Monthly deduction
Surrender charge
Partial surrender fee
Mortality and expense risk charge
Fund expenses
Policy value
Fixed account value
Subaccount values
Proceeds payable upon death
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
Policy loans
Policy surrenders
Total surrenders
Partial surrenders
Allocations of partial surrenders
Effects of partial surrenders
Taxes
<PAGE>
Optional insurance benefits
Waiver of monthly deduction
Accidental death benefit
Other insured rider
Children's insurance rider
Automatic increase benefit rider
Accelerated benefit rider for terminal illness
Payment of policy proceeds
Federal taxes
IDS Life's tax status
Taxation of policy proceeds
Modified endowment contracts
Other tax considerations
IDS Life
Ownership
State regulation
Distribution of the policy
Legal proceedings
Year 2000
Experts
Management of IDS Life
Other fund managers
Other information
Substitution of investments
Voting rights
Reports
Policy illustrations
<PAGE>
Key terms
These terms can help you understand details about your policy.
Accumulation unit: An accounting unit used to calculate the policy value of the
subaccounts prior to the insured's death.
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
the amount payable if the insured's death occurs on or after the insured's
attained insurance age 100. The cash surrender value equals the policy value
minus indebtedness and 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.
No lapse guarantee (NLG): 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 you meet certain premium payment
requirements.
Minimum monthly premium: The premium required to keep the NLG in effect. The
minimum monthly premium is shown in your 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.
Funds: Mutual funds or portfolios, each with a different investment objective.
(See "The funds.")Each of 13 subaccounts of the variable account invests in a
specific one of these funds.
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 insured's age, based upon his or her last birthday on the
date of the application.
Insured: The person whose life is insured by the policy.
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 premium paid minus the premium expense charge.
Owner: The entity(ies) to which, or individual(s) 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.
<PAGE>
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 prior to the insured's attained insurance age
100, proceeds will be the death benefit in effect as of the date of the
insured's death, minus any indebtedness.
o Upon the death of the insured on or after the insured's attained
insurance age 100, proceeds will be the cash surrender value.
o On surrender of the policy, the proceeds will be the cash surrender
value.
Risk 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.
Specified amount: An amount used to determine the death benefit and the proceeds
payable upon death of the insured prior to the insured's attained insurance age
100. 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.
Surrender charge: A charge assessed against the policy value at the time of
surrender, or the policy lapses, during the first 10 years of the policy and for
10 years after an increase in coverage.
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 fund. The policy value in
each subaccount depends on the performance of the particular fund.
Variable account value: The sum of the values that are allocated to the
subaccounts of the variable account.
The policy in brief
Purpose: The purpose of the policy is to provide life insurance protection on
the life of the insured and to build policy value. The policy provides a death
benefit that is payable to the beneficiary upon the insured's death. As in the
case of other life insurance policies, it may not be advantageous to purchase
this policy as a replacement for, or in addition to an existing life insurance
policy.
The policy allows you, as the owner, to allocate your net premiums, or transfer
policy value, to:
The variable account, consisting of subaccounts, each of which invests
in a fund with a particular investment objective. You may direct
premiums to any or all of 13 of these subaccounts. Your policy's value
may increase or decrease daily, depending on the investment return. No
minimum amount is guaranteed. (p.)
The fixed account, which earns interest at rates that are adjusted
periodically by IDS Life. This rate will never be lower than 4.0%. (p.)
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 provide medical and other evidence that the person you propose to insure
(yourself or someone else) is insurable according to our underwriting rules.
(p.)
<PAGE>
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.)
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 subject to certain limits. No premium
payments can be made on or after the insured's attained insurance age 100. We
may refuse premiums in order to comply with the Code. (p.)
No lapse guarantee: A feature of the policy guaranteeing the policy will remain
in force until the insured's attained insurance age 70 (or 5 policy years, if
later.) The feature is in force if you meet certain premium requirements. (p.)
Grace period: If the cash surrender value of your policy becomes less than the
amount needed to pay the monthly deduction and the no lapse 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.)
Reinstatement: If your policy lapses, it can be reinstated within five years.
The reinstatement is subject to certain conditions including evidence of
insurability satisfactory to IDS Life and the payment of a sufficient
premium. (p.)
Loads, fees and charges: You pay the following charges, either directly (such as
deductions from your premium payments or from your policy value), or indirectly
(as deductions from the underlying funds.) These charges primarily compensate
IDS Life for administering and distributing the policy as well as paying policy
benefits and assuming related risks:
o Premium expense charge -- deducted from each premium payment to cover
some distribution expenses, state and local premium taxes, and
federal taxes.
o Monthly deduction -- charged against the value of your policy each
month (prior to the insured's attained insurance age 100), covering the
cost of insurance, cost of issuing the policy, certain administrative
expenses and optional insurance benefits.
o Surrender charge -- applies if you surrender your policy for its full
cash surrender value, or the policy lapses, during the first 10 years
and for 10 years after requesting an increase in the specified amount.
It is based on the initial specified amount and on any increase in the
specified amount.
o Partial surrender fee -- applies if you surrender part of the value of
your policy; equals $25 or 2% of the amount surrendered, whichever is
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 for the first 10 policy years and 0.45% thereafter.
We reserve the right to charge up to 0.9% for all policy years.
o Fund expenses -- apply only to the underlying funds and consists of
investment management fees, taxes, brokerage commissions and
nonadvisory expenses. (p.)
Proceeds payable upon death: Prior to the insured's attained insurance age 100,
your policy's death benefit can never be less than the specified amount, 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. On or after the insured's
attained insurance age 100, the proceeds payable upon the death of the insured
will be the cash surrender value.(p.)
<PAGE>
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 also can arrange for automated transfers among the fixed account
and subaccounts. (p.)
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 have tax consequences if your policy lapses or you
surrender it. (p.)
Policy surrenders: You may cancel this policy while it is in force and receive
its cash surrender value. The cash surrender value is the policy value minus
indebtedness, minus any applicable surrender charges. (p.)
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.)
Payment of policy proceeds: We will pay policy proceeds when you surrender the
policy or the insured dies. 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.)
Federal taxes: The death benefit is not considered part of the beneficiary's
income and therefore is not subject to federal income taxes. When the proceeds
are paid after the insured's attained insurance age 100, if the amount received
plus any indebtedness exceeds your investment in the policy, the excess may be
taxable as ordinary income. Part or all of any proceeds received through full or
partial surrender, 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.)
The variable account
The variable account was established on October 16, 1985 under Minnesota law and
is registered as a single unit investment trust under the Investment Company Act
of 1940. The variable account consists of a number of subaccounts, each of which
invests in shares of a particular fund. This 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. State
insurance law provides that we will not charge a variable subaccount liabilities
of any other subaccount or of any other business conducted by IDS Life. Other
variable life insurance policies that are not described in this prospectus also
invest in subaccounts of the variable account. 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
policies participating in the subaccount.
The U.S. Treasury and the IRS indicated they may provide additional guidance on
investment control. This concerns how many subaccounts an insurance company may
be offer and how many exchanges among subaccounts it may allow before the owner
would be currently taxed on income earned within subaccount assets. At this
time, 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,
so that the owner will not be subject to current taxation as the owner of the
subaccount assets.
<PAGE>
The funds
You can direct your premiums to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
IDS Life Series Fund, Inc.
IDS Life Series Fund, Inc., a Minnesota corporation, is a diversified, open-end
management investment company incorporated on May 8, 1985. The IDS Life Series
Fund International Equity Portfolio was added on October 24, 1994. The IDS Life
Series Fund Equity Income Portfolio was added on ___________, 1999. IDS Life
acts as the investment manager and American Express Financial Corporation acts
as the investment advisor of the IDS Life Series Fund, Inc. American Express
Trust Company acts as custodian of the IDS Life Series Fund, Inc.'s investments.
o IDS Life Series Fund-Equity Portfolio
Objective: capital appreciation. Invests primarily in common
stocks and other securities convertible into common stock.
o IDS Life Series Fund-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.
o IDS Life Series Fund-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.
o IDS Life Series Fund-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.
o IDS Life Series Fund-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.
o IDS Life Series Fund-International Equity Portfolio
Objective: capital appreciation. Invests primarily in common
stocks of foreign issuers and foreign securities convertible into
common stock. Other investments may include certain international
bonds if the portfolio manager believes they have greater
potential for capital appreciation than equities.
o IDS Life Series Fund-Equity Income Portfolio
Objective: to provide a high level of current income and, as a
secondary goal, steady growth of capital. Invests primarily in
dividend-paying stocks. Other investments may include: common
stocks, foreign securities, convertible securities, debt
securities, derivative instruments and money market instruments.
<PAGE>
AIM Variable Insurance Funds, Inc.
AIM Variable Insurance Funds, Inc., a Maryland corporation, is an open-end,
series, management investment company incorporated on January 22, 1993. A I M
Advisors, Inc. acts as the investment advisor for AIM Variable Insurance Funds,
Inc.
o AIM V.I. Growth and Income Fund
Objective: growth of capital, with current income as a secondary
objective. The Fund seeks to achieve its objective by generally
investing at least 65% of its net assets in stocks of companies
believed by management to have the potential for above-average
growth in revenues and earnings.
Putnam Variable Trust
Putnam Variable Trust is a Massachusetts business trust organized on
September 24, 1987. Putnam Investment Management, Inc. acts as the investment
manager for the Putnam Variable Trust.
o Putnam VT New Opportunities Fund - Class IA Shares
Objective: long term capital appreciation. Invests principally in
common stocks of companies in sectors of the economy which Putnam
Investment Management, Inc. ("Putnam Management") believes possess
above-average long-term growth potential.
o Putnam VT High Yield Fund - Class IB Shares
Objective: high current income and, when consistent with this
objective, a secondary objective of capital growth, by investing
primarily in high-yielding, lower-rated fixed income securities
constituting a portfolio which Putnam Investment Management, Inc.
believes does not involve undue risk to income or principal. See
the special considerations for investments in high yield
securities described in the Putnam Variable Trust prospectus.
Warburg Pincus Trust
Warburg Pincus Trust is a Massachusetts business trust organized
on March 15, 1995. Warburg Pincus Asset Management, Inc. acts as investment
advisor for Warburg Pincus Trust.
o Warburg Pincus Trust/Small Company Growth Portfolio
Objective: capital growth. Invests primarily in equity securities
of small-sized domestic companies.
American Century Variable Portfolios, Inc.
American Century Variable Portfolios, Inc., a Maryland Corporation, is a
diversified, open-end management investment company incorporated on June 4,
1987. American Century Investment Management, Inc. acts as investment manager
for American Century Variable Portfolios, Inc.
o American Century VP Value
Objective: long-term capital growth, with income as a secondary
objective. Invests primarily in securities that management
believes to be undervalued at the time of purchase.
Templeton Variable Products Series Fund
Templeton Variable Products Series Fund, a Massachusetts business trust
organized on February 25, 1988, is an open-end management investment company.
Templeton Investment Counsel, Inc. acts as investment manager for the Templeton
Variable Products Series Fund.
o Templeton International Fund - Class C
Objective: long-term capital growth through a flexible policy of
investing in stocks and debt obligations of companies and
governments outside the United States.
The investment managers and advisers cannot guarantee that the funds will meet
their investment objectives nor is there any guarantee that your policy value
will equal or exceed the total premiums you paid. You can find detailed
information about the funds, their investment objectives, policies and risks in
the accompanying fund prospectuses. Please read these prospectuses carefully and
consider, on a continuing basis, which funds are best suited to your long-term
investment needs. Some funds involve more risk than others, so please monitor
your investment.
<PAGE>
Shares of all funds except the IDS Life Series Fund Portfolios are available to
serve as the underlying investment for variable life insurance policies,
variable annuities and qualified plans. Currently the shares of the IDS Life
Series Fund Portfolios are available to serve as the underlying investment for
variable life insurance only. However, in the future these shares also may be
available to serve as the underlying investment for variable life insurance
contracts, variable annuities and qualified plans. It is conceivable that in the
future it may be disadvantageous for variable life insurance separate accounts,
variable annuity separate accounts, and/or qualified plans to invest in the
available funds simultaneously. Although IDS Life and the funds do not currently
foresee any such disadvantages, the boards of directors or trustees of the
appropriate funds will monitor events in order to identify any material
conflicts between such policy owners, contract owners and qualified plans to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that separate funds should be established for variable
life insurance, variable annuity and qualified plan separate accounts, the
variable life insurance policy holders would not bear any expenses associated
with establishing separate accounts. Please refer to the fund prospectuses for
risk disclosure regarding mixed and shared funding.
Diversification: The Internal Revenue Service (IRS) has issued final regulations
relating to the diversification requirements under Section 817(h) of the Code.
Each fund intends to comply with these requirements.
Relationship between funds and subaccounts
Each subaccount buys shares of the appropriate fund at net asset value without a
sales charge. Dividends and capital gain distributions from a fund are
reinvested at net asset value without a sales charge and held by the subaccount
as an asset. Each subaccount redeems fund shares without a charge to the extent
necessary to make death benefit or other payments under the policy.
Rates of return of the funds and subaccounts
This section presents rates of return first for the funds, and then for the
corresponding subaccounts. Rates of return are different in the two cases
because those of the subaccounts reflect additional charges. All charges and
expenses mentioned in the section are explained fully under "Loads, fees and
charges."
Rates of return of the funds:
In the following table are average annual rates of return based on the actual
investment performance of the funds after deduction of applicable fund charges
(including the investment management fees and nonadvisory expenses) for the
periods indicated. These rates do not reflect charges that apply to the
subaccounts or the policy and therefore do not illustrate how actual investment
performance will affect policy benefits. Past performance does not guarantee
future results.
<TABLE>
<CAPTION>
Period ending 12/31/97
Fund 10 years or Since
1 year 3 years 5 years commencement
<S> <C> <C> <C> <C>
IDS Life Series Fund, Inc.
Equity Portfolio (Beta 0.86*) (1/86)** 21.03% 26.21% 18.55% 18.08%
Income Portfolio (1/86) 8.03 10.60 8.25 9.14
Money Market Portfolio (1/86) 5.03 5.02 4.27 5.35
Managed Portfolio (Beta 0.62*) (1/86) 17.91 17.14 14.17 15.75
Government Securities Portfolio (1/86) 8.60 9.15 6.77 8.42
International Equity Portfolio (10/94) 6.20 21.47 -- 20.39
Equity Income Portfolio ( )
-------------
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund (5/94) 25.72 -- -- 21.11
Putnam Variable Trust
Putnam VT New Opportunities Fund-Class IA Shares (5/94) 23.29 -- -- 22.86
Putnam VT High Yield Fund - Class IB Shares (2/88)
Warburg Pincus Trust
Warburg Pincus Trust/Small Company Growth Portfolio (6/95)
<PAGE>
American Century Variable Portfolios, Inc.
American Century VP Value (5/96)
Templeton Variable Products Series Fund
Templeton International Fund - Class C (5/92)***
</TABLE>
* Beta is a volatility measure based on calculations of the fund's monthly
return compared to the S&P 500 Index. A beta less than 1 indicates
performance that is less volatile than the market; A beta more than 1
indicates performance that is more volatile than the market.
** (Commencement date of the fund.)
*** Because Class C shares were not offered until May 1, 1997, performance
shown for periods prior to that date represent the historical results of
Class A shares. Performance of Class C shares for period after May 1, 1997
reflect Class C's higher annual fees and expenses resulting from its Rule
12b-1 plan. Maximum annual plan expenses are 0.25%.
Rates of return of subaccounts
Average annual rates of return in the following table reflect all charges
incurred by the funds 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.
In the table below, you will see the date that the subaccount began operations
and the date the fund began operations. In some cases, the subaccounts and the
funds began operations at the same time, so the performance for both is the
same. In other cases, the fund began operations before the subaccounts that
invest in those funds, so the subaccount and fund performance is different. In
those cases, we show both the actual performance of the subaccount and also
performance from the commencement date of the fund as if the subaccount had
existed at that time. For the new subaccounts, we only show performance from the
commencement date of the fund because those subaccounts do not have any activity
to date. Past performance does not guarantee future results.
<TABLE>
<CAPTION>
Period ending 12/31/97
Since commencement Since commencement
of the subaccounts of the Funds
Subaccount Investing in: 1 year 3 years 5 years 10 years or 1 year 3 years 5 years 10 years or
Since since
commencement commencement
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IDS Life Series Fund,
Inc..-
U Equity (1/86; 1/86)* 20.05% 25.07% 17.49% 16.97% 20.05% 25.07% 17.49% 16.97%
V Income (1/86; 1/86) 7.04 9.62 7.30 8.14 7.04 9.62 7.30 8.14
W Money market (1/86; 4.15 4.17 3.39 4.44 4.15 4.17 3.39 4.44
1/86)
X Managed (1/86; 1/86) 16.88 16.08 13.14 14.66 16.88 16.08 13.14 14.66
Y Government Securities 7.66 8.19 5.83 7.40 7.66 8.19 5.83 7.40
(1/86; 1/86)
FEI Equity Income ( ;
_)
IL International Equity 5.25 21.28 -- 19.41 5.25 21.28 -- 19.41
(10/94; 10/94)
AIM Variable Insurance
Funds, Inc.
FGI Growth and Income Fund 24.59 -- -- 22.15 24.59 25.23 -- 20.00
(11/96; 5/94)
Putnam Variable Trust
FNO New Opportunities 22.18 -- -- 17.34 22.18 24.19 -- 21.76
Fund-Class IA Shares
(11/96; 5/94)
FPH High Yield Fund - Class
IB Shares ( ;
2/88)
<PAGE>
Warburg Pincus Trust
FSC Small Company Growth
Portfolio
( ; 6/95)
American Century
Variable Portfolios,
Inc.
FVL American Century VP
Value
( ; 5/96)
Templeton Variable
Products Series Fund
FIF Templeton International
Fund - Class
C**( ;
)
</TABLE>
* (Commencement date of the subaccount; commencement date of the fund.)
** Because Class C shares were not offered until May 1, 1997, performance
shown for periods prior to that date represent the historical results of
Class A shares. Performance of Class C shares for period after May 1, 1997
reflect Class C's higher annual fees and expenses resulting from its Rule
12b-1 plan. Maximum annual plan expenses are 0.25%.
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
4.0%, 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 4.0%, although
we may do so at our sole discretion.
We will not credit interest in excess of 4.0% 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 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.
<PAGE>
Insurability: Before issuing your policy, we require 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 we determine the individual is not insurable and any premium you
have paid will be returned.
Age limit: IDS Life generally will not issue a policy where the proposed insured
is over the insurance age of 80. We may, however, do so at our sole discretion.
Risk classification: The risk classification is based on the insured's health,
occupation or other relevant underwriting standards. This classification will
affect the 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.
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, we 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
financial advisor with a written request for cancellation, by the 10th day after
you receive it (15th day in Colorado, 20th day in Idaho and North Dakota.)
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 until the policy
value is sufficient to cover the surrender charge, IDS Life requires that
premiums sufficient to keep the no lapse 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 you have paid sufficient premiums to keep the no lapse
guarantee 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 no lapse
guarantee remains in effect.
Premium limitations:
You may make unscheduled premium payments at any time and in any amount of at
least $25. IDS Life reserves the right to limit the number and amount of
unscheduled premium payments. No premium payments, scheduled or unscheduled, are
allowed on or after the insured's attained insurance age 100.
<PAGE>
Also, in order to receive favorable tax treatment under the Code, premiums you
pay during the life of the policy must not exceed certain limitations. To comply
with the Code, we can either refuse excess premiums as you pay them 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 the policy date, 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 policy date, 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.
We convert any amount that you allocate to a subaccount into accumulation units
of that subaccount, as explained under "Policy value." Similarly, when you
transfer value between subaccounts, we convert accumulation units in one
subaccount into a cash value, which we then convert into accumulation units of
the second subaccount.
Keeping the policy in force
No lapse guarantee
The NLG provides that your policy will remain in force until the insured's
attained age 70 (or 5 policy years, if later) even if the cash surrender value
is insufficient to pay the monthly deduction. The NLG will stay in effect as
long as:
o the sum of premiums paid; minus
o partial surrenders; minus
o outstanding indebtedness
equals or exceeds the minimum monthly premiums due since the policy date
The minimum monthly premium is shown in the policy.
If, on a monthly date, you have not paid enough premiums to keep the no lapse
guarantee in effect, the no lapse guarantee will terminate. In addition, your
policy will lapse (terminate) if the cash surrender value is less than the
amount needed to pay the monthly deduction.
The no-lapse guarantee period may be reinstated within 2 years of its
termination if the policy is in force.
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 and the NLG is not in effect,
you will have 61 days to pay the required premium amount. If you do not pay the
required premium, the policy will lapse.
IDS Life will mail a notice to your last known address, requesting payment of
the premium needed so that we can make 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. We will
add any balance to the policy value and allocate it in the same manner as other
premium payments.
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, we will deduct
any overdue monthly deductions from the death benefit.
<PAGE>
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 the required reinstatement premium and
o payment or reinstatement of any indebtedness.
The reinstatement premium is the required premium to reinstate the policy.
The effective date of a reinstated policy will be the monthly date on or next
following the day we accept your application for reinstatement. The suicide
period (see "Proceeds payable upon death") will apply from the effective date of
reinstatement (except in Georgia, Nebraska, Oklahoma, Pennsylvania, South
Carolina, Tennessee, Utah and Virginia.) Surrender charges will also be
reinstated.
We will have two years from the effective date of reinstatement to contest the
truth of statements or representations in the reinstatement application.
Loads, fees and charges
Policy charges compensate IDS Life for:
o providing the insurance benefits of the policy;
o issuing the policy;
o administering the policy;
o assuming certain risks in connection with the policy; and
o distributing the policy.
We deduct some of these charges from your premium payments. We deduct others
periodically from your policy value in the fixed account 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. We credit the amount remaining
after the deduction, called the net premium, to the account(s) you have
selected. The premium expense charge is 5% of each premium payment. It 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 surrender charge,
discussed under "Surrender charge," below.) It also 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 same
premium expense charge even though state premium taxes vary.
Monthly deduction
On each monthly date we deduct from the value of your policy in the fixed
account 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; and
3. charges for any optional insurance benefits provided by rider for the
policy month.
Each of the three components is explained below.
You specify, in your policy application, what percentage of the monthly
deduction from 0% to 100% you want us to take from the fixed account and from
each of the subaccounts. You may change these percentages for future monthly
deductions by writing to us.
<PAGE>
We will take monthly deductions from the fixed account and the subaccounts on a
pro rata basis if:
o you do not specify the accounts from which you want us to take the
monthly deduction, or
o the value in the fixed account or any subaccount is insufficient to
pay the portion of the monthly deduction you have specified;
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 no lapse guarantee is in effect. (See "No lapse
guarantee;" also "Grace period" and "Reinstatement.")
Components of the monthly deduction:
1. Cost of insurance: primarily, the cost of providing the death benefit
under your policy.
It 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 based on the insured's attained
insurance age, sex (unless unisex rates are required by law) and risk
classification. Generally, the cost of insurance rate will increase as the
insured's attained insurance age increases.
We set the rates based on our 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 Last Birthday.
(b) is the death benefit on the monthly date divided by 1.0032737 (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 4.0%);
(c) is the policy value on the monthly date. At this point, the policy value has
been reduced by the policy fee, and any charges for optional riders;
(d) is any flat extra insurance charges assessed as a result of special
underwriting considerations.
2. Policy fee: $5 per month for initial specified amounts below $250,000, and $0
per month for initial specified amounts of $250,000 and above. This charge
reimburses IDS Life for expenses of issuing the policy, such as processing the
application (primarily underwriting) and setting up computer records; and of
administering the policy, such as processing claims, maintaining records, making
policy changes and communicating with owners. We reserve the right to change the
charge in the future, but guarantee that it will never exceed $7.50 per month.
3. Optional insurance benefit charges: charges for any optional benefits you add
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 reimburses IDS Life for costs of issuing the policy, such
as processing the application (primarily underwriting) and setting up computer
records. It also partially pays for commissions, advertising and printing the
prospectus and sales literature.
<PAGE>
The surrender charge for the initial specified amount is shown in your policy.
It is based on the insured's insurance age, sex, risk classification and initial
specified amount. The 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 surrender charge will apply. The additional surrender charge will
be shown in a revised policy. It will be based on the insured's attained
insurance age, sex, risk classification and the amount of the increase. The
additional 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.
Partial surrender fee
If you surrender part of the value of your policy, we will charge you $25 (or 2%
of the amount surrendered, if less.) We guarantee that this fee will not
increase for the duration of your policy.
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 average daily net asset value of the
subaccounts for the first 10 policy years and 0.45% thereafter. We reserve the
right to charge up to 0.9% for all policy years. 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 surrender charge
(described above) may be insufficient to cover the cost of
administering the policy.
Any profit from the mortality and expense risk charge 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 premium
expense charge and surrender charges discussed earlier. IDS Life will make up
any further deficit from its general assets.
Fund expenses
The investment managers and advisers receive fees for their services to the
funds. The funds also pay taxes, brokerage commissions and 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. The table below will help you understand the expenses that the funds
pay.
<TABLE>
<CAPTION>
Annual operating expenses of the funds
at
(management fees, 12b-1 fees and other expenses deducted as a percentage of average net assets as
follows:)
IDS Life
Series IDS Life IDS Life Series
Fund-Government Series Fund-International
Securities Fund-Equity Equity
IDS Life IDS Life (after Income (after expense
IDS Life IDS Life Series Series expense (after limitation)
Series Series Fund-Money Fund-Managed limitation) expense
Fund-Equity Fund-Income Market limitation)
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.70% 0.70% 0.50% 0.70% 0.70% 0.70%% 0.95%
12b-1 fees -- -- -- -- -- -- --
Other expenses
0.02 0.04 0.10 0.02 0.10* 0.10* 0.10*
Total 0.72%** 0.74%** 0.60%** 0.72%** 0.80%** 0.80%** 1.05%**
<PAGE>
Warburg
Pincus Trust/
AIM V.I. Small Company
Growth and Putnam VT New Putnam VT High Growth American Templeton
Income Fund*** Opportunities Yield-Class IB Century VP International-Class
-Class IA Value C++
Management fees 0.63% 0.58% 0.66% 0.90% 1.00% 0.69%
12b-1 fees -- -- 0.15 -- -- 0.25
Other expenses 0.06 0.05 0.06 0.25 0.00 0.19
Total 0.69%+ 0.63% 0.87% 1.15% 1.00% 1.13%
</TABLE>
* IDS Life has agreed to a voluntary limit of 0.1%, on an annual basis, of
the average daily net assets of each of the IDS Life Series Fund Portfolios
for other expenses like taxes and brokerage commissions and for nonadvisory
expenses. If the 0.1% limitation had not been in place, these other
expenses would have been 0.19% for IDS Life Series Fund-Government
Securities Portfolio and 0.11% for IDS Life Series Fund-International
Equity Portfolio. IDS Life Series Fund-Equity Income Portfolio is new. IDS
Life plans to limit these expenses to 0.1%. IDS Life reserves the right to
discontinue limiting these other expenses at 0.1%. However, its present
intention is to continue the limit until the time that actual expenses are
less than the limit
** Annualized operating expenses of underlying funds at
*** Operating expenses of the underlying funds at Dec. 31, 1997. A I M
Advisers, Inc. ("AIM") may from time to time voluntarily waive or reduce
its respective fees. Effective May 1, 1998, the Funds reimburse AIM in an
amount up to 0.25% of the average net asset value of each Fund, for
expenses incurred in providing, or assuring that participating insurance
companies provide, certain administrative services. Currently, the fee only
applies to the average net asset value of each Fund in excess of the net
asset value of each Fund as calculated on April 30, 1998.
+ Operating expenses of the funds at Dec. 31, 1997.
++ The Fund's Class C distribution plan or "Rule 12b-1 Plan" is described in
the Fund's prospectus. Because Class C shares were not offered until May 1,
1997, figures (other than Rule 12b-1 fees) are estimates for 1998 based on
the historical expenses of the Fund's Class A shares for the fiscal year
ended December 31, 1997. Management fees have been restated to reflect the
management fee schedule approved by shareholders and effective May 1, 1997.
Actual management fees before May 1, 1997 were lower. See fund prospectus
for details.
IDS Life has entered into certain arrangements under which it is compensated by
the funds' advisors and/or distributors for the administrative services it
provides to these funds.
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.
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:
o the portion of your initial net premium allocated to the fixed account;
plus
o interest accrued before the policy date; minus
o the portion of the monthly deduction for the first policy month
allocated to the fixed account.
<PAGE>
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 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 funds 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 the policy date
equals:
o the portion of your initial net premium allocated to the subaccount; plus
o interest accrued before the policy date; minus
o the portion of the monthly deduction for the first policy month
allocated to that subaccount.
The value on 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.
Accumulation units: We convert the policy value allocated to each subaccount
into accumulation units. Each time you direct a premium payment or transfer
policy value into one of the subaccounts, we credit a certain number of
accumulation units to your policy for that subaccount. Conversely, each time you
take a partial surrender or transfer value out of a subaccount, we subtract a
certain number of accumulation units.
Accumulation units are the true measure of investment value in each subaccount.
For subaccounts investing in the funds, they are related to, but not the same
as, the net asset value of the corresponding funds. The dollar value of each
accumulation unit can rise or fall daily, depending on the investment
performance of the underlying funds, and on certain charges. Here is 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 accumulation unit value for each subaccount
equals the last accumulation unit value times the current net investment factor.
<PAGE>
Net investment factor: We determine the net investment factor 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 fund; plus
o per-share amount of any dividend or capital gain distribution made by
the relevant fund 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 fund 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,
as described in "Loads, fees and charges," above.
Factors that affect subaccount accumulation units:
Accumulation units of each subaccount may change in two ways; in number and in
value. Here are the factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional premiums allocated to the subaccount;
o transfers into or out of the subaccount;
o partial surrenders and partial surrender fees;
o surrender charges; and/or
o pro rata portions of the monthly deductions
Accumulation unit values will fluctuate due to:
o changes in underlying fund's net asset value;
o dividends distributed to the subaccount;
o capital gains or losses of underlying fund;
o fund operating expenses; and/or
o mortality and expense risk fees.
Proceeds payable upon death
We will pay a benefit to the beneficiary of the policy when the insured dies.
If that death is prior to the insured's attained insurance age 100, the amount
payable is based on the specified amount and death benefit option (described
below) that you have selected, less any indebtedness.
If the insured's death is on or after the attained insurance age 100, the amount
payable is the cash surrender value.
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 the
insured's death, if that death occurs on a valuation date, or on the
next valuation date following the date of death. (See table below.)
<PAGE>
<TABLE>
<CAPTION>
Applicable percentage table
Insured's attained Applicable Insured's attained Applicable
insurance age percentage of insurance age percentage of
policy value policy value
<S> <C> <C> <C>
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
</TABLE>
The percentage is designed to ensure that the policy meets the provisions of
federal tax law which require a minimum death benefit in relation to policy
value for your policy to qualify as life insurance.
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 the insureds death, if that death occurs on a valuation
date, or on the next valuation date following the date of death.
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
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.
<PAGE>
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 death benefit amount
would fall below the minimum amount shown in the policy.
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 following policy costs:
o Monthly deduction because the cost of insurance depends upon the
specified amount.
o Minimum monthly premium.
o Charges for certain optional insurance benefits.
The surrender charge 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 at any time. 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, we may require additional
evidence of insurability that is satisfactory to us. 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 85.
An increase in the specified amount will have the following effect on policy
costs:
o Your monthly deduction will increase because the cost of insurance
charge depends upon the specified amount.
o Charges for certain optional insurance benefits may increase.
o The minimum monthly premium will increase if the NLG 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 no lapse
guarantee is in effect. Because the minimum monthly premium will increase,
additional premiums may also be required to keep the no lapse 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
amount shown in the policy. 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.
A decrease in specified amount will affect your costs as follows:
o Your monthly deduction will decrease because the cost of insurance
charge depends upon the specified amount.
o Charges for certain optional insurance benefits may decrease.
o The minimum monthly premium will decrease if the NLG is in effect.
o The surrender charge will not change.
No surrender charge is imposed when you request a decrease in the specified
amount.
<PAGE>
We will deduct decreases in the specified amount from the current specified
amount in this order:
o First from the portion due to the most recent increase;
o Next from portions due to the next most recent increases
successively; and
o Then from the initial specified amount when the policy was issued.
This procedure may affect the cost of insurance if we have applied different
risk classifications to the current specified amount. We will eliminate the risk
classification applicable to the most recent increase in the specified amount
first, then the risk 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.
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, we will process your
transfer request at the end of the valuation period during which we receive your
request. 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 with the necessary
approval of the SEC. Transfers involving the fixed account are subject to the
restrictions below.
Fixed account transfer policies
o You must make transfers from the fixed account during a 30-day period
starting on a policy anniversary, except for automated transfers, which
can be set up at any time for transfer periods of your choosing subject
to certain minimums.
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.
<PAGE>
o We will not accept requests for transfers from the fixed account at any
other time.
o If you 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:
o For mail and phone transfers--$250 or the entire subaccount balance,
whichever is less.
o For automated transfers--$50.
From the fixed account to a subaccount:
o $250 or the entire fixed account balance, minus any outstanding
indebtedness, whichever is less.
o For automated transfers--$50.
Maximum transfer amounts
From a subaccount to another subaccount or the fixed account:
o None.
From the fixed account to a subaccount:
o Entire fixed account balance, minus any outstanding indebtedness.
Maximum number of transfers per year
We reserve the right to limit mail and telephone transfers to five per policy
year. Twelve automated transfers per policy are allowed.
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
Express mail:
IDS Life Insurance Company
733 Marquette Ave.
Minneapolis, MN 55402
<PAGE>
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 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 we believe is
authentic and we will use reasonable procedures to confirm that it is.
These procedures include asking identifying questions and tape
recording calls. As long as these procedures are followed, IDS Life and
its affiliates will not be liable for any loss resulting from
fraudulent requests.
o We make telephone transfers available automatically. If you do not want
telephone transfers to be made from your account, please write to IDS
Life and tell us.
Automated transfers
In addition to written and telephone requests, you can arrange to have policy
value transferred from one account to another automatically. Your financial
advisor can help you set up an automated transfer.
Automated transfer policies:
o Minimum automated transfer amount: $50
o Only one automated transfer arrangement can be in effect at any time.
You can transfer policy values to one or more subaccounts and the fixed
account, but you can transfer 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 You cannot make automated transfers from the fixed account in an amount
that, if continued, would deplete the fixed account within 12 months.
o If you 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 you submit your automated transfer request with an application for a
policy, automated transfers will not take effect until the policy is
issued.
o If the value of the account from which you are transferring policy
value is less than the $50 minimum, we will stop the transfer
arrangement automatically.
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 of the underlying fund.
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. There is no charge for
dollar-cost averaging.
<PAGE>
How dollar-cost averaging works
Month Amount Accumulation Number of units
invested unit value purchased
Jan $100 $20 5.00
Feb 100 16 6.25
Mar 100 9 11.11
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 variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way 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
telephone numbers for your requests.) We will process your loan request at the
end of the valuation period during which we receive your request. (Loans by
telephone are limited to $50,000.)
Interest rate: The interest rate for policy loans is 6% per year. After the 10th
anniversary we expect to reduce the loan interest to 4% per year. Interest is
charged daily and due at the end of the policy year.
Minimum loan:
o $500 ( $200 for Connecticut residents) or the remaining loan value,
whichever is less.
<PAGE>
Maximum loan:
o In Texas, 100% of the policy value in the fixed account, minus a pro
rata portion of surrender charges.
o In Alabama, 100% of the policy value minus surrender charges.
o In all other states, 90% 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. The amount available at any time for
a new loan is the maximum loan value less any existing indebtedness. When we
compute the amount available, we reserve the right to deduct from the loan value
interest for the period until the next policy anniversary and monthly deductions
that we will take 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 we make a loan from a subaccount, we redeem accumulation
units and transfer the proceeds into the fixed account. We will credit the
loaned amount with 4.0% annual interest.
Repayments: We will allocate loan repayments 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 you do not pay accrued interest when it is 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 the 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 allocated interest,
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 cash surrender value. Even if you do repay it, your loan can have a
permanent effect on death benefits and policy values, because money you borrow
against the subaccounts will not share in the investment results of the relevant
portfolio(s)
A loan may terminate the no lapse guarantee. We deduct the loan amount from the
total premiums you pay, which may reduce the total below the level required to
keep the no lapse guarantee in effect.
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.")
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.") We will process your surrender request at the end of the
valuation period during which we receive your request. We may require you to
return your policy.
We normally will 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 totally surrender your policy, 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 we receive your request.
<PAGE>
Partial surrenders:
After the first policy year, you may surrender any amount from $500 up to 90% of
the policy's cash surrender value. (Partial surrenders by telephone are limited
to $50,000.) We will charge you 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 we receive your request. In determining these
proportions, we first subtract the amount of any outstanding indebtedness from
the fixed account value.
Effect of partial surrenders:
o A partial surrender will reduce the policy value by the amount of the
partial surrender and fee.
o A partial surrender will reduce the death benefit 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 no lapse guarantee. We deduct the
surrender amount from total premiums you paid, which may reduce the
total below the level required to keep the no lapse guarantee in
effect.
o If Option 1 is in effect, a partial surrender will reduce the specified
amount 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.
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 generally will 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 we issue the policy, 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 automatically will credit all future premium payments to the fixed
account unless you request a different allocation.
A transfer for this purpose will not count against the five-transfers-per-year
limit. Also, we will waive any restrictions on transfers into the fixed account
for this type of transfer.
There is no effect on the policy's death benefit, specified amount, net amount
at risk, risk classification(s) or issue age. Only the method of funding the
policy value will be affected.
<PAGE>
Optional insurance benefits
You may choose to add the following benefits to your policy at an additional
cost, in the form of riders (if certain requirements are met.) More detailed
information on these benefits are in your policy.
Waiver of monthly deduction (WMD): Under WMD, we will waive the monthly
deduction if the insured becomes totally disabled.
Accidental death benefit (ADB): ADB provides an additional death benefit if the
insured's death is caused by accidental injury.
Other insured rider (OIR): OIR provides a level, adjustable death benefit on the
life of each other insured covered.
Children's insurance rider (CIR): CIR provides level term care on each eligible
child.
Automatic increase benefit rider (AIB): AIB provides an increase in the
specified amount at a designated percentage on each policy anniversary until
insured's attained age 65.
Accelerated Benefit Rider for Terminal Illness (ABRTI): If the insured is
terminally ill and death is expected to occur within 6 months, the rider
provides that you can withdraw a portion of the death benefit prior to death.
This rider is not available in all states.
Payment of policy proceeds
We will pay policy proceeds when:
o you surrender the policy; or
o the insured dies
We will pay all proceeds by check. We will compute the amount of the death
proceeds and pay it in a single sum unless you select one of the payment options
below. We will pay interest at a rate of at least 4% per year (8% in Arkansas,
11% in Florida) on single sum death proceeds, from the date of the insured's
death to the settlement date (the date on which we pay the proceeds in a lump
sum or first place them under a payment option.)
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
also may select a payment option, unless you say that he or she cannot.) You
decide how much of the proceeds to place under each option (minimum: $5,000.) We
will transfer any such amount to IDS Life's general account. Unless we agree
otherwise, we must make payments under all options to a natural person.
You also may make a written request to us to change a prior choice of payment
option or, if we agree, to elect a payment option other than the three below.
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 also may 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 also may be subject to an
additional 10% penalty tax if the policy is a modified endowment. We will use
the remainder of the proceeds 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 we make after the investment in the policy is
fully recovered will be subject to tax. Amounts we pay under Option B or Option
C that are subject to tax also may be subject to an additional 10% penalty tax.
(See "Penalty tax.")
<PAGE>
Death benefit proceeds applied to any payment option are not considered part of
the beneficiary's income and therefore 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 which is not subject to tax. The
beneficiary's investment in the policy is the death benefit proceeds we apply to
the payment option. All payments we make after the investment in the policy is
fully recovered will be subject to tax.
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
10 $ 9.61
15 6.87
20 5.51
25 4.71
30 4.18
We will furnish monthly amounts for other payment periods at your request,
without charge.
Option C -- Lifetime income: We will make monthly payments for the life of the
person (payee) who is to receive the income. We will guarantee payment for 10,
15 or 20 years.
We will base the amount of each monthly payment per $1,000 placed under this
option 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 last 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 be
at least the amounts shown in the next table.
We will furnish monthly amounts for any adjusted age not shown at your request,
without charge.
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 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
55 4.62 4.22 4.53 4.18 4.39 4.11
60 5.14 4.66 4.96 4.57 5.71 4.44
65 5.81 5.22 5.46 5.05 5.02 4.79
70 6.61 5.96 5.96 5.60 5.27 5.12
75 7.49 6.89 6.38 6.14 5.42 5.35
<PAGE>
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 (we have not collected good payment);
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.
We may delay the payment of any loans or surrenders from the fixed account 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 ADVISOR TO FIND OUT HOW
THESE GENERAL CONSIDERATIONS APPLY TO YOU. The discussion is based on our
understanding of federal income tax laws as currently the Internal Revenue
Service (IRS) currently interprets them; both the laws and their interpretation
may change.
We intend the policy to qualify as a life insurance policy for federal income
tax purposes. To that end, the provisions of the policy are to be interpreted to
ensure or maintain this tax qualification. IDS Life reserves the right to change
the policy in order to ensure that it will continue to qualify as life insurance
for tax purposes. We will send you a copy of any changes.
IDS Life's tax status
The IRS taxes IDS Life as a life insurance company under the Code. For federal
income tax purposes, we consider the subaccounts to be a part of IDS Life,
although we treat their operations separately in accounting and financial
statements. We reinvest the investment income from the subaccounts and it
becomes part of the subaccounts' value. The IRS does not tax IDS Life on this
investment income, including realized capital gains. Therefore, IDS Life does
not charge 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 subaccounts or variable life insurance contracts or in IDS Life's
tax status as we currently understand it.
Taxation of policy proceeds
The IRS does not consider the death benefit to be part of the beneficiary's
income and therefore it is not subject to federal income taxes. When we pay the
proceeds after the insured's attained insurance age 100 and the amount received
plus any indebtedness exceeds your investment in the policy, the IRS may tax the
excess as ordinary income.
The IRS may tax part or all of any pre-death proceeds that you receive through
full surrender or maturity, lapse, partial surrender, policy loan or assignment
of policy value or payment options 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 also may
be subject to an additional 10% penalty tax if the policy is a modified
endowment.
<PAGE>
Source of proceeds Taxable portion of pre-death proceeds
Full surrender: Amount you receive 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 you receive or policy value minus
your investment in the policy.*
Policy loans and assignments Lesser of:
(modified endowments) the amount of the loan/assignment or policy
value minus your investment in the policy.*
Partial surrenders Generally, if the amount you receive is
(other policies): 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
caused by a reduction in benefits.
Policy loans and assignments None
(other policies):
Payment options: If we pay the proceeds of the policy
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." The IRS taxes these policies differently from
conventional life insurance contracts.
Your policy is a modified endowment contract if:
o you apply for it or materially change it on or after June 21, 1988 and
o the premiums you pay 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 you receive in exchange for a modified endowment
is itself a modified endowment.
We have procedures for monitoring whether your policy may become a modified
endowment contract. We calculate modified endowment limits when we issue the
policy. We base these limits on the benefits we provide under the policy and on
the risk classification of the insured. We recalculate these limits later if
certain increases or reductions in benefits occur.
Increases in benefits: We recalculate limits when an increase is a "material
change." Almost any increase you request, such as an increase in specified
amount, the addition of a rider benefit or an increase in an existing rider
benefit, is a material change. An automatic increase under the terms of you
policy, such as an increase in death benefit due to operation of the applicable
percentage table described in the "Death benefits" section or an increase in
policy value growth under Option 2, generally is not a material change. A policy
becomes a modified endowment if premiums you pay in the early years following a
material change exceed the recalculated limits.
<PAGE>
Reductions in benefits: When you reduce benefits within seven years after we
issue the policy or after the most recent material change, we recalculate the
limits as if the reduced level of benefits had always been in effect. In most
cases, this recalculation will further restrict the amount of premiums that you
can pay without exceeding modified endowment limits. If the premiums you have
paid already paid exceed the recalculated limits, the policy becomes a modified
endowment even if you do not pay any further premiums.
Distributions affected: Modified endowment rules apply to distributions in the
year the policy becomes a modified endowment and in all subsequent years. In
addition, the rules apply to distributions taken two years before the policy
becomes a modified endowment because the IRS presumes that you took a
distribution in anticipation of that event.
Serial purchase of modified endowments: The IRS treats all modified endowments
issued by the same insurer (or affiliated companies of the insurer) to the same
owner during any calendar year as one policy for purposes of 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 you use a policy loan for personal purposes,
interest paid on the loan is not tax-deductible. Other rules apply if you use
the loan for trade or business or investment purposes or if a business or
corporation owns the policy from which the loan is taken.
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
also will 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.
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.
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, that use other separate accounts, unit investment trusts and mutual
funds.
<PAGE>
Ownership
IDS Life is a wholly owned subsidiary of American Express Financial Corporation
(AEFC); AEFC, 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 operates. 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
target premium (annualized) in the first three years when the policy is sold,
plus up to 3% of all premiums in excess of the target premium. Each year, IDS
Life pays a service fee of 0.3% or less of the policy value, net of
indebtedness. IDS Life pays additional commissions if an increase in coverage
occurs. IDS Life also pays approximately 27% of the total representative's
commission to the field vice presidents and district sales managers of the
selling representative.
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. In December 1996, an action of this
type was brought against IDS Life and its parent, AEFC. A second action was
filed in March, 1997. The plaintiffs purport to represent a class consisting of
all persons who replaced existing IDS Life policies with new IDS Life policies
from and after January 1, 1985. The complaint puts at issue various alleged
sales practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statutes. Plaintiffs seek damages in an
unspecified amount and also seek to establish a claims resolution facility for
the determination of individual issues.
On October 13, 1998, an action entitled Richard W. And Elizabeth J. Thoresen vs.
American Express Financial Corporation, American Centurion Life Assurance
Company, American Enterprise Life Insurance Company, American Partners Life
Insurance Company, IDS Life Insurance Company and IDS Life Insurance Company of
New York was commenced in Minnesota State Court. The action was brought by
individuals who purchased an annuity in a qualified plan. They allege that the
sale of annuities in tax-deferred contributory retirement investment plans
(e.g., IRAs) is never appropriate. The plaintiffs purport to represent a class
consisting of all persons who made similar purchases. The plaintiffs seek
damages in an unspecified amount.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life is an defendant in various other lawsuits, none of
which, in IDS Life's opinion, will result in a material liability.
<PAGE>
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the variable account.
The variable account has no computer systems of its own but is dependent upon
the systems maintained by AEFC and certain other third parties.
AEFC has conducted a comprehensive review of its computer systems and business
processes to identify the major systems that could be affected by the Year 2000
issue. AEFC is taking steps to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999. AEFC also is evaluating
the Year 2000 readiness of unaffiliated investment managers and other third
parties whose system failures could have an impact on the variable account's
operations. AEFC does not know the potential materiality of any such impact at
this time.
Experts
[to be filed by amendment]
Management of IDS Life
Directors
David R. Hubers
Director since September 1989; president and chief executive officer, AEFC,
since August 1993, and director, AEFC, since January 1984; senior vice
president, Finance and chief financial officer, AEFC, from January 1984 to
August 1993.
Richard W. Kling
Director since February 1984; president since March 1994; executive vice
president, Marketing and Products from January 1988 to March 1994; senior vice
president, AEFC, since May 1994; director of IDS Life Series Fund, Inc. and
chairman of the board of managers of IDS Life Variable Annuity Funds A and B.
Paul F. Kolkman
Director since May 1984; executive vice president since March 1994; vice
president, Finance, from May 1984 to March 1994; vice president, AEFC, since
January 1987.
James A. Mitchell
Chairman of the board since March 1994; director since July 1984; chief
executive officer since November 1986; president from July 1984 to March 1994;
executive vice president, AEFC, since March 1994; director, AEFC, since July
1984; senior vice president, AEFC, from July 1984 to March 1994.
Barry J. Murphy
Director and executive vice president, Client Service, since March 1994; senior
vice president, Operations, Travel Related Services (TRS), a subsidiary of
American Express Company, since July 1992; vice president, TRS, from November
1989 to July 1992 chief operating officer, TRS, from March 1988 to November
1989.
<PAGE>
Stuart A. Sedlacek
Director, senior vice president and chief financial officer of AEFC since
January 1998; vice president - assured assets, AEFC from 1994 to 1997.
Officers other than directors
Jeffrey S. Horton
Vice president and treasurer since December 1997; vice president and corporate
treasurer, AEFC, since December 1997; controller, American Express
Technologies-Financial Services, AEFC, from July 1997 to December 1997;
controller, Risk Management Products, AEFC, from June 1990 to May 1994.
William A. Stoltzmann
Vice president, general counsel and secretary since 1985; vice president and
assistant general counsel, AEFC, since November 1985.
The address for all of the directors and principal officers is: IDS Tower 10,
Minneapolis, MN 55440-0010.
The officers, employees and sales force of IDS Life are bonded, in the amount of
$100 million, by virtue of a blanket fidelity bond issued to American Express
Company by Saint Paul Fire and Marine, the lead underwriter.
Other fund managers
A I M Advisors, Inc.
A I M Advisors, Inc. ("A I M") was organized in 1976 and is headquartered in
Houston, Texas. A I M is a wholly owned subsidiary of A I M Management Group
Inc., a holding company engaged in the financial services business and an
indirect wholly-owned subsidiary of AMVESCAP PLC.
Putnam Investment Management, Inc.
Putnam Management has been managing mutual funds since 1937. Today, the firm
serves as the investment manager for the funds in the Putnam Family, with nearly
$182 billion in assets under management in over 9 million shareholder accounts
at December 31, 1997.
Warburg Pincus Asset Management, Inc.,
Warburg Pincus Asset Management, Inc. is a professional investment advisory firm
which provides investment services to investment companies, employee benefit
plans, endowment funds, foundations, and other institutions and individuals.
American Century Investment Management, Inc.
American Century Investment Management Inc., has been providing investment
advisory services to investment companies and institutional investors since it
was founded in 1958.
Templeton Investment Counsel, Inc.
Templeton Investment Counsel, Inc. provides investment research and
portfolio management services, and also provides management services to numerous
other investment companies.
Other information
The variable account has filed a registration statement with the Securities and
Exchange Commission (SEC). For further information concerning the policy, the
variable account and IDS Life, please refer to the registration statement. You
can find the registration statement on the SEC's web site at http://www.sec.gov.
<PAGE>
Substitution of investments
We may change the funds from which the subaccounts buy shares if: the existing
funds become unavailable; or in the judgment of IDS Life, the funds are no
longer suitable for the subaccounts. If these situations occur, we have the
right to substitute the funds held in the subaccounts for other registered,
open-end management investment companies as long as we believe it would be in
the best interest of persons having voting rights under the policies.
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, we will not make any substitution or change
without any necessary approval of the SEC or state insurance departments. IDS
Life will notify owners within five days of any substitution or change.
Voting rights
As a policy owner with investments in any subaccount, you may vote on important
fund matters. Each share of a fund has one vote. On some issues, such as
election of directors of IDS Life Series Fund, all shares of the IDS Life Series
Fund Portfolios vote together as one series. When electing directors, all shares
of IDS Life Series Fund Portfolios 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 fund -- for example, a fundamental investment
restriction pertaining only to that fund -- its shares vote as a separate
series. If shareholders of a particular fund vote approval of an agreement, the
agreement becomes effective with respect to that fund, whether or not it is
approved by shareholders of the other funds.
IDS Life is the owner of all fund shares and therefore holds all voting rights.
However, IDS Life will vote the shares of each fund according to instructions we
receive 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 we do receive
instructions. IDS Life also will vote fund shares that are not otherwise
attributable to owners the same proportion as those shares in that subaccount
for which we receive instructions.
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. We will determine that number as
of a date we choose that is 60 days or less before the meeting of the fund. We
will send you 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.
Under certain conditions, IDS Life may disregard voting instructions that would
change the goals of one or more of the funds or would result in approval or
disapproval of an investment advisory contract. If IDS Life does disregard
voting instructions, we will advise you of that action and the reasons for in
our next report to owners.
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 the cost of insurance rates and policy fees are current rates or guaranteed
rates and fees.
This type of 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 also would
differ.
<PAGE>
Upon request, we will furnish you 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.
Understanding the illustrations:
Rates of return: assumes 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: assumes a male insurance age 35, in a standard risk
classification, qualifying for the nonsmoker rate. Results would be lower if the
insured were in a substandard risk classification or did not qualify for the
non-smoker rate.
Premiums: assumes a $900 premium is 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: assumes that none have been made. (Since
we assume indebtedness is 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 0.7% of the fund's aggregate average
daily net assets;
o a nonadvisory expense charge, assumed to be 0.1% of each fund's
aggregate average daily net assets for direct expenses incurred by the
fund; and
o the daily mortality and expense risk charge, assumed to be equivalent
to, on an annual basis, 0.9% of the average daily net asset value of
the subaccounts for the illustration labeled "Guaranteed costs
assumed." For the illustration labeled "Current costs assumed," the
daily mortality and expense risk charge is assumed to be equivalent to,
on an annual basis, 0.9% in policy years 1-10 and 0.45% in policy years
11 and after of the average daily net asset value of the subaccounts.
After deduction of the expenses and charges described above, the illustrated
gross annual investment rates of return correspond to the following approximate
net annual rates of return:
<TABLE>
<CAPTION>
Net annual rate of Net annual rate of Net annual rate of
return for "Guaranteed return for "Current return for "Current
Gross annual investment costs assumed" costs assumed" costs assumed"
rate illustration illustration, years illustration, years
of return 1-10 11 and after
<S> <C> <C> <C>
0% -1.69% -1.69% -1.24%
6 4.21 4.21 4.68
12 10.11 10.11 10.61
</TABLE>
Taxes: Results shown in the tables reflect the fact that IDS Life does not
currently charge the subaccounts for federal income tax. If we take such a
charge 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>
<TABLE>
<CAPTION>
Illustration
- ----------------------------------------------------------------------------------------------------------------------
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 $100,000 614 657 700 0 0 0
2 1,937 $100,000 $100,000 $100,000 1,209 1,333 1,463 308 432 562
3 2,979 $100,000 $100,000 $100,000 1,784 2,027 2,292 883 1,126 1,391
4 4,073 $100,000 $100,000 $100,000 2,335 2,737 3,191 1,434 1,836 2,290
5 5,222 $100,000 $100,000 $100,000 2,868 3,467 4,172 1,967 2,566 3,271
6 6,428 $100,000 $100,000 $100,000 3,375 4,212 5,236 2,654 3,491 4,515
7 7,694 $100,000 $100,000 $100,000 3,857 4,972 6,392 3,317 4,431 5,851
8 9,024 $100,000 $100,000 $100,000 4,316 5,749 7,651 3,956 5,389 7,291
9 10,420 $100,000 $100,000 $100,000 4,749 6,541 9,021 4,568 6,361 8,841
10 11,886 $100,000 $100,000 $100,000 5,153 7,346 10,512 5,153 7,346 10,512
11 13,425 $100,000 $100,000 $100,000 5,552 8,200 12,189 5,552 8,200 12,189
12 15,042 $100,000 $100,000 $100,000 5,922 9,072 14,025 5,922 9,072 14,025
13 16,739 $100,000 $100,000 $100,000 6,264 9,963 16,040 6,264 9,963 16,040
14 18,521 $100,000 $100,000 $100,000 6,576 10,873 18,252 6,576 10,873 18,252
15 20,392 $100,000 $100,000 $100,000 6,854 11,799 20,681 6,854 11,799 20,681
16 22,356 $100,000 $100,000 $100,000 7,095 12,739 23,348 7,095 12,739 23,348
17 24,419 $100,000 $100,000 $100,000 7,295 13,690 26,279 7,295 13,690 26,279
18 26,585 $100,000 $100,000 $100,000 7,447 14,646 29,501 7,447 14,646 29,501
19 28,859 $100,000 $100,000 $100,000 7,552 15,609 33,048 7,552 15,609 33,048
20 31,247 $100,000 $100,000 $100,000 7,598 16,570 36,955 7,598 16,570 36,955
age 60 45,102 $100,000 $100,000 $100,000 6,784 21,209 63,603 6,784 21,209 63,603
age 65 62,785 $100,000 $100,000 $127,948 3,559 25,064 108,456 3,559 25,064 108,456
</TABLE>
(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>
<TABLE>
<CAPTION>
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%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 945 $100,000 $100,000 $100,000 584 626 668 0 0 0
2 1,937 $100,000 $100,000 $100,000 1,150 1,270 1,396 249 369 495
3 2,979 $100,000 $100,000 $100,000 1,696 1,931 2,187 795 1,030 1,286
4 4,073 $100,000 $100,000 $100,000 2,219 2,606 3,044 1,318 1,705 2,143
5 5,222 $100,000 $100,000 $100,000 2,723 3,299 3,977 1,822 2,398 3,076
6 6,428 $100,000 $100,000 $100,000 3,203 4,006 4,989 2,482 3,285 4,268
7 7,694 $100,000 $100,000 $100,000 3,658 4,726 6,088 3,117 4,185 5,548
8 9,024 $100,000 $100,000 $100,000 4,090 5,461 7,284 3,729 5,101 6,924
9 10,420 $100,000 $100,000 $100,000 4,496 6,209 8,584 4,315 6,029 8,404
10 11,886 $100,000 $100,000 $100,000 4,873 6,969 9,998 4,873 6,969 9,998
11 13,425 $100,000 $100,000 $100,000 5,221 7,737 11,533 5,221 7,737 11,533
12 15,042 $100,000 $100,000 $100,000 5,538 8,515 13,205 5,538 8,515 13,205
13 16,739 $100,000 $100,000 $100,000 5,823 9,302 15,026 5,823 9,302 15,026
14 18,521 $100,000 $100,000 $100,000 6,075 10,094 17,011 6,075 10,094 17,011
15 20,392 $100,000 $100,000 $100,000 6,289 10,891 19,174 6,289 10,891 19,174
16 22,356 $100,000 $100,000 $100,000 6,463 11,688 21,533 6,463 11,688 21,533
17 24,419 $100,000 $100,000 $100,000 6,590 12,479 24,104 6,590 12,479 24,104
18 26,585 $100,000 $100,000 $100,000 6,666 13,260 26,910 6,666 13,260 26,910
19 28,859 $100,000 $100,000 $100,000 6,683 14,024 29,971 6,683 14,024 29,971
20 31,247 $100,000 $100,000 $100,000 6,637 14,766 33,315 6,637 14,766 33,315
age 60 45,102 $100,000 $100,000 $100,000 5,216 17,893 55,543 5,216 17,893 55,543
age 65 62,785 $100,000 $100,000 $112,343 764 18,976 92,085 764 18,976 92,085
</TABLE>
(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>
CONTENTS OF THE REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 47 pages.
The undertakings 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, filed electronically as Exhibit 1(a)
to Post-Effective Amendment No. 12, File
No. 33-11165 is incorporated herein by reference.
(b) Resolution of Board of Directors of IDS Life
Insurance Company reconstituting the Trust, adopted
October 16, 1985, filed electronically as
Exhibit 1(b) to Post-Effective Amendment No. 12,
File No. 33-11165 is incorporated herein by
reference.
(2) Not applicable.
(3) (a) Not applicable.
(b) (1) Form of Division Vice President's Employment
Agreement dated November 1991, filed
electronically as Exhibit 3(b)1 to Post
Effective Amendment No. 13, File No. 33-11165
is incorporated herein by reference.
(2) Form of District Manager's Rider to IDS Life
Insurance Company, Personal Financial Planner's
Agreement dated November 1986, filed
electronically as Exhibit 3(b)2 to Post
Effective Amendment No. 13, File No. 33-11165
is incorporated herein by reference.
(3) Form of Personal Financial Planner's
Agreement dated November 1986, filed
electronically as Exhibit 3(b)3 to
Post Effective Amendment No. 13,
File No. 33-11165 is incorporated
herein by reference.
<PAGE>
(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) (a) 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.
(b) Flexible Premium Variable Life Insurance
Policy (VUL-3) to be filed by amendment.
(6) (a) Certificate of Incorporation of IDS Life
Insurance Company, dated July 23, 1957,
filed electronically as Exhibit 1.A.(6)(a)
to Post-Effective Amendment No. 12, File No.
33-11165 is incorporated herein by
reference.
(b) Amended By-Laws of IDS Life Insurance Company, filed
electronically to Post-Effective Amendment No. 12,
File No. 33-11165 is incorporated herein by
reference.
(7) Not applicable.
(8) (a) Form of Investment Management and
Services Agreement dated December 17, 1985
between IDS Life and IDS Life Series Fund,
Inc., filed electronically as Exhibit 8(a)
to Post-Effective Amendment No. 13, File No.
33-11165 is incorporated herein by
reference.
(b) Form of Investment Advisory Agreement dated July 11, 1984
between IDS Life and IDS Financial Services Inc. relating
to the Variable Accounts, filed electronically as
Exhibit 8(a)to Post-Effective Amendment No. 13, File
No. 33-11165 is incorporated herein by reference.
(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.
B. (1) Not applicable.
(2) Not applicable.
<PAGE>
C. Not applicable.
2. Opinion of counsel to be filed by amendment.
3. Financial Statement Schedules to be filed by amendment.
4. Not applicable.
5. Financial Data Schedules to be filed by amendment.
6. Actuarial opinion of James M. Jensen to be filed by amendment.
7. (a) Written actuarial consent of James M. Jensen to be filed by
amendment.
(b) Written auditor consent of Ernst & Young LLP to be filed by
amendment.
(c) Power of Attorney to sign amendments to this Registration
Statement dated August 19, 1997, filed as an Exhibit to
Post-Effective Amendment No. 3 to the Registration
Statement on Form S-6, File No. 33-62457 is incorporated
herein by reference.
(d) Power of Attorney to sign amendments to this Registration
Statement date April 8, 1998 filed electronically as Exhibit
7(d) to Post-Effective Amendment No. 17 to the Registration
Statement on Form S-6, File No. 33-11165 is incorporated
herein by reference.
<PAGE>
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,
has duly caused this Registration Statement to be signed on behalf of the
Registrant by the undersigned, thereunto duly authorized, in the
City of Minneapolis, and State of Minnesota on the 28th day of December, 1998.
IDS Life Variable Life Separate Account
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By /s/ Richard W. Kling*
Richard W. Kling, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 28th day of December, 1998.
Signature Title
/s/ James A. Mitchell* Chairman of the Board
James A. Mitchell and Chief Executive Officer
/s/ Richard W. Kling* Director, President
Richard W. Kling and Chief Executive Officer
/s/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Chief Financial Officer and
Stuart A. Sedlacek President, Assured Assets
/s/ Philip C. Wentzel** Director, Vice President and
Philip C. Wentzel
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*Signed pursuant to Power of Attorney dated August 19, 1997 filed as Exhibit
to Amendment No. 5, as an Exhibit to Amendment No. 5 of the
original Registration Statement to Form N-8B-2, File No. 811-4298.
**Signed pursuant to Power of Attorney dated April 8, 1998,
filed electronically as an Exhibit to Post-Effective Amendment No. 3
to the Registration Statement on Form S-6, File No. 33-62457
By:
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Mary Ellyn Minenko
