Registration No. 333-00101
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 7 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Depositor)
The Principal Financial Group
Des Moines, Iowa 50392-0100
(Address of Depositor's Principal Executive Offices)
Traci L. Weldon
Principal Life Insurance Company
The Principal Financial Group
Des Moines, Iowa 50392-0300
(Name and address of agent for service)
Telephone Number, Including Area Code: (515) 247-5111
Please send copies of all communications to
J. Sumner Jones
Jones & Blouch
Suite 405 West
1025 Thomas Jefferson Street, NW
Washington, DC 20007-0805
It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
__X__ on May 1, 1999 pursuant to paragraph (a)(1) of Rule 485
_____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title and Amount of Securities: PrinFlex Life Insurance Policy.
<PAGE>
PRINCIPAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
Registration Statement on Form S-6
Cross Reference Sheet
Items of
Form N-8B-2 Captions in Prospectus
1.............. Cover Page
2.............. The Company
3.............. Not Applicable
4.............. Distribution of the Policy
5.............. Principal Life Insurance Company Variable Life
Separate Account
6(a)........... Not Applicable
6(b)........... Not Applicable
7.............. Not Required
8.............. Not Required
9.............. Legal Proceedings
10(a).......... Ownership, Beneficiaries, Assignment
10(b).......... Policy Values; Participating Policy
10(c), 10(d)... Summary (Transfers; Policy Loans;
Surrenders, Charges and Deductions; Maturity Proceeds;
Death Benefits and Proceeds, Termination and
Reinstatement; Ten Day Examination Offer); Ten Day
Examination Offer; Investment Account Transfers; Policy
Loans; Death Benefits and Rights; Charges and
Deductions (Transaction Fees, Surrender Charge)
Policy Termination and Reinstatement
10(e).......... Summary (Termination and Reinstatement); Policy
Termination and Reinstatement; Registration Statement
10(f).......... Other Matters (Voting Rights)
10(g)(1),
10(g)(2),
10(h)(1),
10(h)(2)....... Principal Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments; The
Contract)
10(g)(3),
10(g)(4),
10(h)(3),
10(h)(4)....... Not Applicable
10(i).......... Principal Life Insurance Company Variable Life
Separate Account, The Policy;
Death Benefits and Rights;
General Provisions (Addition, Deletion or Substitution
of Investments; Optional Insurance Benefits; Benefit
Payment Options); Federal Tax Matters
11............. Principal Life Insurance Company Variable Life
Separate Account; General
Provisions (Addition, Deletion or Substitution of
Investments)
12(a).......... Cover page
12(b).......... Principal Life Insurance Company Variable Life
Separate Account
12(c).......... Not Applicable
12(d).......... Distribution of the Policy
12(e).......... Not Applicable
13(a).......... Summary (Charges and Deductions); Principal Life
Insurance Company Variable Life Separate Account;
Charges and Deductions; Distribution of the Policy
13(b), 13(c),
13(d), 13(e),
13(f), 13(g)... Not Applicable
14............. Distribution of the Policy
15............. Summary (Premiums); The Policy (To Buy a Policy)
16............. Summary (The Policy); Principal Life Insurance
Company Variable Life Separate Account; The Policy
(Allocation of Premiums; Policy Values, Investment
Account Transfers, Fixed Account Transfers, Automatic
Portfolio Rebalancing, Policy Loans, Loan Account,
Surrenders); General Provisions (Addition, Deletion or
Substitution of Investments)
17(a), 17(b),
17(c).......... Captions referenced under Items 10(c), 10(d), 10(e),
and 10(i) above
18(a).......... Summary (Policy Value); The Policy
18(b).......... Not Applicable
18(c).......... Values and Policy Features While the Policy is in Force
18(d).......... Not Applicable
19............. Other Matters (Voting Rights; Statement of Values)
20(a), 20(b)... Principal Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments); Other Matters
(Voting Rights)
20(c), 20(d),
20(e), 20(f)... Not Applicable
21(a), 21(b)... Summary (Policy Loans); The Policy
(Policy Loans)
21(c).......... Not Applicable
22............. General Provisions (The Contract; Incontestability)
23............. Not Applicable
24............. Charges and Deductions (Special Provisions for Group or
Sponsored Arrangements)
25............. The Company
26............. Not Applicable
27............. The Company
28............. Officers and Directors of Principal Life
Insurance Company
29............. The Company
30............. Not Applicable
31............. Not Applicable
32............. Not Applicable
33............. Not Applicable
<PAGE>
PrinFlex Life(R)
Flexible Premium Variable Universal Life Insurance Policy
PrinFlex Life, a flexible premium variable universal life insurance policy (the
"Policy") offered by this Prospectus, is issued by Principal Life Insurance
Company (the "Company"). It is designed to provide lifetime insurance protection
and maximum flexibility with premium payments and death benefits. As a policy
owner, you may, within limits, vary the frequency and amount of premium payments
and increase or decrease the face amount of the life insurance benefit under the
Policy. This flexibility allows you to provide for changing life insurance needs
within a single policy.
The Policy provides:
o a death benefit upon the insured's death;
o policy loans; and
o a net surrender value which may be accessed by a partial or total surrender
of the Policy.
Policy values are accumulated on a fixed basis or vary with the investment
performance of the division of the Principal Life Insurance Company Variable
Life Separate Account (Separate Account) to which you have allocated policy
values. Each division invests in an investment portfolio of an open-end,
management investment company (mutual fund). The mutual fund prospectuses that
are attached to the Policy prospectus describe the investment objective,
policies and risks of the investment choices. You may choose from:
Principal Variable Contracts Fund, Inc.:
Aggressive Growth Account
Asset Allocation Account
Balanced Account
Bond Account
Capital Value Account
Government Securities Account
Growth Account
International Account
International SmallCap Account
MicroCap Account
MidCap Account
MidCap Growth Account
Money Market Account
Real Estate Account
SmallCap Account
SmallCap Growth Account
SmallCap Value Account
Stock Index 500 Account
Utilities Account
Fidelity Variable Insurance Products Fund II:
Contrafund Portfolio
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio
Fidelity Variable Insurance Products Fund:
High Income Portfolio
Putnam Variable Trust Global Asset:
Allocation Fund
Putnam Variable Trust Vista Fund
Putnam Variable Trust Voyager Fund
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, existing insurance
coverage.
This Policy is not a deposit or obligation of, nor is it guaranteed or endorsed
by any bank, credit union, broker-dealer or other financial institution. It is
not federally insured by the Federal Reserve Board, the FDIC or any other
agency. The contract involves investment risk, including possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus should be read carefully and retained for future reference. A
current prospectus for each of the mutual funds must accompany this prospectus
and should be read in conjunction with this prospectus.
The date of this prospectus is __________________.
TABLE OF CONTENTS
GLOSSARY ............................................................ 4
SUMMARY .............................................................. 6
The Policy....................................................... 6
Premiums......................................................... 7
Policy Value..................................................... 7
Investment Account............................................... 7
Fixed Account.................................................... 7
Transfers........................................................ 7
Policy Loans..................................................... 8
Loan Account..................................................... 8
Surrenders....................................................... 8
Charges and Deductions .......................................... 8
Death Benefits and Proceeds...................................... 10
Maturity Proceeds................................................ 10
Adjustment Options............................................... 10
Termination and Reinstatement.................................... 10
Ten Day Examination Offer........................................ 10
THE COMPANY .......................................................... 11
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT....... 11
THE FUNDS............................................................. 12
THE POLICY............................................................ 17
To Buy a Policy.................................................. 17
Payment of Premiums.............................................. 18
Premium Limitations.............................................. 18
Allocation of Premiums........................................... 19
Ten Day Examination Offer........................................ 19
Policy Values.................................................... 20
Investment Account Transfers..................................... 21
Fixed Account Transfers.......................................... 22
Automatic Portfolio Balancing.................................... 23
Policy Loans..................................................... 23
Loan Account..................................................... 24
Surrenders....................................................... 25
DEATH BENEFITS AND RIGHTS............................................. 26
Death Proceeds................................................... 26
Death Benefit Option............................................. 26
Change in Death Benefit Option................................... 28
Adjustment Options............................................... 28
CHARGES AND DEDUCTIONS................................................ 29
Premium Expense Charge........................................... 29
Monthly Policy Charge............................................ 30
Cost of Insurance Charge......................................... 30
Administration Charge............................................ 31
Mortality and Expense Risks Charge............................... 31
Transaction Fees................................................. 31
Surrender Charge................................................. 32
Sales Charge Limitations......................................... 33
Other Charges.................................................... 34
Special Provisions for Group or Sponsored Arrangements........... 34
THE FIXED ACCOUNT..................................................... 35
POLICY TERMINATION AND REINSTATEMENT.................................. 36
Policy Termination............................................... 36
Reinstatement.................................................... 37
OTHER MATTERS......................................................... 38
Voting Rights.................................................... 38
Statement of Values.............................................. 38
Services Available by Telephone.................................. 39
GENERAL PROVISIONS.................................................... 40
The Contract..................................................... 40
Optional Insurance Benefits...................................... 40
Misstatement of Age or Gender.................................... 41
Assignment....................................................... 41
Ownership........................................................ 41
Beneficiary...................................................... 42
Benefit Instructions............................................. 42
Benefit Payment Options.......................................... 42
Right to Exchange Policy......................................... 43
Participating Policy............................................. 44
Incontestability................................................. 44
Suicide.......................................................... 44
Delay of Payments................................................ 44
Addition, Deletion or Substitution of Investments................ 45
DISTRIBUTION OF THE POLICY............................................ 45
OFFICERS AND DIRECTORS OF PRINCIPAL MANAGEMENT CORPORATION............ 46
OFFICERS AND DIRECTORS OF PRINCIPAL LIFE INSURANCE COMPANY............ 46
Executive Officers (Other Than Directors)........................ 46
Directors........................................................ 46
STATE REGULATION...................................................... 48
FEDERAL TAX MATTERS................................................... 48
Tax Status of the Company and the Separate Account............... 48
Charges for Taxes................................................ 48
Diversification Standards........................................ 48
IRS Definition of Life Insurance................................. 49
Modified Endowment Contract Status............................... 49
Policy Surrenders and Partial Surrenders......................... 49
Policy Loans and Loan Interest................................... 50
Corporate Alternative Minimum Tax................................ 50
Exchange or Assignment of Policies............................... 50
Withholding...................................................... 50
Taxation of Accelerated Death Benefits........................... 50
Other Tax Issues................................................. 50
EMPLOYEE BENEFIT PLANS................................................ 51
LEGAL OPINIONS........................................................ 51
LEGAL PROCEEDINGS..................................................... 51
REGISTRATION STATEMENT................................................ 51
OTHER VARIABLE INSURANCE CONTRACTS.................................... 51
RESERVATION OF RIGHTS................................................. 51
YEAR 2000 READINESS DISCLOSURE........................................ 52
INDEPENDENT AUDITORS.................................................. 53
FINANCIAL STATEMENTS.................................................. 53
CUSTOMER INQUIRIES.................................................... 53
The Policy offered by this prospectus may not be available in all states. This
prospectus is not an offer to sell, or solicitation of an offer to buy, the
Policy in states in which the offer or solicitation may not be lawfully made. No
person is authorized to give any information or to make any representation in
connection with this Policy other than those contained in this prospectus.
GLOSSARY
adjustment date - the monthly date on or next following the Company's approval
of a requested adjustment.
attained age - the insured's age on the birthday on or preceding the last policy
anniversary.
business day - any date that the New York Stock Exchange is open for trading and
trading is not restricted.
division - a part of the Separate Account which invests in shares of a mutual
fund.
effective date - the date on which all requirements for issuance of a Policy
have been satisfied.
Fixed Account - that part of the policy value that reflects value in the General
Account of the Company.
General Account - assets of the Company other than those allocated to any of our
Separate Accounts.
insured - the person named as the "insured" on the application for the Policy.
The insured may or may not be the owner.
Investment Account - that part of the policy value that reflects your investment
in one of the divisions of the Separate Account.
Loan Account - that part of the policy value that reflects the value transferred
from the Investment Account(s) and/or Fixed Account as collateral for a policy
loan.
maturity date - the policy anniversary following the insured's 95th birthday.
monthly date - the day of the month which is the same day as the policy date.
Example: If the policy date is June 5, 1999, the first monthly date is
July 5, 1999.
monthly policy charge - the amount subtracted from the policy value on each
monthly date equal to the sum of the cost of insurance and of additional
benefits provided by any rider plus the monthly administration charge and
mortality and expense risks charge in effect on the monthly date.
mutual fund - a registered open-end investment company, or a separate investment
account or portfolio thereof, in which a division of the Separate Account
invests.
net premium - the gross premium less the deductions for the premium expense
charge. It is the amount of premium allocated to the Investment Accounts and/or
Fixed Account.
net surrender value - policy value minus any surrender charge minus any policy
loans and unpaid loan interest.
notice - any form of communication received in our home office which provides
the information we need which may be in writing or another manner which we
approve in advance.
owner - the person, including joint owner, who owns all the rights and
privileges of this contract.
policy date - the date from which monthly dates, policy years and policy
anniversaries are determined.
policy value - an amount equal to the Fixed Account value plus the Investment
Account value(s) plus the Loan Account value.
policy year - the one-year period beginning on the policy date and ending one
day before the policy anniversary and any subsequent one year period beginning
on a policy anniversary.
Example: If the policy date is June 5, 1999, the first policy year ends
on June 4, 2000. The first policy anniversary falls on June 5, 2000.
premium expense charge - the charge deducted from premium payments to cover a
sales charge, state and local premium taxes and federal taxes.
prorated basis - in the proportion that the value of a particular Investment
Account or the Fixed Account bears to the total value of all Investment Accounts
and the Fixed Account.
related policies - policies which have a common effective date pursuant to a
written request from the applicant(s).
surrender value - policy value minus any surrender charge.
target premium - a premium amount which is used to determine the maximum sales
charge that is included as part of the premium expense charge and any applicable
contingent deferred sales charge under a Policy. Target premiums are provided in
Appendix B.
unit - the accounting measure used to calculate the value of the Separate
Account divisions.
valuation date - the date as of which the net asset value of a mutual fund is
determined.
valuation period - the period of time between determination of net asset value
on one valuation date and the next valuation date.
written request - actual delivery to the Company at our home office of a written
notice or request, signed and dated, on a form we supply or approve.
Your notices may be mailed to us at:
Principal Life Insurance Company
P O Box____________
Des Moines, Iowa ___________
<PAGE>
SUMMARY
This prospectus describes a flexible variable universal life policy offered by
the Company. This is a brief summary of the Policy's features. More detailed
information follows later in this prospectus.
The Policy
The Policy is designed to provide you with:
o lifetime protection, and
o flexibility in:
o the amount and frequency of premium payments (subject to
certain limitations), and
o the amount of life insurance proceeds payable under the Policy.
You may allocate your net premium payments to divisions of the Separate Account
and/or the Fixed Account. Currently there are twenty-five divisions available to
you. Not all divisions are available in all states. A current list of divisions
available in your state may be obtained from a sales representative or our home
office.
Each division invests in shares of an underlying mutual fund. More detailed
information about the underlying mutual funds may be found in the current
prospectus for each underlying mutual fund.
The underlying mutual funds are NOT available to the general public directly.
The underlying mutual funds are available only as investment options in variable
life insurance policies or variable annuity contracts issued by life insurance
companies. Some of the underlying mutual funds have been established by
investment advisers that manage publicly traded mutual funds having similar
names and investment objectives. While some of the underlying mutual funds may
be similar to, and may in fact be modeled after publicly traded mutual funds,
you should understand that the underlying mutual funds are not otherwise
directly related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and of any underlying
mutual fund may differ substantially.
Division: the division invests in:
Principal Variable Contracts Fund, Inc
Aggressive Growth Aggressive Growth Account
Asset Allocation Asset Allocation Account
Balanced Balanced Account
Bond Bond Account
Capital Value Capital Value Account
Government Securities Government Securities Account
Growth Growth Account
International International Account
International SmallCap International SmallCap Account
MicroCap MicroCap Account
MidCap MidCap Account
MidCap Growth MidCap Growth Account
Money Market Money Market Account
Real Estate Real Estate Account
SmallCap SmallCap Account
SmallCap Growth SmallCap Growth Account
SmallCap Value SmallCap Value Account
Stock Index 500 Stock Index 500 Account
Utilities Utilities Account
Fidelity Contrafund Fidelity VIP II Contrafund Portfolio
Fidelity Equity-Income Fidelity VIP Equity-Income Portfolio
Fidelity High Income Fidelity VIP High Income Portfolio
Putnam Global Asset Allocation Putnam VT Global Asset Allocation Fund
Putnam Vista Putnam VT Vista Fund
Putnam Voyager Putnam VT Voyager Fund
Premiums
The Company guarantees that the Policy will stay in force if you have paid
enough premium to meet the grace period provision (see THE POLICY - Payment of
Premiums). Your initial premium payment must be at least as much as the minimum
monthly premium shown on your illustration for the Policy. Minimum monthly
premium payments must be made for the first 24 policy months (except where
prohibited by state law). Increases in the face amount of the Policy cause
increases in the minimum monthly premium.
Your net premiums are allocated to divisions of the Separate Account and/or the
Fixed Account. Your initial net premium is allocated to the Money Market
division at the end of the valuation date we receive the premium. Twenty-one
days after the effective date of the Policy, the money is reallocated using your
allocation instructions (see THE POLICY - Allocation of Premiums).
Policy Value
Your Policy value is:
o the value(s) of your Investment Account(s)
o plus the value of your Fixed Account
o plus the value of your Loan Account.
Investment Account
An Investment Account is set up for each division to which you make an
allocation. The value of an Investment Account reflects the investment
experience of the division.
Fixed Account
The Company guarantees that net premiums allocated to the Fixed Account earn
interest at a guaranteed rate. In no event will the guaranteed interest rate be
less than 3% compounded annually.
Transfers
You may transfer amounts between the Investment Accounts and/or the Fixed
Account subject to certain limitations. Transfers in and out of the Fixed
Account are subject to specific limitations described in THE POLICY - Fixed
Account Transfers.
We reserve the right to charge a transfer fee on each unscheduled transfer after
the 12th such transfer in a policy year. The fee will not be more than $25 per
unscheduled transfer.
Policy Loans
You may borrow against your policy value any time the Policy has a net surrender
value. The minimum amount of a loan is $500.
Loan Account
When you take a policy loan, we establish a Loan Account. An amount equal to the
amount of the policy loan is transferred to the Loan Account from your
Investment Accounts and/or Fixed Account. Interest is paid on the amount in the
Loan Account.
Surrenders (total and partial)
Total Surrender
o You may surrender your Policy and receive the net surrender value.
o We calculate the net surrender value as of the date we receive your written
request.
o A surrender charge is imposed on total surrenders within ten years of the
policy date (another date may apply if the Policy has been reinstated or
the face amount increased).
Partial Surrender
o After the second policy year, you may request a partial surrender of the
net surrender value.
o The minimum amount of partial surrender is $500.
o The total of your partial surrenders during a policy year may not be
greater than 75% of the net surrender value (as of the date of the request
for the first partial surrender in that policy year).
o Surrenders are taken from premiums paid into the Policy on a last-in,
first-out basis.
o Partial surrenders are limited to no more than two in each policy year.
Charges and Deductions
Deductions from Premiums
o Sales load of 2.75% of premiums less than or equal to target premiums
(0.75% of premiums in excess of target premiums) made:
o during each of the first ten years, and
o with respect to premiums made because of a face amount increase,
during the first ten years after the increase.
o 2.20% for state and local taxes.
o 1.25% for federal taxes.
Surrender Charges
A surrender charge is imposed on Policy termination or total surrender during
the first ten policy years (and ten years after an increase in the face amount).
The charge is:
o deferred administrative charge of $3 per $1,000 of face amount (but no more
than $1,500 per Policy), plus
o deferred sales charge of 47.25% times premiums paid (up to a maximum of two
target premiums) (see CHARGES AND DEDUCTIONS - Surrender Charge),
multiplied by
o the applicable surrender charge percentage shown below:
Surrender Charge Percentage Table
Number of years since policy The following percentage of
date and/or the adjustment date surrender charge is payable
1 through 5 100.00%
6 95.24
7 85.71
8 71.43
9 52.38
10 28.57
11 and later 00.00
Monthly Policy Charges
o Administration charge:
o During first policy year: 1/12 x ($.40 for each $1,000 of face amount)
but not less than $6.00/month and not more than $16.67/month; or
o During every policy year after the first, the monthly administration
charge is $6.00.
o Cost of insurance charge.
o Mortality and expense risks charge of 0.90% of your Investment Accounts per
year. (After the 9th policy year, the mortality and expense risks charge
will not be more than 0.27% per year.)
o Supplemental benefit rider(s) charge(s).
Other Charges
o Transaction charge of the lesser of $25 or 2% of the amount surrendered for
each partial surrender.
o Investment management fees and other operating expenses for the fund
underlying the Investment Accounts.
Death Benefits and Proceeds
The death proceeds are paid to the beneficiary(ies) when the insured dies. Death
proceeds are calculated as of the insured's date of death. The amount of the
death proceeds are:
o the death benefit plus interest (as explained in DEATH BENEFITS AND RIGHTS
- Death Proceeds)
o plus proceeds from any benefit riders
o minus policy loans and unpaid loan interest
o minus any overdue monthly policy charges.
The Policy provides for two death benefit options - a level amount and a
variable amount. You choose an option on your application. Subject to certain
conditions, you may change your option after the Policy has been issued.
Death proceeds are paid in cash or applied under a benefit payment option. We
pay interest on the death proceeds from the date of death of the insured until
the date of payment or application under a benefit payment option.
Maturity Proceeds
If the insured is living on the maturity date, we will pay you (the owner) an
amount equal to the death proceeds as described above. The Policy then
terminates. Maturity proceeds are paid in cash lump sum or applied under a
benefit payment option.
Adjustment Options
You may send us a written request to increase or decrease the face amount of the
Policy. No request is approved if the Policy is in a grace period or if monthly
policy charges are being waived under a rider.
The minimum amount of a face amount increase is $50,000 and is subject to our
underwriting guidelines in effect at the time you request the increase.
You may only request a decrease in face amount:
o after the second policy anniversary, and
o if the request does not decrease the face amount below $50,000.
Termination and Reinstatement
The Policy terminates when:
o you make a total policy surrender;
o death proceeds are paid;
o maturity proceeds are paid; or
o you do not make additional premium payments (after the expiration of a
61-day grace period).
Subject to certain conditions, you may reinstate a Policy that terminated
because of failure to pay minimum monthly premiums or insufficient values.
Ten Day Examination Offer (Free-look Provision)
o You may return the Policy during the free-look period that is generally 10
days but may be longer in certain states.
o We return either all premiums paid or the policy value, whichever is
required by applicable state law.
THE COMPANY
The Company is a stock life insurance company with its home office at: Principal
Financial Group, Des Moines, Iowa 50306. It is authorized to transact life and
annuity business in all of the United States and the District of Columbia. The
Company is a wholly owned subsidiary of a mutual insurance holding company named
"Principal Mutual Holding Company."
In 1879, the Company was incorporated under Iowa law as a mutual life insurance
company named Bankers Life Association. It changed its name to Bankers Life
Company in 1911 and then to Principal Mutual Life Insurance Company in 1986. The
name change to Principal Life Insurance Company and reorganization into a mutual
holding company structure took place in 1998.
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account was established under Iowa law on November 2, 1987. It was
then registered as a unit investment trust with the Securities and Exchange
Commission ("SEC"). This registration does not involve SEC supervision of the
investments or investment policies of the Separate Account.
The income, gains, and losses, whether or not realized, of the Separate Account
are credited to or charged against the Separate Account without regard to other
income, gains, or losses of the Company. Obligations arising from the Policy,
including the promise to make benefit option payments, are our general corporate
obligations. However, the Policy provides that the portion of the Separate
Account's assets equal to the reserves and other liabilities under the Policy
are not charged with any liabilities arising out of any other business of the
Company.
There currently are twenty-five divisions in the Separate Account available to
you. The assets of each division invest in a corresponding account of a mutual
fund. New accounts may be added and made available. Accounts may also be
eliminated from the Separate Account.
THE FUNDS
The funds are mutual funds registered under the Investment Company Act of 1940
as open-end diversified management investment companies. The funds provide the
investment vehicle for the Separate Account. A full description of the funds,
their investment objectives, policies and restrictions, charges and expenses and
other operational information is contained in the attached prospectuses (which
should be read carefully before investing). Additional copies of these documents
are available from a sales representative or our home office.
The following is a brief summary of the investment objectives of each division:
<TABLE>
<CAPTION>
Division Division Invests In Investment Advisor Investment Objective
<S> <C> <C> <C>
Aggressive Growth Aggressive Growth Account Morgan Stanley through a sub- to provide long-term capital
advisory agreement. appreciation by investing primarily
in growth-oriented common stocks of
medium and large capitalization U.S.
corporations and, to a limited
extent, foreign corporations.
Asset Allocation Asset Allocation Account Morgan Stanley through a sub- to generate a total investment return
advisory agreement. consistent with the preservation of
capital. The Account intends to
pursue a flexible investment policy
in seeking to achieve this investment
objective.
Balanced Balanced Account Invista Capital Management, LLC to generate a total return consisting
through a sub-advisory agreement of current income and capital
appreciation while assuming
reasonable risks in furtherance of
this objective.
Bond Bond Account Principal Management Corportation to provide as high a level of income
as is consistent with preservation of
capital and prudent investment risk.
Capital Value Capital Value Account Invista Capital Management, LLC to provide long-term capital
through a sub-advisory agreement appreciation and secondarily is
growth of investment income. The
Account seeks to achieve its
investment objectives through the
purchase primarily of common stocks,
but the Account may invest in other
securities.
Government Securities Government Securities Account Invista Capital Management, LLC to seek a high level of current
through a sub-advisory agreement income, liquidity and safety of
principal. The Account seeks to
achieve its objective through the
purchase of obligations issued or
guaranteed by the United States
Government or its agencies, with
emphasis on Government National
Mortgage Association Certificates
("GNMA Certificates"). Account shares
are not guaranteed by the United
States Government.
Growth Growth Account Invista Capital Management, LLC to seek growth of capital. The
through a sub-advisory agreement Account seeks to achieve its
objective through the purchase
primarily of common stocks,
but the Account may invest in other
securities.
International International Account Invista Capital Management, LLC to seek long-term growth of capital
through a sub-advisory agreement by investing in a portfolio of equity
securities domiciled in any of the
nations of the world.
International SmallCap International SmallCap Account Invista Capital Management, LLC seeks long-term growth of capital.
through a sub-advisory agreement The Account will attempt to achieve
its objective by investing primarily
in equity securities of non-United
States companies with comparatively
smaller market capitalizations.
MicroCap MicroCap Account Goldman Sachs Asset Management seeks long-term growth of capital.
through a sub-advisory agreement The Account will attempt to achieve
its objective by investing primarily
in value and growth oriented
companies with small market
capitalizations, generally less than
$700 million.
MidCap MidCap Account Invista Capital Management, LLC to achieve capital appreciation by
through a sub-advisory agreement investing primarily in securities of
emerging and other growth-oriented
companies.
MidCap Growth MidCap Growth Account Dreyfus Corporation through seeks long-term growth of capital.
a sub-advisory agreement The Account will attempt to achieve
its objective by investing primarily
in growth stocks of companies with
market capitalizations in the $1
billion to $10 billion range.
Money Market Money Market Account Principal Management Corporation to seek as high a level of current
income available from short-term
securities as is considered
consistent with preservation of
principal and maintenance of
liquidity by investing all of its
assets in a portfolio of money market
instruments.
Real Estate Real Estate Account Principal Management Corporation Seeks to generate a high total
return. The Account will attempt to
achieve its objective by investing
primarily in equity securities of
companies principally engaged in the
real estate industry.
SmallCap SmallCap Account Invista Capital Management, LLC Seeks long-term growth of capital.
through a sub-advisory agreement The Account will attempt to achieve
its objective by investing primarily
in equity securities of both growth
and value oriented companies with
comparatively smaller market
capitalizations.
SmallCap Growth SmallCap Growth Account Berger Associates through a Seeks long-term growth of capital.
sub-advisory agreement The Account will attempt to achieve
its objective by investing primarily
in equity securities of small growth
companies with market capitalization
of less than $1 billion.
SmallCap Value SmallCap Value Account J.P. Morgan Investment Seeks long-term growth of capital by
Management investing primarily in equity
securities of small companies
through a sub-advisory agreement with
value characteristics and market
capitalizations of less than
$1 billion.
Stock Index 500 Stock Index 500 Account Invista Capital Management, LLC Seeks long-term growth of capital.
through a sub-advisory agreement The Account attempts to mirror the
investment results of the Standard &
Poor's Stock Index.
Utilities Utilities Account Invista Capital Management, LLC Seeks to provide current income
through a sub-advisory agreement and long-term growth of income and
capital by investing primarily
through a sub-advisory agreement in
equity and fixed-income securities
of companies in the public utilities
industry.
Fidelity Contrafund Fidelity VIP II Contrafund Fidelity Management and Seeks long-term capital appreciation.
Portfolio Research Company
Fidelity Equity-Income Fidelity VIP Equity-Income Fidelity Management and Seeks reasonable income by investing
Portfolio Research Company primarily in income-producing equity
securities.
Fidelity High Income Fidelity VIP High Income Fidelity Management and Seeks a high level of current income
Portfolio Research Company by investing primarily in high
yielding, lower quality, fixed
income securities, while also
considering growth of capital.
Putnam Global Asset Putnam VT Global Asset Putnam Investment Seeks a high level of long-term total
Allocation Allocation Fund Management, Inc. return consistent with preservation
of capital.
Putnam Vista Putnam VT Vista Fund Putnam Investment Seeks capital appreciation.
Management, Inc.
Putnam Voyager Putnam VT Voyager Fund Putnam Investment Seeks capital appreciation.
Management, Inc.
</TABLE>
Principal Management Corporation (the "Manager") has executed agreements with
various sub-advisors. Under those sub-advisory agreements, the sub-advisor
agrees to assume the obligations of the Manager to provide investment advisory
services for a specific Account. For these services, each sub-advisor is paid a
fee by the Manager.
Account: Balanced, Capital Value, Government Securities, Growth,
International, International SmallCap, MidCap, SmallCap, Stock Index
500 and Utilities
Sub-Advisor: Invista Capital Management, LLC. Invista is a subsidiary
of Principal Life Insurance Company and an affiliate of the Manager.
Invista has managed investments for institutional investors, including
Principal Life, since 1985. As of December 31, 1998, it managed assets
of approximately $31 billion. Invista's address is 1800 Hub Tower, 699
Walnut, Des Moines, Iowa 50309.
Account: Aggressive Growth and Asset Allocation
Sub-Advisor: Morgan Stanley Asset Management Inc. MSAM, with principal
offices at 1221 Avenue of the Americas, New York, NY 10020, provides a
broad range of portfolio management services to customers in the U.S.
and abroad. At December 31, 1998, MSAM managed investments totaling
approximately $163.4 billion. On December 1, 1998 Morgan Stanley Asset
Management Inc. changed its name to Morgan Stanley Dean Witter
Investment Management Inc. but continues to do business in certain
instances using the name Morgan Stanley Asset Management.
Account: MicroCap
Sub-Advisor: Goldman Sachs Asset Management. Goldman Sach's address is
1 New York Plaza, 42nd Floor, New York, NY 10004. It is a separate
operating division of Goldman, Sachs & Co. ("Goldman Sachs"). Goldman
Sachs provides a wide range of fully discretionary investment advisory
services quantitatively driven and active managed U.S. and
international equity portfolios, U.S. and global fixed income
portfolios, commodity and currency products, and money market mutual
funds. As of December 31, 1998, GSAM, together with its affiliates,
managed assets in excess of $195 billion.
Account: MidCap Growth
Sub-Advisor: The Dreyfus Corporation, located at 200 Park Avenue, New
York, NY 10166, was formed in 1947. The Dreyfus Corporation is a
wholly-owned subsidiary of Mellon Bank, N.A. which is a wholly-owned
subsidiary of Mellon Bank Corporation. As of December 31, 1998 the
Dreyfus Corporation managed or administered approximately $118.5
billion in assets for approximately 1.7 million investor accounts
nationwide.
Account: SmallCap Growth
Sub-Advisor: Berger Associates. Berger's address is 210 University
Boulevard, Suite 900, Denver, CO 80206. It serves as investment
advisor, sub-advisor, administrator or sub-administrator to mutual
funds and institutional investors. Berger is a wholly owned subsidiary
of Kansas City Southern Industries, Inc. ("KCSI"). KCSI is a publicly
traded holding company with principal operations in rail
transportation, through its subsidiary the Kansas City Southern
Railway Company, and financial asset management businesses. Assets
under management for Berger as of December 31, 1998 were approximately
$3.4 billion.
Account: SmallCap Value
Sub-Advisor: J.P. Morgan Investment Management. Morgan, with principal
offices at 522 Fifth Avenue, New York, NY 10036 is a wholly-owned
subsidiary of J.P. Morgan & Co. Incorporated ("J.P. Morgan") a bank
holding company. J.P. Morgan, through Morgan and its other
subsidiaries, offers a wide range of services to governmental,
institutional, corporate and individual customers and acts as
investment advisory to individual and institutional customers. As of
December 31, 1998, J.P. Morgan and its subsidiaries had total combined
assets under management of approximately $300 billion.
The Company purchases and sells fund shares for the Separate Account at their
net asset value without any sales or redemption charge. The Separate Account has
divisions that correspond to interests in the Investment Accounts. The assets of
each Investment Account are separate from the others. An Investment Account's
performance has no effect on the investment performance of any other Investment
Account.
The annual expenses of Investment Accounts (as a percentage of average net
assets) as of December 31, 1998 were:
<TABLE>
<CAPTION>
Management 12b-1 Other Total Account
Account Fees Fees Expenses Annual Expenses
<S> <C> <C> <C> <C>
Principal Variable Contracts Fund
Aggressive Growth 0.77% N/A % 0.01% 0.78%
Asset Allocation 0.80 N/A 0.09 0.89
Balanced 0.57 N/A 0.02 0.59
Bond 0.49 N/A 0.02 0.51
Capital Value 0.43 N/A 0.01 0.44
Government Securities 0.49 N/A 0.01 0.50
Growth 0.47 N/A 0.01 0.48
International 0.73 N/A 0.04 0.77
International SmallCap 1.21 N/A 0.13 1.34
MicroCap 1.00 N/A 0.38 1.38
MidCap 0.61 N/A 0.01 0.62
MidCap Growth 0.90 N/A 0.37 1.27
Money Market 0.50 N/A 0.02 0.52
Real Estate 0.90 N/A 0.10 1.00
SmallCap 0.00 N/A 0.40 0.40
SmallCap Growth 0.85 N/A 0.13 0.98
SmallCap Value 1.01 N/A 0.30 1.31
Stock Index 500* 1.10 N/A 0.46 1.56
Utilities 0.60 N/A 0.09 0.69
*Estimated
Fidelity
Fidelity Contrafund
Fidelity Equity-Income
Fidelity High Income
Putnam Class IB Shares
Putnam Global Asset Allocation 0.65 0.15 0.41 0.93*
Putnam Vista 0.65 0.15 0.12 0.92**
Putnam Voyager 0.54 0.15 0.04 0.73*
Putnam Global Asset Allocation 0.44 0.10 0.09 0.63***
Putnam Vista 0.44 0.10 0.08 0.62***
Putnam Voyager 0.36 0.10 0.03 0.49***
* Based on performance of Class IA shares (Class IB shares were first
offered May 1, 1998).
** Class IA numbers were estimated.
*** Actual expenses for Class IB shares for the period from May 1, 1998
through December 31, 1998.
</TABLE>
THE POLICY
The descriptions that follow are based on provisions of the Policy offered by
this prospectus.
To Buy a Policy
A completed application and required supplements must be submitted to us through
an agent or broker selling the Policy.
The minimum face amount of a Policy is:
o $50,000 for regular underwriting, or
o $25,000 for guaranteed issue, expanded nonmedical and batch underwriting.
We reserve the right to increase or decrease the minimum face amount.
Generally, we do not issue policies for insureds who are:
o over age 85 for regular underwriting, or
o over age 70 for guaranteed issue, expanded nonmedical and batch
underwriting.
Applicants for the Policy must:
o furnish satisfactory evidence of insurability for the insured, and
o meet our insurance underwriting guidelines and suitability rules.
We reserve the right to reject any application or related premium if we
determine that our underwriting guidelines, suitability rules or procedures have
not been met.
If you want insurance coverage to start at the time the application is
submitted, you must send a payment of at least the required minimum initial
premium amount with your completed application. The required minimum initial
premium amount is shown on the policy illustration. If this amount is submitted
with the application, a conditional receipt is given to you. The receipt
acknowledges the initial payment and details any interim conditional insurance
coverage.
Policy Date
If we issue a Policy, a policy date is determined. Policies may not be dated on
the 29th, 30th or 31st of any month. Policies that would otherwise be dated on
these dates are dated on the 28th of the month. Effective
______________________, Policies that are issued on a COD basis and that would
otherwise be dated on the 29th, 30th or 31st of a month will be dated on the 1st
of the following month. Your policy date is shown on the current data pages.
Upon specific request and our approval,
o your Policy may be backdated, however:
o the policy date may not be more than three months prior to the date of
application (or shorter period if required by state law);
o payment of minimum required premium is required for the backdated
period; and
o monthly policy charges are deducted from the policy value for the
backdated period.
o in the case of related policies:
o issuance of policies may be delayed to provide a common policy date;
o we will set the common policy date following the last underwriting
decision on all applications; and
o your written request regarding the policy dates must accompany the
applications.
Effective Date
The policy date and the effective date are the same unless:
o a backdated policy date is requested, or
o a Policy is applied for on a COD basis or the application was not
accompanied by a payment of at least the minimum monthly premium, or
o additional premiums are required (the effective date is the date we
receive, review and accept the required premium), or
o application amendments are required (the effective date is the date we
receive, review and accept amendments).
The insurance coverage does not take effect until you actually receive the
Policy. If the insured was to die before the owner actually receives the Policy,
there is no coverage under the Policy (coverage is determined solely under the
terms of conditional receipt, if any).
Payment of Premiums
The amount and frequency of your premium payments affects the policy value, the
net surrender value and how long the Policy remains in force. After the initial
premium, you may determine the amount and timing of subsequent premium payments
within certain restrictions. You must pay premiums to us at our home office.
Where permitted by state law, you must pay a minimum premium during the first 24
policy months ("minimum required premium"). Within certain limits you can set
your premium schedule. We send premium reminder notices to you if you establish
an annual, semiannual or quarterly premium payment schedule. Preauthorized
withdrawals may be set up on a monthly basis (to allow us to automatically
deduct premium payments from your checking or other financial institution
account). You may also make unscheduled payments to us at our home office.
During the first 24 policy months, failure to make premium payments does not
cause the Policy to terminate if:
o any minimum required premium is paid, and
o no policy loan is taken.
After the first 24 policy months (or any time a policy loan is taken), making
premium payments under your planned periodic premium schedule does not guarantee
that your Policy will stay in force unless:
o your Policy's net surrender value is at least equal to the monthly policy
charge on the current monthly date, or
o the death benefit guarantee rider is in effect.
During the twelve month period ended December 31, 1998, we received premium
payments totaling $75,322,153 for these Policies.
Premium Limitations
In no event may the total of all premiums paid, both scheduled and unscheduled,
be more than the current maximum premium payments allowed for life insurance
under the Internal Revenue Code (the "Code"). If you make a premium payment that
would result in total premiums exceeding the current maximum limitation, we only
accept that portion of the payment that makes total premiums equal the maximum.
Any excess will be returned and no further premiums are accepted until allowed
by the current maximum premium limitations.
Allocation of Premiums
Your initial net premium (and other net premiums we receive prior to the
effective date and twenty days after the effective date) are allocated to the
Money Market division at the end of the valuation period we receive the premium.
Twenty-one days after the effective date, the money is reallocated to the
divisions of the Separate Account and/or to the Fixed Account according to your
instructions. If the twenty-first day is not a business day, the transfer will
occur on the first business day following the twenty-first day from the
effective date.
Example: The effective date of your policy is February 1st. Your net
premium is allocated to the Money Market division at the
end of the valuation period we receive the premium. At the
close of business on February 21st, the net premium is
reallocated to the Investment Account and/or Fixed Account
that you selected.
Net premium payments received after the twenty-day period are allocated to the
Investment Accounts or to the Fixed Account according to your instructions. For
each division and the Fixed Account, the allocation percentage must be zero or a
whole number not less than 10. The total of all the percentages for the
divisions and the Fixed Account must equal 100. The percentage allocation for
future premium payments may be changed, without charge, at any time by sending a
written request to us or, if telephone privileges apply, calling us at
1-800-247-9988. The allocation changes are effective at the end of the valuation
period in which your new instructions are received.
Ten Day Examination Offer (Free-Look Provision)
Under state law, you have the right to return the Policy for any reason during
the free-look period and receive your premiums paid. (If you apply for your
Policy in California, the amount refunded is described below). Your request to
return the Policy must be in writing. The request and the Policy must be mailed
to us or returned to the agent (as determined by the postmark) no later than the
last day of the free-look period as shown below.
The free-look period is the later of:
o 10 days* after the Policy is delivered to you,
o 10 days* after a written notice is delivered or mailed to you which tells
about the cancellation right, or
o 45 days after you complete the application.
*Different free-look periods apply if your Policy is issued in:
o California and you are age 60 and over (30 day free-look period);
o Colorado (15 day free-look period); or
o Idaho or North Dakota (20 day free-look period).
If you applied for your Policy in California, the amount refunded is:
o the policy value as of the date we receive your written request for
cancellation
o plus the premium expense charge(s) deducted from the premium
o plus the monthly policy charge(s) deducted from the policy value.
NOTE:
o If the purchase of this Policy is a replacement for another life insurance
policy or an annuity contract, different free-look periods may apply. We
reserve the right to keep the initial premium payment in the Money Market
division longer than 20 days to correspond to the free-look periods of a
particular state's replacement requirements.
o See GENERAL PROVISIONS - Delay of Payments.
Policy Values
Your policy value is equal to the sum of the values in your Investment Accounts,
Fixed Account and Loan Account (see THE FIXED ACCOUNT and THE POLICY - Loan
Account). The policy value reflects your premium payments, partial surrenders,
policy loans and the Policy expenses.
There is no guaranteed minimum Investment Account value. Its value reflects the
investment experience of the Investment Accounts. It is possible that the
investment performance could cause a loss of the entire amount allocated to the
Investment Accounts. Without additional premium payments or investments in the
Fixed Account or a death benefit guarantee rider, this could result in no death
benefit upon the insured's death.
At the end of any valuation period, your value in an Investment Account is:
o the number of units you have in a division
o multiplied by the value of a unit in the division.
The number of units is the total of units purchased by allocations to the
division from:
o your initial premium payment (less premium expense charges)
o plus subsequent premium payments (less premium expense charges);
o plus transfers from another division or the Fixed Account
minus units sold:
o for partial surrenders from the division;
o as part of a transfer to another division, the Fixed Account or the Loan
Account; and
o to pay monthly policy charges and fees.
Unit values are calculated each valuation date. To calculate the unit value of a
division, the unit value from the previous valuation date is multiplied by the
division's net investment factor for the current valuation period. The number of
units does not change due to a change in unit value.
The net investment factor measures the performance of each division. The net
investment factor for a valuation period is calculated as follows:
[{the share price of the underlying mutual fund account at the end of the
valuation period before that day's transactions
plus
the per share amount of the dividend (or other distribution) made by the
mutual fund account during the valuation period}
divided by
the share price of the underlying mutual fund account at the end of the
previous valuation period after that day's transactions].
When an investment owned by an Account pays a dividend, the dividend increases
the net asset value of a share of the Account as of the date the dividend is
recorded. As the net asset value of a share of an Account increases, the unit
value of the corresponding division also reflects an increase. Payment of a
dividend under these circumstances does not increase the number of units you own
in the Account.
Investment Account Transfers
You may request an unscheduled transfer or set up a periodic transfer by sending
or faxing (1-515-__________) us a written request or calling us if telephone
privileges apply (1-800-247-9988) (see OTHER MATTERS - Services Available by
Telephone). You must specify the dollar amount or percentage to transfer from
each Investment Account. In states where allowed, we reserve the right to reject
transfer instructions from someone providing them for multiple Policies for
which he or she is not the owner.
You may not make a transfer to the Fixed Account if:
o a transfer has been made from the Fixed Account to an Investment Account
within six months, or
o immediately after the transfer, the Fixed Account value would be more than
$1,000,000 (without our prior approval).
Unscheduled Transfers You may make unscheduled transfers from an Investment
Account to another Investment Account or to the Fixed Account. The transfer is
made, and values determined, as of the end of the valuation period in which we
receive your request.
o The transfer amount must be equal or greater than the lesser of $100 or the
value of your Investment Account.
o We reserve the right to charge a transfer fee on each unscheduled transfer
after the 12th such transfer in a policy year. The fee will not be more
than $25 per unscheduled transfer.
Scheduled Transfers (dollar cost averaging (DCA)) You may elect to have
automatic transfers made on a periodic basis.
o The amount of the transfer is:
o the dollar amount you select (the minimum is the lesser of $100 or the
value of the Investment Account), or
o a percentage of the Investment Account value as of the date you
specify (other than the 29th, 30th or 31st).
o You select the transfer date (other than the 29th, 30th or 31st) and the
transfer frequency (annually, semi-annually, quarterly or monthly).
o If the selected date is not a valuation date, the transfer is completed on
the next valuation date.
o The value of the Investment Account must be equal to or more than $2,500
when your scheduled transfers begin.
o Transfers continue until your interest in the Investment Account has a zero
balance or we receive notice to stop them.
o We reserve the right to limit the number of Separate Account divisions from
which simultaneous transfers are made. In no event will it ever be less
than two.
o Scheduled transfers will not start until the end of your free-look period.
Fixed Account Transfers
Transfers from your investment in the Fixed Account to your Investment
Account(s) are subject to certain limitations. You may transfer amounts by
making either a scheduled or unscheduled Fixed Account transfer. You may not
make both a scheduled and unscheduled Fixed Account transfer in the same policy
year. In states where allowed, we reserve the right to reject transfer
instructions from someone providing them for multiple Policies for which he or
she is not the owner.
Unscheduled Transfers
You may make one unscheduled Fixed Account transfer to an
Investment Account(s) within the 30 day period following the policy date and
each policy anniversary. The transfer is made, and values determined, as of the
end of the valuation period in which we receive your request.
o You must specify the dollar amount or percentage to be transferred (not to
exceed 25% of the Fixed Account value as of the latter of the policy date
or the most recent policy anniversary).
o The minimum transfer amount must be equal to or greater than the lesser of
$100 or the entire value of your Fixed Account.
Scheduled Transfers (dollar cost averaging (DCA))
You may make scheduled transfers on a monthly basis from the Fixed Account to
your Investment Account(s) as follows:
o The value of your Fixed Account must be equal to or more than $2,500 when
your scheduled transfers begin. We reserve the right to change this amount
but it will never be more than $10,000.
o The amount of the transfer is:
o the dollar amount you select (minimum of $50), or
o a percentage of the Fixed Account value (the maximum amount of the
transfer is 2% of the Fixed Account value as of the specified dated)
as of the date you specify which may be:
o the later of the policy date or most recent policy anniversary
date, or
o the date the Company receives your request.
o Transfers occur on a date you specify (other than the 29th, 30th or 31st of
any month).
o If the selected date is not a valuation date, the transfer is completed on
the next valuation date.
o Scheduled transfers will not start until the end of your free-look period.
Scheduled transfers continue until your value in the Fixed Account has a zero
balance or we receive your notice to stop them. You may change the amount of the
transfer once each policy year by sending us a written request or calling us if
telephone privileges apply (1-800-247-9988). If you stop the transfers, you may
not start them again until six months after the last scheduled transfer.
Automatic Portfolio Rebalancing (APR)
APR allows you to maintain a specific percentage of your policy value in your
Investment Accounts over time.
EXAMPLE: You may choose to rebalance so that 50% of your policy values
are in the Bond division and 50% in the Capital Value division.
At the end of the specified period, market changes may have
caused 60% of your value to be in the Bond division and 40% in
the Capital Value division. By rebalancing, units from the Bond
division are sold and applied to purchase units in the Capital
Value division so that 50% of the policy values are once again
invested in each division.
You may elect APR at the time of application or after the Policy has been
issued. The transfers are made at the end of the next valuation period after we
receive your instruction. APR transfers:
o do not begin until the expiration of the free-look period;
o are done without charge (and are not counted as unscheduled transfers when
determining any transfer fee);
o may be done on the frequency you specify:
o quarterly APR transfers may be done on a calendar year or policy year
basis,
o semiannual or annual APR transfers may only be done on a policy year
basis.
o may be done, if telephone privileges apply, by calling us at
1-800-247-9988, mailing us your written request or faxing your request to
us at 1-515-_______.
APR is not available for values in the Fixed Account. If you have scheduled
transfers from Investment Accounts, APR is not available for those Investment
Accounts.
Policy Loans
While your Policy is in effect and has a net surrender value, you may borrow
money from us with the Policy as the security for the policy loan.
o The minimum policy loan is $500.
o The maximum amount you may borrow is 90% of the net surrender value as of
the date we process the policy loan.
o If telephone privileges apply, you may request a policy loan of $5,000 or
less by calling us at 1-800-247-9988. If you do not have telephone
privileges or are requesting a policy loan of more than $5,000, your
request must be made in writing.
o Generally, policy loan proceeds are sent within five business days from the
date we receive your request (see GENERAL PROVISIONS - Delay of Payments).
o Requests for policy loans from any joint owner are binding on all joint
owners.
Loan Account
When a policy loan is taken, an amount equal to the loan is transferred from
your Investment Account(s) and Fixed Account to your Loan Account. Loan Accounts
are part of our General Account. You may instruct us on the proportions to be
taken from your accounts. If you do not provide such instruction, the loan
amount is withdrawn in the same proportion as the allocation used for the most
recent monthly policy charge. Any loan interest due and unpaid is transferred in
the same manner.
Your Loan Account earns interest from the date of transfer. During the first ten
policy years, the loan account interest rate is 6% per year. After the tenth
policy year, the loan account interest rate is 7.75% per year.
You pay interest on your policy loan at the annual rate of 8%. Interest accrues
daily and is due and payable at the end of the policy year. If interest is not
paid when due, it is added to the loan amount. Adding unpaid interest to the
policy loan amount causes additional amounts to be withdrawn from your Fixed
Account and/or Investment Account(s) and transferred to the Loan Account.
Withdrawals are made in the same proportions as described above.
Policy loans and unpaid loan interest reduce your net surrender value. If the
net surrender value is less than the monthly policy charges on a monthly date,
the 61-day grace period provision applies (see POLICY TERMINATION AND
REINSTATEMENT - Policy Termination).
While the Policy is in force and before the insured dies, policy loans and loan
interest may be repaid as follows:
o policy loans may be repaid totally or in part;
o repayments are allocated to the Investment Account(s) and Fixed Account in
the proportions used for allocation of premium payments; and
o payments that we receive that are not designated as premium payments are
applied as loan repayments if a policy loan is outstanding.
A policy loan generally has a permanent effect on policy values. If a policy
loan had not been made, the policy value would reflect the investment experience
of the Investment Account(s) and the interest credited to the Fixed Account. In
addition, policy loans and unpaid loan interest are subtracted from:
o death proceeds at the insured's death;
o surrender value upon total surrender or termination of a Policy; and
o maturity proceeds payable at maturity.
Surrenders
You must send us a written request for any surrender. The request must be signed
by all owners, irrevocable beneficiary(ies), if any, and any assignees.
Total surrender
You may surrender the Policy on or before the maturity date while the Policy is
in effect. You receive the net surrender value at the end of the valuation
period during which we receive your surrender request. The net surrender value
is the total of the values of your Investment Accounts plus your Fixed Account
plus your Loan Account minus any applicable surrender charge, policy loans and
unpaid loan interest (see CHARGE AND DEDUCTIONS - Surrender Charge).
o If the total surrender is within ten years of the policy date or a face
amount increase a surrender charge is imposed.
o The written consent of all collateral assignees and irrevocable
beneficiaries must be obtained prior to surrender.
o We reserve the right to require you to return the Policy to us prior to
making any payment though this does not affect the amount of the cash
surrender value.
Partial surrender
After the second policy anniversary and prior to the maturity date, you may
surrender a part of the Fixed Account and/or Investment Account value by sending
us a written request. The surrender is effective at the end of the valuation
period during which we receive your written request for surrender. You may not
request more than two partial surrenders in each policy year.
The minimum amount of a partial surrender is $500. The total of your two partial
surrenders during a policy year may not be greater than 75% of the net surrender
value (as of the date of the request for the first partial surrender in that
policy year).
You pay a transaction fee on each partial surrender. The fee is the lesser of
$25 or 2% of the amount surrendered. It is withdrawn in the same proportion as
your monthly policy charge allocation.
Your policy value is reduced by the amount of the surrender and the transaction
fee. We surrender units from the Investment Account divisions and/or values from
the Fixed Account to equal the dollar amount of the surrender request and
transaction fee. The surrender is deducted from your Fixed Account value and/or
your Investment Account(s) according to the surrender allocation percentages you
specify. If surrender allocation percentages are not specified, we use your
monthly policy charge allocation percentages. The amount surrendered is taken
from the premiums paid on a last-in, first-out basis. No surrender charge is
imposed on a partial surrender.
If the Option 1 death benefit is in effect and a partial surrender is made, the
face amount of the policy is also reduced by the amount of the surrender and the
transaction fee. Total and partial surrenders from the Policy are generally paid
within five business days of our receipt of your request for surrender. Certain
delays in payment are permitted (see GENERAL PROVISIONS - Delay of Payments).
DEATH BENEFITS AND RIGHTS
Death Proceeds
While the Policy remains in force and before the maturity date, we pay death
proceeds upon the insured's death.
o We must receive proof of the insured's death and all other required
documents.
o Payments are made to your named beneficiary(ies) under your designated
death benefit option (see GENERAL PROVISIONS - Beneficiary).
The payments are made in cash lump sum or under a benefit payment option
selected by the beneficiary(ies). Death proceeds are calculated as of the date
of the insured's death and include:
o the death benefit described below;
o plus proceeds from any benefit rider on the insured's life;
o minus policy loans and unpaid loan interest;
o minus any overdue monthly policy charges if the insured died during a grace
period;
o plus interest on the death proceeds from date of death until date of
payment or application under a benefit payment option. (We determine the
interest rate which will not be not less than the rate required by state
law.)
Death Benefit Option
You choose death benefit Option 1 or Option 2 at the time of application.
Option 1 (level amount option) The death benefit is the greater of 1) the
Policy's current face amount, or 2) the policy value on the date of death
multiplied by the applicable percentage. The applicable percentage is 250% for
an insured age 40 or below and the percentage declines with increasing ages. The
death benefit remains level unless the applicable percentage of policy value
exceeds the current face amount (in which case the death benefit varies as the
policy value varies).
Illustration of Option 1 Assume that the insured is under age 40 and that there
is no loan amount and that the policy face amount is $500,000.
Under Option 1, the death benefit must be equal or greater than 250% of the
policy value. If the policy value is more than $200,000, the death benefit is
greater than $500,000. Each additional dollar added to the policy value above
$200,000 increases the death benefit by $2.50. If the policy value exceeds
$200,000 and increases by $100 because of investment performance or premium
payments, the death benefit increases by $250.
Similarly, if the policy value exceeds $200,000, each dollar taken out of the
policy value reduces the death benefit by $2.50. For example, if the policy
value is reduced from $500,000 to $450,000 because of partial surrenders,
charges or negative investment performance, the death benefit is reduced from
$1,250,000 to $1,125,000. However, if at any time the policy value multiplied by
the applicable percentage is less than the face amount, the death benefit equals
the current face amount of the Policy.
The applicable percentage lowers as the insured's age increases. If the current
age of the insured in the illustration is 50 (rather than age 40), the
applicable percentage would be 185%. The death benefit would not be greater than
the $500,000 face amount unless the policy value exceeded $270,270 rather than
$200,000. Each dollar added to or taken from the policy value changes the death
benefit by $1.85 (rather than $2.50).
Option 2 (variable amount option) The death benefit is equal to the greater of
1) the current face amount plus the policy value on the date of death, or 2) the
policy value on the date of death multiplied by the applicable percentage.
Illustration of Option 2 Assume that the insured is under age 40 and that there
is no loan amount and that the policy face amount is $500,000.
A policy with a policy value of $100,000 has a death benefit of $600,000
($500,000 plus $100,000); a policy value of $300,000 has a death benefit of
$800,000 ($500,000 plus $300,000). The death benefit however must be at least
250% of the policy value. As a result, if the policy value exceeds $333,334, the
death benefit is greater than the face amount plus policy value. Each additional
dollar of policy value above $333,334 increases the death benefit by $2.50. If
the policy value exceeds $333,334 and increases by $100 because of investment
performance or premium payments, the death benefit increases by $250.
If the policy value exceeds $333,334, each dollar taken out of the policy value
reduces the death benefit by $2.50. For example, the policy value is reduced
from $400,000 to $340,000 because of partial surrenders, charges or negative
investment performance, the death benefit is reduced from $1,000,000 to
$850,000. However, if the policy value multiplied by the applicable percentage
is less than the policy face amount plus the policy value, then the death
benefit is the current face amount plus the policy value.
The applicable percentage lowers as the insured's age increases. If the current
age of the insured in the illustration is 50 (rather than age 40), the
applicable percentage would be 185%. The death benefit would be the sum of the
policy value plus $500,000 unless the policy value exceeded $588,237 rather than
$333,334. Each dollar added to or taken from the policy value changes the death
benefit by $1.85 (rather than $2.50).
APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages decrease by a pro rata portion
for each full year.)
Insured's attained age percentage
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 through 90 105
95 100
*We reserve the right, where allowed by law, to change or delete the
percentages as required by changes to the Code.
Change in Death Benefit Option
You may change the death benefit option on or after the second policy
anniversary. Up to two changes are allowed per policy year. Your request must be
made in writing and approved by us. The effective date of the change will be the
monthly date that coincides with or next follows our approval. Changing the
death benefit option changes the future cost of insurance.
If you change from Option 1 to Option 2, the new face amount is the old face
amount decreased by the policy value (as of the effective date of the change).
The change is not allowed if it would result in a face amount of less than
$50,000. A change from Option 1 to Option 2 may require evidence of insurability
for the new death benefit if required by our underwriting guidelines in place at
the time of your request.
If you change from Option 2 to Option 1, the new face amount is the old face
amount increased by the policy value (as of the effective date of the change). A
change from Option 2 to Option 1 does not require evidence of insurability.
Adjustment Options
Increase in policy face amount You may request an increase at any time provided
that the policy is not in a grace period, and monthly policy charges are not
being waived under a rider. The minimum increase in face amount is $50,000. A
face amount increase request made in the first 24 policy months will increase
the minimum monthly required premium for the remainder of the 24 months.
The request must be made on an adjustment application. The application must be
signed by the owner(s) and the insured.
We will approve your request if at the time of your request:
o the insured is age 85 or less; and
o we receive evidence satisfactory to us that the insured is insurable under
our underwriting guidelines then in place.
The increase in face amount is in a risk classification determined by us. The
adjustment is effective on the monthly date on or next following our approval of
your request. No free-look period applies to an increase in face amount.
We calculate an adjustment conditional receipt premium deposit based on your
request for an increase. If you make a payment with your adjustment application
of at least as much as the adjustment conditional receipt premium deposit, we
issue a conditional receipt. The conditional receipt shows receipt of the
payment and outlines any interim insurance coverage.
Any payment made with the adjustment application is held in our General Account
without interest. If we approve the adjustment, the amount of the premium
payment being held minus the premium expense charge is allocated to the
Investment Accounts and/or Fixed Account on the effective date of the
adjustment. Your current premium allocation percentages are used to make this
allocation.
Decrease in policy face amount After the first two policy years, you may request
a decrease in the policy face amount as follows:
o the request must be made on an adjustment application;
o the application must be signed by both the owner(s) and the insured;
o the policy is not in a grace period;
o monthly policy charges are not being waived under a waiver rider; and
o the decrease may not reduce the policy face amount below $50,000.
CHARGES AND DEDUCTIONS
We make certain charges and deductions to support operation of the Policy and
the Separate Account. Some charges are deducted from premium payments when they
are received. Other charges are deducted on a monthly basis while others are
deducted at the time a Policy is surrendered or terminated. Fees for
administrative expenses are also charged on certain transfers and all partial
surrenders.
Premium Expense Charge
When we receive your premium payment, we deduct a premium expense charge. This
charge includes:
o sales load of 2.75% of premiums less than or equal to target premiums
(0.75% of premiums in excess of target premiums) made:
o during each of the first ten years, and
o with respect to premiums made because of a face amount increase,
during the first ten years after the increase.
o 2.20% for state and local taxes.
o 1.25% for federal taxes.
The sales load is intended to pay us for distribution expenses. These expenses
include commissions paid to registered representatives, printing of prospectuses
and sales literature, and advertising. Sales loads charged in any policy year
are not necessarily related to actual distribution expenses incurred in that
year. We expect that the majority of these expenses are incurred in the early
years of a Policy and that any deficit is made up during the life of the Policy.
If distribution expenses are more than the sales load (including the sales load
portion of the surrender charge), the deficit is made up from our other assets
or surplus in our General Account.
For the twelve month period ending December 31, 1998, we collected $1,050,366 in
premium expense charges and $1,193,496 in premium tax charges from these
Policies.
Monthly Policy Charge
The monthly policy charge is intended to cover certain charges and expenses
incurred in connection with the Policy. Deductions are made up of:
o a charge for the cost of insurance;
o a charge for any optional benefit added by rider(s);
o a monthly administration charge; and
o a mortality and expense risks charge (applies only to Investment Accounts).
On the policy date and each monthly date thereafter, we deduct the charge from
your policy value in the Investment Accounts and/or Fixed Account (but not your
Loan Account). The deduction is made using your current monthly policy charge
allocation percentages.
Your allocation percentages may be:
o the same as allocation percentages for premium payments;
o determined on a prorated basis; or
o determined by any other allocation method which we agree upon.
The allocation percentage for each Investment Account and/or the Fixed Account
must be zero or a whole number not less than 10. The total of the allocation
percentages must equal 100. Allocation percentages may be changed without
charge. A request for an allocation change is effective on the date we receive
your request. If we cannot follow your instructions because of insufficient
value in any Investment Account and/or the Fixed Account, the monthly policy
charge is deducted on a prorated basis.
For the twelve month period ending December 31, 1998, administrative and cost of
insurance charges totaled $8,373,910 for these Policies.
Cost of Insurance Charge
Your monthly cost of insurance charge is (a) multiplied by (b minus c) where:
o (a) is the cost of insurance rate described below divided by 1,000;
o (b) is the death benefit at the beginning of the policy month, divided by
1.0024663 (the sum of one plus the monthly guaranteed fixed account
interest rate); and
o (c) is the policy value at the beginning of the policy month calculated as
if the monthly policy charge was zero.
The cost of insurance rate is based on the gender*, issue age, duration since
issue, smoking status, and risk classification of the insured. We determine the
rate based on our expectation as to mortality experience. Changes in the cost of
insurance rates apply to all individuals of the same age, gender*, smoking
status and risk classification. The rate will never exceed the rate shown in the
Table of Guaranteed Maximum Cost of Insurance Rates in the Policy. The
guaranteed maximum cost of insurance rate is based on the gender*, smoking
status, attained age and risk classification of the insured.
Different cost of insurance rates may apply to face amount increases. The cost
of insurance for the increase is based on the insured's gender*, issue age,
duration since issue, smoking status, and risk classification at the time of the
increase. The guaranteed maximum cost of insurance rate for the increase is
based on the insured's gender*, smoking status, attained age and risk
classification at the time of the increase.
* The cost of insurance rate for Policies issued in states which
require unisex pricing or in connection with employment related
insurance and benefit plans is not based on the gender of the insured.
Administration Charge
Current charges
o The monthly administration charge in the first policy year is 1/12 x ($.40
per $1,000 of face amount) with a minimum monthly charge of $6.00 and a
maximum monthly charge of $16.67.
o After the first policy year, the monthly administration charge is $6.00.
Guaranteed administration charges
o The guaranteed maximum monthly administration charge in the first policy
year is 1/12 x ($.60 per $1,000 of face amount) with a minimum monthly
charge of $25.
o After the first policy year, the guaranteed maximum monthly administration
charge is $10.00.
The Policy also has a contingent deferred administration charge as part of the
surrender charge. The surrender charge applies to total surrender of the Policy
and to termination of the Policy at the end of a grace period (see CHARGES AND
DEDUCTIONS - Surrender Charge).
The monthly administration charge and the deferred administration charge
reimburse us for the administrative expenses of the Policy and the Separate
Account. Administration expenses do not include the cost of selling the Policy.
They do include the costs of: processing applications; conducting medical
examinations; determining insurability; establishing and maintaining records;
processing death benefit claims and policy changes; reporting and overhead. We
do not expect to collect more from the administration charges than our actual
accumulated expenses.
Mortality and Expense Risks Charge
The mortality risk we assume is that insureds may live for a shorter period of
time than we estimate. As a result, we would have to pay a greater amount in
death benefits than we collect in premium payments. The expense risk we assume
is that expenses incurred in issuing and administering the policy are greater
than we estimated. The Company expects to make a profit from this charge to the
extent it is not needed to provide benefits and pay expenses under the Policies.
Each month during the first nine policy years, we deduct a charge for these
risks at an annual rate of 0.90% of your Investment Account(s). Each month
thereafter, we deduct a charge at an annual rate of 0.27% of your Investment
Account(s).
We reserve the right to increase the annual rate but guarantee that the maximum
annual rate will not exceed 0.90%. If we increase the annual rate, the increase
will only apply to policies issued on or after the date of the increase.
During the twelve month period ending December 31, 1998, mortality and expense
risks charges totaled $509,501 for these Policies.
Transaction Fees
A transaction fee of the lesser of $25 or 2% of the surrender amount applies to
each partial surrender and is withdrawn in the same proportion as the allocation
used for the most recent monthly policy charge.
We reserve the right to charge a transfer fee on each unscheduled transfer after
the 12th such transfer in a policy year. The fee will not be more than $25 per
unscheduled transfer.
Surrender Charge
Surrender charges vary based on the target premium of the policy and the
premiums paid. The charge applies only during the first ten policy years unless
there is a face amount increase. A face amount increase has its own surrender
charge period that begins on the adjustment date. The total surrender charge on
the policy is the sum of the surrender charges for the face amount at issue and
each face amount increase. The surrender charge has two parts - the contingent
deferred sales charge and a contingent deferred administration charge - that are
determined separately. The surrender charge is not affected by any decrease in
face amount or any change in face amount resulting in a change of death benefit
options.
The contingent deferred administration charge reimburses us for expenses
incurred in issuing the Policy. These expenses include processing the
application (primarily underwriting) and setting up records. This charge is
intended to cover the average anticipated issue expenses for all Policies. There
may not be a direct relationship between the amount of the charge for any given
Policy and the amount of expenses attributable to that Policy.
The contingent deferred sales charge compensates us for expenses relating to the
sale of the Policy. These include commissions, advertising and printing of
prospectuses and sales literature.
The surrender charge on an early surrender or Policy lapse is significant. As a
result, you should purchase a Policy only if you have the financial capacity to
keep it in force for a substantial period of time.
All or a portion of the surrender charge is waived on Policies issued with an
accounting benefit rider. The waiver applies to total surrender of Policies in
early policy years. An accounting benefit rider is issued to a corporate owner
of a Policy. The rider is designed to permit the corporation to reflect greater
policy values on its financial statements in early policy years than would
otherwise be permitted.
During the twelve month period ended December 31, 1998, we collected $316,435 in
surrender charges from these Policies.
Contingent deferred sales charge
The contingent deferred sales charge is equal to 47.25% of premium paid up to
the number of target premiums shown below:
Number of Target Premiums
Insured's Age All States
on Issue or Except Oregon
Adjustment Date and New York New York Oregon
0-45 2.00 2.00 2.00
46-50 2.00 1.90 2.00
51-55 2.00 1.75 2.00
56-60 2.00 1.65 2.00
61-65 2.00 1.55 2.00
66-70 1.50 1.50 1.45
71-75 1.08 1.10 1.05
76-80 0.80 0.80 0.80
81-85 0.48 0.50 0.50
Contingent deferred administration charge
The contingent deferred administration charge is $3 per $1,000 of face amount
subject to a maximum of $1,500.
Surrender charge percentage The surrender charge during any policy year is (the
contingent deferred sales charge plus the contingent deferred administration
charge) multiplied by (the applicable surrender charge percentage shown below):
Surrender Charge Percentage Table
Number of years since policy The following percentage of
date and/or the adjustment date surrender charge is payable
1 through 5 100.00%
6 95.24
7 85.71
8 71.43
9 52.38
10 28.57
11 and later 00.00
Sales Charge Limitations
If you surrender your policy within two years of issue or of an increase in face
amount, a sales charge refund is made to the extent that the total sales charge
deducted exceeds (a) plus (b), where
o (a) is 30% of actual premium payments made up to the lesser of:
o one guideline annual premium, or
o the maximum amount of premiums subject to the deferred sales charge.
o (b) is 10% of the premiums paid in excess of one guideline annual premium,
up to the lesser of:
o two guideline annual premiums, or
o the maximum amount of premiums subject to the deferred sales charge.
Other Charges
The Investment Accounts represent shares of divisions of the Separate Account.
The assets of each division are used to purchase shares in a corresponding
mutual fund at net asset value. The net asset value of the mutual fund reflects
management fees and operating expenses already deducted from the assets of the
fund. Current management fees and operating expenses for each mutual fund are
shown in the section entitled THE FUNDS.
Special Provisions for Group or Sponsored Arrangements
Where permitted by state law, Policies may be purchased under group or sponsored
arrangements as well as on an individual basis.
o group arrangement - program under which a trustee, employer or similar
entity purchases Policies covering a group of individuals on a group basis.
o sponsored arrangement - program under which an employer permits group
solicitation of its employees or an association permits group solicitation
of its members for the purchase of Policies on an individual basis.
Charges and deductions may be reduced for Policies purchased under a group or
sponsored arrangement including waiver of premium sales load and waiver of
surrender charge. Reductions may be available to:
o employees, officers, directors, agents and immediate family members of the
group or sponsored arrangement, and
o employees of agents of the Company and its subsidiaries.
Reductions are made under our rules in effect on the date a Policy application
is approved and are based on certain criteria (size of group, expected number of
participants, anticipated premium payments).
Generally, the sales contacts and effort, administrative costs and mortality
cost per Policy vary based on the size of the arrangement, the purpose for which
the Policies are purchased and certain characteristics of the members. The
amount of the reduction and the criteria for reducing the charges and deductions
reflect: a) our reduced sales effort and administrative costs; and b) the
different mortality experience expected from sales to arrangements.
We may modify, on a uniform basis, both the amounts of reductions and the
criteria for qualification. Reductions in these charges will not discriminate
unfairly against any person, including the affected owners and all other policy
owners with policies funded with the Separate Account.
In addition, groups and persons buying Policies under a sponsored arrangement
may apply for flexible underwriting. If flexible underwriting is granted, the
cost of insurance charge may increase because of higher anticipated mortality
experience. Flexible underwriting programs currently available include: batch
underwriting, expanded non-medical underwriting and guaranteed issue
underwriting.
THE FIXED ACCOUNT
You may allocate net premiums and transfers from your Investment Account(s) to
the Fixed Account. The Fixed Account is part of our General Account. Because of
exemptions and exclusions contained in the Securities Act of 1933 and the
Investment Company Act of 1940, the Fixed Account has not been registered under
these acts. Neither the Fixed Account nor any interest in it is subject to the
provisions of these acts. As a result the SEC has not reviewed the disclosures
in this prospectus relating to the Fixed Account. However, disclosures relating
to the Fixed Account are subject to generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses. You may obtain more information regarding the Fixed
Account from our home office or from a sales representative.
Our obligations with respect to the Fixed Account are supported by our General
Account. Subject to applicable law, we have sole discretion over the investment
of assets in the General Account.
We guarantee that net premiums allocated to the Fixed Account accrue interest
daily at an effective annual rate of 3% compounded annually. We may, in our sole
discretion, credit interest at a higher rate.
The mortality and expense risks charge is not imposed on amounts in the Fixed
Account. The value of your Fixed Account on any valuation day is:
o net premiums allocated to the Fixed Account
o plus transfers from the Investment Account(s)
o plus interest credited to the Fixed Account
o minus surrenders, surrender charges and monthly policy charges
o minus transaction fees allocated to the Fixed Account
o minus transfers to the Loan Account
o minus transfers to the Separate Account.
POLICY TERMINATION AND REINSTATEMENT
Policy Termination
You must make an initial minimum monthly premium payment to have coverage under
the Policy. A minimum premium is required during the first 24 policy months.
During the first 24 policy months:
o The sum of the premiums paid must be at least equal to the minimum required
premium on a monthly date.
o The minimum required premium on a monthly date is the sum of the minimum
monthly premium since the policy date to the most recent monthly date. The
current minimum monthly premium is shown on your current data pages.
o We will send you a pending lapse notice if you have made insufficient
premium payments.
After the first 24 policy months or any time a policy loan is taken:
o The net surrender value of your policy must at least equal the monthly
policy charge on a current monthly date.
o If your Policy has a death benefit guarantee rider, its premium must be
paid.
o We will send you a pending lapse notice if you have made insufficient
premium payments.
o Making premium payments under your planned periodic premium schedule does
not guarantee that your Policy will stay in force.
Grace Period
The grace period begins when we send you a notice of pending lapse. The notice:
o is mailed to your last known post office address;
o shows the minimum payment required to keep the Policy in force; and
o shows the 61-day period during which we will accept the required payment.
If the grace period begins because the sum of the premiums paid is less than the
minimum required premium, the minimum payment is (a) minus (b) where:
(a) is the minimum required premium due on the second monthly date
following the beginning of the grace period, and
(b) is the sum of the premiums paid since the policy date.
If the grace period ends before we receive the minimum payment, we will pay you
any remaining policy value which is (a) minus (b) where:
(a) is the net surrender value on the monthly date on or immediately
preceding the start of the grace period, and
(b) is the two monthly policy charges during the grace period.
If the grace period begins because the net surrender value is less than the
current monthly policy charge, the minimum payment is equal to (a) plus (b)
divided by (c) where:
(a) is the amount by which the surrender charge is more than the policy
value on the monthly date on or immediately preceding the start of the
grace period,
(b) is three monthly policy charges, and
(c) is one minus the maximum premium expense charge percentage.
To cover past due policy charges, if the grace period ends before we receive the
minimum payment, we keep any remaining value in the Policy. This payment is
intended to 1) reimburse us for the monthly policy charges during the grace
period, and 2) provide enough policy value to pay the monthly policy charge on
the first monthly date after the grace period.
Due to possible adverse market fluctuations, there is no guarantee that the
amount requested at the beginning of the grace period is enough to pay the
monthly policy charges as they are processed. If the net surrender value is not
at least as much as the monthly policy charge on any monthly date, a new 61-day
grace period starts.
The Policy is in force during a grace period. If we do not receive the required
payment, the Policy terminates as of the monthly date on or immediately
preceding the start of the grace period. If the insured dies during a grace
period, policy proceeds are reduced by:
o all monthly policy charges due and unpaid at the insured's death, and
o any policy loans and unpaid loan interest.
The Policy also terminates when:
o you make a total policy surrender;
o death proceeds are paid; and
o maturity proceeds are paid.
When the Policy terminates, all of your policy rights and privileges end.
Reinstatement
Subject to certain conditions, you may reinstate a Policy that terminated
because of insufficient value. The Policy may only be reinstated:
o prior to the maturity date and while the insured is alive;
o upon our receipt of satisfactory evidence of insurability (according to our
underwriting guidelines then in effect);
o if you make a payment of a reinstatement premium which is equal to (a) plus
(b) divided by (c) where: (a) is the amount by which the surrender charge
is more than the policy value on the monthly date at the start of the grace
period before the monthly policy charge is deducted, (b) is three monthly
policy charges, and (c) is one minus the maximum premium expense charge
percentage (see CHARGES AND DEDUCTIONS - Premium Expense Charge); and
o if the application for reinstatement is mailed to us within three years of
the Policy termination (in some states, we must provide a longer period of
time for Policy reinstatement).
If a policy loan or loan interest was unpaid when the Policy terminated, the
policy loan must be reinstated or repaid (loan interest is not collected for the
period the Policy was terminated).
We do not require payment of monthly policy charges during the period the Policy
was terminated. Reinstatement is effective on the next monthly date following
our approval of the reinstatement application. Premiums received with your
reinstatement application are held without interest until the reinstatement
date. They are allocated to your selected Investment Accounts and/or Fixed
Account on the reinstatement date. We will use the premium allocation
percentages in effect at the time of termination of the Policy unless you
provide new allocation instructions. The reinstated Policy has the same policy
date as the original Policy. Your rights and privileges as owner(s) are restored
upon reinstatement.
If you reinstate your Policy and then it is totally surrendered, a surrender
charge may be imposed. The charge, if any, is calculated based on the number of
years the Policy was in force. The period of time during which the Policy was
terminated is not credited toward the number of policy years to make this
calculation.
OTHER MATTERS
Voting Rights
We vote Investment Account shares held in the Separate Account at shareholder
meetings. We follow the voting instructions received from people having the
voting interest in the Account shares.
You have a voting interest under a Policy. You have one vote for each $100 of
policy value in the Investment Accounts. Fractional votes are allocated for
amounts less than $100. The number of votes on which you have the right to
instruct us is determined as of a date established by the mutual fund for
setting the shareholders eligible to vote.
According to procedures adopted by the mutual fund, voting instructions are
solicited by a written proxy statement before a shareholder meeting. We vote
other Account shares, for which no voting instructions are received, in the same
proportion as the shares for which we receive voting instructions. Account
shares held in our General Account are voted in proportion to instructions that
are received with respect to the participating contracts.
If we determine, under applicable law, that Account shares need not be voted
according to the instructions received, we may vote Account shares held in the
Separate Account in our own right.
We may, when required by state insurance regulatory authorities, disregard
voting instructions. This may be done if the instructions would require shares
to be voted to:
o change a subclassification or investment objective of the Account, or
o disapprove an investment advisory contract of the fund or Account, or
o approve changes initiated by an owner in the investment policy or
investment advisor of the Account or mutual fund if we reasonably
disapprove of the changes.
The change would be disapproved only if:
o the proposed change is contrary to state law;
o prohibited by state regulatory authorities; or
o we determine the change is inconsistent with the investment objectives of
the mutual fund.
If we disregard voting instructions, a summary of the action and the reason for
the actions will be included in the next semiannual report from the underlying
fund to owners.
Statement of Values
You receive an annual statement at the end of each policy year. The statement
will show:
o current death benefit;
o current policy value and surrender value;
o all premiums paid since the last statement;
o all charges since the last statement;
o any policy loans and unpaid loan interest;
o any partial surrenders since the last statement;
o the number of units and unit value;
o total value of each of your Investment Accounts and the Fixed Account;
o designated beneficiary(ies); and
o all riders included in the Policy.
You will also receive a statement as of the end of each calendar quarter. At any
time, you may request a current statement by telephoning 1-800-247-9988.
We also send you the reports required by the Investment Company Act of 1940.
Services Available by Telephone
Telephone Instructions Unless you decline telephone privileges on the
supplemental application, instructions for the following transactions may be
given to us via the telephone:
o policy loans (loan proceeds are mailed only to the owner's address of
record);
o changes in allocations of future premium payments;
o changes in allocation of the monthly policy charge;
o changes to your APR instructions;
o changes to your DCA instructions; and
o provide instructions for unscheduled Investment Account and/or Fixed
Account transfers.
Telephone instructions:
o may be given by calling us at 1-800-247-9988 between 7 a.m. and 5 p.m.
Central Time on any day that the New York Stock Exchange is open;
o must be received by us before the close of the New York Stock Exchange
(generally 3:00 p.m. Central Time) to be effective the day you call;
o are effective the next valuation day if not received until after the close
of the New York Stock Exchange; and
o from one joint owner are binding on all joint owners.
Although neither the Separate Account nor the Company is responsible for the
authenticity of telephone transaction requests, the Separate Account and the
Company reserve the right to refuse telephone orders. You are liable for a loss
resulting from a fraudulent telephone order that we reasonably believe is
genuine. We use reasonable procedures to assure instructions are genuine. If the
procedures are not followed, we may be liable for loss due to unauthorized or
fraudulent transactions. The procedures include: recording all telephone
instructions, requesting personal identification information (name, phone
number, social security number, birth date, etc.) and sending written
confirmation to the owner's address of record.
Direct Dial
You may receive information about your policy from our Direct Dial system
between 7:00 a.m. and 9:00 p.m. Central Time, Monday through Saturday. The
Direct Dial number is 1-800-247-9988. Through this automated system, you can:
o obtain information about unit values and policy values,
o initiate certain changes to your policy, and
o change your personal identification number.
Instructions from one joint owner are binding on all joint owners.
GENERAL PROVISIONS
The Contract
The entire contract is made up of: applications, amendments, riders and
endorsements attached to the Policy, current data pages, copies of any
supplemental applications, amendments, endorsements and revised Policy or data
pages which are mailed to you. No statement, unless made in an application, is
used to void a Policy (or void an adjustment in the case of an adjustment
application). Only our corporate officers can agree to change or waive any
provisions of a Policy. Any change or waiver must be in writing and signed by an
officer of the Company.
Optional Insurance Benefits
Subject to certain conditions, you may add one or more supplemental benefits to
your Policy. These include:
o term insurance options
o waiver of monthly policy charges
o accelerated benefits in the event of terminal illness
o cost of living increases
o accidental death coverage
o waiver of premium payments upon disability
o extended coverage
o death benefit guarantees
o riders that apply only to business owned Policies
Detailed information concerning supplemental benefits may be obtained from an
authorized agent or our home office. Not all supplemental benefits are available
in all states. The cost, if any, of an optional insurance benefit is deducted as
part of your monthly policy charge.
Death Benefit Guarantee Rider (also known as the "no lapse guarantee")
This rider provides that if the rider premium is paid, the Policy does not lapse
even if the net surrender value is not enough to pay the monthly policy charges
on a monthly date. This rider is automatically made a part of the policy if the
planned periodic premium is equal to or greater than the death benefit guarantee
premium.
The death benefit (no lapse) guarantee premium requirement is met if:
o the sum of all premiums paid
o minus any partial surrenders
o minus any policy loans and unpaid loan interest
is at least as much as the sum of death benefit guarantee monthly premiums from
the policy date to the most recent monthly date. Your most recent death benefit
(no lapse) guarantee premium is shown on your current data page.
The death benefit (no lapse) guarantee premium is based on the issue age, gender
(where permitted by law) and risk classification of the insured. The monthly
death benefit (no lapse) guarantee premium is considered to be zero for any
month that deductions are being waived. This premium may change if:
o the Policy face amount is changed,
o the death benefit option is changed,
o a rider is added or deleted, or
o an adjustment is made to your Policy.
As a result of a change, an additional premium may be required to satisfy the
new death benefit (no lapse) guarantee premium.
If on any monthly date, the death benefit (no lapse) guarantee premium
requirement is not met, we send you a notice stating the premium required to
reinstate the rider. If the premium required to maintain the guarantee is not
received in our home office before the expiration of the 61-day grace period
(which begins when the notice is mailed), the death benefit (no lapse) guarantee
is no longer in effect and the rider is terminated. If the rider terminates, it
may not be reinstated.
If the rider is in effect on the policy maturity date, we pay you the excess, if
any, of the face amount over the maturity proceeds.
This rider is not available in Massachusetts.
Extended Coverage Rider This rider allows, under certain conditions, the Policy
to remain in force until the insured's death. This rider is not available in
Massachusetts.
Misstatement of Age or Gender
If the age or, where applicable, gender of the insured has been misstated, we
adjust the death benefit payable under your Policy to reflect the amount that
would have been payable at the correct age and gender.
Assignment
You may assign your Policy. Each assignment is subject to any payments made or
action taken by the Company prior to our notification of the assignment. We
assume no responsibility for the validity of any assignment.
An assignment must be made in writing and filed with us at our home office. The
irrevocable beneficiary(ies), if any, must authorize any assignment in writing.
Your rights, as well as those of the beneficiary(ies), are subject to any
assignment on file with us.
Ownership
You may change your ownership designation at any time. Your request must be in
writing and approved by us. After approval, the change is effective as of the
date you signed the request for change. We reserve the right to require that you
send us the Policy so that we can record the change.
Unless changed, the owner(s) is as named in the application. The owner(s) may
exercise every right and privilege of the Policy, subject to the rights of any
irrevocable beneficiary(ies) and any assignee(s).
All rights and privileges of ownership of a Policy end if the Policy is
surrendered, death or maturity proceeds are paid, or if the grace period ends
without our receiving the payment required to keep the Policy in force. The
rights and privileges end as of the monthly date on or immediately preceding the
start of the grace period.
If an owner dies before the Policy terminates, the surviving owner(s), if any,
succeed to that person's ownership interest, unless otherwise specified. If all
owners die before the policy terminates, ownership of the Policy passes to the
insured. With our consent, you may specify a different arrangement for
contingent ownership.
Beneficiary
You have the right to name a beneficiary(ies) and contingent beneficiary(ies).
This may be done as part of the application process or by sending us a written
request. Unless you have named an irrevocable beneficiary, you may change your
beneficiary designation by sending us a written request. After approval, the
change is effective as of the date you signed the request for change. We reserve
the right to require that you send us the Policy so that we can record the
change.
If no beneficiary(ies) survives the death of the surviving insured, the death
proceeds are paid to the owner(s) or the estate of the owner(s) in equal
percentages unless otherwise specified.
Benefit Instructions
While the insured is alive, you may give us instructions for payment of death
proceeds under one of the benefit options of the Policy. The instructions or
changes to the instructions must be in writing. If you change the
beneficiary(ies), prior benefit instructions are revoked.
Benefit Payment Options
While the insured is alive, you may arrange for death proceeds to be paid in a
lump sum or under one of the benefit payment options. These choices are also
available if the Policy is surrendered or matures.
o Option A - Special Benefit Arrangement A specially designed benefit option
may be arranged with our approval.
o Option B - Proceeds left at interest We hold the amount of the benefit on
deposit. Interest payments are made annually, semiannually, quarterly or
monthly as selected.
o Option C - Fixed Income We pay income of a fixed amount for a fixed period
(not exceeding 30 years).
o Option D - Life Income We pay income during a person's lifetime. A minimum
guaranteed period may be used.
o Option E - Joint and Survivor Life Income We pay income during the lifetime
of two people and continue until the death of the survivor. This option
includes a minimum guaranteed period of 10 years.
o Option F - Joint and Two-thirds Survivor Life Income We pay an income
during the lifetime of two people and two-thirds of the original amount
during the remaining lifetime of the survivor.
Interest at a rate set by us, but never less than required by state law, will be
applied to calculate the above benefit payment options.
Right to Exchange Policy
During the first 24 months after the policy date (except during a grace period),
you have the right to exchange your Policy for any other form of fixed benefit
individual life insurance policy (other than term insurance) that we make
available for this purpose. No charge is imposed on this exchange. Your exchange
request must be postmarked or delivered to our home office before the end of the
24-month period. The exchange is effective when we receive 1) your written
request, 2) any amount required as an adjustment, and 3)
surrender of the Policy.
You may also exchange the Policy for a fixed-benefit, flexible premium policy we
make available for this purpose if there is a material change in the investment
policy of a division (see GENERAL PROVISIONS - Addition, Deletion or
Substitution of Investments). In addition, you have the right to exchange a face
amount increase for a fixed-benefit, flexible premium policy we make available
for this purpose at any time during the first 24 months after the increase (but
not during a grace period) (see DEATH BENEFITS AND RIGHTS - Adjustment Options).
The new policy:
o at your option, provides either the same death benefit or the same amount
at risk as the Policy did at the time of your request;
o has the same insured as the original Policy;
o premiums are based on the same gender, issue age and risk classification;
o payments and cash values or policy values may be adjusted to reflect
variances, if any, in the payments and policy values under the Policy and
the new policy;
o minimum benefits are fixed and guaranteed;
o does not participate in the investment experience of the Separate Account;
and
o does not require evidence of insurability.
Any policy loan and loan interest must be:
o repaid before the exchange, or
o transferred to the new policy.
Benefit riders included as a part of the Policy may be exchanged, without
evidence of insurability, for similar benefit riders on the new policy. Two
conditions must be met:
o in your written request for the exchange, you must indicate that the
rider(s) should be part of the new policy; and
o the similar benefit rider(s) is available for the new policy on the
effective date of the benefit rider for the Policy based on the same issue
age, gender and risk classification of the insured under the Policy.
Participating Policy
Policies issued in certain states share in any divisible surplus of the Company.
The Company will determine each Policy's share of the surplus and will credit it
as a dividend at the end of each policy year. The Company does not expect to pay
any dividends under the Policy. Dividends, if any, will be paid in cash.
Policies issued in certain other states will not share in any divisible surplus
of the Company. A current list of which category your state falls into may be
obtained from a sales representative or our home office.
Incontestability
We will not contest the insurance coverage provided by the Policy, except for
any increases in face amount, after the Policy has been in force during the
lifetime of either insured for a period of two years from the policy date. Any
face amount increase has its own two-year contestability period that begins on
the effective date of the adjustment. The time limit in the incontestability
period does not apply to fraudulent misrepresentations.
Suicide
Death proceeds are not paid if the insured dies by suicide, while sane or
insane, within two years of the policy date (or two years from the date of face
amount increase with respect to such increase). In the event of the suicide of
the insured within two years of the policy date, our only liability is a refund
of premiums paid, without interest, minus any policy loans and unpaid loan
interest and partial surrenders. In the event of suicide within two years of a
face amount increase, our only liability with respect to that increase is a
refund of the cost of insurance for the increase. Any refund will be paid to the
beneficiary(ies).
Delay of Payments
Payment due to exercise of your rights under the free-look provision,
surrenders, policy loans, death or maturity proceeds, and transfers to or from
an Investment Account are generally made within five days after we receive your
instructions in a form acceptable to us. This period may be shorter where
required by law. However, payment of any amount upon return of the Policy, total
or partial surrender, policy loan, death, maturity or the transfer to or from a
division of the Separate Account may be deferred during any period when the
right to sell mutual fund shares is suspended as permitted under provisions of
the Investment Company Act of 1940 (as amended).
The right to sell shares may be suspended during any period when:
o trading on the New York Stock Exchange is restricted as determined by the
SEC or when the Exchange is closed for other than weekends and holidays, or
o an emergency exists, as determined by the SEC, as a result of which:
o disposal by a fund of securities owned by it is not reasonably
practicable;
o it is not reasonably practicable for a fund to fairly determine the
value of its net assets; or
o the SEC permits suspension for the protection of security holders.
If payments are delayed and your instruction is not canceled by your written
instruction, the amount of the transaction is determined the first valuation
date following the expiration of the permitted delay. The transaction is made
within five days thereafter.
In addition, payments on surrenders attributable to a premium payment made by
check may be delayed up to 15 days. This permits payment to be collected on the
check.
Addition, Deletion or Substitution of Investments
We reserve the right to make certain changes if, in our judgement, they best
serve your interests or are appropriate in carrying out the purpose of the
Policy. Any changes are made only to the extent and in the manner permitted by
applicable laws. Also, when required by law, we will obtain your approval of the
changes and approval from any appropriate regulatory authority. Approvals may
not be required in all cases. Examples of the changes we may make include:
o transfer assets in any division to another division or to the Fixed
Account;
o add, combine or eliminate divisions in the Separate Account; or
o substitute the shares of an Investment Account for the Investment Account
shares in any division:
o if shares of an Investment Account are no longer available for
investment; or
o if in our judgement, investment in an Investment Account becomes
inappropriate considering the purposes of the Separate Account.
If we eliminate or combine existing divisions or transfer assets from one
division to another, you may change allocation percentages and transfer any
value in an affected division to another Investment Account(s) and/or the Fixed
Account without charge. In the alternative, you may exchange the Policy for a
fixed-benefit, flexible premium life insurance policy we offer for this purpose.
You may exercise this exchange privilege until the latter of 60 days after: 1)
the effective date of the change; or 2) the date you receive a notice of the
options available. You may only exercise this right if you have an interest in
the affected division(s). The face amount of the new policy is the death benefit
of the Policy on the date of the exchange.
DISTRIBUTION OF THE POLICY
We intend to sell the Policies in all jurisdictions where we are licensed. The
Policies will be sold by licensed insurance agents who are also registered
representatives of broker-dealers registered with the SEC under the Securities
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc. (NASD).
The Policies will be distributed by the general distributor, Princor Financial
Services Corporation (Princor), which is an affiliate of ours. Princor is a
securities broker-dealer registered with the SEC and a member of the NASD. The
Policies may also be sold through other broker-dealers authorized by Princor and
applicable law to do so. Registered representatives of such broker-dealers may
be paid on a different basis than described below.
For Policies sold through Princor, commissions generally will be no more than
50% of premium received in the first policy year, or the first year following an
adjustment, up the planned periodic premium (not to exceed target premium). In
addition, a commission of up to 3% of premium above the lesser of planned
periodic or target premium received in the first policy year (or first year
following an adjustment) may be paid. In the second through tenth years
following the policy date (or adjustment date), commissions range from 0% to 2%
of premiums received. A service fee of up to 2% is paid on premiums received
after the second policy year. Expense allowances may be paid to agents and
brokers based on premiums received.
For the twelve month period ended December 31, 1998, we paid Princor $12,022,076
to compensate registered representatives of Princor for sale of these Policies.
OFFICERS AND DIRECTORS OF PRINCIPAL MANAGEMENT CORPORATION
The officers and directors of the investment advisor, Principal Management
Corporation, are shown below. This list includes some of the same people
(designated by *), who are serving in the same capacities as officers and
directors of the underwriter, Princor Financial Services Corporation. The
principal business address for each officer and director is: Principal Financial
Group, Des Moines, Iowa 50392.
*JOHN E. ASCHENBRENNER Director
CRAIG R. BARNES Vice President
*CRAIG L. BASSETT Treasurer
*MICHAEL J. BEER Executive Vice President and Chief Operating Officer
*MARY L. BRICKER Assistant Corporate Secretary
*DAVID J. DRURY Director
*ARTHUR S. FILEAN Vice President
*PAUL N. GERMAIN Vice President - Mutual Fund Operations
*ERNEST H. GILLUM Vice President - Compliance and Product Development
*THOMAS J. GRAF Director
*J. BARRY GRISWELL Chairman of the Board and Director
*JOYCE N. HOFFMAN Vice President and Corporate Secretary
*STEPHAN L. JONES Director and President
*ELLEN Z. LAMALE Director
*GREGG R. NARBER Director
*RICHARD L. PREY Director
*LAYNE A. RASMUSSEN Controller - Mutual Funds
*ELIZABETH R. RING Controller
*MICHAEL J. ROUGHTON Counsel
*JEAN B. SCHUSTEK Product Compliance Officer - Registered Products
DEWAIN A. SPARRGROVE Vice President
OFFICERS AND DIRECTORS OF PRINCIPAL LIFE INSURANCE COMPANY
Principal Life Insurance Company is managed by a Board of Directors. The
directors and executive officers of the Company, their positions with the
Company, including Board Committee memberships, and their principal occupation
during the last five years, are as follows:
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS):
JOHN EDWARD ASCHENBRENNER Senior Vice President
DENNIS PAUL FRANCIS Senior Vice President
THOMAS JEFFERSON GAARD Senior Vice President
MICHAEL HARRY GERSIE Senior Vice President
THOMAS JOHN GRAF Senior Vice President
GREGG ROSS NARBER Senior Vice President and General Counsel
MARY AGNES O'KEEFE Senior Vice President
RICHARD LEO PREY Senior Vice President
CARL CHANSON WILLIAMS Senior Vice President and Chief Information Officer
<TABLE>
DIRECTORS:
<CAPTION>
Name, Positions and Offices Principal Occupation During Last 5 Years
- --------------------------------------------------------------------------------
<S> <C>
MARY VERMEER ANDRINGA President and Chief Operating Officer, Vermeer Manufacturing Company.
Director
Member, Nominating Committee
BETSY JEAN BERNARD Executive Vice President, U.S. West since 1998. President and Chief Executive Officer,
Director since 1998.President and Chief Executive Officer, AVIRNEX Communications Group
since 1997. President and Chief Executive Officer, Pacific Bell Communications since
1995.
JOCELYN CARTER-MILLER Vice President, Motorola, Inc. since 1998. Vice President and General Manager,
Director since 1997. Prior thereto, Vice President of Latin American and Caribbean Operations
of Motorola.
RUTH MARGARET DAVIS President and Chief Executive Officer, The Pymatuning Group, Inc.
Director
Member, Nominating Committee
DAVID JAMES DRURY Chairman and Chief Executive Officer, Principal Life Insurance Company since
Director January 1995. President and Chief Executive Officer from 1994 - 1995; President
Chairman of the Board from 1993 - 1994; Executive Vice President from 1992 - 1993.
Chair, Executive Committee
CHARLES DANIEL GELATT, JR. President, NMT Corporation.
Director
Member, Executive Committee
Chair, Human Resources Committee
JOHN BARRY GRISWELL President, Principal Life Insurance Company since March 1998. Executive Vice
Director President 1996 - 1998. Senior Vice President 1988 - 1996.
GERALD DAVID HURD Retired. Chairman and Chief Executive Officer, Principal Life Insurance Company
Director 1989 - 1994.
Member, Executive and
Nominating Committees
THEODORE MURTAGH HUTCHISON Retired. Vice Chairman, Principal Life Insurance Company 1994 - 1997. Prior
Director thereto, Executive Vice President.
Member, Audit Committee
CHARLES SAMUEL JOHNSON Chairman, President and Chief Executive Officer, Pioneer Hi-Bred International, Inc. since
Director December 1996. President and Chief Executive Officer 1995 - 1996. President and Chief
Member, Audit Committee Operating Officer 1995. Executive Vice President 1993 - 1995.
WILLIAM TURNBALL KERR Chairman, President & Chief Executive Officer, Meredith Corporation since January 1998.
Director President and Chief Executive Officer, 1997-1998. President and Chief Operating Officer
Member, Executive Committee and 1994 -1997. Prior thereto, Executive Vice President.
Chair, Nominating Committee
LEE LIU Chairman and Chief Executive Officer, IES Industries, Inc., since November 1996. Prior
Director thereto, Chairman, President and Chief Executive Officer.
Member, Executive and Human
Resources Committees
VICTOR HENDRIK LOEWENSTEIN Managing Partner, Egon Zehnder International
Director
Member, Audit Committee
RONALD DALE PEARSON Chairman, President and Chief Executive Officer, Hy-Vee, Inc.
Director
Member, Human Resources Committee
JOHN ROY PRICE Managing Director, The Chase Manhattan Corporation since April 1996. Prior thereto,
Director Managing Director, Chemical Banking Corporation.
Member, Nominating Committee
DONALD MITCHELL STEWART President, The College Board.
Director
Member, Human Resources Committee
ELIZABETH EDITH TALLETT President & CEO of Dioscor, Inc. & Serex, Inc. since 1996. President and Chief Executive
Director Officer, Transcell Technologies, Inc. 1992 - 1996.
Chair, Audit Committee
DEAN DICKSON THORNTON Retired since 1993. Prior thereto President, Boeing Commercial Airplane Group.
Director
Member, Audit Committee
FRED WILLIAM WEITZ President, Chairman of the Board and Chief Executive Officer, Essex Meadows, Inc. since
Director 1995. Prior thereto, President, Chairman of the Board, and Chief Executive Officer, The
Member, Human Resources Committee Weitz Corporation and its subsidiaries.
</TABLE>
STATE REGULATION
The Company is subject to the laws of the State of Iowa governing insurance
companies and to regulation by the Insurance Department of the State of Iowa. An
annual statement in a prescribed form must be filed by March 1 in each year
covering our operations for the preceding year and our financial condition on
December 31 of the prior year. Our books and assets are subject to examination
by the Commissioner of Insurance of the State of Iowa or her representatives at
all times. A full examination of our operations is conducted periodically by the
National Association of Insurance Commissioners. Iowa law and regulations also
prescribe permissible investments, but this does not involve supervision of the
investment management or policy of the Company.
In addition, we are subject to the insurance laws and regulations of other
states and jurisdictions where we are licensed to operate. Generally, the
insurance departments of these states and jurisdictions apply the laws of the
state of domicile in determining the field of permissible investments.
FEDERAL TAX MATTERS
The following description is a general summary of the tax rules, primarily
related to federal income taxes, which in our opinion are currently in effect.
These rules are based on laws, regulations and interpretations that are subject
to change at any time. This summary is not comprehensive and is not intended as
tax advice. While we reserve the right to change the Policy to assure it
continues to qualify as life insurance for tax purposes, we cannot make any
guarantee regarding the future tax treatment of any Policy. You should consult a
qualified tax adviser about the tax implications of taking action under a
Policy.
Tax Status of the Company and the Separate Account
We are taxed as an insurance company under subchapter L of the Code. The
Separate Account is not a separate taxable entity. Its operations are taken into
account by us in determining our tax liability. All Separate Account investment
income and realized net capital gains are reinvested and taken into account in
determining policy values and are automatically applied to increase the book
reserves associated with the Policies.
Charges for Taxes
We impose a federal tax charge equal to 1.25% of premiums received under the
Policy to compensate us for the federal income tax liability we incur by reason
of receiving those premiums. We believe that this charge is reasonable in
relation to the increased tax burden the Company incurs as a result of Section
848 of the Code. No other charge is currently made to the Separate Account for
federal income taxes of the Company that may be attributable to the Separate
Account. Periodically, we review the appropriateness of charges to the Separate
Account for federal income taxes. In the future, a charge may be made for
federal income taxes incurred by us and attributable to the Separate Account. In
addition, depending on the method of calculating interest on policy values
allocated to the Fixed Account, a charge may be imposed for the Policy's share
of our federal income taxes attributable to the Fixed Account.
Under current law, we may incur state or local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant. If there
is a material change attributable to state or local taxes, we reserve the right
to charge the Separate Account for the portion of taxes, if any, attributable to
the Separate Account.
Diversification Standards
The Policy should qualify as a life insurance contract as long as the underlying
investments for the Policy satisfy diversification requirements of Section
817(h) of the Code.
IRS Definition of Life Insurance
The Policy should qualify as a life insurance contract as long as it satisfies
certain tests under Section 7702 of the Code.
o The Policy qualifies if it satisfies a cash value accumulation test or a
guideline premium requirement and falls within a cash value corridor.
o If at any time a premium is paid which would result in total premiums
exceeding the current maximum premium allowed, we only accept that portion
of the premium which would make the total premiums equal the maximum.
Modified Endowment Contract Status
Section 7702A of the Code sets forth a classification of life insurance policies
known as "Modified Endowment Contracts." Policy loans and partial surrenders
from a policy that is classified as a modified endowment contract are taxable as
ordinary income to the owner in an amount equal to the lesser of the amount of
the loan/partial surrender or the excess of policy value over the owner's
investment in the Policy. Additionally, taxable distributions are subject to a
federal income tax penalty of 10% unless the payment is:
o made after the owner attains age 59 1/2;
o attributable to the taxpayer becoming disabled; or
o part of a series of substantially equal periodic payments (made not less
frequently than annually) made for the life or life expectancy of the
taxpayer.
Modified endowment contract classification may be avoided by limiting the amount
of premiums paid under the Policy. If you contemplate a large premium payment
under this Policy, and you wish to avoid modified endowment contract status, you
may contact us before making the payment and we will tell you the maximum amount
which can be paid into the Policy before it would become a modified endowment
contract.
Policy Surrenders and Partial Surrenders
A surrender or lapse of the Policy may have income tax consequences. Upon
surrender, the owner(s) is not taxed on the cash surrender value except for the
amount, if any, that exceeds the gross premiums paid less the untaxed portion of
any prior surrenders. The amount of any policy loan, upon surrender or lapse, is
added to the cash surrender value and treated, for this purpose, as if it had
been received. A loss incurred upon surrender is generally not deductible. The
tax consequences of a surrender may differ if the proceeds are received under
any income payment settlement option.
A total surrender of the Policy will, and a partial surrender may, be included
in your gross income to the extent that the distribution exceeds your investment
in the Policy. Partial surrenders generally are not taxable unless the total of
such surrenders exceeds total premiums paid to the date of partial surrender
less the untaxed portion of any prior partial surrenders. During the first 15
policy years, an amount may be taxable prior to your tax-free recovery of your
investment in the Policy if the partial surrender results in or is necessitated
by a reduction in death benefits. A qualified tax advisor should be consulted
regarding the tax consequences of any partial surrender during the first 15
policy years.
The increase in policy value of the Policy is not included in gross income
unless and until there is a total surrender or partial surrender under the
Policy. A complete surrender of the Policy will, and a partial surrender may, be
included in your gross income to the extent the distribution exceeds your
investment in the Policy. Transfers between the Investment Accounts and/or the
Fixed Account are not considered as distributions from the Policy and would not
be considered taxable income.
Policy Loans and Loan Interest
Loans received under the Policy are generally recognized as loans for tax
purposes and are not considered to be distributions subject to tax. Interest
paid to us as a result of a policy loan may or may not be deductible depending
on a number of factors. Due to the complexity of these factors, you should
consult a competent tax advisor as to the deductibility of interest paid on
policy loans. If the Policy is a modified endowment contract, a policy loan is
taxable to an amount equal to the lesser of the amount of the loan or the excess
of policy value over the owner's investment in the Policy.
Corporate Alternative Minimum Tax
Ownership of a Policy by certain corporations may affect the owner's exposure to
the corporate alternative minimum tax. In determining whether it is subject to
alternative minimum tax, the corporate owner must make two computations. First,
the corporation must take into account a portion of the current year's increase
in the built-in gain in its corporate owned policies. Second, the corporation
must take into account a portion of the amount by which the death benefits
received under any Policy exceed the sum of 1) the premiums paid on that Policy
in the year of death, and 2) the corporation's basis in the Policy (as measured
for alternative minimum tax purposes) as of the end of the corporation's tax
year immediately preceding the year of death. The corporate alternative minimum
tax does not apply to S corporations. Such tax also does not apply to "Small
Corporations" as defined by section 55(c) of the Code. Corporations with gross
receipts of $5,000,000 or less for their first taxable year after 1996 with
gross receipts not exceeding $7,500,000 after the first taxable year will meet
this definition.
Exchange or Assignment of Policies
A change of policy or insured, or an exchange or assignment of a Policy may have
tax consequences. An assignment or exchange may result in taxable income to the
transferring owner. For complete information with respect to policy assignments
and exchanges, a qualified tax advisor should be consulted.
Withholding
Withholding is generally required on certain taxable distributions under
insurance contracts. In the case of periodic payments, the withholding is at
graduated rates. With respect to non-periodic distributions, withholding is a
flat rate of 10%. You may elect to have either non-periodic or periodic payments
made without withholding except if your tax identification number has not been
furnished to us or if the IRS has notified us that the number you furnished is
incorrect.
Taxation of Accelerated Death Benefits
We provide accelerated death benefits on a lien basis. It is unclear as to
whether benefits paid under this rider are taxable. For information regarding
taxation of accelerated death benefits, a qualified tax advisor should be
consulted.
Other Tax Issues
Federal estate taxes and state and local estate, inheritance and other taxes may
become due depending on applicable law and your circumstances or the
circumstances of the policy beneficiary(ies) if you or the insured dies. Any
person concerned about the estate implications of the Policy should consult a
competent tax advisor.
EMPLOYEE BENEFIT PLANS
The United States Supreme Court has held that optional annuity benefits under a
qualified deferred compensation plan cannot vary on the basis of gender. Polices
are available for use in connection with employment related insurance or benefit
plans which do not vary between male and female insured of a particular age and
underwriting classification. A competent tax advisor should be consulted on
these matters.
LEGAL OPINIONS
Legal matters applicable to the issue and sale of the Policies, including our
right to issue Policies under Iowa Insurance Law, have been passed upon by Gregg
R. Narber, Senior Vice President and General Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a party
or which would materially affect the Separate Account.
REGISTRATION STATEMENT
This prospectus omits some information contained in the registration statement
that we have filed with the SEC. Statements contained in this prospectus are
summaries of the contents of the Policy and other legal documents.
OTHER VARIABLE INSURANCE CONTRACTS
The Company currently offers other variable life contracts that participate in
the Separate Account. In the future, we may designate additional group or
individual variable annuity contracts as participating in the Separate Account.
RESERVATION OF RIGHTS
The Company reserves the right to amend or terminate the special plans described
in this prospectus. Such plans include preauthorized premium payments, dollar
cost averaging (DCA) and automatic portfolio rebalancing (APR). You would be
notified of any such action to the extent required by law.
YEAR 2000 READINESS DISCLOSURE
Starting in early 1995, as a corporate effort, the Company recognized the Year
2000 could have a significant impact on our operations. With the strong
commitment from the Board of Directors, Chief Executive Officer and Chief
Information Officer, we initiated a comprehensive plan to ensure our systems and
facilities would function correctly regardless of the date on the calendar.
Assessments of our computer systems were completed in 1996. We identified 35,000
programs comprising 40 million lines of mainframe code, 1,300 PC software
packages, and 400,000+ end-user PC applications that could be affected by the
Year 2000.
Our analysis didn't stop there. We requested Year 2000 compliance status
information from hardware and software vendors of over 1,000 PC systems and 450
mainframe systems. New purchase agreements, along with renewal agreements, have
included a "Year 2000" warranty clause since 1997.
In 1997, we contacted critical service and product suppliers such as banks and
utility companies regarding their Year 2000 readiness. To further assess the
stability of our external supply chain, we conducted another survey in 1998, and
a third evaluation of our most critical suppliers will take place in 1999.
As of December 31, 1998, 100 percent of our identified mission critical system
renovations were completed, tested and in production. We expect to complete the
remaining identified changes by June 30, 1999 (when we receive and install
updated software releases from our outside vendors).
Full-scale testing of our systems began in March 1998 using an in-house,
isolated testing facility. We include "system date manipulation" and "file
aging" processes to verify a wide variety of dates before, on, and after January
1, 2000, including February 29, 2000 (leap day).
Our objective is to complete full-scale testing of all identified mission
critical systems in second quarter 1999, with significant attentions to year-end
and leap-year processing. Verification will continue through 1999, and into the
early part of 2000, to ensure no new date related problems are introduced into
previously tested or newly developed systems.
We believe our thorough systems testing process should eliminate significant
date related problems that could affect our systems. We will have staff onsite
during critical times to ensure a timely and accurate response to unforeseen
issues which may arise.
Contingency plan development began July 1998. The methodology was documented in
November 1998. We expect initial plans to be completed by March 31, 1999. These
plans are being developed to address external systems and non-systems events
that could affect our operations. Many of those scenarios are beyond our
control, so we are identifying possible options, which will minimize their
impact. We are also communicating with other entities involved to encourage
their Year 2000 preparedness. We will re-evaluate our contingency plans
throughout the Year 2000 experience.
The cost associated with completing our Year 2000 readiness for the business
unit of the Company which issues the Policy is estimated to be $1.3 - $1.6
million.
Additional corporate Y2K information can be found on our website at
www.principal.com/general/faqy2k.htm
INDEPENDENT AUDITORS
The financial statements of the Principal Life Insurance Company Variable Life
Separate Account and the consolidated financial statements of the Principal
Financial Group(R) (comprised of Principal Life Insurance Company and its
subsidiaries) are included in this prospectus. Those statements have been
audited by Ernst & Young LLP, independent auditors, 801 Grand Avenue, Des
Moines, Iowa 50309, for the periods indicated in their reports.
FINANCIAL STATEMENTS
The consolidated financial statements of The Principal Financial Group(R)
(comprised of the Company and its subsidiaries) which are included in this
prospectus should be considered only as it relates to our ability to meet our
obligations under the Policy. They do not relate to investment performance of
the assets held in the Separate Account.
CUSTOMER INQUIRIES
Your questions should be directed to: PrinFlex Life(R), Principal Financial
Group, P.O. Box ________, Des Moines, Iowa _____-_______,1-800- 247-9988
<PAGE>
PART II. OTHER INFORMATION
UNDERTAKING 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 heretofore or hereafter adopted under the authority conferred in that
section.
UNDERTAKING PURSUANT TO RULE 484
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, 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 had 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 OF THE INVESTMENT COMPANY ACT OF 1940
Principal Life Insurance Company represents the fees and charges deducted
under the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
Company.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The prospectus, consisting of 97 pages;
The undertaking to file reports;
The undertaking pursuant to Rule 484;
Representations pursuant to Section 26 of the Investment Company Act of
1940;
The signatures;
Written consents of the following persons:
G.R. Narber, Esq.(Filed January 8, 1996)
The following exhibits:
1. Copies of all exhibits required by paragraph A of the
instructions as to exhibits in Form N-8B-2 are set forth below
under designations based on such instructions:
1.A(1) Resolution of Executive Committee of Board of Directors of
Principal Life Insurance Company establishing the Variable
Life Separate Account.(*Filed January 8, 1996)
1.A(3)(a) Distribution Agreement between Princor Financial Services
Corporation and Principal Life Insurance Company.
(*Filed January 8, 1996)
1.A(3)(a)(i) Form of Selling Agreement. (@Filed December 19, 1997)
1.A(3)(b) Registered Representative Agreement.(*Filed January 8, 1996)
1.A(3)(c) Schedule of sales commissions.(*Filed January 8, 1996)
1.A(5)(a) Form of PrinFlex Life Insurance Policy.(**Filed June 5, 1996)
1.A(5)(a)(i) Cost of Living Increase Rider.(**Filed June 5, 1996)
1.A(5)(a)(ii) Waiver of Monthly Policy Charge Rider.(**Filed June 5, 1996)
1.A(5)(a)(iii) Waiver of Specified Premium Rider.(**Filed June 5, 1996)
1.A(5)(a)(iv) Accidental Death Benefit Rider.(*Filed January 8, 1996)
1.A(5)(a)(v) Children Term Insurance Rider.(**Filed June 5, 1996)
1.A(5)(a)(vi) Spouse Term Insurance Rider.(**Filed June 5, 1996)
1.A(5)(a)(vii) Change of Insured Rider.(**Filed June 5, 1996)
1.A(5)(a)(viii)Death Benefit Guarantee Rider.(**Filed June 5, 1996)
1.A(5)(a)(ix) Salary Increase Rider.(**Filed June 5, 1996)
1.A(5)(a)(x) Extra Protection Increase Rider.(**Filed June 5, 1996)
1.A(5)(a)(xi) Accounting Benefits Rider.(*Filed January 8, 1996)
1.A(5)(a)(xii) Extended Coverage Rider.(*Filed June 5, 1996)
1.A(5)(a)(xiii)Accelerated Benefits Rider.(*Filed January 8, 1996)
1.A(5)(b) Form of PrinFlex Life Insurance Policy - Unisex Version.
(**Filed June 5, 1996)
1.A(5)(b)(i) Accidental Death Benefit Rider.(**Filed January 8, 1996)
1.A(5)(b)(ii) Children Term Insurance Rider.(**Filed June 5, 1996)
1.A(5)(b)(iii) Spouse Term Insurance Rider.(**Filed June 5, 1996)
1.A(5)(b)(iv) Change of Insured Rider.(**Filed June 5, 1996)
1.A(5)(b)(v) Death Benefit Guarantee Rider.(**Filed June 5, 1996)
1.A(6)(a) Articles of Incorporation, as Amended of Principal Life
Insurance Company.(*Filed January 8, 1996)
1.A(6)(b) By-laws of Principal Life Insurance Company.
(*Filed January 8, 1996)
1.A(10) Form of Application for PrinFlex Life Insurance Policy.
(*Filed January 8, 1996)
1.A(10)(b) Form of Supplemental Application for PrinFlex Life Insurance
Policy.(**Filed June 5, 1996)
2. Opinion and consent of G.R. Narber, Senior Vice President and
General Counsel of Principal Life Insurance Company.
(*Filed January 8, 1996)
3. No financial statements will be omitted from the prospectus
pursuant to Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
6. Consent of Ernst & Young LLP.^
7. Description of Issuance, Transfer and Redemption Procedures
Pursuant to Rule 6e-3(T)(b)(12)(iii).(***Filed October 23, 1996)
8. Powers of Attorney of Directors of Principal Life
Insurance Company.(*, ***, +)
9. Opinion and consent of Lisa Ford, Assistant Actuary.^
- ---------------------------
* Filed by Initial Filing.
** Filed by Amendment No. 1.
*** Filed by Amendment No. 2.
@ Filed by Amendment No. 3.
+ Filed by Amendment No. 6.
^ to be filed by amendment
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Principal Life Insurance Company Variable Life Separate Account,
certifies that it meets the requirements of Securities Act Rule 485(a) for
effectiveness of the Registration Statement and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned
thereto duly authorized in the city of Des Moines and State of Iowa, on the 26th
day of February 26, 1999.
PRINCIPAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
(Registrant)
By: PRINCIPAL LIFE INSURANCE COMPANY
(Depositor)
/s/ D. J. Drury
By ______________________________________________
D. J. Drury
Chairman and Chief Executive Officer
Attest:
/s/ Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statment has been signed below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ D. J. Drury Chairman and February 26, 1999
- -------------------- Chief Executive Officer
D. J. Drury
/s/ D. C. Cunningham Vice President and February 26, 1999
- -------------------- Controller (Principal
D. C. Cunningham Accounting Officer)
/s/ M. H. Gersie Senior Vice President February 26, 1999
- -------------------- (Principal Financial
M. H. Gersie Officer)
(M. V. Andringa)* Director February 26, 1999
- --------------------
M. V. Andringa
(R. M. Davis)* Director February 26, 1999
- --------------------
R. M. Davis
(C. D. Gelatt, Jr.)* Director February 26, 1999
- --------------------
C. D. Gelatt, Jr.
(J. B. Griswell)* Director February 26, 1999
- --------------------
J. B. Griswell
(G. D. Hurd)* Director February 26, 1999
- --------------------
G. D. Hurd
(T. M. Hutchison)* Director February 26, 1999
- --------------------
T. M. Hutchison
(C. S. Johnson)* Director February 26, 1999
- --------------------
C. S. Johnson
(W. T. Kerr)* Director February 26, 1999
- --------------------
W. T. Kerr
(L. Liu)* Director February 26, 1999
- --------------------
L. Liu
(V. H. Loewenstein)* Director February 26, 1999
- --------------------
V. H. Loewenstein
(R. D. Pearson)* Director February 26, 1999
- --------------------
R. D. Pearson
(J. R. Price)* Director February 26, 1999
- --------------------
J. R. Price
(D. M. Stewart)* Director February 26, 1999
- --------------------
D. M. Stewart
(E. E. Tallett)* Director February 26, 1999
- --------------------
E. E. Tallett
(D. D. Thornton)* Director February 26, 1999
- --------------------
D. D. Thornton
(F. W. Weitz)* Director February 26, 1999
- --------------------
F. W. Weitz
*By /s/ David J. Druy
------------------------------------
David J. Drury
Chairman and Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT INDEX
Page Number in
Sequential Numbering
Exhibit No. Description Where Exhibit Can Be Found
<S> <C> <C>
1.A(1) Resolution of Executive Committee *
of Board of Directors of Depositor
establishing Variable Life Separate
Account.
1.A(3)(a) Distribution Agreement Between *
Depositor and Principal Underwriter.
1.A(3)(a)(i) Form of Selling Agreement. *
1.A(3)(b) Registered Representative Agreement. *
1.A(3)(c) Schedule of Sales Commissions. *
1.A(5)(a) PrinFlex Life Policy. *
1.A(5)(a)(i) Cost of Living Increase Rider. *
1.A(5)(a)(ii) Waiver of Monthly Policy Charge Rider. *
1.A(5)(a)(iii) Waiver of Specified Premium Rider. *
1.A(5)(a)(iv) Accidental Death Benefit Rider. *
1.A(5)(a)(v) Children Term Insurance Rider. *
1.A(5)(a)(vi) Spouse Term Insurance Rider. *
1.A(5)(a)(vii) Change of Insured Rider. *
1.A(5)(a)(viii) Death Benefit Guarantee Rider. *
1.A(5)(a)(ix) Salary Increase Rider. *
1.A(5)(a)(x) Extra Protection Increase Rider. *
1.A(5)(a)(xi) Accounting Benefits Rider. *
1.A(5)(a)(xii) Extended Coverage Rider. *
1.A(5)(a)(xiii) Accelerated Benefits Rider. *
1.A(5)(b) PrinFlex Life Policy - Unisex Version. *
1.A(5)(b)(i) Accidental Death Benefit Rider. *
1.A(5)(b)(ii) Children Term Insurance Rider. *
1.A(5)(b)(iii) Spouse Term Insurance Rider. *
1.A(5)(b)(iv) Change of Insured Rider. *
1.A(5)(b)(v) Death Benefit Guarantee Rider. *
1.A(6)(a) Articles of Incorporation, as Amended, *
of Depositor.
1.A(6)(b) By-laws of Depositor. *
1.A(10) Form of Application for the PrinFlex *
Life Policy.
1.A(10)(a) Form or Supplemental Application *
For the PrinFlex Life Policy.
2 Opinion and consent of G.R. Narber, *
Senior Vice President and General
Counsel.
6 Consent of Ernst & Young LLP **
7 Description of Issuance, Transfer and Redemption *
Procedurespursuant to Rule 6e-3(T)(b)(12(iii).
8 Powers of Attorney of Directors of 17
Principal Life Insurance
Company.
9 Opinion and consent of Lisa Ford, **
Assistant Actuary.
* Previously filed.
** to be filed by amendment
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal Life
Insurance Company, an Iowa corporation (the "Company"), hereby constitutes and
appoints D. J. Drury, J. B. Griswell, G. R. Narber and J. N. Hoffman, and each
of them (with full power to each of them to act alone), the undersigned's true
and lawful attorney-in-fact and agent, with full power of substitution to each,
for and on behalf and in the name, place and stead of the undersigned, to
execute and file any of the documents referred to below relating to registration
under the Securities Act of 1933 with respect to flexible premium variable life
insurance contracts, with premiums received in connection with such contracts
held in the Principal Life Insurance Company Variable Life Separate Account on
Form S-6 or other forms under the Securities Act of 1933, and any and all
amendments thereto and reports thereunder with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person; hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 26th
day of February, 1999.
/s/ Betsy J. Bernard
_____________________________
B. J. Bernard
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal Life
Insurance Company, an Iowa corporation (the "Company"), hereby constitutes and
appoints D. J. Drury, J. B. Griswell, G. R. Narber and J. N. Hoffman, and each
of them (with full power to each of them to act alone), the undersigned's true
and lawful attorney-in-fact and agent, with full power of substitution to each,
for and on behalf and in the name, place and stead of the undersigned, to
execute and file any of the documents referred to below relating to registration
under the Securities Act of 1933 with respect to flexible premium variable life
insurance contracts, with premiums received in connection with such contracts
held in the Principal Life Insurance Company Variable Life Separate Account on
Form S-6 or other forms under the Securities Act of 1933, and any and all
amendments thereto and reports thereunder with all exhibits and all instruments
necessary or appropriate in connection therewith, each of said attorneys-in-fact
and agents and his or their substitutes being empowered to act with or without
the others or other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person; hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 26th
day of February, 1999.
/s/ Jocelyn Carter-Miller
_____________________________
J. Carter-Miller
