IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT, 485BPOS, 1999-04-28

IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT
485BPOS, 1999-04-28

Previous: HEALTH CARE REIT INC /DE/, SC 13G, 1999-04-28

Next: IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT, 485BPOS, 1999-04-28

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Post-Effective Amendment No. 20
FORM S-6

File No. 33-11165

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2

A. Exact name of trust: IDS Life Variable Life Separate Account

B. Name of depositor: IDS LIFE INSURANCE COMPANY

C. Complete address of depositor's principal executive offices:

IDS Tower 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

It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on April 30, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of rule (485)
[ ] this post-effective amendment designates a new effective date for a
previously filed post effective amendment.

E. Title of securities being registered:

Flexible Premium Variable Life Insurance Policy

F. Approximate date of proposed public offering: not applicable.

<PAGE>

<PAGE>
- ------------------------------
Flexible Premium Variable Life Insurance Policy

PROSPECTUS APRIL 30, 1999

IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT

Issued and sold by: IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440.
Telephone: 800-437-0602

web site address: http://www.americanexpress.com/advisors

This prospectus contains information about the 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 POLICY 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>
- ---------------------------------
Contents

TABLE OF CONTENTS

THE POLICY IN BRIEF 3
KEY TERMS 6
THE VARIABLE ACCOUNT 9
THE FUNDS 10
IDS Life Series Fund -- Equity Portfolio 10
IDS Life Series Fund -- Income Portfolio 10
IDS Life Series Fund -- Money Market
Portfolio 10
IDS Life Series Fund -- Managed Portfolio 10
IDS Life Series Fund --
Government Securities Portfolio 10
IDS Life Series Fund --
International Equity Portfolio 10
AIM V.I. Growth and Income Fund 11
Putnam VT New Opportunities Fund --
Class IA Shares 11
Fund objectives 11
Relationship between funds and
subaccounts 12
RATES OF RETURN OF THE FUNDS AND SUBACCOUNTS 13
THE TRUST 15
Trust maturity 15
Roles of Smith Barney Inc. and IDS Life 15
THE FIXED ACCOUNT 16
PURCHASING YOUR POLICY 17
Application 17
Right to examine policy 18
Premiums 18
KEEPING THE POLICY IN FORCE 20
Death benefit guarantee 20
Grace period 20
Reinstatement 21
LOADS, FEES AND CHARGES 22
Premium expense charge 22
Monthly deduction 22
Note for Massachusetts and Montana
residents 24
Surrender charge 24
Partial surrender fee 29
Mortality and expense risk charge 29
Transaction charge 29
Fund expenses 30
POLICY VALUE 31
Fixed account value 31
Subaccount values 31
DEATH BENEFITS 34
Change in death benefit option 35
Changes in specified amount 36
Misstatement of age or sex 37
Suicide 37
Beneficiary 37
TRANSFERS BETWEEN THE FIXED ACCOUNT AND
SUBACCOUNTS 38
Fixed account transfer policies 38
Minimum transfer amounts 38
Maximum transfer amounts 38
Maximum number of transfers per year 38
Two ways to request a transfer, loan or
surrender 39
Automated transfers 39
Automated dollar-cost averaging 40
POLICY LOANS 41
POLICY SURRENDERS 43
Total surrenders 43
Partial surrenders 43
Allocations of partial surrenders 43
Effects of partial surrenders 43
Taxes 44
Exchange right 44
Paid-up insurance option 44
OPTIONAL INSURANCE BENEFITS 45
Waiver of monthly deduction 45
Accidental death benefit 45
Other insured rider 45
Children's insurance rider 45
Automatic increase benefit rider 45
Accelerated benefit rider for terminal
illness 45
PAYMENT OF POLICY PROCEEDS 46
FEDERAL TAXES 50
IDS Life's tax status 50
Taxation of policy proceeds 50
Modified endowment contracts 51
Other tax considerations 52
IDS LIFE 54
Ownership 54
State regulation 54
Distribution of the policy 54
Legal proceedings 55
Year 2000 56
Experts 56
MANAGEMENT OF IDS LIFE 57
OTHER FUND MANAGERS 58
OTHER INFORMATION 59
Voting rights 59
Reports 60
POLICY ILLUSTRATIONS 61

2 PROSPECTUS
<PAGE>
- ---------------------------------
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 we pay 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 or unit investment trust with a particular investment objective. You may
direct premiums to any or all of nine of these subaccounts. Your policy's
value may increase or decrease daily, depending on the investment return. No
minimum amount is guaranteed. (p. 9)

THE FIXED ACCOUNT, which earns interest at rates that are adjusted
periodically by IDS Life. This rate will never be lower than 4.5%. (p. 16)
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:

- - PREMIUM EXPENSE CHARGE -- 2.5% sales charge and 2.5% premium tax charge
deducted from each premium payment. This charge pays some distribution
expenses and state and local premium taxes.

- - MONTHLY DEDUCTION -- charged against the value of your policy each month,
covering the cost of insurance, cost of issuing the policy, certain
administrative expenses, a death benefit guarantee charge and optional
insurance benefits.

- - 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. We base it based
on the initial specified amount and on any increase in the specified amount.

- - PARTIAL SURRENDER FEE -- applies if you surrender part of the value of your
policy; equals $25 or 2% of the amount surrendered, whichever, if less.

- - 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.

- - TRANSACTION CHARGE -- applies only to subaccount that invests in the unit
investment trust which is part of the Smith Barney Inc. Stripped ("Zero
Coupon") U.S. Treasury Securities Fund, Series A ("trust"); equals, on an
annual basis, 0.25% of its average daily net asset value.

- - FUND EXPENSES -- apply only to the underlying funds and consists of investment
management fees, taxes, brokerage commissions and nonadvisory expenses. (p.
22)
PURCHASING YOUR
POLICY: To apply, send a completed application and premium payment to
IDS Life's home office. 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 before we can accept your application. (p. 17)

3 PROSPECTUS
<PAGE>
The policy in brief

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. 18)
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. We may refuse premiums in
order to comply with the Code. (p. 18)
DEATH BENEFIT GUARANTEE (DBG):
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 effect if you meet
certain premium requirements (p. 20)
GRACE PERIOD: If the cash surrender value of your policy becomes less than
the amount needed to pay the monthly deduction and the DBG 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.
20)
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. The DBG cannot be reinstated.
(p. 21)
DEATH BENEFITS: Your policy's death benefit can never be less than the
specified amount in your policy application, unless you change
that amount or your policy has outstanding indebtedness. The
relationship between the policy value and the death benefit
depends on which of two options you choose:

- - OPTION 1 LEVEL AMOUNT: The death benefit is the greater of the specified
amount or a percentage of policy value.

- - 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 generally will affect policy
charges. (p. 34)
TRANSFERS BETWEEN
THE FIXED ACCOUNT
AND SUBACCOUNTS: You may, at no charge, transfer policy value from one
subaccount to another or between subaccounts and the fixed
account. (Certain restrictions apply to transfers involving the
fixed account.) You can request up to five transfers per year
by phone or mail. You can also arrange for automated transfers
on a monthly, quarterly, semiannual or annual basis. (p. 38)
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 also may have tax
consequences if your policy lapses or you surrender it. (p. 41)
POLICY SURRENDERS:
You may cancel the 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. 43)
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. 44)
PAYMENT OF
POLICY PROCEEDS: We will pay policy proceeds when you surrender the policy, or
the insured dies or the policy matures. You or the beneficiary
may choose whether you want us to make a lump-sum payment or
payments under one or more of certain options. (p. 46)

4 PROSPECTUS
<PAGE>

FEDERAL TAXES: The death benefit is not considered part of the beneficiary's
income and thus is not subject to federal income taxes. Part or
all of any proceeds you receive through full or partial
surrender, maturity, lapse, policy loan or assignment of policy
value may be subject to federal income tax as ordinary income.
Proceeds other than death benefits from certain policies,
classified as "modified endowments," are taxed differently from
proceeds of conventional life insurance contracts and also may
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. 50)

5 PROSPECTUS
<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 you surrender the policy in full or
the policy matures. The cash surrender value equals the policy value minus any
indebtedness and any applicable surrender charges.

CLOSE OF BUSINESS: Closing time of the New York Stock Exchange, normally 3 p.m.,
Central time.

CODE: The Internal Revenue Code of 1986, as amended.

DEATH BENEFIT GUARANTEE (DBG): 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.

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 you allocate to the
fixed account, including indebtedness.

FUNDS: Mutual funds or portfolios, each with a different investment objective.
(See "The funds.") Each of the 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.

MATURITY DATE: The insured's attained insurance age 100, if living.

MINIMUM MONTHLY PREMIUM: The premium required to keep the DBG in effect. We show
the minimum monthly premium in your 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 we apply cost
of insurance rates in determining the monthly cost of insurance.

6 PROSPECTUS
<PAGE>

NET PREMIUM: The premium paid minus the premium expense charge.

OWNER: The entity(ies) to which, or individual(s) to whom, we issue the policy
or to whom you subsequently transfer ownership. 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 we issue the policy and from which we determine policy
anniversaries, policy years and policy months.

POLICY VALUE: The sum of the fixed account value plus the variable account
value.

PROCEEDS: The amount payable under the policy as follows:

- - 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.

- - On the maturity date, proceeds will be the cash surrender value.

- - On surrender of the policy, the proceeds will be the cash surrender value.

RATE CLASSIFICATION: A group of insureds that IDS Life expects will have similar
mortality experience.

SCHEDULED PREMIUM: A premium, you select at the time of application, of a level
amount, at a fixed interval of time.

SPECIFIED AMOUNT: An amount we use to determine the death benefit and the
proceeds payable upon death of the insured. We show the initial specified amount
in your policy.

SUBACCOUNT(S): One or more of the investment divisions of the variable account,
each of which invests in a particular fund or trust.

SURRENDER CHARGE: A charge we assess against the policy value at the time of
surrender, or if the policy lapses, during the first 10 years of the policy and
for 10 years after an increase in coverage.

TRUST: A unit investment trust, which is part of Smith Barney Inc. Stripped
("Zero Coupon") U.S. Treasury Securities Fund, Series A. One subaccount of the
variable account invests in the trust, which contains certain debt obligations
of the United States.

VALUATION DATE: A normal business day, Monday through Friday, on which the New
York Stock Exchange is open. We set the value of each subaccount 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.

7 PROSPECTUS
<PAGE>
Key terms

VARIABLE ACCOUNT: IDS Life Variable Life Separate Account consisting of
subaccounts, each of which invests in a particular fund or unit investment
trust. The policy value in each subaccount depends on the performance of the
particular fund or trust.

VARIABLE ACCOUNT VALUE: The sum of the values that you allocate to the
subaccounts of the variable account.

8 PROSPECTUS
<PAGE>
- ---------------------------------
The variable account

We established the variable account on Oct. 16, 1985, under Minnesota law. It 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, or the trust. 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 with
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 contracts 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
offer and how many exchanges among subaccounts it may allow before the owner
would be currently taxed on income earned within subaccount assets. We do not
know at this time what the additional guidance will be or when action will be
taken. We reserve the right to modify the policy, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.

9 PROSPECTUS
<PAGE>
- ------------------------------
The funds

You can direct your premiums to any of 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. 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.

IDS LIFE SERIES FUND -- EQUITY PORTFOLIO

Objective: capital appreciation. Invests primarily in common stocks and other
securities convertible into common stock.

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 normally will 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.

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.

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.

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.

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.

10 PROSPECTUS
<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. AIM
Advisors, Inc. acts as the investment advisor for AIM Variable Insurance Funds,
Inc.

AIM V.I. GROWTH AND INCOME FUND

Objective: growth of capital with a secondary objective of current income.

PUTNAM VARIABLE TRUST

Putnam Variable Trust is a Massachusetts business trust organized on September
24, 1987. Putnam Investment Management, Inc. ("Putnam Management") acts as the
investment manager for the Putnam Variable Trust.

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 Management believes
possesses above-average, long-term growth potential.

FUND OBJECTIVES

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 best suit your long-term investment
needs. Some funds involve more risk than others, so please monitor your
investment.

The investment objectives and policies of some of the funds may be similar to
the investment objectives and policies of other funds that the investment
managers or advisors or their affiliates manage. Although the objectives and
policies may be similar, the investment results of one fund may be higher or
lower than the results of the other fund. The investment manager or adviser
cannot guarantee, and makes no representation, that the investment results of
similar funds will be comparable even if the funds have the same investment
adviser, manager or sponsor.

Shares of the 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 possible that in the
future it may not be an advantage 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, they should take in response to a conflict. If a
board were to conclude that separate funds should be established for variable
life insurance, variable annuity

11 PROSPECTUS
<PAGE>
The funds

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.

12 PROSPECTUS
<PAGE>
- ---------------------------------
Rates of return of the fund 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 assuming reinvestment of dividends and capital gains. 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. If these charges were reflected, the illustrated rates of return would
have been lower. Past performance does not guarantee future results.

PERIOD ENDING 12/31/98

<TABLE>
<CAPTION>
10 YEARS OR
FUND 1 YEAR 3 YEARS 5 YEARS SINCE COMMENCEMENT

<S> <C> <C> <C> <C>
IDS LIFE SERIES FUND, INC.

Equity Portfolio (Beta 1.16*)
(1/86)** 9.05% 16.57% 17.64% 18.05%

Income Portfolio (1/86)** 5.46 5.63 6.41 8.91

Money Market Portfolio
(1/86)** 5.04 4.97 4.74 5.19

Managed Portfolio (Beta 0.72*)
(1/86)** 14.43 15.61 13.11 16.44

Government Securities
Portfolio (1/86)** 8.32 6.08 6.03 8.60

International Equity Portfolio
(10/94)** 21.51 19.09 -- 28.00

AIM VARIABLE INSURANCE FUNDS,
INC.

AIM V.I. Growth and Income
Fund (5/94)** 27.68 -- -- 22.49

PUTNAM VARIABLE TRUST

Putnam VT New Opportunities
Fund-Class IA
Shares (5/94)** 24.38 -- -- 23.19
</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.)

13 PROSPECTUS
<PAGE>
Rates of return of the fund and subaccounts

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. If these charges were reflected,
the illustrated rates of return would have been lower.

We show actual performance from the date the subaccounts began investing in the
funds. For some subaccounts, we do not provide any performance information
because they are new and have not had any activity to date. Although we base
performance figures on historical earnings, past performance is no guarantee of
future results.

PERIOD ENDING 12/31/98

<TABLE>
<CAPTION>
SINCE COMMENCEMENT OF THE SUBACCOUNTS
10 YEARS
OR SINCE
SUBACCOUNT INVESTING IN 1 YEAR 3 YEARS 5 YEARS COMMENCEMENT

<S> <C> <C> <C> <C> <C>
IDS LIFE SERIES FUND, INC.

U Equity Portfolio (1/86)* 8.08% 15.52% 16.58% 16.94%

V Income Portfolio (1/86)* 4.56 4.71 5.48 7.95

W Money Market Portfolio (1/86)* 4.12 4.09 3.87 4.29

X Managed Portfolio (1/86)* 13.40 14.63 12.09 15.29

Government Securities
Y Portfolio (1/86)* 7.38 5.15 5.10 7.64

IL International Equity Portfolio (10/94)* 20.42 15.94 -- 19.59

AIM VARIABLE INSURANCE FUNDS, INC.

AIM V.I. Growth and Income
FGI Fund (11/96)* 26.54 -- -- 24.22

PUTNAM VARIABLE TRUST

FNO Putnam VT New Opportunities Fund- Class IA Shares (11/96)* 23.27 -- -- 20.12
</TABLE>

* (Commencement date of the subaccount.)

14 PROSPECTUS
<PAGE>
- ---------------------------------
The trust

You can direct your premiums to one subaccount that invests in the SMITH BARNEY
INC. STRIPPED ("ZERO COUPON") U.S. TREASURY SECURITIES FUND, SERIES A, a unit
investment trust ("trust"). This trust matures in 2004.

The objective of the trust is to provide safety of capital and income through
investment in a fixed portfolio consisting primarily of zero coupon securities.

Zero coupon securities are:

- - bearer obligations issued by the United States Government stripped of their
unmatured interest coupons;

- - coupons stripped from United States debt obligations; and

- - receipts and certificates for these stripped debt obligations and coupons.

Zero coupon securities are issued and sold at a deep discount from their face
value. If they are held to maturity, they return full face value. Before
maturity, the market prices of zero coupon securities generally are more
volatile than the market prices of conventional, interest-bearing securities.

TRUST MATURITY

We will notify you in writing 30 days before the date the trust matures in 2004.
You can give us written instructions seven days or more before the maturity date
and tell us how you would like to reallocate the policy value allocated to the
subaccount investing in the trust. If we do not receive instructions from you,
we will automatically reallocate the policy value allocated to the subaccount
investing in the trust to the subaccount that invests in the IDS Life Series
Fund -- Money Market Portfolio.

ROLES OF SMITH BARNEY INC. AND IDS LIFE

Smith Barney sponsors the trust and sells units to the subaccounts. Because the
trust invests in a specified portfolio, there is no investment manager. The
price of the trust's units includes a transaction charge that IDS Life pays
directly to Smith Barney out of our general account assets. This charge is
limited by agreement between IDS Life and Smith Barney and will not be greater
than that ordinarily paid by a dealer for similar securities. We will seek
reimbursement for the amounts we pay through a daily asset charge, described
under "Loads, fees and charges."

IDS Life and Smith Barney reserve the right to discontinue the sale of new units
of a trust and to create additional trusts in the future.

You can find more detailed information in the current prospectus for the Smith
Barney Inc. Stripped ("Zero Coupon") U.S. Treasury Securities Fund, Series A.

15 PROSPECTUS
<PAGE>
- ------------------------------
The fixed account

You can allocate premiums to the fixed account or transfer policy value from the
subaccounts to the fixed account (with certain restrictions, explained in
"Transfers between the fixed account and subaccounts").

The fixed account is the general investment account of IDS Life. It includes all
assets owned by IDS Life other than those in the variable account and other
separate accounts. Subject to applicable law, IDS Life has sole discretion to
decide how assets of the fixed account will be invested.

Placing policy value in the fixed account does not entitle you to share in the
fixed account's investment experience, nor does it expose you to the account's
investment risk. Instead, IDS Life guarantees that the policy value you place in
the fixed account will accrue interest at an effective annual rate of at least
4.5%, independent of the actual investment experience of the account. IDS Life
bears the full investment risk of amounts allocated to the fixed account. IDS
Life is not obligated to credit interest at any rate higher than 4.5%, although
we may do so at our sole discretion.

We will not credit interest in excess of 4.5% 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.

16 PROSPECTUS
<PAGE>
- ---------------------------------
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:

- - select a specified amount of insurance;

- - select a death benefit option;

- - designate a beneficiary; and

- - state how premiums are to be allocated among the fixed account and/or the
subaccounts.

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. We may decline your
application if we determine the individual is not insurable and we will return
any premium you have paid.

AGE LIMIT: IDS Life generally will not issue a policy to persons over the
insurance age of 75. We may, however, do so at our sole discretion.

RATE CLASSIFICATION: The rate classification is based on the insured's health,
occupation or other relevant underwriting standards. This classification will
affect your monthly deduction and may affect the cost of certain optional
insurance benefits. (See "Loads, fees and charges" and "Optional insurance
benefits.")

OTHER CONDITIONS: In addition to proving insurability, you and the insured must
also meet certain conditions, stated in the application form, before coverage
will become effective and your policy will be delivered to you.

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.

DEATH OF THE INSURED: If the insured dies before the policy is issued and:

- - if all conditions stated in the application have not been met, IDS Life's sole
liability will be to return the premium paid plus any interest earned.

- - if all conditions stated in the application have been met, IDS Life's
liability will be the lesser of the death benefit applied for or $500,000.

17 PROSPECTUS
<PAGE>
Purchasing your 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 home
office 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 North
Dakota) after IDS Life mails or personally delivers a written notice of
withdrawal right; or

- - the 45th day after you sign your application.

On the date your request is postmarked or received, the policy will immediately
be considered void from the start.

PREMIUMS

PAYMENT OF PREMIUMS:

In applying for your policy, you decide how much you intend to pay and how often
you will make payments. DURING THE FIRST SEVERAL POLICY YEARS UNTIL THE POLICY
VALUE IS SUFFICIENT TO COVER THE SURRENDER CHARGE, IDS LIFE REQUIRES THAT YOU
PAY PREMIUMS SUFFICIENT TO KEEP THE DBG IN EFFECT IN ORDER TO KEEP THE POLICY IN
FORCE.

You may schedule payments annually, semiannually or quarterly. (IDS Life must
approve payment at any other interval). We show this premium schedule 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 the sufficient premiums to keep the DBG 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 DBG 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.

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.

18 PROSPECTUS
<PAGE>

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.

Your ability to allocate policy value to the trust may be limited by the
availability of trust units.

19 PROSPECTUS
<PAGE>
- ---------------------------------
Keeping the policy in force

DEATH BENEFIT GUARANTEE

The DBG provides that your policy will remain in force until insured's age 70
(or 5 policy years, if later) even if the cash surrender value is insufficient
to pay the monthly deduction. The DBG will stay in effect as long as:

- - the sum of premiums paid; minus

- - partial surrenders; minus

- - any outstanding indebtedness

- - equals or exceeds the minimum monthly premiums; times

- - the number of months since policy date (including the current month)

If, on a monthly date, you have not paid enough premiums to keep the DBG in
effect, we will mail a notice to your last known address, asking you to pay a
premium sufficient to bring your total up to the required minimum. If you do not
pay this amount within 61 days, your policy will lapse (terminate) if the cash
surrender value is less than the amount needed to pay the monthly deduction.
Although the policy can be reinstated as explained below, the DBG cannot be
reinstated.

GRACE PERIOD

If on a monthly date the cash surrender value of your policy is less than the
amount needed to pay the next monthly deduction and the DBG 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 a
premium that will raise the cash surrender value to an amount sufficient to
cover the next three monthly deductions. If we receive this premium before the
end of the 61-day grace period, we will use the payment to cover all monthly
deductions and any other charges then due. We will add any balance to the policy
value and allocated 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, any overdue
monthly deductions will be deducted from the death benefit.

20 PROSPECTUS
<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:

- - a written request;

- - evidence satisfactory to IDS Life that the insured remains insurable;

- - payment of a premium that will keep the policy in force for at least three
months;

- - payment of the monthly deductions that were not collected during the grace
period; and

- - payment or reinstatement of any indebtedness.

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 "Death benefits") will apply from the effective date of
reinstatement (except in Georgia, Oklahoma, Pennsylvania, South Carolina,
Tennessee 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.

21 PROSPECTUS
<PAGE>
- ---------------------------------
Loads, fees and charges

Policy charges compensate IDS Life for:

- - providing the insurance benefits of the policy;

- - issuing the policy;

- - administering the policy;

- - assuming certain risks in connection with the policy; and

- - distributing the policy.

We deduct some of these charges from your premium payments. We deduct others
periodically from your policy value in the fixed and/or subaccounts. We may also
assess 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 has two parts:

SALES CHARGE: 2.5% 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. (The contingent
deferred sales charge, discussed under "Surrender charge," below also may
partially compensate these expenses.)

PREMIUM TAX CHARGE: 2.5% of each premium payment. Compensates IDS Life for
paying taxes imposed by certain states and governmental subdivisions on premiums
received by insurance companies. All policies in all states are charged the
average rate of 2.5% even though state premium taxes vary from 2% to 3.5%. This
2.5% rate may be different than the actual premium tax IDS Life expects to pay
in your state.

MONTHLY DEDUCTION

On each monthly date we deduct from the value of your policy in the fixed and/or
subaccounts an amount equal to the sum of:

1. the cost of insurance for the policy month;

2. the policy fee shown in your policy;

3. the death benefit guarantee charge shown in your policy; and

4. charges for any optional insurance benefits provided by rider for the policy
month.

We explain each of the four components 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.

22 PROSPECTUS
<PAGE>

We will take monthly deductions from the fixed account and the subaccounts on a
pro rata basis if:

- - you do not specify the accounts from which you want us to take the monthly
deduction;

- - the value in the fixed account or any subaccount is insufficient to pay the
portion of the monthly deduction you have specified; or

- - you purchased the policy in Texas.

If the cash surrender value of your policy is not enough to cover the monthly
deduction on a monthly anniversary, the policy may lapse. However, the policy
will not lapse if the DBG is in effect. (See "Death benefit 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, which depends on:

- - the amount of the death benefit;

- - the policy value; and

- - 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 sex, attained
insurance age (age at last policy anniversary) and rate classification.
Generally, the cost of insurance rate will increase as the insured's attained
insurance age increases.

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 Nearest Birthday.

If you purchase your policy on or after May 1, 1991 with an initial specified
amount of $350,000 or greater, your policy qualifies for lower cost of insurance
rates than policies purchased with a specified amount less than $350,000. In
addition, if you purchase your policy on or after May 1, 1993 (October 1, 1993
for policies purchased in New Jersey) and before November 20, 1997, it qualifies
for lower cost of insurance rates than policies purchased earlier. IDS Life
modified cost of insurance rates to reflect IDS Life and industry-wide changes
in mortality experience for all policies purchased on or after November 20,
1997. These modified cost of insurance rates effective November 20, 1997, do not
apply to policies purchased in New Jersey.

23 PROSPECTUS
<PAGE>
Loads, fees and charges

(b) IS THE DEATH BENEFIT on the monthly date divided by 1.0036748 (which reduces
IDS Life's net amount at risk, solely for computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4.5%);

(c) IS THE POLICY VALUE on the monthly date. At this point, the policy value has
been reduced by the policy fee, death benefit guarantee charge and any charges
for optional riders;

(d) IS ANY FLAT EXTRA INSURANCE CHARGES we assess as a result of special
underwriting considerations.

NOTE FOR MASSACHUSETTS AND MONTANA RESIDENTS

Please disregard all policy provisions in this prospectus that are based on the
sex of the insured. The policy will be issued on a unisex basis. Also disregard
references to mortality tables; the tables will be replaced with an 80% male,
20% female blend of the 1980 Commissioners Standard Ordinary Smoker and
Non-Smoker Mortality Tables, Age Nearest Birthday.

2. POLICY FEE: $5 per month. We waive this fee for policies purchased on or
after May 1, 1991 with an initial specified amount of $350,000 or more. This
charge reimburses IDS Life for expenses of 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. DEATH BENEFIT GUARANTEE CHARGE: 1 cent per $1,000 of the current specified
amount and 1 cent per $1,000 of coverage under any other insured rider. This
charge compensates IDS Life for the risk it assumes in providing the DBG. The
charge is included in the monthly deduction in the first five policy years or
until the insured's attained insurance age 70, whichever is later. We will not
deduct the charge if the DBG is no longer in effect. For any policy month in
which a waiver of monthly deduction rider pays the monthly deduction, the
minimum monthly premium will be zero. (See "Death benefit guarantee," for an
explanation of the minimum monthly premium and "Other insured rider," under
"Optional insurance benefits.")

4. OPTIONAL INSURANCE BENEFIT CHARGES: charges for any optional benefits added
to the policy by rider. See "Optional insurance benefits."

SURRENDER CHARGE

If you surrender your policy or the policy lapses during the first 10 policy
years and in the 10 years following an increase in specified amount, we will
assess a surrender charge. The surrender charge is the sum of two parts:

CONTINGENT DEFERRED ISSUE AND ADMINISTRATIVE EXPENSE CHARGE:

Reimburses IDS Life for costs of issuing the policy, such as processing the
application (primarily underwriting) and setting up computer records. For the
initial specified amount, this charge is $4 per thousand dollars of initial
specified amount. It remains level during the first five policy years and then
decreases monthly until it is zero at the end of 10 policy years. If you
increase the specified amount of the policy, an

24 PROSPECTUS
<PAGE>

additional charge will apply. The additional charge will be $4 per thousand
dollars of increase in specified amount. It remains level during the first five
years following the effective date of the increase and then decreases monthly
until it is zero at the end of the 10th year following the increase.

CONTINGENT DEFERRED SALES CHARGE:

Partially compensates IDS Life for expenses of distributing the policy,
including financial advisors' commissions, advertising and printing the
prospectus and sales literature. For the initial specified amount, this charge
is the sum of 27.5% of premium payments up to a maximum premium amount shown in
the policy plus 6.5% of all other premium payments. The maximum premium amount
shown in the policy will be based on the insured's insurance age, sex, rate
classification and initial specified amount. It is calculated according to a
formula contained in a SEC rule. If you increase the specified amount of the
policy, an additional charge will apply. The additional charge will be 6.5% of
all premium payments attributable to the increase. Premiums attributable to the
increase are calculated as

a X (b + c)

where:

(a) IS THE AMOUNT OF THE INCREASE in the specified amount divided by the total
specified amount after the increase;

(b) IS THE POLICY value on the date of the increase; and

MAXIMUM SURRENDER CHARGE:

The total surrender charge is subject to an overall upper limit or "maximum
surrender charge." We will show "maximum surrender charge" for the initial
specified amount in the policy. It is based on the insured's insurance age, sex,
rate classification and initial specified amount. The "maximum surrender charge"
for the initial specified amount will remain level during the first five policy
years and then decrease monthly until it is zero at the end of 10 policy years.
If you increase the specified amount, an "additional maximum surrender charge"
will apply. We will show the "additional maximum surrender charge" in a revised
policy. It will be based on the insured's attained insurance age, sex, rate
classification and the amount of the increase. The "additional maximum surrender
charge" will remain level during the first five years following the effective
date of the increase and then decrease monthly until it is zero at the end of
the 10th year following the increase.

If premium payments are equal to or somewhat higher than the premiums needed to
keep the DBG in effect, for several years the surrender charge generally will be
the charge described in the "Contingent deferred issue and administrative
expense charge" and "Contingent deferred sales charge" sections above. After
that, the "Maximum surrender charge" generally will apply. If you pay premium
payments at a significantly higher level, the "Maximum surrender charge"
generally will apply in all years.

25 PROSPECTUS
<PAGE>
Loads, fees and charges

The following example we calculate illustrates how the surrender charge for a
male, insurance age 35 qualifying for nonsmoker rates. The specified amount is
assumed to be $100,000.

a. the contingent deferred sales charge is 27.5% of premium payments up to a
maximum premium amount of $1001 of premium payments and 6.5% of all premium
payments in excess of $1001.

b. the contingent deferred issue and administrative expense charge is $4 per
$1000 of specified amount or $400. This amount remains level during the first
five policy years and then decreases monthly until it is zero at the end of
10 policy years.

c. the "maximum surrender charge" is $901. It remains level during the first
five policy years and then decreases monthly until it is zero at the end of
10 policy years.

Assuming an annual premium payment of $900, the actual surrender charge will be
the lesser of a+b or c. Here is how we calculate the actual surrender charge:

<TABLE>
<CAPTION>
LAPSE OR SURRENDER AT
BEGINNING OF YEAR a b a + b c SURRENDER CHARGE

<S> <C> <C> <C> <C> <C>
1 $247.50 $400.00 $647.50 $901.00 $647.50

2 327.21 400.00 727.21 901.00 727.21

3 385.71 400.00 785.71 901.00 785.71

4 444.21 400.00 844.21 901.00 844.21

5 502.71 400.00 902.71 901.00 901.00

6 561.21 400.00 961.21 901.00 901.00

7 619.71 320.00 939.71 720.80 720.80

8 678.21 240.00 918.21 540.60 540.60

9 736.71 160.00 896.71 360.40 360.40

10 795.21 80.00 875.21 180.20 180.20

11 853.71 0.00 853.71 0.00 0.00
</TABLE>

From the beginning of year 6 to the end of year 10, the amounts shown in b and c
decrease on a monthly basis.

26 PROSPECTUS
<PAGE>

The maximum surrender charge is the rate from the table below multiplied by the
number of thousands of dollars of initial specified amount.

For example, a male age 20 with a nonsmoker rate classification and an initial
specified amount of $50,000 will have a maximum surrender charge of $6.61
multiplied by 50 or $330.50. As another example, a female age 75 with a standard
rate classification and an initial specified amount of $5,000,000 will have a
maximum surrender charge of $44.75 multiplied by 5,000 or $223,750.

<TABLE>
<CAPTION>
AGE MALE STANDARD MALE NONSMOKER FEMALE STANDARD FEMALE NONSMOKER

27 PROSPECTUS
<PAGE>
Loads, fees and charges

<TABLE>
<CAPTION>
AGE MALE STANDARD MALE NONSMOKER FEMALE STANDARD FEMALE NONSMOKER

28 PROSPECTUS
<PAGE>

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). This fee is guaranteed not to 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 daily net asset value of the
subaccounts -- a level guaranteed for the life of the policy. Computed daily,
the charge compensates IDS Life for:

- - MORTALITY RISK -- the risk that the cost of insurance charge will be
insufficient to meet actual claims.

- - EXPENSE RISK -- the risk that the policy fee and the contingent deferred issue
and administrative expense charge (described above) may be insufficient to
cover the cost of administering the policy.

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 sales and
surrender charges discussed earlier. IDS Life will make up any further deficit
from its general assets.

TRANSACTION CHARGE

IDS Life makes a daily charge against the assets of the subaccount that invests
in the trust. This charge is intended to reimburse us for the transaction fee we
pay from our general account assets to Smith Barney on the sale of the trust
units to the subaccounts.

The asset charge is equivalent to an effective annual rate of 0.25% of the value
of the subaccounts investing in the trust. We can increase this amount in the
future, but it will not exceed an effective annual rate of 0.5% of the value of
these subaccounts. The charge will be based on our costs (taking into account
the interest we lose on the amounts paid to Smith Barney).

29 PROSPECTUS
<PAGE>
Loads, fees and charges

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.

ANNUAL OPERATING EXPENSES OF THE FUNDS
(as a percentage of average daily net assets)

<TABLE>
<CAPTION>
IDS LIFE
IDS LIFE IDS LIFE SERIES IDS LIFE
SERIES SERIES FUND- SERIES
FUND- FUND- MONEY FUND-
EQUITY INCOME MARKET MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO

<S> <C> <C> <C> <C>
Management fees 0.70% 0.70% 0.50% 0.70%

12b-1 -- -- -- --

Other expenses 0.02 0.04 0.10 0.02

Total 0.72%** 0.74%** 0.60%** 0.72%**
</TABLE>

<TABLE>
<CAPTION>
IDS LIFE IDS LIFE
SERIES SERIES
FUND- FUND- AIM
GOVERNMENT INTERNATIONAL V.I. GROWTH PUTNAM
SECURITIES PORTFOLIO EQUITY PORTFOLIO AND VT NEW
(AFTER EXPENSE (AFTER EXPENSE INCOME OPPORTUNITIES FUND-
LIMITATION) LIMITATION) FUND CLASS IA SHARES

<S> <C> <C> <C> <C>
Management fees 0.70% 0.95% 0.61% 0.56%

12b-1 -- -- -- --

Other expenses 0.10* 0.10* 0.04* 0.05*

Total 0.80%** 1.05%** 0.65%*** 0.61%***
</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 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.
** Annual operating expenses at April 30, 1998.
*** Annual operating expenses at Dec. 31, 1998.

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.

30 PROSPECTUS
<PAGE>
- ---------------------------------
Policy value

The value of your policy is the sum of values in the fixed account and each
subaccount of the variable account.

FIXED ACCOUNT VALUE

The value in the fixed account on the policy date (when the policy is issued)
equals:

- - the portion of your initial net premium allocated to the fixed account; plus

- - interest accrued before the policy date; minus

- - the portion of the monthly deduction for the first policy month allocated to
the fixed account.

On any later date, the value in the fixed account equals:

- - the value on the previous monthly date; plus

- - net premiums allocated to the fixed account since the last monthly date; plus

- - any transfers to the fixed account from the subaccounts, including loan
transfers, since the last monthly date; plus

- - accrued interest on all of the above; minus

- - any transfers from the fixed account to the subaccounts, including loan
repayment transfers, since the last monthly date; minus

- - any partial surrenders or partial surrender fees allocated to the fixed
account since the last monthly date; minus

- - interest on any transfers or partial surrenders, from the date of the transfer
or surrender to the date of calculation; minus

- - any portion of the monthly deduction for the coming month that is allocated to
the fixed account if the date of calculation is a monthly date.

SUBACCOUNT VALUES

The value in each subaccount changes daily, depending on the investment
performance of the fund or trust in which that subaccount invests and on other
factors detailed below. There is no guaranteed minimum subaccount value. You as
owner bear the entire investment risk.

CALCULATION OF SUBACCOUNT VALUE: The value of each subaccount on the policy date
equals:

- - the portion of your initial net premium allocated to the subaccount; plus

- - interest accrued before the policy date; minus

- - the portion of the monthly deduction for the first policy month allocated to
that subaccount.

The value of each subaccount on each valuation date equals:

- - the value of the subaccount on the preceding valuation date, multiplied by the
net investment factor for the current valuation period (explained below); plus

- - net premiums received and allocated to the subaccount during the current
valuation period; plus

31 PROSPECTUS
<PAGE>
Policy value

- - any transfers to the subaccount (from the fixed account or other subaccounts,
including loan repayment transfers) during the period; minus

- - any transfers from the subaccount including loan transfers during the current
valuation period; minus

- - any partial surrenders and partial surrender fees allocated to the subaccount
during the period; minus

- - 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're related to, but not the same as,
the net asset value of the corresponding fund. The dollar value of each
accumulation unit can rise or fall daily, depending on the investment
performance of the underlying fund, on any change in the value of trust units
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 value for each subaccount equals the last
value times the current net investment factor.

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:

- - net asset value per share of the fund or value of a unit of the trust; plus

- - per-share amount of any dividend or capital gain distribution made by the
relevant fund to the subaccount; plus

- - any credit or minus any charge for reserves to cover any tax liability
resulting from the investment operations of the subaccount.

(b) equals:

- - net asset value per share of the fund or value of a unit of the trust at the
end of the preceding valuation period; plus

- - any credit or minus any charge for reserves to cover any tax liability in the
preceding valuation period.

32 PROSPECTUS
<PAGE>

(c) is a percentage factor representing the mortality and expense risk charge
and, for the subaccount investing in the trust, the transaction charge, as
described in "Loads, fees and charges," above.

FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS:
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:

The number of accumulation units you own may fluctuate due to:

- - additional purchase payments allocated to the subaccounts;

- - transfers into or out of the subaccount(s);

- - partial surrenders and partial surrender fees;

- - surrender charges; and/or

- - pro rata portions of the monthly deductions

Accumulation unit values will fluctuate due to:

- - changes in underlying fund(s) net asset value or the value of the trust;

- - dividends distributed to the subaccount(s);

- - capital gains or losses of underlying funds;

- - fund operating expenses;

- - mortality and expense risk charges; and/or

- - the transaction charge for the subaccount investing in the trust.

33 PROSPECTUS
<PAGE>
- ---------------------------------
Death benefits

When you purchase your policy, you decide on the minimum amount of protection
you want for the beneficiary if the insured dies. This amount is called the
specified amount. Your policy's death benefit can never be less than this amount
unless you change it or unless your policy has an outstanding indebtedness.

You also choose one of two death benefit options, which determines how the
policy's value will affect the amount paid to the beneficiary if the insured
dies while the policy is in force:

OPTION 1 (LEVEL AMOUNT): Under this option, the policy's value is part of the
specified amount. The Option 1 death benefit is the greater of:

- - the specified amount on the date of the insured's death; or

- - the applicable percentage of the policy value on the date of death, if death
occurs on a valuation date, or on the next valuation date following the date
of death. (See table below.)
<TABLE>
<CAPTION>
<S> <C> <C>
APPLICABLE PERCENTAGE TABLE

<CAPTION>
INSURED'S APPLICABLE INSURED'S
ATTAINED PERCENTAGE OF ATTAINED
INSURANCE POLICY INSURANCE
AGE VALUE AGE
<S> <C> <C>

40 or younger 250% 61
41 243 62
42 236 63
43 229 64
44 222 65
45 215 66
46 209 67
47 203 68
48 197 69
49 191 70
50 185 71
51 178 72
52 171 73
53 164 74
54 157 75-95
55 150 96
56 146 97
57 142 98
58 138 99
59 134 100
60 130

<CAPTION>
APPLICABLE PERCENTAGE TABLE
INSURED'S APPLICABLE
ATTAINED PERCENTAGE OF
INSURANCE POLICY
AGE VALUE
<S> <C>
40 or younger 128%
41 126
42 124
43 122
44 120
45 119
46 118
47 117
48 116
49 115
50 113
51 111
52 109
53 107
54 105
55 104
56 103
57 102
58 101
59 100
60
</TABLE>

The percentage is designed to ensure that the policy meets the provisions of
federal tax law which requires a minimum death benefit in relation to policy
value for your policy to qualify as life insurance.

34 PROSPECTUS
<PAGE>

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:

- - the policy value plus the specified amount; or

- - the applicable percentage of policy value (from the preceding table) on the
date of death, if death occurs on a valuation date, or on the next valuation
date following the date of death.

<TABLE>
<CAPTION>
EXAMPLES: OPTION 1 OPTION 2

<S> <C> <C>
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
</TABLE>

If you want to have premium payments and favorable investment performance
reflected partly in the form of an increasing death benefit, you should consider
Option 2. If you are satisfied with the specified amount of insurance protection
and prefer to have premium payments and favorable investment performance
reflected to the maximum extent in the policy value, you should consider Option
1. Under Option 1, the cost of insurance is lower because IDS Life's net amount
at risk is generally lower; for this reason the monthly deduction is less and a
larger portion of your premiums and investment returns is retained in the policy
value.

CHANGE IN DEATH BENEFIT OPTION

You may make a written request to change the death benefit option once per
policy year. A change in the death benefit option also will change the specified
amount. You do not need to provide additional evidence of insurability.

IF YOU CHANGE FROM OPTION 1 TO OPTION 2: The specified amount will decrease by
an amount equal to the policy value on the effective date of the change. You
cannot change from Option 1 to Option 2 if the resulting specified amount would
fall below the minimum amount shown in the policy.

The minimum specified amount for policies purchased on or after May 1, 1991 with
an initial specified amount of $350,000 or more is:

- - $350,000 in the first policy year;

- - $325,000 in years two to five;

- - $300,000 in years six to 10; and

- - $275,000 thereafter.

IF YOU CHANGE FROM OPTION 2 TO OPTION 1: The specified amount will increase by
an amount equal to the policy value on the effective date of the change.

35 PROSPECTUS
<PAGE>
Death benefits

An increase or decrease in specified amount resulting from a change in the death
benefit option will affect the following policy costs:

- - Monthly deduction because the cost of insurance depends upon the specified
amount.

- - Minimum monthly premium.

- - 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 we will not permit
an increase after the insured's attained insurance age 75.

An increase in the specified amount will have the following effects on policy
charges:

- - Your monthly deduction will increase because the cost of insurance and the
death benefit guarantee charge both depend upon the specified amount.

- - Charges for certain optional insurance benefits will increase.

- - The minimum monthly premium will increase if the DBG is in effect.

- - 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 DBG is in
effect. Because the minimum monthly premium will increase, you may also have to
pay additional premiums to keep the DBG in effect.

DECREASES: Any decrease in specified amount will take effect on the monthly
anniversary on or next following our receipt of your written request. The
specified amount remaining after the decrease may not be less than the minimum
specified amount (currently $50,000 for the first two policy years, $40,000 in
years three through 10, and $25,000 thereafter). If, following a decrease in
specified amount, the policy would no longer qualify as life insurance under
federal tax law, the decrease may be limited to the extent necessary to meet
these requirements.

The minimum specified amount for policies purchased on or after May 1, 1991 with
an initial specified amount of $350,000 or more is:

- - $350,000 in the first policy year;

- - $325,000 in years two to five;

36 PROSPECTUS
<PAGE>

- - $300,000 in years six to 10; and

- - $275,000 thereafter.

A decrease in specified amount will affect your costs as follows:

- - Your monthly deduction will decrease because the cost of insurance and the DBG
charge both depend upon the specified amount.

- - Charges for certain optional insurance benefits will decrease.

- - The minimum monthly premium will decrease if the DBG is in effect.

- - The surrender charge will not change.

No surrender charge is imposed when you request a decrease in the specified
amount.

We will deduct decreases in the specified amount from the current specified
amount in this order:

- - First from the portion due to the most recent increase;

- - Next from portions due to the next most recent increases successively; and

- - Then from the initial specified amount when the policy was issued.

This procedure may affect the cost of insurance if we have applied different
rate classifications to the current specified amount. We will eliminate the rate
classification applicable to the most recent increase in the specified amount
first, then the rate classification applicable to the next most recent increase,
and so on.

MISSTATEMENT OF AGE OR SEX

If the insured's age or sex has been misstated, the proceeds payable upon death
will be:

- - the policy value on the date of death; plus

- - 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

- - the amount of any outstanding indebtedness on the date of death.

SUICIDE

Suicide by the insured, whether sane or insane, within two years from 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.

37 PROSPECTUS
<PAGE>
- ---------------------------------
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. Transfers involving
the fixed account are subject to the restrictions below.

FIXED ACCOUNT TRANSFER POLICIES

- - 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
for monthly, quarterly or semiannual transfer periods.

- - If we receive your request to transfer amounts from the fixed account within
30 days before the policy anniversary, the transfer will become effective on
the anniversary.

- - 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.

- - We will not accept requests for transfers from the fixed account at any other
time.

- - 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:

- - For mail and phone transfers -- $250 or the entire subaccount balance,
whichever is less.

- - For automated transfers -- $50.

From the fixed account to a subaccount:

- - $250 or the entire fixed account balance minus any outstanding indebtedness,
whichever is less.

- - For automated transfers -- $50.

MAXIMUM TRANSFER AMOUNTS

From a subaccount to another subaccount or the fixed account:

- - None.

From the fixed account to a subaccount:

- - Entire fixed account balance minus any outstanding indebtedness.

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.

38 PROSPECTUS
<PAGE>

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.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ---
1
BY LETTER
REGULAR MAIL: EXPRESS MAIL:
IDS Life Insurance Company IDS Life Insurance Company
P.O. Box 499 733 Marquette Ave.
Minneapolis, MN 55440 Minneapolis, MN 55402

- ----------------------------------------------------------------------------------------------------------
- ---
2
BY PHONE
Call between 7 a.m. and 6 p.m. Central Time:
1-800-437-0602 (toll free) or
(612) 671-4738 (Minneapolis)
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
</TABLE>

- - 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.

- - 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 we follow these procedures, IDS Life and its affiliates will not be
liable for any loss resulting from fraudulent requests.

- - 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 phone 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:

- - Minimum automated transfer: $50

- - 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.

- - You can start or stop this service by written request. You must allow seven
days for us to change any instructions that currently are in place.

- - You cannot make automated transfers from the fixed account in an amount that,
if continued, would deplete the fixed account within 12 months.

39 PROSPECTUS
<PAGE>
Transfers between the fixed account and subaccounts

- - 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.
- - If you submit your automated transfer request with an application for a
policy, automated transfers will not take effect until the policy is issued.
- - 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.

- - 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.

By investing an
equal number of
dollars each month...
you automatically
buy more units when
the per unit market
price is low...
and fewer units
when the per unit
market price is high.

HOW DOLLAR-COST AVERAGING WORKS

<TABLE>
<CAPTION>
AMOUNT ACCUMULATION NUMBER OF UNITS
MONTH INVESTED UNIT VALUE PURCHASED

<S> <C> <C> <C>
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
</TABLE>

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.

40 PROSPECTUS
<PAGE>
- ---------------------------------
Policy loans

You may borrow against your policy by written or telephone request. (See chart
under "Transfers between the fixed account and subaccounts" for address and
phone numbers for your requests.) We will process your loan request at the end
of valuation period during which we receive your request. (Loans by telephone
are limited by $50,000.)

INTEREST RATE:

The interest rate for policy loans is 6.1% payable in advance, which is
equivalent to a 6.5% effective rate. For policies purchased on or after May 1,
1993 (October 1, 1993 for New Jersey), we expect to reduce the loan interest
rate after a policy's 10th anniversary to 4.3% payable in advance, equivalent to
a 4.5% effective rate.

MINIMUM LOAN:

$500 ($200 for Connecticut residents) or the remaining loan value, whichever is
less.

MAXIMUM LOAN:

- - In Texas, 100% of the policy value in the fixed account, minus a pro rata
portion of surrender charges.

- - In Virginia, 90% of the policy value minus surrender charges.

- - In all other states, 85% of the policy value minus surrender charges.

We will compute the maximum loan value as of the end of the valuation period
during which we receive your loan request. 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, we will take it 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 4.5% 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.

41 PROSPECTUS
<PAGE>
Policy loans

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 such interest from the fixed account and/or subaccounts, using the monthly
deduction allocation percentages. If the value in the fixed account or any
subaccount is not enough to pay the allocated interest, we will take all of the
interest from all of the accounts in proportion to their value, minus
indebtedness.

EFFECTS OF POLICY LOANS:

If you do not repay your loan, it will reduce the death benefit and policy
value. Even if you do repay it, your loan can have a permanent effect on death
benefits and policy values, because money you borrow against the subaccounts
will not share in the investment results of the relevant fund(s) or the trust.

A loan may terminate the DBG. We deduct the loan amount from the total premiums
you pay, which may reduce the total below the level required to keep the DBG 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 generally will be liable for taxes on the
excess. (See "Federal taxes.")

42 PROSPECTUS
<PAGE>
- ------------------------------
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 that you
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.

PARTIAL SURRENDERS

After the first policy year, you may surrender any amount from $500 up to 85% of
the policy's cash surrender value. (Partial surrenders by telephone are limited
to $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.

EFFECTS OF PARTIAL SURRENDERS

A partial surrender will reduce the policy value by the amount of the partial
surrender and fee.

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.

A partial surrender may terminate the DBG. We deduct the surrender amount from
total premiums you paid, which may reduce the total below the level required to
keep the DBG in effect.

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:

- - First from the specified amount provided by the most recent increase;

- - Next from the next most recent increases successively;

- - Then from the initial specified amount when the policy was issued.

43 PROSPECTUS
<PAGE>
Policy surrenders

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.")

- - 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 the policy is issued, you can exchange it for one that
provides benefits that do not vary with the investment return of the
subaccounts. Because the policy itself offers a fixed return option, all you
need to do is transfer all of the policy value in the subaccounts to the fixed
account. We 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 be no effect on the policy's death benefit, specified amount, net
amount at risk, rate classification or issue age. Only the method of funding the
policy value will be affected.

PAID-UP INSURANCE OPTION

You may request that we use the cash surrender value of the policy to purchase
an amount of paid-up insurance. You may make your request in writing during the
30 days before any policy anniversary. The paid-up insurance policy will take
effect as of the policy anniversary and will mature on the original policy's
maturity date. You will forfeit all rights to make future premium payments and
all riders will terminate.

The amount and cash surrender value of the paid-up insurance will be based on
the cost of insurance rates guaranteed in the policy and on the fixed account
guaranteed interest rate. The paid-up policy's death benefit amount, minus its
cash surrender value, cannot be greater than your current policy's death
benefit, minus its policy value (both as of the date of the paid-up policy's
purchase). The amount of paid-up insurance will remain level and will not be
less than required by law.

Any cash surrender value that is not used to purchase the paid-up insurance
amount will be paid to you. At any time before the insured's death, you may
surrender the paid-up insurance for its cash surrender value.

44 PROSPECTUS
<PAGE>
- ------------------------------
Optional insurance benefits

You may choose to add the following benefits to your policy, in the form of
riders (if you meet certain requirements). More detailed information on these
benefits is 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. This rider is not available in New Jersey.

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.

45 PROSPECTUS
<PAGE>
- ---------------------------------
Payment of policy proceeds

Proceeds will be paid when:

- - you surrender the policy;

- - the insured dies; or

- - the policy maturity date is reached, which occurs when the insured reaches
attained insurance age 100.

We pay all proceeds by check. We will compute the amount of the death benefit
proceeds and pay it in a single sum unless you select one of the payment options
below. We will pay interest at a rate not less than 4% per year (8% in Arkansas
and Colorado) on single sum death proceeds, from the date of the insured's death
to the settlement date (the date on which we pay 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
may also select a payment option, unless you say that he or she cannot.) You
decide how much of the proceeds will be placed 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 may also 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. We describe an owner's investment in the policy 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 may also be subject to an additional 10% penalty tax. (See
"Penalty tax.")

Death benefit proceeds applied to any payment option are not considered part of
the beneficiary's income and 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

46 PROSPECTUS
<PAGE>

the policy. The beneficiary's investment in the policy is the death benefit
proceeds applied 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:

<TABLE>
<CAPTION>
PAYMENT PERIOD MONTHLY PAYMENT PER $1,000
(YEARS) PLACED UNDER OPTION B

<S> <C>
5 $18.32

10 10.06

15 7.34

20 6.00

25 5.22

30 4.72
</TABLE>

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. Payment will be guaranteed 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

47 PROSPECTUS
<PAGE>
Payment of policy proceeds

depends on the sex and adjusted age of the payee on that date. Adjusted age
means the age of the payee (on the payee's nearest birthday) minus an adjustment
as follows:

<TABLE>
<CAPTION>
CALENDAR YEAR OF CALENDAR YEAR OF
PAYEE'S BIRTH ADJUSTMENT PAYEE'S BIRTH ADJUSTMENT

<S> <C> <C> <C>
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
</TABLE>

The amount of each monthly payment per $1,000 placed under this option will not
be less than amounts shown in the next table.

We will furnish monthly amounts for any adjusted age not shown at your request,
without charge.
<TABLE>
<CAPTION>
ADJUSTED
AGE LIFE INCOME PER $1,000 WITH
PAYEE PAYMENTS GUARANTEED FOR
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------

<CAPTION>
10 YEARS 15 YEARS 20 YEARS
MALE FEMALE MALE FEMALE MALE FEMALE
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

50 $4.81 $4.47 $4.74 $4.45 $4.65 $4.40

55 5.20 4.80 5.09 4.74 4.94 4.87

60 5.70 5.22 5.51 5.12 5.25 4.98

65 6.35 5.77 5.98 5.58 5.54 5.32

70 7.14 6.50 6.47 6.12 5.77 5.63

75 8.00 7.40 6.87 6.64 5.91 5.85
</TABLE>

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:

- - the payments derive from a premium payment made by a check that has not
cleared the banking system (we have not collected good payment);

- - the NYSE is closed (other than customary weekend and holiday closings);

48 PROSPECTUS
<PAGE>

- - 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 pay you interest on the amount
surrendered at an annual rate of 3% for the period of postponement.

49 PROSPECTUS
<PAGE>
- ---------------------------------
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 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 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
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.

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.

50 PROSPECTUS
<PAGE>

<TABLE>
<CAPTION>
SOURCE OF PROCEEDS TAXABLE PORTION OF PRE-DEATH PROCEEDS
<S> <C>
FULL SURRENDER AND MATURITY: 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 greater
(OTHER POLICIES): 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 proceeds of the policy under one of the
payment options, see the "Payment option" under
"Payment of policy proceeds" section for tax
information.
- ------------------------------------------------------------------------------------------------------
</TABLE>

* 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:

- - you apply for it or materially change it on or after June 21, 1988 and

- - 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

51 PROSPECTUS
<PAGE>
Federal taxes

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.

REDUCTIONS IN BENEFITS: When you reduce benefits within seven years after issue
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 premium you can pay without
exceeding modified endowment limits. If the premiums you have 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, which are presumed to be taken 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:

- - the distribution occurs after the owner attains age 59 1/2;

- - the distribution is attributable to the owner becoming disabled (within the
meaning of Code Section 72(m)(7); or

- - 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 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
will also depend on the circumstances.

52 PROSPECTUS
<PAGE>

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. Rates that do not distinguish between men and women are
available when required for employment-related programs in all states except
Illinois, Michigan, New Jersey, South Carolina and Texas.

53 PROSPECTUS
<PAGE>
- ---------------------------------
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, utilizing other separate accounts, unit investment trusts and mutual
funds.

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.

The AEFC family of companies offers not only insurance and annuities, but also
mutual funds, investment certificates and a broad range of financial management
services.

Besides managing investments for all funds in the IDS MUTUAL FUND GROUP, AEFC
also manages investments for itself and its subsidiaries, IDS Certificate
Company and IDS Life Insurance Company. Total assets under management on Mar.
31, 1999 were more than $219 billion.

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. IDS Life files an annual statement in a prescribed form with
Minnesota's Department of Commerce and in each state in which IDS Life does
business. IDS Life's books and accounts are subject to review by the Minnesota
Department of Commerce at all times and a full examination of its operations is
conducted periodically. Such regulation does not, however, involve any
supervision of management or investment practices or policies.

DISTRIBUTION OF THE POLICY

IDS Life is the sole distributor of the policy. IDS Life is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. (NASD). Representatives of IDS
Life are licensed insurance and annuity agents and are registered with the NASD
as representatives of IDS Life.

IDS Life pays its representatives a commission of up to 50% of the initial
minimum monthly premium (annualized) when they sell the policy, plus 3% of all
premiums in excess of 12 times the minimum monthly premium. At the end of policy
years one through 10, IDS Life pays a service fee not greater than 0.3% of the
policy value, net

54 PROSPECTUS
<PAGE>

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. On December 13, 1996, an action
entitled Lesa Benacquisto and Daniel Benacquisto vs. IDS Life Insurance Company
and American Express Financial Corporation was commenced in Minnesota state
court. The action is brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint puts at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled Arnold Mork, Isabella Mork, Ronald Melchart and Susan
Melchart vs. IDS Life Insurance Company and American Express Financial
Corporation was commenced in the same court on March 21, 1997. In addition to
claims that are included in the Benacquisto lawsuit, the second action includes
an allegation of improper replacement of an existing IDS Life annuity contract.
A subsequent class action, Richard Thorensen and Elizabeth Thorensen vs. AEFC,
American Partners Life Insurance Company, American Enterprise Life Insurance
Company, American Centurion Life Assurance Company, IDS Life Insurance Company
and IDS Life Insurance Company of New York, was filed in the same court on
October 13, 1998 alleging that the sale of annuities in tax-deferred
contributory retirement investment plans (e.g. IRA's) was done through deceptive
marketing practices, which the company denies. Plaintiffs in each of the above
actions seek damages in an unspecified amount and also seek to establish a
claims resolution facility for the determination of individuals issues.

IDS Life and AEFC believe they have meritorious defenses to the claims raised in
the lawsuits. The outcome of any litigation cannot be predicted with certainty.
In the opinion of management, however, the ultimate resolution of the above
lawsuits and others filed against IDS Life should not have a material adverse
effect on IDS Life's consolidated financial position.

55 PROSPECTUS
<PAGE>
IDS Life

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 IDS Life and the
variable account. IDS Life and the variable account have no computer systems of
their own but are dependent upon the systems of AEFC and certain other third
parties.

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

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

EXPERTS

Ernst & Young LLP, independent auditors, have audited the consolidated financial
statements of IDS Life Insurance Company at Dec. 31, 1998 and 1997, and for each
of the three years in the period ended Dec. 31, 1998, and the individual and
combined financial statements of the segregated asset subaccounts of the IDS
Life Variable Life Separate Account -- Flexible Premium Variable Life
Subaccounts (comprised of subaccounts U, V, W, X, Y, IL, FGI, FNO, and 2004V) at
Dec. 31, 1998 except for the FGI and FNO subaccounts which are for each of the
two years in the period ended Dec. 31, 1998 and the period Nov. 22, 1996
(commencement of operations) to Dec. 31, 1996, as set forth in their reports.
We've included our financial statements in the prospectus in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.

Actuarial matters included in the prospectus have been examined by James M.
Jensen, F.S.A., M.A.A.A., Vice President, Insurance Product Development, as
stated in his opinion filed as an exhibit to the Registration Statement.

56 PROSPECTUS
<PAGE>
- ---------------------------------
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.

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 May 1994 to July 1997; director of finance and
analysis, Corporate Treasury, 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.

57 PROSPECTUS
<PAGE>
- ---------------------------------
Other fund managers

A I M ADVISORS, INC.

A I M Advisors, Inc. ("A I M") serves as the fund's investment advisor. A I M
has acted as an advisor since its organization in 1976. Today, A I M, together
with its subsidiaries, advises or manages over 110 investment portfolios
encompassing a broad range of investment objectives.

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
$222 billion in assets under management at December 31, 1998.

SMITH BARNEY INC.

Smith Barney, sponsor of the trust, a Delaware corporation and a subsidiary of
The Travelers Inc., is engaged in the underwriting, securities and commodities
brokerage business, and is a member of the NYSE, other major securities
exchanges and commodity exchanges and the National Association of Securities
Dealers, Inc. The sponsor sponsors seven open-end investment companies and three
closed-end investment companies as well as a variety of unit investment trusts.
The sponsor has acted as principal underwriter and managing underwriter of other
investment companies. The sponsor, in addition to participating as a member of
various selling groups or as an agent of other investment companies, executes
orders on behalf of investment companies for the purchase and sale of securities
of such companies and sells securities to such companies in its capacity as a
broker or dealer in securities.

58 PROSPECTUS
<PAGE>
- ------------------------------
Other information

The variable account has filed a registration statement with the 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.

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.

Generally, ownership of units of a unit investment trust does not involve the
exercise of voting rights. However, unit holders in the trust may vote for
removal of the trustee or for amendment or termination of the trust indenture.
In the event of such a vote, IDS Life, as the owner of the units, would solicit
voting instructions from owners under the same procedures used for votes
affecting the fund.

59 PROSPECTUS
<PAGE>
Other information

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.

60 PROSPECTUS
<PAGE>
- ---------------------------------
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:

- - the annual rate of return of the Fund is 0%, 6% or 12%

- - the cost of insurance rates and policy fees are current rates and fees for
policies purchased:

- on or after November 20, 1997;

- on or after May 1, 1993 (October 1, 1993 for New Jersey) and before
November 20, 1997;

- before May 1, 1993 (October 1, 1993 for New Jersey); and

- - the cost of insurance rates and policy fees are 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 would also
differ.

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 to be uniform, gross, after-tax, annual rates of 0%, 6%
or 12% for the fund. Results would differ depending on allocations among the
subaccounts, if returns averaged 0%, 6% and 12% for the funds as a whole but
differed across individual funds.

INSURED: assumes a male insurance age 35, in a standard rate classification,
qualifying for the nonsmoker rate. Results would be lower if the insured were in
a substandard rate classification or did not qualify for the non-smoker rate.

PREMIUMS: 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 death benefit, policy value and cash surrender value reflect the following
charges:

- - Sales charge: 2.5% of each premium payment.

- - Premium tax charge: 2.5% of each premium payment.

- - Cost of insurance charge for the sex, age and rate classification for the
assumed insured.

61 PROSPECTUS
<PAGE>
Policy illustrations

- - Policy fee: $5 per month ($7.50 per month guaranteed maximum).

- - Death benefit guaranteed charge: 1 cent per $1,000 of the current specified
amount.

- - The expenses paid by the fund and charges made against the subaccounts as
described below:

The net investment return of the subaccounts, shown in the tables, is lower than
the gross, after-tax return of the fund or trust because we deducted the
expenses paid by the fund and charges made against the subaccounts. These
include:

- - the daily investment management fee paid by the funds, assumed to be
equivalent to an annual rate of 0.7% of the fund's average daily net assets;
the assumed investment management fee is approximately equal to a simple
average of the investment management fees of the funds available under the
policy and the transaction charges of the trust. The actual charges you incur
will depend on how you choose to allocate policy value. See Fund expenses in
the Loads, fees and charges section of this prospectus for additional
information;

- - the daily mortality and expense risk charge, equivalent to 0.9% of the daily
net asset value of the subaccounts annually; and

- - a nonadvisory expense charge of 0.1% of each fund's average daily net assets
for direct expenses incurred by the fund; currently, this is the maximum
direct expenses the funds will incur after IDS Life limits the direct expenses
of some funds. The actual charges you incur will depend on how you choose to
allocate policy value. See Fund expenses in the Loads, fees, and charges
section of this prospectus for additional information.

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 RETURN NET ANNUAL
FOR RATE OF RETURN
GROSS ANNUAL "GUARANTEED FOR "CURRENT
INVESTMENT RATE OF COSTS ASSUMED" COSTS ASSUMED"
RETURN ILLUSTRATION ILLUSTRATION
<S> <C> <C>
0% (1.69)% (1.69)%
6 4.21 4.21
12 10.11 10.11
</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.

62 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION POLICIES PURCHASED ON OR AFTER NOVEMBER 20, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------

<CAPTION>
INITIAL SPECIFIED AMOUNT
$100,000 MALE - AGE 35 CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 1 NONSMOKER ANNUAL PREMIUM $900
------------------------------------------------------------------------------------------------------------------
CASH SURRENDER VALUE
POLICY VALUE (1)(2) (1)(2)
PREMIUM ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED DEATH BENEFIT (1)(2) GROSS GROSS
END OF WITH ANNUAL ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
POLICY INTEREST ANNUAL INVESTMENT RETURN OF OF OF
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 $608 $657 $694 $0 $0 $46
2 1,937 100,000 100,000 100,000 1,206 1,330 1,459 479 602 732
3 2,979 100,000 100,000 100,000 1,783 2,026 2,290 998 1,241 1,505
4 4,073 100,000 100,000 100,000 2,341 2,742 3,195 1,496 1,898 2,351
5 5,222 100,000 100,000 100,000 2,878 3,478 4,182 1,977 2,577 3,281

6 6,428 100,000 100,000 100,000 3,396 4,234 5,258 2,675 3,513 4,537
7 7,694 100,000 100,000 100,000 3,895 5,012 6,434 3,354 4,471 5,893
8 9,024 100,000 100,000 100,000 4,373 5,810 7,717 4,012 5,450 7,356
9 10,420 100,000 100,000 100,000 4,829 6,630 9,119 4,649 6,450 8,938
10 11,886 100,000 100,000 100,000 5,259 7,467 10,646 5,259 7,467 10,646

11 13,425 100,000 100,000 100,000 5,664 8,321 12,314 5,664 8,321 12,314
12 15,042 100,000 100,000 100,000 6,044 9,195 14,136 6,004 9,195 14,136
13 16,739 100,000 100,000 100,000 6,396 10,087 16,128 6,396 10,087 16,128
14 18,521 100,000 100,000 100,000 6,719 10,994 18,305 6,719 10,994 18,305
15 20,392 100,000 100,000 100,000 7,013 11,919 20,689 7,013 11,919 20,684

16 22,356 100,000 100,000 100,000 7,272 12,858 23,297 7,272 12,858 23,297
17 24,419 100,000 100,000 100,000 7,496 13,809 25,153 7,496 13,809 25,153
18 26,585 100,000 100,000 100,000 7,679 14,768 29,281 7,679 14,768 29,281
19 28,859 100,000 100,000 100,000 7,816 15,731 32,707 7,816 15,731 32,707
20 31,247 100,000 100,000 100,000 7,905 16,697 36,467 7,905 16,697 36,467

age 60 45,102 100,000 100,000 100,000 7,422 21,390 61,691 7,422 21,390 61,691
age 65 62,785 100,000 100,000 125,819 4,830 25,402 103,130 4,830 25,402 103,130
</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 YOU SHOULD
NOT CONSIDER THEM TO BE 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. WE DO NOT REPRESENT
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.

63 PROSPECTUS
<PAGE>
Policy illustrations
<TABLE>
<CAPTION>
ILLUSTRATION POLICIES PURCHASED ON OR AFTER MAY 1, 1993 AND BEFORE NOVEMBER 20, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------

<CAPTION>
INITIAL SPECIFIED AMOUNT $100,000 MALE - AGE 35 CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 1 NONSMOKER ANNUAL PREMIUM $900
------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED
WITH DEATH BENEFIT (1)(2) POLICY VALUE (1)(2) CASH SURRENDER VALUE (1)(2)
END OF ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $945 $100,000 $100,000 $100,000 $605 $648 $691 $0 $0 $43
2 1,937 100,000 100,000 100,000 1,200 1,323 1,452 473 596 725
3 2,979 100,000 100,000 100,000 1,775 2,017 2,280 989 1,231 1,494
4 4,073 100,000 100,000 100,000 2,329 2,729 3,181 1,485 1,885 2,337
5 5,222 100,000 100,000 100,000 2,864 3,461 4,163 1,963 2,560 3,262

6 6,428 100,000 100,000 100,000 3,379 4,214 5,234 2,659 3,493 4,513
7 7,694 100,000 100,000 100,000 3,876 4,988 6,404 3,335 4,447 5,864
8 9,024 100,000 100,000 100,000 4,351 5,782 7,681 3,990 5,422 8,894
9 10,420 100,000 100,000 100,000 4,802 6,595 9,074 4,622 6,415 9,591
10 11,886 100,000 100,000 100,000 5,227 7,425 10,591 5,227 7,425 10,591

11 13,425 100,000 100,000 100,000 5,627 8,272 12,247 5,627 8,272 12,247
12 15,042 100,000 100,000 100,000 6,001 9,138 14,057 6,001 9,138 14,057
13 16,739 100,000 100,000 100,000 6,349 10,021 16,036 6,349 10,021 16,036
14 18,521 100,000 100,000 100,000 6,666 10,920 18,198 6,666 10,920 18,198
15 20,392 100,000 100,000 100,000 6,953 11,834 21,563 6,953 11,834 20,563

16 22,356 100,000 100,000 100,000 7,205 12,761 23,150 7,205 12,761 23,150
17 24,419 100,000 100,000 100,000 7,421 13,699 25,983 7,421 13,699 25,983
18 26,585 100,000 100,000 100,000 7,597 14,645 29,086 7,597 14,645 29,086
19 28,859 100,000 100,000 100,000 7,726 15,594 33,485 7,726 15,594 32,485
20 31,247 100,000 100,000 100,000 7,806 16,543 36,213 7,806 16,543 36,213

age 60 45,102 100,000 100,000 100,000 7,274 21,139 61,221 7,274 21,139 61,221
age 65 62,785 100,000 100,000 124,847 4,629 25,020 102,334 4,629 25,020 102,334
</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.

64 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------

<CAPTION>
INITIAL SPECIFIED AMOUNT $100,000 MALE - AGE 35 GUARANTEED COSTS ASSUMED
DEATH BENEFIT OPTION 1 NONSMOKER ANNUAL PREMIUM $900
------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED
WITH DEATH BENEFIT(1)(2) POLICY VALUE(1)(2) CASH SURRENDER VALUE(1)(2)
END OF ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
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 $575 $617 $659 $0 $0 $11
2 1,937 100,000 100,000 100,000 1,141 1,261 1,386 414 533 658
3 2,979 100,000 100,000 100,000 1,687 1,921 2,175 901 1,135 1,389
4 4,073 100,000 100,000 100,000 2,213 2,598 3,033 1,369 1,754 2,189
5 5,222 100,000 100,000 100,000 2,720 3,293 3,968 1,819 2,392 3,067

6 6,428 100,000 100,000 100,000 3,196 3,996 4,976 2,475 3,275 4,255
7 7,694 100,000 100,000 100,000 3,654 4,718 6,076 3,113 4,178 5,535
8 9,024 100,000 100,000 100,000 4,082 5,450 7,267 3,722 5,089 6,906
9 10,420 100,000 100,000 100,000 4,493 6,203 8,570 4,313 6,022 8,390
10 11,886 100,000 100,000 100,000 4,876 6,966 9,986 4,876 6,966 9,986

11 13,425 100,000 100,000 100,000 5,231 7,742 11,527 5,231 7,742 11,527
12 15,042 100,000 100,000 100,000 5,559 8,531 13,208 5,559 8,531 13,208
13 16,739 100,000 100,000 100,000 5,849 9,323 15,034 5,849 9,323 15,034
14 18,521 100,000 100,000 100,000 6,114 10,129 17,030 6,114 10,129 17,030
15 20,392 100,000 100,000 100,000 6,341 10,940 19,206 6,341 10,940 19,206

16 22,356 100,000 100,000 100,000 6,521 11,745 21,573 6,521 11,745 21,573
17 24,419 100,000 100,000 100,000 6,667 12,557 24,163 6,667 12,557 24,163
18 26,585 100,000 100,000 100,000 6,766 13,364 26,993 6,766 13,364 26,993
19 28,859 100,000 100,000 100,000 6,809 14,158 30,082 6,809 14,158 30,082
20 31,247 100,000 100,000 100,000 6,786 14,929 33,454 6,786 14,929 33,454

age 60 45,102 100,000 100,000 100,000 5,533 18,272 55,886 5,533 18,272 55,863
age 65 62,785 100,000 100,000 113,155 1,437 19,813 92,750 1,437 19,813 92,750
</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.

65 PROSPECTUS
<PAGE>
Policy illustrations
<TABLE>
<CAPTION>
ILLUSTRATION POLICIES PURCHASED BEFORE MAY 1, 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------

<CAPTION>
INITIAL SPECIFIED AMOUNT $100,000 MALE - AGE 35 CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 1 NONSMOKER ANNUAL PREMIUM $900
------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED
WITH DEATH BENEFIT(1)(2) POLICY VALUE(1)(2) CASH SURRENDER VALUE(1)(2)
END OF ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $945 $100,000 $100,000 $100,000 $605 $648 $691 $0 $0 $43
2 1,937 100,000 100,000 100,000 1,200 1,323 1,452 473 596 725
3 2,979 100,000 100,000 100,000 1,775 2,017 2,280 989 1,231 1,494
4 4,073 100,000 100,000 100,000 2,329 2,729 3,181 1,485 1,885 2,337
5 5,222 100,000 100,000 100,000 2,864 3,461 4,163 1,963 2,560 3,262

6 6,428 100,000 100,000 100,000 3,368 4,202 5,222 2,647 3,481 4,501
7 7,694 100,000 100,000 100,000 3,853 4,964 6,379 3,312 4,424 5,839
8 9,024 100,000 100,000 100,000 4,309 5,737 7,633 3,948 5,377 7,273
9 10,420 100,000 100,000 100,000 4,746 6,534 9,006 4,566 6,354 8,826
10 11,886 100,000 100,000 100,000 5,155 7,343 10,500 5,155 7,343 10,500

11 13,425 100,000 100,000 100,000 5,536 8,167 12,127 5,536 8,167 12,127
12 15,042 100,000 100,000 100,000 5,890 9,006 13,902 5,890 9,006 13,902
13 16,739 100,000 100,000 100,000 6,206 9,850 15,932 6,206 9,850 15,832
14 18,521 100,000 100,000 100,000 6,495 10,712 17,945 6,495 10,712 17,945
15 20,392 100,000 100,000 100,000 6,747 11,581 20,250 6,747 11,581 20,250

16 22,356 100,000 100,000 100,000 6,964 12,458 22,769 6,964 12,458 22,769
17 24,419 100,000 100,000 100,000 7,134 13,334 25,519 7,134 13,334 25,519
18 26,585 100,000 100,000 100,000 7,258 14,210 28,526 7,258 14,210 28,526
19 28,859 100,000 100,000 100,000 7,325 15,076 31,813 7,325 15,076 31,813
20 31,247 100,000 100,000 100,000 7,327 15,923 35,405 7,327 15,923 35,405

age 60 45,102 100,000 100,000 100,000 6,474 19,997 58,664 6,474 19,997 58,664
age 65 62,785 100,000 100,000 110,666 3,077 22,796 90,710 3,077 22,796 90,710
</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.

66 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY

ANNUAL FINANCIAL INFORMATION
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
IDS Life Insurance Company

We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of IDS Life Variable Life Separate
Account -- Flexible Premium Variable Life Subaccounts (comprised of subaccounts
U, V, W, X, Y, IL, FGI, FNO, and 2004V) as of December 31, 1998, and the related
statements of operations and changes in net assets for each of the three years
in the period then ended, except for the FGI and FNO subaccounts which are for
each of the two years in the period ended December 31, 1998 and the period
November 22, 1996 (commencement of operations) to December 31, 1996. These
financial statements are the responsibility of the management of IDS Life
Insurance Company. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1998 with the affiliated and
unaffiliated mutual fund managers and the unit investment trust sponsor. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of IDS
Life Variable Life Separate Account -- Flexible Premium Variable Life
Subaccounts at December 31, 1998, and the individual and combined results of
their operations and the changes in their net assets for the periods described
above, in conformity with generally accepted accounting principles.

Ernst & Young LLP
Minneapolis, Minnesota
March 12, 1999

67 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------

STATEMENTS OF NET ASSETS YEAR ENDED DEC. 31, 1998
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-----------------------------------------------------------------
ASSETS U V W X Y
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
portfolios and units of the trust:
at cost............................... $754,516,686 $82,802,098 $34,738,056 $468,110,128 $12,327,341
-----------------------------------------------------------------
at market value....................... $890,343,198 $82,794,183 $34,738,024 $561,662,445 $12,591,497
Dividends receivable.................... -- 453,912 136,251 -- 52,544
Accounts receivable from IDS Life for
contract purchase payments.............. 29,608 142,868 63,093 104,584 24,281
Receivable from mutual funds, portfolios
and the trust for share redemptions..... 647,792 -- -- 322,897 --
- -----------------------------------------------------------------------------------------------------------
Total assets............................ 891,020,598 83,390,963 34,937,368 562,089,926 12,668,322
- -----------------------------------------------------------------------------------------------------------

LIABILITIES
- -----------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee.......... 677,400 62,775 26,167 427,481 9,406
Transaction charge...................... -- -- -- -- --
Payable to mutual funds, portfolios and
the trust for investments purchased..... -- 534,005 173,177 -- 67,419
- -----------------------------------------------------------------------------------------------------------
Total liabilities....................... 677,400 596,780 199,344 427,481 76,825
- -----------------------------------------------------------------------------------------------------------
Net assets applicable to Variable Life
contracts in accumulation period........ $890,343,198 $82,794,183 $34,738,024 $561,662,445 $12,591,497
- -----------------------------------------------------------------------------------------------------------
ACCUMULATION UNITS OUTSTANDING.......... 205,971,122 36,389,966 21,082,168 139,808,650 5,728,665
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER ACCUMULATION UNIT... $ 4.32 $ 2.28 $ 1.65 $ 4.02 $ 2.20
- -----------------------------------------------------------------------------------------------------------

<CAPTION>
SEGREGATED ASSET SUBACCOUNTS COMBINED
----------------------------------------------------- VARIABLE
ASSETS IL FGI FNO 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------- ---------------------------------------------------------------------
Investments in shares of mutual funds,
portfolios and units of the trust:
at cost............................... $205,977,181 $132,651,504 $109,927,003 $ 6,496,286 $1,807,546,283

---------------------------------------------------------------------
at market value....................... $242,624,735 $161,862,311 $136,226,674 $10,453,926 $2,133,296,993
Dividends receivable.................... -- -- -- -- 642,707
Accounts receivable from IDS Life for
contract purchase payments.............. 120,600 144,696 171,285 6,264 807,279
Receivable from mutual funds, portfolios
and the trust for share redemptions..... 63,288 -- -- -- 1,033,977
- ---------------------------------------- ---------------------------------------------------------------------
Total assets............................ 242,808,623 162,007,007 136,397,959 10,460,190 2,135,780,956
- ---------------------------------------- ---------------------------------------------------------------------
LIABILITIES
- ---------------------------------------- ---------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee.......... 183,888 119,796 101,125 8,129 1,616,167
Transaction charge...................... -- -- -- 2,258 2,258
Payable to mutual funds, portfolios and
the trust for investments purchased..... -- 144,696 171,285 6,264 1,096,846
- ---------------------------------------- ---------------------------------------------------------------------
Total liabilities....................... 183,888 264,492 272,410 16,651 2,715,271
- ---------------------------------------- ---------------------------------------------------------------------
Net assets applicable to Variable Life
contracts in accumulation period........ $242,624,735 $161,742,515 $136,125,549 $10,443,539 $2,133,065,685
- ---------------------------------------- ---------------------------------------------------------------------
ACCUMULATION UNITS OUTSTANDING.......... 114,891,933 102,425,500 92,520,119 3,446,619
- ---------------------------------------- ---------------------------------------------------------------------
NET ASSET VALUE PER ACCUMULATION UNIT... $ 2.11 $ 1.58 $ 1.47 $ 3.03
- ---------------------------------------- ---------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

68 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------

STATEMENTS OF OPERATIONS YEAR ENDED DEC. 31,1998
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-------------------------------------------------------------
INVESTMENT INCOME U V W X Y
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $127,552,190 $5,482,824 $1,502,154 $44,064,797 $ 651,047
- -------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 7,017,729 673,510 274,445 4,505,632 95,855
Transaction charge...................... -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total expenses.......................... 7,017,729 673,510 274,445 4,505,632 95,855
- -------------------------------------------------------------------------------------------------------
Investment income (loss) -- net......... 120,534,461 4,809,314 1,227,709 39,559,165 555,192
- -------------------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- -------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... 9,112,329 2,569,475 12,888,386 3,977,679 2,869,520
Cost of investments sold................ 7,404,017 2,534,204 12,888,474 3,476,801 2,821,030
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments............................. 1,708,312 35,271 (88) 500,878 48,490
Net change in unrealized appreciation or
depreciation of investments............. (54,778,267) (1,588,877) 50 24,071,107 143,444
- -------------------------------------------------------------------------------------------------------
Net gain (loss) on investments.......... (53,069,955) (1,553,606) (38) 24,571,985 191,934
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $ 67,464,506 $3,255,708 $1,227,671 $64,131,150 $ 747,126
- -------------------------------------------------------------------------------------------------------

<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
VARIABLE
INVESTMENT INCOME IL FGI FNO 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------- ---------------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $10,109,537 $ 2,141,220 $ 962,047 $ -- $192,465,816
- ---------------------------------------- ---------------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 1,923,842 894,291 771,763 70,451 16,227,518
Transaction charge...................... -- -- -- 25,415 25,415
- ---------------------------------------- ---------------------------------------------------------------
Total expenses.......................... 1,923,842 894,291 771,763 95,866 16,252,933
- ---------------------------------------- ---------------------------------------------------------------
Investment income (loss) -- net......... 8,185,695 1,246,929 190,284 (95,866) 176,212,883
- ---------------------------------------- ---------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- ---------------------------------------- ---------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... 1,835,092 352,149 285 1,237,707 34,842,622
Cost of investments sold................ 1,688,869 309,487 297 800,049 31,923,228
- ---------------------------------------- ---------------------------------------------------------------
Net realized gain (loss) on
investments............................. 146,223 42,662 (12) 437,658 2,919,394
Net change in unrealized appreciation or
depreciation of investments............. 27,604,400 26,122,797 21,170,328 694,437 43,439,419
- ---------------------------------------- ---------------------------------------------------------------
Net gain (loss) on investments.......... 27,750,623 26,165,459 21,170,316 1,132,095 46,358,813
- ---------------------------------------- ---------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $35,936,318 $27,412,388 $21,360,600 $1,036,229 $222,571,696
- ---------------------------------------- ---------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

69 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------

STATEMENTS OF OPERATIONS YEAR ENDED DEC. 31, 1997
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-------------------------------------------------------------
INVESTMENT INCOME U V W X Y
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $ 23,181,667 $4,276,019 $1,234,742 $38,138,777 $ 636,103
- -------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 5,566,619 541,604 223,384 3,575,194 86,117
Transaction charge...................... -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total expenses.......................... 5,566,619 541,604 223,384 3,575,194 86,117
- -------------------------------------------------------------------------------------------------------
Investment income (loss) -- net......... 17,615,048 3,734,415 1,011,358 34,563,583 549,986
- -------------------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- -------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... 5,074,599 3,857,257 9,523,185 2,995,867 3,337,156
Cost of investments sold................ 4,025,924 3,771,946 9,523,329 2,544,758 3,359,081
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments............................. 1,048,675 85,311 (144) 451,109 (21,925)
Net change in unrealized appreciation or
depreciation of investments............. 96,070,257 286,967 141 24,614,820 182,848
- -------------------------------------------------------------------------------------------------------
Net gain (loss) on investments.......... 97,118,932 372,278 (3) 25,065,929 160,923
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $114,733,980 $4,106,693 $1,011,355 $59,629,512 $ 710,909
- -------------------------------------------------------------------------------------------------------

<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
VARIABLE
INVESTMENT INCOME IL FGI FNO 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------- ------------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $4,413,548 $ 62,316 $ -- $ -- $ 71,943,172
- ---------------------------------------- ------------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 1,238,582 190,159 206,714 109,628 11,738,001
Transaction charge...................... -- -- -- 24,094 24,094
- ---------------------------------------- ------------------------------------------------------------
Total expenses.......................... 1,238,582 190,159 206,714 133,722 11,762,095
- ---------------------------------------- ------------------------------------------------------------
Investment income (loss) -- net......... 3,174,966 (127,843) (206,714) (133,722) 60,181,077
- ---------------------------------------- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- ---------------------------------------- ------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... 668,935 -- -- 2,237,691 27,694,690
Cost of investments sold................ 630,427 -- -- 1,587,437 25,442,902
- ---------------------------------------- ------------------------------------------------------------
Net realized gain (loss) on
investments............................. 38,508 -- -- 650,254 2,251,788
Net change in unrealized appreciation or
depreciation of investments............. 2,355,317 3,092,969 5,147,244 385,145 132,135,708
- ---------------------------------------- ------------------------------------------------------------
Net gain (loss) on investments.......... 2,393,825 3,092,969 5,147,244 1,035,399 134,387,496
- ---------------------------------------- ------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $5,568,791 $2,965,126 $4,940,530 $ 901,677 $194,568,573
- ---------------------------------------- ------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

70 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------
STATEMENTS OF OPERATIONS YEAR ENDED DEC. 31, 1996
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-------------------------------------------------------------
INVESTMENT INCOME U V W X Y
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $66,883,373 $ 3,233,159 $ 611,169 $21,120,183 $ 532,217
- -------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 3,754,636 437,113 114,838 2,565,481 103,203
Transaction charge...................... -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total expenses.......................... 3,754,636 437,113 114,838 2,565,481 103,203
- -------------------------------------------------------------------------------------------------------
Investment income (loss) -- net......... 63,128,737 2,796,046 496,331 18,554,702 429,014
- -------------------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- -------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... 2,580,239 3,501,950 6,220,752 1,852,115 1,415,835
Cost of investments sold................ 1,907,065 3,439,003 6,220,842 1,633,941 1,428,871
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments............................. 673,174 62,947 (90) 218,174 (13,036)
Net change in unrealized appreciation or
depreciation of investments............. 5,691,003 (1,319,174) (94) 17,604,775 (403,974)
- -------------------------------------------------------------------------------------------------------
Net gain (loss) on investments.......... 6,364,177 (1,256,227) (184) 17,822,949 (417,010)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $69,492,914 $ 1,539,819 $ 496,147 $36,377,651 $ 12,004
- -------------------------------------------------------------------------------------------------------

SEGREGATED ASSET SUBACCOUNTS

<S> <C> <C> <C> <C> <C>
- ---------------------------------------- -------------------------------------------------------
Dividend income from mutual funds,
portfolios and the trust................ $6,174,491 $ 8,263 $ -- $ -- $ 98,562,855
- ---------------------------------------- -------------------------------------------------------
Expenses:
Mortality and expense risk fee.......... 553,611 576 1,042 92,437 7,622,937
Transaction charge...................... -- -- -- 25,675 25,675
- ---------------------------------------- -------------------------------------------------------
Total expenses.......................... 553,611 576 1,042 118,112 7,648,612
- ---------------------------------------- -------------------------------------------------------
Investment income (loss) -- net......... 5,620,880 7,687 (1,042) (118,112) 90,914,243
- ---------------------------------------- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS -- NET
- ---------------------------------------- -------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds, portfolios
and the trust:
Proceeds from sales..................... -- -- -- 1,466,047 17,036,938
Cost of investments sold................ -- -- -- 1,083,250 15,712,972
- ---------------------------------------- -------------------------------------------------------
Net realized gain (loss) on
investments............................. -- -- -- 382,797 1,323,966
Net change in unrealized appreciation or
depreciation of investments............. 2,374,285 (4,959) (17,901) (460,529) 23,463,432
- ---------------------------------------- -------------------------------------------------------
Net gain (loss) on investments.......... 2,374,285 (4,959) (17,901) (77,732) 24,787,398
- ---------------------------------------- -------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... $7,995,165 $ 2,728 $(18,943) $ (195,844) $115,701,641
- ---------------------------------------- -------------------------------------------------------
</TABLE>

*For the period from Nov. 22, 1996 (commencement of operations) to Dec. 31,
1996.
See accompanying notes to financial statements.

71 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------

STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DEC. 31, 1998
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-----------------------------------------------------------------
OPERATIONS U V W X Y
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
Investment income (loss) -- net......... $120,534,461 $ 4,809,314 $ 1,227,709 $ 39,559,165 $ 555,192
Net realized gain (loss) on
investments............................. 1,708,312 35,271 (88) 500,878 48,490
Net change in unrealized appreciation or
depreciation of investments............. (54,778,267) (1,588,877) 50 24,071,107 143,444
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 67,464,506 3,255,708 1,227,671 64,131,150 747,126
- -----------------------------------------------------------------------------------------------------------

CONTRACT TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------
Contract purchase payments.............. 131,410,140 16,568,072 22,533,012 77,494,858 3,068,352
Net transfers*.......................... 34,512,161 4,116,034 (12,918,560) 18,929,696 53,255
Transfers for policy loans.............. (9,132,065) (674,976) (55,561) (4,854,390) (80,357)
Policy charges.......................... (33,270,686) (4,896,101) (3,021,126) (23,227,333) (899,151)
Contract terminations:
Surrender benefits...................... (23,336,785) (1,937,895) (1,277,678) (15,414,416) (327,256)
Death benefits.......................... (2,020,055) (233,686) (20,106) (1,378,719) (72,670)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 98,162,710 12,941,448 5,239,981 51,549,696 1,742,173
- -----------------------------------------------------------------------------------------------------------
Net assets at beginning of year......... 724,715,982 66,597,027 28,270,372 445,981,599 10,102,198
- -----------------------------------------------------------------------------------------------------------
Net assets at end of year............... $890,343,198 $82,794,183 $34,738,024 $561,662,445 $12,591,497
- -----------------------------------------------------------------------------------------------------------

ACCUMULATION UNIT ACTIVITY
- -----------------------------------------------------------------------------------------------------------
Units outstanding at beginning of
year.................................... 181,225,095 30,615,038 17,863,880 125,875,176 4,935,518
Contracts purchase payments............. 33,079,510 7,413,809 13,938,851 20,914,302 1,443,628
Net transfers*.......................... 8,570,310 1,826,332 (8,013,780) 5,128,103 (294)
Transfers for policy loans.............. (2,227,458) (301,509) (34,006) (1,313,581) (37,323)
Policy charges.......................... (8,392,023) (2,191,418) (1,868,460) (6,275,456) (423,666)
Contract terminations:
Surrender benefits...................... (5,791,106) (867,738) (791,849) (4,147,133) (154,579)
Death benefits.......................... (493,206) (104,548) (12,468) (372,761) (34,619)
- -----------------------------------------------------------------------------------------------------------
Units outstanding at end of year........ 205,971,122 36,389,966 21,082,168 139,808,650 5,728,665
- -----------------------------------------------------------------------------------------------------------

<CAPTION>
SEGREGATED ASSET SUBACCOUNTS COMBINED
----------------------------------------------------- VARIABLE
OPERATIONS IL FGI FNO 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------
Investment income (loss) -- net......... $ 8,185,695 $ 1,246,929 $ 190,284 $ (95,866) 176,212,883
Net realized gain (loss) on
investments............................. 146,223 42,662 (12) 437,658 2,919,394
Net change in unrealized appreciation or
depreciation of investments............. 27,604,400 26,122,797 21,170,328 694,437 43,439,419
- ---------------------------------------- ---------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 35,936,318 27,412,388 21,360,600 1,036,229 222,571,696
- ---------------------------------------- ---------------------------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- ---------------------------------------------------------------------
Contract purchase payments.............. 43,374,689 38,889,216 33,203,965 1,188,404 367,730,708
Net transfers*.......................... 14,647,773 51,456,625 38,403,499 (494,072) 148,706,411
Transfers for policy loans.............. (2,119,714) (594,550) (793,889) (110,294) (18,415,796)
Policy charges.......................... (8,039,269) (5,030,171) (4,074,024) (580,108) (83,037,969)
Contract terminations:
Surrender benefits...................... (5,022,065) (1,558,456) (1,507,870) (268,924) (50,651,345)
Death benefits.......................... (398,029) (120,690) (87,018) (72,835) (4,403,808)
- ---------------------------------------- ---------------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 42,443,385 83,041,974 65,144,663 (337,829) 359,928,201
- ---------------------------------------- ---------------------------------------------------------------------
Net assets at beginning of year......... 164,245,032 51,288,153 49,620,286 9,745,139 1,550,565,788
- ---------------------------------------- ---------------------------------------------------------------------
Net assets at end of year............... $242,624,735 $161,742,515 $136,125,549 $10,443,539 $2,133,065,685
- ---------------------------------------- ---------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- ---------------------------------------------------------------------
Units outstanding at beginning of
year.................................... 93,664,100 41,101,142 41,573,554 3,567,591
Contracts purchase payments............. 21,932,881 28,706,679 26,100,519 411,025
Net transfers*.......................... 7,154,080 37,992,736 29,942,354 (174,863)
Transfers for policy loans.............. (1,072,377) (441,852) (628,537) (37,757)
Policy charges.......................... (4,060,677) (3,704,506) (3,213,466) (199,789)
Contract terminations:
Surrender benefits...................... (2,527,911) (1,141,804) (1,184,846) (94,039)
Death benefits.......................... (198,163) (86,895) (69,459) (25,549)
- ---------------------------------------- -----------------------------------------------------
Units outstanding at end of year........ 114,891,933 102,425,500 92,520,119 3,446,619
- ---------------------------------------- -----------------------------------------------------
</TABLE>

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

72 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DEC. 31, 1997
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
-----------------------------------------------------------------
OPERATIONS U V W X Y
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Investment income (loss) -- net......... $ 17,615,048 $ 3,734,415 $ 1,011,358 $ 34,563,583 $ 549,986
Net realized gain (loss) on
investments............................. 1,048,675 85,311 (144) 451,109 (21,925)
Net change in unrealized appreciation or
depreciation of investments............. 96,070,257 286,967 141 24,614,820 182,848
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 114,733,980 4,106,693 1,011,355 59,629,512 710,909
- -----------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------
Contract purchase payments.............. 123,570,339 15,053,091 17,423,616 72,845,044 2,402,678
Net transfers*.......................... 33,103,308 (239,083) (4,227,737) 21,193,067 (810,517)
Transfers for policy loans.............. (8,713,893) (546,324) (290,773) (5,307,297) (111,242)
Policy charges.......................... (29,122,591) (4,215,454) (2,208,148) (20,456,659) (809,036)
Contract terminations:
Surrender benefits...................... (18,607,496) (1,766,331) (792,989) (11,491,981) (418,878)
Death benefits.......................... (1,276,530) (247,537) (55,408) (1,781,799) (63,523)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 98,953,137 8,038,362 9,848,561 55,000,375 189,482
- -----------------------------------------------------------------------------------------------------------
Net assets at beginning of year......... 511,028,865 54,451,972 17,410,456 331,351,712 9,201,807
- -----------------------------------------------------------------------------------------------------------
Net assets at end of year............... $724,715,982 $66,597,027 $28,270,372 $445,981,599 $10,102,198
- -----------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- -----------------------------------------------------------------------------------------------------------
Units outstanding at beginning of
year.................................... 153,373,376 26,774,670 11,458,041 109,309,116 4,856,455
Contract purchase payments.............. 34,678,477 7,178,911 11,237,391 22,016,619 1,231,725
Net transfers*.......................... 9,264,513 (114,293) (2,674,428) 6,349,838 (435,528)
Transfers for policy loans.............. (2,427,763) (259,393) (188,211) (1,607,411) (56,371)
Policy charges.......................... (8,157,111) (2,008,118) (1,421,377) (6,182,237) (415,413)
Contract terminations:
Surrender benefits...................... (5,158,329) (837,375) (511,680) (3,467,220) (212,344)
Death benefits.......................... (348,068) (119,364) (35,856) (543,529) (33,006)
- -----------------------------------------------------------------------------------------------------------
Units outstanding at end of year........ 181,225,095 30,615,038 17,863,880 125,875,176 4,935,518
- -----------------------------------------------------------------------------------------------------------

<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
VARIABLE
OPERATIONS IL FGI FNO 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------- -------------------------------------------------------------------
Investment income (loss) -- net......... $ 3,174,966 $ (127,843) $ (206,714) $ (133,722) $ 60,181,077
Net realized gain (loss) on
investments............................. 38,508 -- -- 650,254 2,251,788
Net change in unrealized appreciation or
depreciation of investments............. 2,355,317 3,092,969 5,147,244 385,145 132,135,708
- ---------------------------------------- -------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 5,568,791 2,965,126 4,940,530 901,677 194,568,573
- ---------------------------------------- -------------------------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- -------------------------------------------------------------------
Contract purchase payments.............. 42,899,371 13,841,301 13,991,080 1,264,809 303,291,329
Net transfers*.......................... 27,901,000 34,880,409 30,282,735 (1,577,359) 140,505,823
Transfers for policy loans.............. (1,682,789) (200,323) (223,063) (94,962) (17,170,666)
Policy charges.......................... (6,477,870) (1,233,735) (1,274,804) (611,744) (66,410,041)
Contract terminations:
Surrender benefits...................... (2,719,919) (246,589) (436,800) (371,697) (36,852,680)
Death benefits.......................... (279,136) (8,789) (9,988) (7,346) (3,730,056)
- ---------------------------------------- -------------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 59,640,657 47,032,274 42,329,160 (1,398,299) 319,633,709
- ---------------------------------------- -------------------------------------------------------------------
Net assets at beginning of year......... 99,035,584 1,290,753 2,350,596 10,241,761 1,036,363,506
- ---------------------------------------- -------------------------------------------------------------------
Net assets at end of year............... $164,245,032 $51,288,153 $49,620,286 $ 9,745,139 $1,550,565,788
- ---------------------------------------- -------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- -------------------------------------------------------------------
Units outstanding at beginning of
year.................................... 59,452,809 1,288,668 2,406,142 4,120,643
Contract purchase payments.............. 24,446,022 11,617,761 12,833,138 497,391
Net transfers*.......................... 16,110,287 29,596,543 28,094,106 (624,993)
Transfers for policy loans.............. (959,477) (167,885) (203,109) (37,033)
Policy charges.......................... (3,690,168) (1,026,899) (1,156,378) (239,813)
Contract terminations:
Surrender benefits...................... (1,538,186) (199,141) (390,852) (145,736)
Death benefits.......................... (157,187) (7,905) (9,493) (2,868)
- ---------------------------------------- ---------------------------------------------------
Units outstanding at end of year........ 93,664,100 41,101,142 41,573,554 3,567,591
- ---------------------------------------- ---------------------------------------------------
</TABLE>

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

73 PROSPECTUS
<PAGE>
IDS LIFE VARIABLE LIFE SEPARATE ACCOUNT -- FLEXIBLE PREMIUM VARIABLE LIFE
SUBACCOUNTS
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DEC. 31, 1996
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
----------------------------------------------------------------
OPERATIONS U V W X Y
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Investment income (loss) -- net......... $ 63,128,737 $ 2,796,046 $ 496,331 $ 18,554,702 $ 429,014
Net realized gain (loss) on
investments............................. 673,174 62,947 (90) 218,174 (13,036)
Net change in unrealized appreciation or
depreciation of investments............. 5,691,003 (1,319,174) (94) 17,604,775 (403,974)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 69,492,914 1,539,819 496,147 36,377,651 12,004
- ----------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS
- ----------------------------------------------------------------------------------------------------------
Contract purchase payments.............. 105,961,565 13,310,365 9,046,621 66,518,941 2,145,072
Net transfers*.......................... 66,015,408 3,722,805 (1,205,578) 22,431,178 692,739
Transfers for policy loans.............. (6,244,169) (355,098) 27,139 (3,900,647) (80,185)
Policy charges.......................... (23,329,445) (3,771,136) (1,130,174) (17,570,432) (802,276)
Contract terminations:
Surrender benefits...................... (14,981,757) (1,611,110) (450,677) (10,189,903) (266,418)
Death benefits.......................... (952,889) (205,738) (28,391) (652,571) (45,597)
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 126,468,713 11,090,088 6,258,940 56,636,566 1,643,335
- ----------------------------------------------------------------------------------------------------------
Net assets at beginning of year......... 315,067,238 41,822,065 10,655,369 238,337,495 7,546,468
- ----------------------------------------------------------------------------------------------------------
Net assets at end of year............... $511,028,865 $54,451,972 $17,410,456 $331,351,712 $9,201,807
- ----------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ----------------------------------------------------------------------------------------------------------
Units outstanding at beginning of
year.................................... 112,397,698 21,093,984 7,292,031 89,225,571 3,992,247
Contract purchase payments.............. 34,307,830 6,801,860 6,064,251 23,599,318 1,157,301
Net transfers*.......................... 21,380,545 1,912,837 (839,017) 7,943,928 352,919
Transfers for policy loans.............. (2,016,634) (182,651) 18,550 (1,382,862) (43,801)
Policy charges.......................... (7,542,639) (1,925,848) (757,352) (6,225,537) (432,937)
Contract terminations:
Surrender benefits...................... (4,851,362) (820,422) (301,100) (3,621,740) (144,876)
Death benefits.......................... (302,062) (105,090) (19,322) (229,562) (24,398)
- ----------------------------------------------------------------------------------------------------------
Units outstanding at end of year........ 153,373,376 26,774,670 11,458,041 109,309,116 4,856,455
- ----------------------------------------------------------------------------------------------------------

<CAPTION>
COMBINED
VARIABLE
OPERATIONS IL FGI** FNO** 2004V ACCOUNT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------- ----------------------------------------------------------------
Investment income (loss) -- net......... $ 5,620,880 $ 7,687 $ (1,042) $ (118,112) $ 90,914,243
Net realized gain (loss) on
investments............................. -- -- -- 382,797 1,323,966
Net change in unrealized appreciation or
depreciation of investments............. 2,374,285 (4,959) (17,901) (460,529) 23,463,432
- ---------------------------------------- ----------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations............... 7,995,165 2,728 (18,943) (195,844) 115,701,641
- ---------------------------------------- ----------------------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- ----------------------------------------------------------------
Contract purchase payments.............. 28,312,012 143,703 362,548 1,608,506 227,409,333
Net transfers*.......................... 43,320,118 1,148,866 2,017,177 (554,960) 137,587,753
Transfers for policy loans.............. (665,251) (596) (2,348) (127,372) (11,348,527)
Policy charges.......................... (3,387,753) (3,948) (7,838) (654,323) (50,657,325)
Contract terminations:
Surrender benefits...................... (1,284,169) -- -- (375,186) (29,159,220)
Death benefits.......................... (77,361) -- -- (9,015) (1,971,562)
- ---------------------------------------- ----------------------------------------------------------------
Increase (decrease) from contract
transactions............................ 66,217,596 1,288,025 2,369,539 (112,350) 271,860,452
- ---------------------------------------- ----------------------------------------------------------------
Net assets at beginning of year......... 24,822,823 -- -- 10,549,955 648,801,413
- ---------------------------------------- ----------------------------------------------------------------
Net assets at end of year............... $99,035,584 $1,290,753 $2,350,596 $10,241,761 $1,036,363,506
- ---------------------------------------- ----------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- ----------------------------------------------------------------
Units outstanding at beginning of
year.................................... 18,302,995 -- -- 4,174,429
Contract purchase payments.............. 17,547,447 143,378 369,756 665,327
Net transfers*.......................... 26,953,612 1,149,856 2,046,787 (232,388)
Transfers for policy loans.............. (412,513) (611) (2,377) (53,487)
Policy charges.......................... (2,093,202) (3,955) (8,024) (271,285)
Contract terminations:
Surrender benefits...................... (797,805) -- -- (158,093)
Death benefits.......................... (47,725) -- -- (3,860)
- ---------------------------------------- ------------------------------------------------
Units outstanding at end of year........ 59,452,809 1,288,668 2,406,142 4,120,643
- ---------------------------------------- ------------------------------------------------
</TABLE>

*Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
**For the period from Nov. 22, 1996 (commencement of operations) to Dec. 31,
1996.
See accompanying notes to financial statements.

74 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE SUBACCOUNTS

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

1. ORGANIZATION

IDS Life Variable Life Separate Account (the Variable Account) was established
under Minnesota law on Oct. 16, 1985 as a segregated asset account of IDS Life
Insurance Company (IDS Life). The Variable Account is registered as a single
unit investment trust under the Investment Company Act of 1940, as amended (the
1940 Act). Operations of the Variable Account commenced on Jan. 20, 1986.

The Variable Account is comprised of various subaccounts. Each subaccount
invests exclusively in shares of the following portfolios and funds (the Funds)
or in the Trust. The Funds are registered under the 1940 Act as diversified,
open-end management investment companies. The Trust is registered under the 1940
Act as a unit investment trust. The Funds have the following investment managers
and the Trust has the following sponsor.

<TABLE>
<S> <C> <C>
SUBACCOUNT INVESTS EXCLUSIVELY IN SHARES OF INVESTMENT MANAGER/SPONSOR
- -------------------------------------------------------------------------------------------------------

U IDS Life Series Fund Equity Portfolio IDS Life Insurance Company(1)
V IDS Life Series Fund Income Portfolio IDS Life Insurance Company(1)
W IDS Life Series Fund Money Market Portfolio IDS Life Insurance Company(1)
X IDS Life Series Fund Managed Portfolio IDS Life Insurance Company(1)
Y IDS Life Series Fund Government Securities Portfolio IDS Life Insurance Company(1)
IL IDS Life Series Fund International Equity Portfolio IDS Life Insurance Company(1)
FGI A I M V.I. Growth and Income Fund A I M Management Group Inc.
FNO Putnam VT New Opportunities Fund Putnam Investment Management, Inc.
2004V 2004 Trust Smith Barney Inc.
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1)American Express Financial Corporation (AEFC) is the
investment advisor.

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

IDS Life serves as the distributor of the Flexible Premium Variable Life Policy.

- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

INVESTMENTS IN THE TRUST
Investments in units of the Trust are stated at market value which is the net
asset value per unit as determined by the Trust. Investment transactions are
accounted for on the date the units are purchased and sold. The cost of
investments sold and redeemed is determined on the average cost method.

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

75 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE SUBACCOUNTS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

- --------------------------------------------------------------------------------
3. MORTALITY AND EXPENSE RISK FEE AND POLICY CHARGES

IDS Life makes contractual assurances to the Variable Account that possible
future adverse changes in administrative expenses and mortality experience of
the policyowners and beneficiaries will not affect the Variable Account. The
mortality and expense risk fee paid to IDS Life is computed daily and is equal,
on an annual basis, to 0.9% of the average daily net assets of the subaccount. A
monthly deduction is made for the cost of insurance and the policy fee. The cost
of insurance for the policy month is determined on the monthly date by
determining the net amount at risk, as of that day, and by then applying the
cost of insurance rates to the net amount at risk which IDS Life is assuming for
the succeeding month. The monthly deduction will be taken from the subaccounts
as specified in the application for the policy.

IDS Life deducts a policy fee of $5 per month. The policy fee is waived for
policies purchased on or after May 1, 1991 with an initial specified amount of
$350,000 or more. This charge reimburses IDS Life for expenses incurred in
administering the policy, such as processing claims, maintaining records, making
policy changes and communicating with owners of policies. IDS Life does not
anticipate that it will make any profit on this charge. IDS Life reserves the
right to change this charge in the future, but guarantees that it will never
exceed $7.50 per month.

- --------------------------------------------------------------------------------
4. DEATH BENEFIT GUARANTEE CHARGE AND OPTIONAL INSURANCE
BENEFIT CHARGE

For each policy month the death benefit guarantee is in effect, IDS Life deducts
a charge of $.01 per $1,000 of the amount used to determine the death benefit
(specified amount) and $.01 per $1,000 coverage under the other insured rider to
compensate it for the risk assumed in providing the death benefit guarantee.

Each month IDS Life deducts charges for any optional insurance benefits added to
the policy by rider.

76 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE SUBACCOUNTS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

5. PREMIUM EXPENSE CHARGE

IDS Life deducts charges for two separate items from each premium payment. The
total of these charges is called the premium expense charge. Details regarding
these two charges follows.

A sales charge of 2.5% of each premium payment will be deducted to compensate
IDS Life for expenses in distributing the policy, including agents'
compensation,
advertising and printing the prospectus and sales literature.

The policy provides that a charge of 2.5% of each premium payment will be
deducted to cover the premium taxes assessed by the various states. Premium
taxes vary from state to state. This charge is the average rate which IDS Life
expects to pay on premiums from all states.

- --------------------------------------------------------------------------------
6. TRANSACTION CHARGE

IDS Life makes a daily charge against the assets of the subaccount investing in
the Trust. This charge is intended to reimburse IDS Life for the transaction
charge paid directly by IDS Life to Smith Barney Inc. on the sale of the Trust
units to the Variable Account. IDS Life pays these amounts from its general
account assets. The amount of the asset charge is equivalent to an effective
annual rate of 0.25% of the account value invested in the Trust. This amount may
be increased in the future but in no event will it exceed an effective annual
rate of 0.5% of the account value. The charge will be cost-based (taking into
account a loss of interest) with no anticipated element of profit for IDS Life.

- --------------------------------------------------------------------------------
7. SURRENDER CHARGE

There are surrender charges for full surrenders in the first 10 years of the
policy and for 10 years following an increase in specified amount. They are
generally level for 5 years and decreasing the next 5 years. The surrender
charge is based on the specified amount, the insured's issue age, sex and smoker
class and the total gross premium paid. Charges by IDS Life for surrenders are
not identified on an individual segregated asset account basis. Charges for all
segregated asset accounts amounted to $17,936,810 in 1998, $14,502,145 in 1997
and $11,956,753 in 1996. Such charges are not treated as a separate expense of
the subaccounts or Variable Account. They are ultimately deducted from surrender
benefits paid by IDS Life.

- --------------------------------------------------------------------------------
8. INVESTMENT IN SHARES/UNITS

The subaccounts' investment in shares of the Funds and units of the Trust as of
Dec. 31, 1998 were as follows:

<TABLE>
<CAPTION>
SUBACCOUNT INVESTMENT SHARES/UNITS NAV
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------

U IDS Life Series Fund Equity Portfolio.................. 32,330,459 $ 27.54
V IDS Life Series Fund Income Portfolio.................. 8,256,015 10.03
W IDS Life Series Fund Money Market Portfolio............ 34,741,315 1.00
X IDS Life Series Fund Managed Portfolio................. 29,407,407 19.10
Y IDS Life Series Fund Government Securities Portfolio... 1,213,762 10.37
IL IDS Life Series Fund International Equity Portfolio.... 13,438,137 18.05
FGI AIM V.I. Growth and Income Fund........................ 6,815,255 23.75
FNO Putnam VT New Opportunities Fund....................... 5,227,424 26.06
2004V 2004 Trust............................................. 13,738,943 0.76
- -------------------------------------------------------------------------------------------
</TABLE>

77 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE SUBACCOUNTS

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

9. INVESTMENT TRANSACTIONS

The subaccounts' purchases of the Funds' shares or Trust unit's, including
reinvestment of dividend distributions, were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DEC. 31,
---------------------------------------------
<S> <C> <C> <C> <C>
SUBACCOUNT INVESTMENT 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------

U IDS Life Series Fund Equity Portfolio....................... $226,733,888 $121,966,988 $ 192,481,448
V IDS Life Series Fund Income Portfolio....................... 20,320,237 15,630,034 17,388,084
W IDS Life Series Fund Money Market Portfolio................. 19,356,076 20,383,104 12,976,023
X IDS Life Series Fund Managed Portfolio...................... 94,424,448 92,732,258 77,193,596
Y IDS Life Series Fund Government Securities Portfolio........ 5,166,525 4,076,984 3,488,184
IL IDS Life Series Fund International Equity Portfolio......... 52,222,291 63,357,169 72,175,223
FGI AIM V.I. Growth and Income.................................. 84,722,297 46,942,418 1,296,276*
FNO Putnam VT New Opportunities................................. 65,398,582 42,159,212 2,369,506*
2004V 2004 Trust.................................................. 796,355 713,379 1,236,344
- -----------------------------------------------------------------------------------------------------------------------
Combined Variable Account $569,140,699 $407,961,546 $ 380,604,684
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

*Commenced operations on Nov. 22, 1996.

78 PROSPECTUS
<PAGE>
FLEXIBLE PREMIUM VARIABLE
LIFE SUBACCOUNTS

- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------

The following tables give per-unit information about the financial history of
each subaccount.

<TABLE>
<CAPTION>
Year ended Dec. 31,
----------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT U (INVESTING IN SHARES OF IDS
LIFE SERIES FUND EQUITY PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $4.00 $3.33 $2.80 $2.04 $2.01 $1.79 $1.71 $1.04 $1.10 $0.90
Accumulation unit value at end of
period.................................. $4.32 $4.00 $3.33 $2.80 $2.04 $2.01 $1.79 $1.71 $1.04 $1.10
Number of accumulation units outstanding
at end of period (000 omitted).......... 205,971 181,225 153,373 112,398 86,672 54,422 35,765 20,713 13,993 9,013
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT V (INVESTING IN SHARES OF IDS
LIFE SERIES FUND INCOME PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $2.18 $2.03 $1.98 $1.65 $1.74 $1.53 $1.41 $1.23 $1.17 $1.06
Accumulation unit value at end of
period.................................. $2.28 $2.18 $2.03 $1.98 $1.65 $1.74 $1.53 $1.41 $1.23 $1.17
Number of accumulation units outstanding
at end of period (000 omitted).......... 36,390 30,615 26,775 21,094 16,248 13,255 8,848 6,088 4,646 3,207
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT W (INVESTING IN SHARES OF IDS
LIFE SERIES FUND MONEY MARKET PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $1.58 $1.52 $1.46 $1.40 $1.36 $1.34 $1.31 $1.25 $1.17 $1.08
Accumulation unit value at end of
period.................................. $1.65 $1.58 $1.52 $1.46 $1.40 $1.36 $1.34 $1.31 $1.25 $1.17
Number of accumulation units outstanding
at end of period (000 omitted).......... 21,082 17,864 11,458 7,292 4,148 2,911 2,981 2,876 2,221 1,497
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT X (INVESTING IN SHARES OF IDS
LIFE SERIES FUND MANAGED PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $3.54 $3.03 $2.67 $2.27 $2.27 $1.91 $1.75 $1.34 $1.25 $0.97
Accumulation unit value at end of
period.................................. $4.02 $3.54 $3.03 $2.67 $2.27 $2.27 $1.91 $1.75 $1.34 $1.25
Number of accumulation units outstanding
at end of period (000 omitted).......... 139,809 125,875 109,309 89,226 70,903 45,870 30,475 21,753 15,649 10,496
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT Y (INVESTING IN SHARES OF IDS
LIFE SERIES FUND GOVERNMENT SECURITIES
PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $2.05 $1.89 $1.89 $1.62 $1.71 $1.54 $1.46 $1.26 $1.20 $1.05
Accumulation unit value at end of
period.................................. $2.20 $2.05 $1.89 $1.89 $1.62 $1.71 $1.54 $1.46 $1.26 $1.20
Number of accumulation units outstanding
at end of period (000 omitted).......... 5,729 4,936 4,856 3,992 3,949 3,444 2,556 1,504 1,096 491
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT IL(1) (INVESTING IN SHARES OF
IDS LIFE SERIES FUND INTERNATIONAL
EQUITY PORTFOLIO)
Accumulation unit value at beginning of
period.................................. $1.75 $1.67 $1.36 $0.99 $1.00 -- -- -- -- --
Accumulation unit value at end of
period.................................. $2.11 $1.75 $1.67 $1.36 $0.99 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted).......... 114,892 93,664 59,453 18,303 2,582 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT FGI(2) (INVESTING IN SHARES
OF AIM V.I. GROWTH AND INCOME FUND)
Accumulation unit value at beginning of
period.................................. $1.25 $1.00 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of
period.................................. $1.58 $1.25 $1.00 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted).......... 102,426 41,101 1,289 -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT FNO(2) (INVESTING IN SHARES
OF PUTNAM VT NEW OPPORTUNITIES FUND)
Accumulation unit value at beginning of
period.................................. $1.19 $0.98 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of
period.................................. $1.47 $1.19 $0.98 -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted).......... 92,520 41,574 2,406 -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2004V (INVESTING IN SHARES OF
2004 TRUST)
Accumulation unit value at beginning of
period.................................. $2.73 $2.48 $2.53 $1.96 $2.18 $1.81 $1.67 $1.40 $1.37 $1.12
Accumulation unit value at end of
period.................................. $3.03 $2.73 $2.48 $2.53 $1.96 $2.18 $1.81 $1.67 $1.40 $1.37
Number of accumulation units outstanding
at end of period (000 omitted).......... 3,447 3,568 4,121 4,174 3,814 3,410 2,842 2,360 2,020 1,588
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)Operations commenced on Oct. 28, 1994.
(2)Operations commenced on Nov. 22, 1996.

79 PROSPECTUS
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

IDS LIFE FINANCIAL INFORMATION
- -----------------------------------------------------------------

The financial statements shown below are those of the insurance company and not
those of any other entity. They are included for the purpose of informing the
investor as to the financial condition of the insurance company and its ability
to carry out its obligations under its variable contracts.

IDS LIFE INSURANCE COMPANY
- -----------------------------------------------------------------

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS DEC. 31, 1998 DEC. 31, 1997
ASSETS ($ thousands, except share amounts)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost (fair value: 1998,
$8,420,035; 1997, $9,743,410).................................... $ 7,964,114 $ 9,315,450
Available for sale, at fair value (amortized cost: 1998,
$13,344,949; 1997, $12,515,030).................................. 13,613,139 12,876,694
Mortgage loans on real estate.................................... 3,505,458 3,618,647
Policy loans..................................................... 525,431 498,874
Other investments................................................ 366,604 318,591
- -------------------------------------------------------------------------------------------------
Total investments................................................ 25,974,746 26,628,256
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents........................................ 22,453 19,686
Amounts recoverable from reinsurers.............................. 262,260 205,716
Amounts due from brokers......................................... 327 8,400
Other accounts receivable........................................ 47,963 37,895
Accrued investment income........................................ 366,574 357,390
Deferred policy acquisition costs................................ 2,496,352 2,479,577
Other assets..................................................... 30,487 22,700
Separate account assets.......................................... 27,349,401 23,214,504
- -------------------------------------------------------------------------------------------------
Total assets..................................................... $ 56,550,563 $ 52,974,124
- -------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities.................................................. $ 21,172,303 $ 22,009,747
Universal life-type insurance.................................... 3,343,671 3,280,489
Traditional life insurance....................................... 225,306 213,676
Disability income and long-term care insurance................... 660,320 533,124
Policy claims and other policyholders' funds..................... 70,309 68,345
Deferred income taxes, net....................................... 16,930 61,582
Amounts due to brokers........................................... 195,406 381,458
Other liabilities................................................ 410,285 345,383
Separate account liabilities..................................... 27,349,401 23,214,504
- -------------------------------------------------------------------------------------------------
Total liabilities................................................ 53,443,931 50,108,308
- -------------------------------------------------------------------------------------------------
Stockholder's equity:
Capital stock, $30 par value per share; 100,000 shares
authorized, issued and outstanding............................... 3,000 3,000
Additional paid-in capital....................................... 288,327 290,847
Accumulated other comprehensive income, net of tax:
Net unrealized securities gains.................................. 169,584 226,359
Retained earnings................................................ 2,645,721 2,345,610
- -------------------------------------------------------------------------------------------------
Total stockholder's equity....................................... 3,106,632 2,865,816
- -------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity....................... $ 56,550,563 $ 52,974,124
- -------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

F-1
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEARS ENDED DEC. 31,
1998 1997 1996
CONSOLIDATED STATEMENTS OF INCOME ($ thousands)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Revenues:
Premiums:
Traditional life insurance....................................... $ 53,132 $ 52,473 $ 51,403
Disability income and long-term care insurance................... 176,298 154,021 131,518
- ------------------------------------------------------------------------------------------------------------
Total premiums................................................... 229,430 206,494 182,921
- ------------------------------------------------------------------------------------------------------------
Policyholder and contractholder charges.......................... 383,965 341,726 302,999
Management and other fees........................................ 401,057 340,892 271,342
Net investment income............................................ 1,986,485 1,988,389 1,965,362
Net realized gain (loss) on investments.......................... 6,902 860 (159)
- ------------------------------------------------------------------------------------------------------------
Total revenues................................................... 3,007,839 2,878,361 2,722,465
- ------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Death and other benefits:
Traditional life insurance....................................... 29,835 28,951 26,919
Universal life-type insurance and investment contracts........... 108,349 92,814 85,017
Disability income and long-term care insurance................... 27,414 22,333 19,185
Increase in liabilities for future policy benefits:
Traditional life insurance....................................... 6,052 3,946 1,859
Disability income and long-term care insurance................... 73,305 63,631 57,230
Interest credited on universal life-type insurance and investment
contracts........................................................ 1,317,124 1,386,448 1,370,468
Amortization of deferred policy acquisition costs................ 382,642 322,731 278,605
Other insurance and operating expenses........................... 287,326 276,596 261,468
- ------------------------------------------------------------------------------------------------------------
Total benefits and expenses...................................... 2,232,047 2,197,450 2,100,751
- ------------------------------------------------------------------------------------------------------------
Income before income taxes....................................... 775,792 680,911 621,714
Income taxes..................................................... 235,681 206,664 207,138
- ------------------------------------------------------------------------------------------------------------
Net income....................................................... $ 540,111 $ 474,247 $ 414,576
- ------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

F-2
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ACCUMULATED
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN INCOME, RETAINED
THREE YEARS ENDED DEC. 31, 1998 ($ thousands) EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995................................ $2,331,708 $3,000 $278,814 $ 230,129 $1,819,765
Comprehensive income:
Net income................................................ 414,576 -- -- -- 414,576
Unrealized holding losses arising during the year, net of
deferred policy acquisition costs of $10,325 and taxes of
$82,982................................................... (154,111) -- -- (154,111) --
Reclassification adjustment for losses included in net
income, net of tax of $(5,429)............................ 10,084 -- -- 10,084 --
----------- ----------
Other comprehensive loss.................................. (144,027) -- -- (144,027) --
-----------
Comprehensive income...................................... 270,549 -- -- -- --
Capital contribution from parent.......................... 4,801 -- 4,801 -- --
Other changes............................................. 2,022 -- -- -- 2,022
Cash dividends to parent.................................. (165,000) -- -- -- (165,000)
---------------------------------------------------------------
Balance, December 31, 1996................................ 2,444,080 3,000 283,615 86,102 2,071,363
Comprehensive income:
Net income................................................ 474,247 -- -- -- 474,247
Unrealized holding gains arising during the year, net of
effect on deferred policy acquisition costs of $(7,714)
and taxes of $(75,215).................................... 139,686 -- -- 139,686 --
Reclassification adjustment for losses included in net
income, net of tax of $(308).............................. 571 -- -- 571 --
----------- ----------
Other comprehensive income................................ 140,257 -- -- 140,257 --
-----------
Comprehensive income...................................... 614,504 -- -- -- --
Capital contribution from parent.......................... 7,232 -- 7,232 -- --
Cash dividends to parent.................................. (200,000) -- -- -- (200,000)
---------------------------------------------------------------
Balance, December 31, 1997................................ 2,865,816 3,000 290,847 226,359 2,345,610
Comprehensive income:
Net income................................................ 540,111 -- -- -- 540,111
Unrealized holding losses arising during the year, net of
effect on deferred policy acquisition costs of $6,333 and
taxes of $32,826.......................................... (60,964) -- -- (60,964) --
Reclassification adjustment for losses included in net
income, net of tax of $(2,254)............................ 4,189 -- -- 4,189 --
----------- ----------
Other comprehensive loss.................................. (56,775) -- -- (56,775) --
-----------
Comprehensive income...................................... 483,336 -- -- -- --
Other changes............................................. (2,520) -- (2,520) -- --
Cash dividends to parent.................................. (240,000) -- -- -- (240,000)
---------------------------------------------------------------
Balance, December 31, 1998................................ $3,106,632 $3,000 $288,327 $ 169,584 $2,645,721
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

F-3
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEARS ENDED DEC. 31,
1998 1997 1996
CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................... $ 540,111 $ 474,247 $ 414,576
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Policy loan issuance, excluding universal life-type insurance.... (53,883) (54,665) (49,314)
Policy loan repayment, excluding universal life-type insurance... 57,902 46,015 41,179
Change in amounts recoverable from reinsurers.................... (56,544) (47,994) (43,335)
Change in other accounts receivable.............................. (10,068) 6,194 (4,981)
Change in accrued investment income.............................. (9,184) (14,077) 4,695
Change in deferred policy acquisition costs, net................. (10,443) (156,486) (294,755)
Change in liabilities for future policy benefits for traditional
life, disability income and long-term care insurance............. 138,826 112,915 97,479
Change in policy claims and other policyholders' funds........... 1,964 (15,289) 27,311
Change in deferred income tax provision (benefit)................ (19,122) 19,982 (65,609)
Change in other liabilities...................................... 64,902 13,305 46,724
Amortization of premium (accretion of discount), net............. 9,170 (5,649) (23,032)
Net realized (gain) loss on investments.......................... (6,902) (860) 159
Policyholder and contractholder charges, non-cash................ (172,396) (160,885) (154,286)
Other, net....................................................... 10,786 7,161 (10,816)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities.............. $ 485,119 $ 223,914 $ (14,005)
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed maturities held to maturity:
Purchases........................................................ $ (1,020) $ (1,996) $ (43,751)
Maturities, sinking fund payments and calls...................... 1,162,731 686,503 759,248
Sales............................................................ 236,963 236,761 279,506
Fixed maturities available for sale:
Purchases........................................................ (4,100,238) (3,160,133) (2,299,198)
Maturities, sinking fund payments and calls...................... 2,967,311 1,206,213 1,270,240
Sales............................................................ 278,955 457,585 238,905
Other investments, excluding policy loans:
Purchases........................................................ (555,647) (524,521) (904,536)
Sales............................................................ 579,038 335,765 236,912
Change in amounts due from brokers............................... 8,073 2,647 (11,047)
Change in amounts due to brokers................................. (186,052) 119,471 140,369
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities.............. 390,114 (641,705) (333,352)
- ------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Activity related to universal life-type insurance and
investment contracts:
Considerations received.......................................... 1,873,624 2,785,758 3,567,586
Surrenders and death benefits.................................... (3,792,612) (3,736,242) (4,250,294)
Interest credited to account balances............................ 1,317,124 1,386,448 1,370,468
Universal life-type insurance policy loans:
Issuance......................................................... (97,602) (84,835) (86,501)
Repayment........................................................ 67,000 54,513 58,753
Capital transaction with parent.................................. -- 7,232 4,801
Dividends paid................................................... (240,000) (200,000) (165,000)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities........................ (872,466) 212,874 499,813
- ------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents............. 2,767 (204,917) 152,456
Cash and cash equivalents at beginning of year................... 19,686 224,603 72,147
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year......................... $ 22,453 $ 19,686 $ 224,603
- ------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

F-4
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS)
- -----------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS
IDS Life Insurance Company (the Company) is a stock life insurance company
organized under the laws of the State of Minnesota. The Company is a wholly
owned subsidiary of American Express Financial Corporation (AEFC), which is a
wholly owned subsidiary of American Express Company. The Company serves
residents of all states except New York. IDS Life Insurance Company of New York
is a wholly owned subsidiary of the Company and serves New York State residents.
The Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company, American Partners Life Insurance
Company and American Express Corporation.

The Company's principal products are deferred annuities and universal life
insurance, which are issued primarily to individuals. It offers single premium
and flexible premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well. The Company's insurance products
include universal life (fixed and variable), whole life, single premium life and
term products (including waiver of premium and accidental death benefits). The
Company also markets disability income and long-term care insurance.

BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which vary in certain
respects from reporting practices prescribed or permitted by state insurance
regulatory authorities (see Note 4).

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

INVESTMENTS
Fixed maturities that the Company has both the positive intent and the ability
to hold to maturity are classified as held to maturity and carried at amortized
cost. All other fixed maturities and all marketable equity securities are
classified as available for sale and carried at fair value. Unrealized gains and
losses on securities classified as available for sale are reported as a separate
component of other comprehensive income, net of deferred policy acquisition
costs and deferred taxes.

Realized investment gain or loss is determined on an identified cost basis.

Prepayments are anticipated on certain investments in mortgage-backed securities
in determining the constant effective yield used to recognize interest income.
Prepayment estimates are based on information received from brokers who deal in
mortgage-backed securities.

Mortgage loans on real estate are carried at amortized cost less reserves for
mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.

Impairment of mortgage loans is measured as the excess of a loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for mortgage
loan losses. The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the portfolio. The
level of the reserve account is determined based on several factors, including
historical

F-5
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve for
mortgage loan losses.

The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.

The cost of interest rate caps and floors is amortized to investment income over
the life of the contracts and payments received as a result of these agreements
are recorded as investment income when realized. The amortized cost of interest
rate caps and floors is included in other investments. Amounts paid or received
under interest rate swap agreements are recognized as an adjustment to
investment income.

The Company purchases and writes index options to hedge the fee income earned on
the management of equity securities in separate accounts and the underlying
mutual funds. These index options are carried at market value and are included
in other investments or other liabilities, as appropriate. Gains or losses on
index options that qualify as hedges are deferred and recognized in management
and other fees in the same period as the hedged fee income. Gains or losses on
index options that do not qualify as hedges are marked to market through the
income statement.

The Company also uses index options to manage the risks related to a certain
annuity product that pays interest based upon the relative change in a major
stock market index between the beginning and end of the product's term.
Purchased options used in conjunction with this product are reported in other
investments and written options are included in other liabilities. The
amortization of the cost of purchased options, the proceeds of written options
and the changes in intrinsic value of the contracts are included in net
investment income.

Policy loans are carried at the aggregate of the unpaid loan balances which do
not exceed the cash surrender values of the related policies.

When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.

STATEMENTS OF CASH FLOWS
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost, which approximates fair value.

Supplementary information to the consolidated statements of cash flows for the
years ended December 31 is summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------
CASH PAID DURING THE YEAR FOR:
Income taxes....................... $215,003 $174,472 $317,283
Interest on borrowings............. 14,529 8,213 4,119
- -----------------------------------------------------------------
</TABLE>

RECOGNITION OF PROFITS ON ANNUITY CONTRACTS AND INSURANCE POLICIES
Profits on fixed deferred annuities are recognized by the Company over the lives
of the contracts, using primarily the interest method. Profits represent the
excess of investment income earned from investment of contract considerations
over interest credited to contract owners and other expenses.

F-6
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The retrospective deposit method is used in accounting for universal life-type
insurance. Under this method, profits are recognized over the lives of the
policies in proportion to the estimated gross profits expected to be realized.

Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and expenses
are associated with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association is
accomplished by means of the provision for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.

Policyholder and contractholder charges include the monthly cost of insurance
charges, issue and administrative fees and surrender charges. These charges also
include the minimum death benefit guarantee fees received from the variable life
insurance separate accounts. Management and other fees include investment
management fees from underlying proprietary mutual funds and mortality and
expense risk fees received from the variable annuity and variable life insurance
separate accounts.

DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally sales compensation, policy
issue costs, underwriting and certain sales expenses, have been deferred on
insurance and annuity contracts. The deferred acquisition costs for most single
premium deferred annuities and installment annuities are amortized using
primarily the interest method. The costs for universal life-type insurance and
certain installment annuities are amortized as a percentage of the estimated
gross profits expected to be realized on the policies. For traditional life,
disability income and long-term care insurance policies, the costs are amortized
over an appropriate period in proportion to premium revenue.

LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal life-type insurance and deferred annuities are
accumulation values.

Liabilities for fixed annuities in a benefit status are based on established
industry mortality tables and interest rates ranging from 5% to 9.5%, depending
on year of issue.

Liabilities for future benefits on traditional life insurance are based on the
net level premium method, using anticipated mortality, policy persistency and
interest earning rates. Anticipated mortality rates are based on established
industry mortality tables. Anticipated policy persistency rates vary by policy
form, issue age and policy duration with persistency on cash value plans
generally anticipated to be better than persistency on term insurance plans.
Anticipated interest rates range from 4% to 10%, depending on policy form, issue
year and policy duration.

Liabilities for future disability income and long-term care policy benefits
include both policy reserves and claim reserves. Policy reserves are based on
the net level premium method, using anticipated morbidity, mortality, policy
persistency and interest earning rates. Anticipated morbidity and mortality
rates are based on established industry morbidity and mortality tables.
Anticipated policy persistency rates vary by policy form, issue age, policy
duration and, for disability income policies, occupation class. Anticipated
interest rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 7% over 5 to 10
years.

Claim reserves are calculated based on claim continuance tables and anticipated
interest earnings. Anticipated claim continuance rates are based on established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 6% to 8%.

REINSURANCE
The maximum amount of life insurance risk retained by the Company on any one
life is $750 of life benefit plus $50 of accidental death benefits. The maximum
amount of life insurance risk retained on any joint-life

F-7
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
combination is $1,500. The excesses are reinsured with other life insurance
companies, primarily on a yearly renewable term basis. Long-term care policies
are primarily reinsured on a coinsurance basis. Beginning in 1998, the Company
retains all disability income and waiver of premium risk.

FEDERAL INCOME TAXES
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.

Included in other liabilities at December 31, 1998 and 1997 are $26,291 payable
to and $12,061, receivable from, respectively, AEFC for federal income taxes.

SEPARATE ACCOUNT BUSINESS
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance contract
owners. The Company receives investment management fees from the proprietary
mutual funds used as investment options for variable annuities and variable life
insurance. The Company receives mortality and expense risk fees from the
separate accounts.

The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.

For variable life insurance, the Company guarantees that the rates at which
insurance charges and administrative fees are deducted from contract funds will
not exceed contractual maximums. The Company also guarantees that the death
benefit will continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.

ACCOUNTING CHANGES
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires the reporting and display of
comprehensive income and its components. Comprehensive income is defined as the
aggregate change in stockholder's equity excluding changes in ownership
interests. For the Company, it is net income and the unrealized gains or losses
on available-for-sale securities, net of the effect on deferred policy
acquisition costs, taxes and reclassification adjustment.

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use." The SOP, which is effective
January 1, 1999, requires the capitalization of certain costs incurred after the
date of adoption to develop or obtain software for internal use. Software
utilized by the Company is owned by AEFC and will be capitalized by AEFC. As a
result, the new rule will not have a material impact on the Company's results of
operations or financial condition.

In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments," providing guidance for the
timing of recognition of liabilities related to guaranty fund assessments. The
Company will adopt the SOP on January 1, 1999. The Company has historically
carried a balance

F-8
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
in other liabilities on the balance sheet for potential guaranty fund assessment
exposure. Adoption of the SOP will not have a material impact on the Company's
results of operations or financial condition.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2000. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
Earlier application of all of the provisions of this Statement is encouraged,
but it is permitted only as of the beginning of any fiscal quarter that begins
after issuance of the Statement. This Statement cannot be applied retroactively.
The ultimate financial impact of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.

RECLASSIFICATION
Certain 1997 and 1996 amounts have been reclassified to conform to the 1998
presentation.

- --------------------------------------------------------------------------------
2. INVESTMENTS

Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values are
determined by established procedures involving, among other things, review of
market indices, price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial files.

The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1998 are
as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
U.S. Government agency obligations........... $ 39,888 $ 4,460 $ -- $ 44,348
State and municipal obligations.............. 9,683 491 -- 10,173
Corporate bonds and obligations.............. 6,305,476 447,752 27,087 6,726,141
Mortgage-backed securities................... 1,609,067 30,458 152 1,639,373
- ----------------------------------------------------------------------------------------------------
$7,964,114 $483,161 $ 27,239 $ 8,420,035
- ----------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
AVAILABLE FOR SALE COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
U.S. Government agency obligations........... $ 52,043 $ 3,324 $ -- $ 55,367
State and municipal obligations.............. 11,060 1,231 -- 12,291
Corporate bonds and obligations.............. 7,332,344 271,174 155,181 7,448,337
Mortgage-backed securities................... 5,949,502 151,511 3,869 6,097,144
- ----------------------------------------------------------------------------------------------------
Total fixed maturities....................... 13,344,949 427,240 159,050 13,613,139
Equity securities............................ 3,000 158 -- 3,158
- ----------------------------------------------------------------------------------------------------
$13,347,949 $427,398 $159,050 $ 13,616,297
- ----------------------------------------------------------------------------------------------------
</TABLE>

F-9
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

2. INVESTMENTS (CONTINUED)
The amortized cost, gross unrealized gains and losses and fair values of
investmentsin fixed maturities and equity securities at December 31, 1997 are as
follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
HELD TO MATURITY COST GAINS LOSSES FAIR VALUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
U.S. Government agency obligations........... $ 41,932 $ 2,949 $ -- $ 44,881
State and municipal obligations.............. 9,684 568 -- 10,252
Corporate bonds and obligations.............. 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities................... 1,983,188 25,976 7,911 2,001,253
- -----------------------------------------------------------------------------------------------------
$9,315,450 $445,193 $17,233 $ 9,743,410
- -----------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
AVAILABLE FOR SALE COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
U.S. Government agency obligations........... $ 65,291 $ 4,154 $ -- $ 69,445
State and municipal obligations.............. 11,045 1,348 -- 12,393
Corporate bonds and obligations.............. 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities................... 7,130,565 160,478 6,879 7,284,164
- -----------------------------------------------------------------------------------------------------
Total fixed maturities....................... 12,515,030 398,741 37,077 12,876,694
Equity securities............................ 3,000 361 -- 3,361
- -----------------------------------------------------------------------------------------------------
$12,518,030 $399,102 $37,077 $ 12,880,055
- -----------------------------------------------------------------------------------------------------
</TABLE>

The amortized cost and fair value of investments in fixed maturities at December
31, 1998 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
<S> <C> <C>
- ------------------------------------------------------------------
Due in one year or less................. $ 354,296 $ 359,020
Due from one to five years.............. 2,111,369 2,249,847
Due from five to ten years.............. 3,012,227 3,189,789
Due in more than ten years.............. 877,155 982,006
Mortgage-backed securities.............. 1,609,067 1,639,373
- ------------------------------------------------------------------
$7,964,114 $ 8,420,035
- ------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
<S> <C> <C>
- ------------------------------------------------------------------
Due in one year or less................. $ 102,463 $ 104,475
Due from one to five years.............. 682,336 725,859
Due from five to ten years.............. 3,904,326 4,044,378
Due in more than ten years.............. 2,718,659 2,654,382
Mortgage-backed securities.............. 5,937,165 6,084,045
- ------------------------------------------------------------------
$13,344,949 $13,613,139
- ------------------------------------------------------------------
</TABLE>

During the years ended December 31, 1998, 1997 and 1996, fixed maturities
classified as held to maturity were sold with amortized cost of $230,036,
$229,848 and $277,527, respectively. Net gains and losses on these sales were
not significant. The sale of these fixed maturities was due to significant
deterioration in the issuers' credit worthiness.

Fixed maturities available for sale were sold during 1998 with proceeds of
$278,955 and gross realized gains and losses of $15,658 and $22,102,
respectively. Fixed maturities

F-10
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

2. INVESTMENTS (CONTINUED)
available for sale were sold during 1997 with proceeds of $457,585 and gross
realized gains and losses of $6,639 and $7,518, respectively. Fixed maturities
available for sale were sold during 1996 with proceeds of $238,905 and gross
realized gains and losses of $571 and $16,084, respectively.

At December 31, 1998, bonds carried at $14,302 were on deposit with various
states as required by law.

At December 31, 1998, investments in fixed maturities comprised 83 percent of
the Company's total invested assets. These securities are rated by Moody's and
Standard & Poor's (S&P), except for securities carried at approximately $3.6
billion which are rated by AEFC's internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at amortized
cost, by rating on December 31 is as follows:

<TABLE>
<CAPTION>
RATING 1998 1997
<S> <C> <C>
- ------------------------------------------------------------------
Aaa/AAA................................. $ 7,629,628 $ 9,195,619
Aaa/AA.................................. 2,277 --
Aa/AA................................... 308,053 232,451
Aa/A.................................... 301,325 246,792
A/A..................................... 2,525,283 2,787,936
A/BBB................................... 1,148,736 1,200,345
Baa/BBB................................. 6,237,014 5,226,616
Baa/BB.................................. 492,696 475,084
Below investment grade.................. 2,664,051 2,465,637
- ------------------------------------------------------------------
$21,309,063 $21,830,480
- ------------------------------------------------------------------
</TABLE>

At December 31, 1998, 93 percent of the securities rated Aaa/AAA are GNMA, FNMA
and FHLMC mortgage-backed securities. No holdings of any other issuer are
greater than one percent of the Company's total investments in fixed maturities.
At December 31, 1998, approximately 13 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
- --------------------------------------------------------------------------------------
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
REGION SHEET TO PURCHASE SHEET TO PURCHASE
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
East North Central............ $ 750,705 $ 16,393 $ 748,372 $ 32,462
West North Central............ 491,006 81,648 456,934 14,340
South Atlantic................ 839,233 21,020 922,172 14,619
Middle Atlantic............... 476,448 6,169 545,601 15,507
New England................... 263,761 2,824 316,250 2,136
Pacific....................... 195,851 16,946 184,917 3,204
West South Central............ 136,841 1,412 125,227 --
East South Central............ 46,029 -- 60,274 --
Mountain...................... 345,379 8,473 297,545 28,717
- --------------------------------------------------------------------------------------
3,545,253 154,885 3,657,292 110,985
Less allowance for losses..... 39,795 -- 38,645 --
- --------------------------------------------------------------------------------------
$3,505,458 $154,885 $3,618,647 $110,985
- --------------------------------------------------------------------------------------
</TABLE>

F-11
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

2. INVESTMENTS (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
PROPERTY TYPE SHEET TO PURCHASE SHEET TO PURCHASE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Department/retail stores...... $ 1,139,349 $ 59,305 $ 1,189,203 $ 27,314
Apartments.................... 960,808 9,272 1,089,127 16,576
Office buildings.............. 783,576 50,450 716,729 34,546
Industrial buildings.......... 298,549 13,263 295,889 21,200
Hotels/motels................. 109,185 14,122 101,052 --
Medical buildings............. 124,369 -- 99,979 9,748
Nursing/retirement homes...... 46,696 -- 72,359 --
Mixed Use..................... 65,151 -- 71,007 --
Other......................... 17,570 8,473 21,947 1,601
- -----------------------------------------------------------------------------------------
3,545,253 154,885 3,657,292 110,985
Less allowance for losses..... 39,795 -- 38,645 --
- -----------------------------------------------------------------------------------------
$ 3,505,458 $ 154,885 $ 3,618,647 $ 110,985
- -----------------------------------------------------------------------------------------
</TABLE>

Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.

At December 31, 1998 and 1997, the Company's recorded investment in impaired
loans was $24,941 and $45,714, respectively, with allowances of $6,662 and
$9,812, respectively. During 1998 and 1997, the average recorded investment in
impaired loans was $37,873 and $61,870, respectively.
The Company recognized $1,809, $2,981and $4,889 of interest income related to
impaired loans for the years ended December 31, 1998, 1997 and 1996
respectively.

The following table presents changes in the allowance for investment losses
related to all loans:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- --------------------------------------------------------------
Balance, January 1................. $38,645 $37,495 $37,340
Provision for investment losses.... 7,582 8,801 10,005
Loan payoffs....................... (800) (3,851) (4,700)
Foreclosures and writeoffs......... (5,632) (3,800) (5,150)
- --------------------------------------------------------------
Balance, December 31............... $39,795 $38,645 $37,495
- --------------------------------------------------------------
</TABLE>

At December 31, 1998, the Company had commitments to purchase investments other
than mortgage loans for $223,011. Commitments to purchase investments are
made in the ordinary course of business. The fair value of these commitments is
$nil.

Net investment income for the years ended December 31 is summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Interest on fixed maturities....... $1,676,984 $1,692,481 $1,666,929
Interest on mortgage loans......... 301,253 305,742 283,830
Other investment income............ 43,518 25,089 43,283
Interest on cash equivalents....... 5,486 5,914 5,754
- -----------------------------------------------------------------------
2,027,241 2,029,226 1,999,796
Less investment expenses........... 40,756 40,837 34,434
- -----------------------------------------------------------------------
$1,986,485 $1,988,389 $1,965,362
- -----------------------------------------------------------------------
</TABLE>

F-12
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

2. INVESTMENTS (CONTINUED)
Net realized gain (loss) on investments for the years ended December 31 is
summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- --------------------------------------------------------------
Fixed maturities................... $12,084 $16,115 $ 8,736
Mortgage loans..................... (5,933) (6,424) (8,745)
Other investments.................. 751 (8,831) (150)
- --------------------------------------------------------------
$ 6,902 $ 860 $ (159)
- --------------------------------------------------------------
</TABLE>

Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------
Fixed maturities available for sale..... $(93,474) $ 223,441 $(231,853)
Equity securities....................... (203) 53 (52)
- ------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
3. INCOME TAXES

The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the
Internal Revenue Code provisions applicable to life insurance companies.

The income tax expense (benefit) for the years ended December 31 consists of the
following:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------
Federal income taxes:
Current............................ $244,946 $176,879 $260,357
Deferred........................... (16,602) 19,982 (65,609)
- -----------------------------------------------------------------
228,344 196,861 194,748
State income taxes-current......... 7,337 9,803 12,390
- -----------------------------------------------------------------
Income tax expense................. $235,681 $206,664 $207,138
- -----------------------------------------------------------------
</TABLE>

Increases (decreases) to the federal tax provision applicable to pretax income
based on the statutory rate are attributable to:

<TABLE>
<CAPTION>
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------
PROVISION RATE PROVISION RATE PROVISION RATE
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Federal income taxes based
on the statutory rate....................................... $271,527 35.0% $238,319 35.0% $217,600 35.0%
(Decreases) increases are attributable to:
Tax-excluded interest and dividend income................... (12,289) (1.6) (10,294) (1.5) (9,636) (1.5)
State taxes, net of federal benefit......................... 4,769 .6 6,372 .9 8,053 1.3
Affordable housing credits.................................. (19,688) (2.5) (20,705) (3.0) (5,090) (.8)
Other, net.................................................. (8,638) (1.1) (7,028) (1.0) (3,789) (.7)
- --------------------------------------------------------------------------------------------------------------------------
Federal income taxes........................................ $235,681 30.4% $206,664 30.4% $207,138 33.3%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

A portion of life insurance company income earned prior to 1984 was not subject
to current taxation but was accumulated, for tax purposes, in a policyholders'
surplus account. At December 31, 1998, the Company had a policyholders' surplus
account balance of $20,114. The policyholders' surplus account is only

F-13
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- --------------------------------------------------------------------------------

3. INCOME TAXES (CONTINUED)
taxable if dividends to the stockholder exceed the stockholder's surplus account
or if the Company is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.

Significant components of the Company's deferred tax assets and liabilities as
of December 31 are as follows:

<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
- ---------------------------------------------------------------------------
Deferred tax assets:
Policy reserves........................................ $756,769 $748,204
Life insurance guaranty fund assessment reserve........ 15,289 20,101
Other.................................................. 4,253 9,589
- ---------------------------------------------------------------------------
Total deferred tax assets.............................. 776,311 777,894
- ---------------------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs...................... 698,471 700,032
Unrealized gain on investments......................... 91,315 121,885
Investments, other..................................... 3,455 17,559
- ---------------------------------------------------------------------------
Total deferred tax liabilities......................... 793,241 839,476
- ---------------------------------------------------------------------------
Net deferred tax liabilities........................... $ 16,930 $ 61,582
- ---------------------------------------------------------------------------
</TABLE>

The Company is required to establish a valuation allowance for any portion of
the deferred tax assets that management believes will not be realized. In the
opinion of management, it is more likely than not that the Company will realize
the benefit of the deferred tax assets and, therefore, no such valuation
allowance has been established.

- --------------------------------------------------------------------------------
4. STOCKHOLDER'S EQUITY

Retained earnings available for distribution as dividends to the parent are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by state insurance regulatory authorities. Statutory
unassigned surplus aggregated $1,598,203 as of December 31, 1998 and $1,468,677
as of December 31, 1997 (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in 1999 in
excess of approximately $353,933 would require approval of the Department of
Commerce of the State of Minnesota.

Statutory net income for the years ended December 31 and capital and surplus as
of December 31 are summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Statutory net income............... $ 429,903 $ 379,615 $ 365,585
Statutory capital and surplus...... 1,883,405 1,765,290 1,565,082
- -----------------------------------------------------------------------
</TABLE>

F-14
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS

The Company loans funds to AEFC under a collateral loan agreement. The balance
of the loan was $nil at December 31, 1998 and 1997. This loan can be increased
to a maximum of $75,000 and pays interest at a rate equal to the preceding
month's effective new money rate for the Company's permanent investments.
Interest income on related party loans totaled $nil, $103 and $780 in 1998, 1997
and 1996, respectively.

The Company participates in the American Express Company Retirement Plan which
covers all permanent employees age 21 and over who have met certain employment
requirements. Employer contributions to the plan are based on participants' age,
years of service and total compensation for the year. Funding of retirement
costs for this plan complies with the applicable minimum funding requirements
specified by ERISA. The Company's share of the total net periodic pension cost
was $211, $201 and $174 in 1998, 1997 and 1996, respectively.

The Company also participates in defined contribution pension plans of American
Express Company which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of either each
employee's eligible compensation or basic contributions. Costs of these plans
charged to operations in 1998, 1997 and 1996 were $1,503, $1,245 and $990,
respectively.

The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees and retired
financial advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees are considered
to have been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. The Company's share of postretirement benefits in
1998, 1997 and 1996 was $1,352, $1,330 and $1,449, respectively.

Charges by AEFC for use of joint facilities, technology support, marketing
services and other services aggregated $411,337, $414,155 and $397,362 for 1998,
1997 and 1996, respectively. Certain of these costs are included in deferred
policy acquisition costs.

- --------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENCIES

At December 31, 1998, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $81,074,928, $74,730,720 and
$67,274,354, respectively, of which $4,912,313, $4,351,904 and $3,875,921 were
reinsured at the respective year ends. The Company also reinsures a portion of
the risks assumed under disability income and long-term care policies. Under all
reinsurance agreements, premiums ceded to reinsurers amounted to $66,378,
$60,495 and $48,250 and reinsurance recovered from reinsurers amounted to
$20,982, $19,042, and $15,612 for the years ended December 31, 1998, 1997 and
1996, respectively. Reinsurance contracts do not relieve the Company from its
primary obligation to policyholders.

A number of lawsuits have been filed against life and health insurers in
jurisdictions in which the Company, its parent and its subsidiaries conduct
business involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. The Company has been named as a
defendant in three of these types of actions.

The plaintiffs purport to represent a class consisting of all persons who
purchased policies or contracts from the Company and its subsidiaries. The
complaints put at issue various alleged sales practices and misrepresentations,
alleged breaches of fiduciary duties and alleged violations of consumer fraud
statutes. The Company and its subsidiaries believe they have meritorious
defenses to the claims raised in these lawsuits.

The outcome of any litigation cannot be predicted with certainty. In the opinion
of

F-15
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
management, however, the ultimate resolution of these lawsuits, taken in the
aggregate, should not have a material adverse effect on the Company's
consolidated financial position.

The IRS routinely examines the Company's federal income tax returns, and is
currently auditing the Company's returns for the 1990 through 1992 tax years.
Management does not believe there will be a material adverse effect on the
Company's consolidated financial position as a result of this audit.

- --------------------------------------------------------------------------------
7. LINES OF CREDIT

The Company has available lines of credit with its parent aggregating $100,000.
The interest rate for any borrowings is established by reference to various
indices plus 20 to 45 basis points, depending on the term. Borrowings
outstanding under this agreement were $nil at December 31, 1998 and 1997.

- --------------------------------------------------------------------------------
8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into transactions involving derivative financial instruments
to manage its exposure to interest rate risk and equity market risk, including
hedging specific transactions. The Company does not hold derivative instruments
for trading purposes. The Company manages risks associated with these
instruments as described below.

Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate or equity market index.
The Company is not impacted by market risk related to derivatives held for
non-trading purposes beyond that inherent in cash market transactions.
Derivatives held for purposes other than trading are largely used to manage risk
and, therefore, the cash flow and income effects of the derivatives are inverse
to the effects of the underlying transactions.

Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. The Company monitors credit risk related to derivative
financial instruments through established approval procedures, including setting
concentration limits by counterparty, and requiring collateral, where
appropriate. A vast majority of the Company's counterparties are rated A or
better by Moody's and Standard & Poor's.

Credit risk related to interest rate caps and floors and index options is
measured by the replacement cost of the contracts. The replacement cost
represents the fair value of the instruments.

The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance sheet.
Notional amounts far exceed the related credit risk.

F-16
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------

8. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The Company's holdings of derivative financial instruments are as follows:

<TABLE>
<CAPTION>
TOTAL
DECEMBER 31, 1998 NOTIONAL CARRYING FAIR CREDIT
ASSETS: AMOUNT AMOUNT VALUE EXPOSURE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Assets:
Interest rate caps............ $ 3,400,000 $ 15,985 $ 4,256 $ 4,256
Interest rate floors.......... 1,000,000 1,082 13,971 13,971
Options purchased............. 110,912 24,094 29,453 29,453
Liabilities:
Options purchased/written..... 265,454 (10,526) (11,062) --
Off balance sheet:
Interest rate swaps........... 1,667,000 -- (73,477) --
- -------------------------------------------------------------------------------
$ 30,635 $ (36,859) $47,680
- -------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997 NOTIONAL CARRYING FAIR TOTAL CREDIT
ASSETS: AMOUNT AMOUNT VALUE EXPOSURE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
Assets:
Interest rate caps............ $4,600,000 $24,963 $ 15,665 $15,665
Interest rate floors.......... 1,000,000 1,561 4,551 4,551
Options purchased/written..... 279,737 9,808 10,449 10,449
Liabilities:
Options written............... 7,373 (89) 114 --
Off balance sheet:
Interest rate swaps........... 1,267,000 -- (45,799) --
- ---------------------------------------------------------------------------------
$36,243 $ (15,020) $30,655
- ---------------------------------------------------------------------------------
</TABLE>

The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The interest rate caps, floors and swaps expire
on various dates from 1999 to 2003. The put and call options expire on various
dates from 1999 to 2005.

Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect the margin
between interest rates earned on investments and the interest rates credited to
related annuity contract holders.

The Company is also using interest rate swaps to manage interest rate risk
related to the level of fee income earned on the management of fixed income
securities in separate accounts and the underlying mutual funds. The amount of
fee income received is based upon the daily market value of the separate account
and mutual fund assets. As a result, changing interest rate conditions could
impact the Company's fee income significantly. The Company entered into interest
rate swaps to hedge anticipated fee income for 1999 related to separate accounts
and mutual funds which invest in fixed income securities. Interest will be
accrued and reported in accrued investment income and other liabilities, as
appropriate, and management and other fees.

The Company offers a certain annuity product that pays interest based upon the
relative change in a major stock market index between the beginning and end of
the product's term. As a means of hedging its obligation under the provisions of
this product, the Company purchases and writes options on the major stock market
index.

Index options are used to manage the equity market risk related to the fee
income that the Company receives from its separate accounts and the underlying
mutual funds. The amount of the fee income received is based upon the daily
market value of the separate account and mutual fund assets. As a result, the
Company's fee income could be impacted significantly by changing economic
conditions in the equity market. The Company entered into index option

F-17
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ THOUSANDS) (CONTINUED)
- -----------------------------------------------------------------

8. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
collars (combination of puts and calls) to hedge anticipated fee income for 1998
and 1999 related to separate accounts and mutual funds which invest in equity
securities. Testing has demonstrated the impact of these instruments on the
income statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation no longer
exists, or in the event the Company disposes of the index options collars, the
instruments will be marked-to-market through the income statement. At December
31, 1998 deferred losses on purchased put and written call index options were
$2,933 and $7,435, respectively. At December 31, 1997 deferred losses on
purchased put index options were $2,428 and deferred gains on written call index
options were $5,275.

- --------------------------------------------------------------------------------
9. FAIR VALUES OF FINANCIAL INSTRUMENTS

The Company discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. Fair
values of life insurance obligations and all non-financial instruments, such as
deferred acquisition costs are excluded.

Off-balance sheet intangible assets, such as the value of the field force, are
also excluded. Management believes the value of excluded assets and liabilities
is significant. The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.

<TABLE>
<CAPTION>
1998 1997
- ----------------------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
FINANCIAL ASSETS
Investments:
Fixed maturities (Note 2):
Held to maturity.............. $ 7,964,114 $ 8,420,035 $ 9,315,450 $ 9,743,410
Available for sale............ 13,613,139 13,613,139 12,876,694 12,876,694
Mortgage loans on real estate
(Note 2)...................... 3,505,458 3,745,617 3,618,647 3,808,570
Other:
Equity securities (Note 2).... 3,158 3,158 3,361 3,361
Derivative financial
instruments (Note 8).......... 41,161 47,680 36,332 30,665
Other......................... 28,872 28,872 82,347 85,383
Cash and cash equivalents
(Note 1)...................... 22,453 22,453 19,686 19,686
Separate account assets
(Note 1)...................... 27,349,401 27,349,401 23,214,504 23,214,504

FINANCIAL LIABILITIES
Future policy benefits for
fixed annuities............... $19,855,203 $19,144,838 $20,731,052 $19,882,302
Derivative financial
instruments (Note 8).......... 10,526 84,539 89 45,685
Separate account
liabilities................... 25,005,732 24,179,115 21,488,282 20,707,620
- ----------------------------------------------------------------------------------
</TABLE>

At December 31, 1998 and 1997, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,226,985 and $1,185,155, respectively, and policy loans of $90,115
and $93,540, respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1998 and 1997. The fair value of
deferred annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in non-life
contingent payout status is estimated as the present value of projected benefit
payments at rates appropriate for contracts issued in 1998 and 1997.

At December 31, 1998 and 1997, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less any applicable surrender
charges and less variable insurance contracts carried at $2,343,669 and
$1,726,222, respectively.

F-18
<PAGE>
IDS LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF AMERICAN EXPRESS FINANCIAL CORPORATION)

- -----------------------------------------------------------------

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
IDS Life Insurance Company

We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

Ernst & Young LLP
Minneapolis, Minnesota
February 4, 1999

F-19

<PAGE>

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>

CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 20 TO
REGISTRATION STATEMENT NO. 33-11165

This Post-Effective Amendment No. 20 comprises the following papers and
documents:

The facing sheet.

The prospectus consisting of 79 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, Persona
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.

(c) Schedules of Sales Commissions incorporated
by reference to Registrant's original
Registration Statement for the Variable
Account on Form N-8B-2 (File No. 811-4298;
May 10, 1985).

(4) Not applicable.

(5) Flexible Premium Variable Life Insurance Policy filed
with the Original Registration Statement (File No.
33-11165) on December 31, 1986 and incorporated
herein by reference.

<PAGE>

(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.

C. Not applicable.

2. Opinion of counsel is filed electronically herewith.

3. Not applicable.

4. Not applicable.

5. Not applicable.

6. Actuarial opinion of James M. Jensen, F.S.A., M.A.A.A., Vice President
- Insurance Product Development is filed electronically herewith.

7. (a) Written actuarial consent of James M. Jensen, F.S.A.,
M.A.A.A., Vice President - Insurance Product Development is
filed electronically herewith.

(b) Written auditor consent of Ernst & Young LLP is filed
electronically herewith.

(c) Power of Attorney to sign amendments to this Registration
Statement dated March 12, 1997, filed as Exhibit 7(d) to
Post-Effective Amendment No. 15, File No.
33-11165 is incorporated herein by reference.

(d) Power of Attorney to sign amendments to this Registration
Statement date April 8, 1998, is filed electronically as
Exhibit 7(d) to Post-Effective Amendment No. 15; 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,
certifies that it meets requirements for the effectiveness of this Amendment to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its 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 27th day
of April, 1999.

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 27th day of April, 1999.

Signature Title

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

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

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

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

/s/ Paula S. Meyer* Director and Executive Vice President,
Paula S. Meyer Assured Assets

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

<PAGE>

Signature Title

/s/ Stuart A. Sedlacek* Chief Financial Officer and
Stuart A. Sedlacek President

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

/s/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton

*Signed pursuant to Power of Attorney dated March 12, 1997 filed as Exhibit No.
7(d) to Post-Effective Amendment No. 15, File No. 33-11165 is incorporated
herein by reference.

**Signed pursuant to Power of Attorney dated April 8, 1998, filed electronically
as an Exhibit to Post-Effective Amendment No. 17, File No. 33-11165.

By:

/s/ Mary Ellyn Minenko
Mary Ellyn Minenko

EXHIBIT INDEX

Exhibit 2: Opinion of counsel
Exhibit 6: Actuarial Opinion of Mark Gorham, F.S.A., M.A.A.A.
Exhibit 7a: Actuarial Consent of Mark Gorham, F.S.A., M.A.A.A.
Exhibit 7b: Auditor consent of Ernst & Young LLP

April 27, 1999

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

RE: IDS Life Variable Life Separate Account, Form S-6
Post-Effective Amendment No. 20
File No. 33-11165/811-4298

Ladies and Gentlemen:

I am familiar with the establishment of the IDS Life Variable Life Separate
Account ("Account"), which is a separate account of IDS Life Insurance Company
("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.

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

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

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

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

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

Sincerely

/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Group Counsel

April 26, 1999

IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440

Gentlemen:

This opinion is furnished in connection with the Post-Effective Amendment No. 20
(Amendment) by IDS Life Insurance Company for the filing of the Flexible Premium
Variable Life Insurance Policy ("the Policy") under the Securities Act of 1933.
The prospectus included on Form S-6 in the Amendment describes the Policy. I am
familiar with the Policy, the Amendment and the exhibits thereto. In my opinion,
the illustrations of Death Benefits, Policy Values, and Surrender Values
included in the section of the prospectus entitled "Illustrations", under the
assumptions stated in that section, are consistent with the provisions of the
Policy.

I hereby consent to the use of this opinion as an exhibit to the registration
statement and to the reference to my name under the heading "Experts" in this
prospectus.

Very Truly Yours,

/s/ James M. Jensen
James M. Jensen, F.S.A., M.A.A.A.
Vice President - Insurance Product Development

CONSENT OF ACTUARY

The Board of Directors
IDS Life Insurance Company

I consent to the reference to me under the caption "Experts" and to the use of
my opinion dated April 26, 1999 on the Illustrations used by IDS Life Insurance
Company in the Prospectus for the Flexible Premium Variable Life Insurance
Policy offered by IDS Life Insurance Company as part of the Post-Effective
Amendment No. 20 being filed under the Securities Act of 1933.

/s/ James M. Jensen
James M. Jensen, F.S.A., M.A.A.A.
Vice President - Insurance Product Development

Minneapolis, Minnesota
April 26, 1999

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 4, 1999 on the consolidated financial
statements and schedules of IDS Life Insurance Company and our report dated
March 12, 1999 on the financial statements of IDS Life Variable Life Separate
Account - Flexible Premium Variable Life Subaccounts in Post-Effective Amendment
No. 20 to the Registration Statement (Form S-6, No. 33-11165) and related
Prospectus for the registration of the Flexible Premium Variable Life Insurance
Policies to be offered by IDS Life Insurance Company.

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