Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUST REGISTERED ON
FORM N-8B-2
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
711 High Street
Des Moines, Iowa 50309
(Address of Depositor's Principal Executive Offices)
Traci L. Weldon
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50309
(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
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
----------------------------------
Title and Amount of Securities: Survivorship Flexible Premium Variable Universal
Life Insurance Policy. (Pursuant to Rule 24F-2 under the Investment Company Act
of 1940, the Registrant elects to register an indefinite amount of securities
being registered.)
Amount of Filing Fee: No fee required.
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
----------------------------------
The Registrant hereby amends its Registration Statement under the Securities Act
of 1933 on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
<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.............. Cover Page
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, Beneficiary, Assignment
10(b).......... Calculation of Accumulated Value; Unit Values; Net
Investment Factor; Valuations in Connection with a
Policy; Participating Policy
10(c), 10(d)... Summary (Transfers; Policy Loans; Loan Accounts;
Surrenders, Charges and Deductions; Death Benefits and
Proceeds; Maturity Proceeds)
10(e).......... Summary (Premiums, Termination and Reinstatement);
Policy Termination and Reinstatement (Policy
Termination; Reinstatement)
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)
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 (Policy Values); General
Provisions (Addition, Deletion or Substitution of
Investments); General Provisions (Optional Insurance
Benefits); 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).......... Not Applicable
12(c).......... Principal Life Insurance Company Variable Life
Separate Account; The Funds
12(d).......... Distribution of the Policy
12(e).......... Principal Life Insurance Company Variable Life
Separate Account
13(a).......... Principal Life Insurance Company Variable Life
Separate Account; Charges and Deductions
13(b), 13(c),
13(d), 13(e),
13(f), 13(g)... Summary (Charges and Deductions); Charges and
Deductions
14............. The Policy (To buy a Policy); Distribution of the
Policy
15............. Summary (Premiums); The Policy (Payment of Premiums;
Premium Limitations; Allocation of Premiums)
16............. Summary (The Policy); Principal Life Insurance Company
Variable Life Separate Account; The Policy (Policy
Values); 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 (Policy Values)
18(b).......... Summary (Policy Value); The Policy (Policy Values)
18(c).......... Summary (Policy Loans); The Policy (Policy Values;
Policy Loans; Loan Account)
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 Values;
Policy Loans)
21(c).......... Summary (Policy Value; Policy Loans); The Policy
(Policy Values; Policy Loans)
22............. General Provisions (The Contract; Incontestability)
23............. Not Applicable
24............. Summary
25............. The Company
26............. Summary (Investment Account); The Policy (Investment
Account Transfers)
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>
Survivorship Flexible Premium Variable Universal Life Insurance Policy
This survivorship 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 payable upon the death of the surviving insured;
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:
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Variable Contracts Fund, Inc. Fidelity Variable Insurance Products Fund II:
Aggressive Growth Account Contrafund Portfolio
Asset Allocation Account Fidelity Variable Insurance Products Fund:
Balanced Account Equity-Income Portfolio
Bond Account Fidelity Variable Insurance Products Fund:
Capital Value Account High Income Portfolio
Government Securities Account Putnam Variable Trust Global Asset Allocation Fund
Growth Account Putnam Variable Trust Vista Fund
International Account Putnam Variable Trust Voyager Fund
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
</TABLE>
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..................................................................... 5
The Policy............................................................. 5
Premiums............................................................... 6
Policy Value........................................................... 6
Investment Account..................................................... 6
Fixed Account.......................................................... 7
Transfers.............................................................. 7
Policy Loans........................................................... 7
Loan Account........................................................... 7
Surrenders............................................................. 7
Charges and Deductions................................................. 7
Death Benefits and Proceeds............................................ 8
Maturity Proceeds...................................................... 9
Adjustment Options..................................................... 9
Termination and Reinstatement.......................................... 9
Ten Day Examination Offer.............................................. 9
THE COMPANY................................................................. 9
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT............. 9
THE FUNDS................................................................... 10
THE POLICY.................................................................. 14
To Buy a Policy........................................................ 14
Payment of Premiums.................................................... 14
Premium Limitations.................................................... 15
Allocation of Premiums................................................. 15
Ten Day Examination Offer.............................................. 15
Policy Values.......................................................... 16
Investment Account Transfers........................................... 17
Fixed Account Transfers................................................ 17
Automatic Portfolio Rebalancing (APR).................................. 18
Policy Loans........................................................... 18
Loan Account........................................................... 19
Surrenders............................................................. 19
DEATH BENEFITS AND RIGHTS................................................... 20
Death Proceeds......................................................... 20
Death Benefit Options.................................................. 20
Change in Death Benefit Option......................................... 22
Adjustment Options..................................................... 22
CHARGES AND DEDUCTIONS...................................................... 22
Premium Expense Charge................................................. 23
Monthly Policy Charge.................................................. 23
Cost of Insurance Charge............................................... 23
Administration Charge.................................................. 24
Mortality and Expense Risk Charge...................................... 24
Transaction Charge..................................................... 24
Surrender Charge....................................................... 25
Other Charges.......................................................... 25
THE FIXED ACCOUNT........................................................... 25
POLICY TERMINATION AND REINSTATEMENT........................................ 26
Policy Termination..................................................... 26
Reinstatement............................................................... 27
OTHER MATTERS............................................................... 27
Voting Rights.......................................................... 27
Statement of Values.................................................... 28
Services Available by Telephone........................................ 28
GENERAL PROVISIONS.......................................................... 29
The Contract........................................................... 29
Optional Insurance Benefits............................................ 29
Misstatement of Age or Gender.......................................... 30
Assignment............................................................. 30
Ownership.............................................................. 30
Beneficiary............................................................ 31
Benefit Instructions................................................... 31
Benefit Payment Options................................................ 31
Rights to Exchange Policy.............................................. 31
Non-Participating Policy............................................... 31
Incontestability....................................................... 31
Suicide................................................................ 32
Delay of Payments...................................................... 32
Addition, Deletion or Substitution of Investments...................... 32
DISTRIBUTION OF THE POLICY.................................................. 33
OFFICERS AND DIRECTORS OF PRINCIPAL MANAGEMENT CORPORATION.................. 33
OFFICERS AND DIRECTORS OF PRINCIPAL LIFE INSURANCE COMPANY.................. 34
STATE REGULATION............................................................ 35
FEDERAL TAX MATTERS......................................................... 35
Tax Status of the Company and the Separate Account.......................... 35
Charges for Taxes...................................................... 35
Diversification Standards.............................................. 36
IRS Definition of Life Insurance....................................... 36
Modified Endowment Contract Status..................................... 36
Policy Surrenders and Partial Surrenders............................... 36
Policy Loans and Loan Interest......................................... 37
Corporate Alternative Minimum Taxes.................................... 37
Exchange or Assignment of Policies..................................... 37
Withholding............................................................ 37
Other Tax Issues....................................................... 37
EMPLOYEE BENEFIT PLANS...................................................... 37
LEGAL OPINIONS.............................................................. 37
LEGAL PROCEEDINGS........................................................... 37
REGISTRATION STATEMENT...................................................... 38
OTHER VARIABLE INSURANCE CONTRACTS.......................................... 38
Reservation of Rights.................................................. 38
YEAR 2000................................................................... 38
INDEPENDENT AUDITORS........................................................ 38
CUSTOMER INQUIRIES.......................................................... 38
FINANCIAL STATEMENTS........................................................ 38
APPENDIX A.................................................................. 39
APPENDIX B TARGET PREMIUMS.................................................. 44
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 - for each insured, it is 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.
insureds - the persons named as the "insureds" on the application for the
Policy. The insureds may or may not be the owners.
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.
monthly date - the day of the month which is the same day as the policy date.
Example: If the policy date is September 5, 1999, the first monthly date is
October 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 September 5, 1999, the first policy year
ends on September 4, 2000. The first policy anniversary falls on September
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.
surrender value - policy value minus any surrender charge.
surviving insured - the insured who is living at the death of the other insured.
If both insureds die simultaneously, then the term "surviving insured" means the
younger of the two insureds.
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
surrender 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 ___________
SUMMARY
This prospectus describes a survivorship 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 insurance protection covering two individuals,
o a death benefit payable at the death of the surviving insured, 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 account of a mutual fund
as follows:
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 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 value(s) of your Investment Account(s)
o plus value of your Fixed Account
o plus value of your Loan Account.
Investment Account
An Investment Account is set up for each division to which you allocate a
portion of your net premium. The value of an Investment Account reflects the
investment experience of the division that you choose.
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
Premium Expense Charge
Deductions from premiums during each of the first ten years (and with respect to
premiums made because of a face amount increase, during the first ten years
after the increase) equal:
o sales load of 5.0% of premiums paid which are less than or equal to
target premiums (2.0% of premiums in excess of target premiums)
o plus 2.20% for state and local taxes
o plus 1.25% for federal taxes.
Deductions after the first ten policy years (and after ten years of a face
amount increase) include:
o sales load of 2.0% of premiums paid
o plus 2.20% for state and local taxes
o plus 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)
(see CHARGES AND DEDUCTIONS - Surrender Charge).
Surrender charge percentage. The surrender charge during any policy year is
equal to the number of target premiums from the table below multiplied by the
applicable surrender charge percentage also shown below:
Joint Equivalent Age (JEA)
on policy or Number of
adjustment date target premiums
-------------------------- ---------------
75 or less 1.00
76 through 85 0.90
86 or greater 0.75
Surrender Charge Percentage Table
---------------------------------
Number of years since policy date The following percentage of
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
The surrender charge on a face amount increase is calculated by multiplying the
increase in target premium due to the face increase by the applicable number of
target premiums from the table above. This result is multiplied by the
applicable surrender charge percentage from the above table to get the increase
in surrender charges for all years.
Monthly Policy Charges
o Administration charge:
o The current monthly administration charge is $8.00 per month.
o An additional monthly administration charge is imposed in the
first ten policy years (and ten years after an increase in the
face amount) of $.07 per $1,000 of face amount. The charge of $.07
per $1,000 of face amount is increased by $.005 per $1,000 for
each insured that is classified as a smoker.
o Cost of insurance charge.
o Mortality and expense risks charge:
o in the first nine policy years, 0.80% of your Investment Accounts
per year;
o after the ninth policy year, 0.30% of your Investment Accounts
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 managementfees 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 surviving insured
dies. Death proceeds are calculated as of the date of death of the surviving
insured. The amount of the death proceeds is:
o the death benefit plus interest (as explained in DEATH BENEFITS AND
RIGHTS - Death Proceeds);
o plus proceeds from any benefit riders on the life of the surviving
insured;
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 surviving
insured until the date of payment or application under a benefit payment option.
Maturity Proceeds
If either 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 $100,000 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 $100,000.
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 planned periodic premium payment or additional premium
payments (after the expiration of a 61-day grace period).
Subject to certain conditions, you may reinstate a Policy that terminated
because 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 to provide long-term capital appreciation
sub-advisory agreement 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 to generate a total investment return
sub-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, Inc. to generate a total return consisting of
through a sub-advisory agreement current income and capital appreciation
while assuming reasonable risks in
furtherance of this objective.
Bond Bond Account Principal Life Insurance Company 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, Inc. to provide long-term capital appreciation
through a sub-advisory agreement 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 Invista Capital Management, Inc. to seek a high level of current income,
Account through a sub-advisory agreement 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, Inc. to seek growth of capital. The Account
through a sub-advisory agreement 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, Inc. to seek long-term growth of capital by
through a sub-advisory agreement investing in a portfolio of equity
securities domiciled in any of the
nations of the world.
International SmallCap International SmallCap Invista Capital Management, Inc. seeks long-term growth of capital. The
Account through a sub-advisory agreement 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 seeks long-term growth of capital. The
Management through a Account will attempt to achieve its
sub-advisory agreement 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, Inc. 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 a seeks long-term growth of capital. The
sub-advisory agreement 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 Life Insurance Company 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 Life Insurance Company 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, Inc. seeks long-term growth of capital. The
through a sub-advisory agreement 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. The
sub-advisory agreement 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 JP Morgan Asset Management, Inc. seeks long-term growth of capital. The
through a sub-advisory agreement Account will attempt to achieve its
objective by investing primarily in
equity securities of small growth
companies with value characteristics and
market capitalizations of less than
$1 billion.
Stock Index 500 Stock Index 500 Invista Capital Management, Inc. seeks long-term growth of capital. The
Account through a sub-advisory agreement Account attempts to mirror the investment
results of the Standard & Poor's Stock
Index.
Utilities Utilities Account; Invista Capital Management, Inc. seeks to provide current income and
through a sub-advisory agreement long-term growth of income and capital.
The Account will attempt to achieve its
objective by investing primarily in
equity and fix-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 Fidelity VIP Equity-Income Fidelity Management and seeks reasonable income by
Equity-Income Portfolio Research Company investing primarily in income-producing
equity securities.
Fidelity High Income Fidelity VIP High Income Fidelity Management and seeks a high level of current income by
Portfolio Research Company 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, Inc. Invista is a subsidiary
of Principal Life Insurance Company that makes it 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 $_______ billion. Invista's address is
1800 Hub Tower, 699 Walnut, Des Moines, Iowa 50309.
Account: Aggressive Growth and Asset Allocation
Sub-Advisor: Morgan Stanley Dean Witter Investment 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 $_____ billion, including
approximately $_____ billion under active management and $______
billion as Named Fiduciary or Fiduciary Advisor.
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.
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 ________ the Dreyfus
Corporation managed or administered approximately $___ billion in
assets for approximately _____ 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. Kansas City Southern Industries,
Inc. ("KCSI") owns approximately 87% of Berger. 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.
Account: SmallCap Value
Sub-Advisor: J.P. Morgan Asset 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 $_____ 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:
Management Other Total Account
Account Fees Expenses Annual Expenses
------- --------- -------- ---------------
Aggressive Growth
Asset Allocation
Balanced
Bond
Capital Value
Government Securities
Growth
International
International SmallCap
MicroCap
MidCap
MidCap Growth
Money Market
Real Estate
SmallCap
SmallCap Growth
SmallCap Value
Stock Index 500
Utilities
Fidelity Contrafund
Fidelity Equity-Income
Fidelity High Income
Putnam Global Asset Allocation
Putnam Vista
Putnam Voyager
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 when originally issued is $100,000. We
reserve the right to increase or decrease the minimum face amount.
To issue a Policy, we require at least one insured to be age 85 or younger as of
the policy date. Neither insured may be older than age 90 as of the policy date.
Other underwriting restrictions may apply.
Applicants for the Policy must:
o furnish satisfactory evidence of insurability of both insureds, and
o meet our insurance underwriting guidelines and suitability rules.
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.
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.
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. Your policy date is shown on the current
data pages.
Upon specific request and our approval, your Policy may be backdated. The policy
date may not be more than six months prior to the date of application (or
shorter period if required by state law). Payment of minimum monthly premium is
required for the backdated period. Monthly policy charges are deducted from the
policy value for the backdated period.
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 both insureds were 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. The minimum monthly premium is shown on the current
data pages for your Policy. You must pay premiums to us at our home office.
If the net surrender value on any monthly date is less than the monthly policy
charge, a 61-day grace period begins. However, during the first 60 policy
months, the Policy will stay in force if (a minus b) is greater than or equal to
(c) where:
o (a) is the sum of the premiums paid;
o (b) is the sum of all existing policy loans, unpaid loan interest,
partial surrenders and transaction charges; and
o (c) is the sum of the
minimum monthly premiums since the policy date to the most recent
monthly date.
After the first 60 policy months, 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.
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 or by payroll deduction (where
permitted by state law and approved by us).
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 more than 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 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 date 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.
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-__________. 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 See GENERAL PROVISIONS - Delay of Payments.
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.
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). There is no guaranteed minimum Investment Account value. Its value
reflects the investment experience of the Investment Accounts that you choose.
It also reflects your premium payments, partial surrenders, policy loans and the
Policy expenses deducted from the Separate Account.
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 surviving 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
divisions' 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:
[{share price of the underlying mutual fund account at the end of the
valuation period before that day's transactions
plus
per share amount of the dividend (or other distribution) made by the
mutual fund account during the valuation period}
divided by
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-__________) us a written request or calling us if telephone
privileges apply (1-800-_________). 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(s).
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 (minimum of 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.
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 Tranfers 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 if less.
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 date)
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.
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-_________). 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.
o You may elect APR at the time of application or after the Policy has
been issued.
o 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-___________, mailing us your written request or faxing your
request to us at 1-800-_______.
o The transfers are made at the end of the next valuation period after we
receive your instruction.
o APR is not available:
o for values in the Fixed Account, or
o if you have scheduled transfers from the same 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-__________. 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).
Whilethe Policy is in force and before the surviving 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 death of the surviving insured;
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 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.
o If the total surrender is within ten years of the policy date or a face
amount increase a surrender charge is imposed.
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 two percent 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 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 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 written 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 death of the surviving insured. If both insureds die
simultaneously, then surviving insured shall mean the younger of the two
insureds. No benefit is paid on the first death of an insured unless such
benefit exists under a rider.
o You must notify us of the first death of an insured as soon as possible
after it occurs. (This facilitates the timely payment of death proceeds
at the death of the surviving insured and may affect the status of any
riders.)
o We must receive proof of the deaths of both insureds 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 surviving insured's death and include:
o death benefit described below;
o plus proceeds from any benefit rider on the surviving insured's life;
o minus policy loans and unpaid loan interest;
o minus any overdue monthly policy charges if the surviving insured died
during a grace period;
o plus interest on the death proceeds from date of death of the surviving
insured until date of payment or application under a benefit payment
option. (We determine the interest rate that is 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 the Policy's
current face amount or the policy value on the date of death of the surviving
insured multiplied by the applicable percentage. The applicable percentage is
250% if the younger insured is 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 younger 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 younger insured's age increases. If the
current age of the younger 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
the current face amount plus the policy value on the date of death of the
surviving insured or the policy value on the date of death of the surviving
insured multiplied by the applicable percentage.
Illustration of Option 2. Assume that the younger insured is under age 40 and
that there is no loan amount and that the policy face amount is $500,000.
Under Option 2, the death benefit is the face amount plus the policy value on
the date of death of the surviving insured. For example, 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 on the date of death of
the surviving insured.
The applicable percentage lowers as the younger insured's age increases. If the
current age of the younger 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.)
Younger 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 and older 101
*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
$100,000. 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 $100,000. A
face amount increase request made in the first 60 policy months will increase
the minimum monthly premium for the remainder of the 60 months.
The request must be made on an adjustment application. The application must be
signed by the owner(s) and the insureds.
We will approve your request if:
o both insureds are alive at the time of your request; and
o the attained age of the older insured is age 90 or less and of the
younger insured is 85 or less at the time of the request; and
o we receive evidence satisfactory to us that at least one of the
insureds is insurable under our underwriting guidelines in place at the
time of your request.
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, on the effective date of the
adjustment, the amount of the premium payment being held minus the premium
expense charge, is moved to the Investment Accounts and/or Fixed Account. 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(s);
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 $100,000.
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.
Deductions from premiums during each of the first ten years and with respect to
premiums made because of a face amount increase, during the first ten years
after the increase equal:
o sales load of 5.0% of premiums paid which are less than or equal to
target premiums (2.0% of premiums in excess of target premiums) (See
Appendix B for additional information on target premiums.)
o plus 2.20% for state and local taxes
o plus 1.25% for federal taxes.
Deductions from premiums after the tenth policy year (and after ten years of a
face amount increase) equal:
o sales load of 2.0% of premiums made
o plus 2.20% for state and local taxes
o plus 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.
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.
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
the 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.
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 each 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* 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*, attained age and risk
classification of each insured.
Different cost of insurance rates may apply to face amount increases. The cost
of insurance for the increase is based on each 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 each insured's gender*, 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
1) Current charges
o The current monthly administration charge is $8.00 per month.
o An additional monthly administration charge is imposed in the first ten
policy years (and ten years after an increase in the face amount) of
$.07 per $1,000 of face amount. The charge of $.07 per $1,000 of face
amount is increased by $.005 per $1,000 for each insured that is
classified as a smoker.
2) Guaranteed administration charges
In all policy years, the guaranteed maximum monthly administration charge is
$8.00 per month plus ($.08 per $1,000 of face amount). The charge of $.08 per
$1,000 of face amount is increased by $.005 per $1,000 for each insured that is
classified as a smoker.
The monthly administration charge reimburses 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 0.80% of your Investment Account(s). Each month
thereafter, we deduct a charge at an annual rate of 0.30% of your Investment
Account(s).
We reserve the right to increase the annual rate but guarantee that the maximum
annual rate will not exceed 0.80%. If we increase the annual rate, the increase
will only apply to policies issued on or after the date of the increase.
Transaction Charge
A transaction fee of the lesser of $25 or 2% of the surrender amount applies to
each partial surrender. The fee 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 is not affected by any decrease
in face amount or any change in face amount resulting from a change of death
benefit options.
The surrender 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 also 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 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.
Surrender charge percentage. The surrender charge during any policy year is
equal to the number of target premiums from the table below multiplied by the
applicable surrender charge percentage also shown below:
Joint Equivalent Age (JEA)
on policy or Number of
adjustment date target premiums
-------------------------- ---------------
75 or less 1.00
76 through 85 0.90
86 or greater 0.75
Surrender Charge Percentage Table
---------------------------------
Number of years since policy date The following percentage of
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
The surrender charge on a face amount increase is calculated by multiplying the
increase in target premium due to the face increase by the applicable number of
target premiums from the table above. This result is multiplied by the
applicable surrender charge percentage from the above table to get the increase
in surrender charges for all years.
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.
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 premium payment to have coverage under the
Policy.
If the net surrender value on any monthly date is less than the monthly policy
charge, a 61-day grace period begins. However, during the first 60 policy
months, the Policy will stay in force if (a minus b) is greater than or equal to
(c) where:
o (a) is the sum of the premiums paid;
o (b) is the sum of all existing policy loans, unpaid loan interest,
partial surrenders and transactions charges; and
o (c) is the sum of the minimum monthly premiums since the policy date
to the most recent monthly date.
After the first 60 policy months, 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.
GracePeriod. 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 you are in a grace period, the minimum payment is equal to (a) plus (b)
divided by (c) where:
o (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,
o (b) is three monthly policy charges, and
o (c) is one minus the maximum premium expense charge percentage (see
CHARGES AND DEDUCTIONS - Premium Expense Charge).
This payment is intended to a) reimburse us for the monthly policy charges
during the grace period, and b) provide enough policy value to pay the monthly
policy charge on the first monthly date after the grace period. 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.
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 surviving insured dies during a
grace period, policy proceeds are reduced by:
o all monthly policy charges due and unpaid at the death of the surviving
insured, 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 the owners' 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 at least one 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).
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); and
o 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-_______________.
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, instructions
for the following transactions may be given to us via the telephone:
o policy loans (loan proceeds are only mailed 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-___________ between ____ a.m. and
______ 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 ______ a.m. and ________ p.m. Central Time, Monday through
Saturday. The Direct Dial number is 1-800-____________. 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:
four year term insurance rider policy split option rider
single life term insurance rider enhanced death benefit rider
extended coverage rider death benefit guarantee rider
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 death benefit guarantee monthly premiums since 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 each 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.
Extended Coverage Rider This rider allows, under certain conditions, the Policy
to remain in force until the death of the surviving insured - with a death
benefit being paid rather than maturing the Policy.
Misstatement of Age or Gender
If the age or, where applicable, gender of either of the insureds has been
misstated, we adjust the death benefit payable under your Policy to reflect the
amount that would have been payable at the correct ages 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, the Policy passes to the estate of the
last surviving owner.
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 either 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 surviving 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, applies
to:
o determine the payment under Option B, and
o any interest in excess of the guaranteed minimum is added to payments
under Option C.
Right to Exchange Policy
During the first 24 months after the policy date (except during a grace period),
you have the right to make an irrevocable, one-time election to transfer all of
your Investment Account values to the Fixed Account. No charge is imposed on
this transfer.
Your request must be in writing and be signed by the owner(s). The request must
be postmarked or delivered to our home office before the end of the 24-month
period. The transfer is effective when we receive your written request.
Non-Participating Policy
The Policies do not share in any divisible surplus of the Company.
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 mistrepresentations.
Suicide
Death proceeds are not paid if either 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
either 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. If the suicide occurs at the
death of the first insured, this amount will be paid to the owner(s) of the
Policy. If the suicide occurs at the death of the surviving insured, this amount
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. You may exercise this exchange privilege until the
latter of 60 days after a) the effective date of the change, or b) the date you
receive notice of the options available. You may only exercise this right if you
have an interest in the affected division(s)
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 to 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.
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.
<TABLE>
<CAPTION>
<S> <C> <C>
* JOHN E. ASCHENBRENNER Director
CRAIG R. BARNES Vice President
* CRAIG L. BASSETT Treasurer
* MICHAEL J. BEER Senior 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
</TABLE>
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:
<TABLE>
<CAPTION>
Executive Officers (other than Directors):
<S> <C> <C>
JOHN EDWARD ASCHENBRENNER Senior Vice President
PAUL FRANCIS BOGNANNO Senior Vice President
CHARLES ROBERT DUNCAN 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
ROBB BRYAN HILL 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
ROBERT ALLEN SLEPICKA Senior Vice President
NORMAN RAUL SORENSEN Senior Vice President
CARL CHANSON WILLIAMS Senior Vice President and Chief Information Officer
</TABLE>
<TABLE>
<CAPTION>
Directors:
Name, Positions and Offices Principal Occupation During Last 5 Years
- ------------------------------------------------------------------------------------
<S> <C>
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 from
Chairman of the Board 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 1989
Director 1994.
Member, Executive and
Nominating Committees
CHARLES SAMUEL JOHNSON Chairman, President and Chief Executive Officer, Pioneer Hi-Bred International,
Director Inc. since December 1996. President and Chief Executive Officer 1995 - 1996.
Member, Audit Committee President and Chief Operating Officer 1995. Executive Vice President 1993 - 1995.
WILLIAM TURNBALL KERR Chairman, President & Chief Executive Officer, Meredith Corporation since January
Director 1998. President and Chief Executive Officer, 1997-1998. President and Chief Operating
Member, Executive Committee and Officer 1994-1997. Prior thereto, Executive Vice President.
Chair, Nominating Committee
LEE LIU Chairman of the Board, Alliant Corporation since April 1998. Chairman and Chief
Director Executive Officer, IES Industries, Inc., November 1996-April 1998. Prior thereto,
Member, Executive and Human Chairman, President and Chief Executive Officer.
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 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. since 1996. Also, President and Chief Executive Officer
Director Ellard Pharmaceuticals, Inc. since 1997 and Chairman of Humascan, Inc. since
Chair, Audit Committee 1998. President and Chief Executive Officer, Transcell Technologies, Inc. 1992 - 1996.
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,
Member, Human Resources The Weitz Corporation and its subsidiaries.
Committee
</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 Sections 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 a) the premiums paid on that Policy
in the year of death, and b) 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 Secition 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 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.
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). In addition, we
reserve the right to charge a transfer fee of no more than $25 for each
unscheduled transfer after the 12th such transfer in a policy year. You would be
notified of any such action to the extent required by law.
YEAR 2000
The Year 2000 information will be added by amendment.
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.
CUSTOMER INQUIRIES
Your questions should be directed to: Survivorship Flexible Premium Variable
Universal Life, Principal Financial Group, P.O. Box ________, Des Moines, Iowa
_____-_______, 1-800- _____________________.
FINANCIAL STATEMENTS
The financial statements of the Company will be added by amendment.
APPENDIX A
The following tables illustrate how the policy value, surrender value and death
proceeds of the Policy may change with the investment experience of the
Investment Accounts. The tables show how these amounts in the Policy issued to
insureds with a given joint equivalent age (JEA) varies over time if planned
periodic premiums are paid annually and if the investment return of the assets
in the Investment Accounts were a uniform, gross, after-tax, annual rate of 0%,
6% or 12%. The death benefits and values would be different from those shown if
the return averaged 0%, 6% or 12%, but fluctuated above and below those averages
during the year. Both death benefit option 1 and option 2 are illustrated.
The illustrations reflect a hypothetical Policy issued to a 55 year-old male
nonsmokers and a 50 year-old female non-smoker. llustrations for younger males
or females would be more favorable than those presented. Illustrations for older
males or smokers would be less favorable.
o Illustrations 1 and 3 reflect current administrative and cost of
insurance charges.
o Illustrations 2 and 4 reflect the guaranteed maximum administration
and cost of insurance charges.
The illustrations reflect all Policy charges including:
o deductions from premiums for sales load and state and federal taxes;
o monthly administration charges;
o cost of insurance charge;
o mortality and expense risks charge; and
o contingent deferred sales load that may be deducted if the Policy were
fully surrendered or lapsed.
In addition, the illustrations reflect the average fees and expenses of the
Investment Accounts. The average fees and expenses of the Accounts may decrease
or increase in the future. Such a change would make the operating expenses
actually incurred by an Account differ from the average rate used in the
illustrations.
The illustrations are based on the assumption that:
o payments are made according to the $16,000 annual target premium
schedule;
o no values are allocated to the Fixed Account;
o no changes are made to the death benefit option or face amount;
o no policy loans and/or partial surrenders are made; and
o no riders are in effect.
Upon request, we will prepare a comparable illustration based upon the proposed
insureds' actual age, gender, smoking status, risk classification and desired
Policy features.
In advertisements or sales literature for the Policies that include performance
data for one of more of the Investment Accounts, we may include policy values,
surrender values and death benefit figures computed using the same methods that
were used in creating the following illustrations. However, the actual average
total rate of return for the specific Investment Account(s) will be used instead
of the hypothetical rates used in the following illustrations. This information
may be shown in the form of graphs, charts, tables and examples. It may include
data for periods prior to the offering of the Policy for an Account that has had
performance during such prior period (with policy charges assumed to be equal to
current charges for any period(s) prior to the offering of the Policy).
<TABLE>
<CAPTION>
Illustration 1 PRINCIPAL LIFE INSURANCE COMPANY Initial Face Amount $1,000,000
SURVIVORSHIP VARIABLE UNIVERSAL LIFE Death Benefit Option 1
PLANNED PREMIUM $16,000 MALE AGE 55 PREFERRED NON-SMOKER, FEMALE AGE 50 PREFERRED NON-SMOKER
ASSUMING CURRENT CHARGES
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Gross Assuming Hypothetical Gross
Annual Investment Return of Annual Investment Return of
End of Accumulated 0% 6% 12% 0% 6% 12%
Year Premiums (1) (-.78% Net) (5.22% Net) (11.22% Net) (-.78% Net) (5.22% Net) (11.22% Net)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 13,646 $ 14,493 $ 15,339
2 34,440 1,000,000 1,000,000 1,000,000 26,956 29,487 32,120
3 52,962 1,000,000 1,000,000 1,000,000 39,910 44,982 50,466
4 72,410 1,000,000 1,000,000 1,000,000 52,487 60,972 70,512
5 92,831 1,000,000 1,000,000 1,000,000 64,663 77,450 92,405
6 114,272 1,000,000 1,000,000 1,000,000 76,412 94,408 116,308
7 136,786 1,000,000 1,000,000 1,000,000 87,723 111,851 142,420
8 160,425 1,000,000 1,000,000 1,000,000 98,860 130,064 171,234
9 185,246 1,000,000 1,000,000 1,000,000 109,815 149,073 203,024
10 211,309 1,000,000 1,000,000 1,000,000 121,186 169,746 239,278
11 238,674 1,000,000 1,000,000 1,000,000 133,525 192,574 280,669
12 267,408 1,000,000 1,000,000 1,000,000 145,697 216,499 326,552
13 297,578 1,000,000 1,000,000 1,000,000 157,693 241,565 377,415
14 329,257 1,000,000 1,000,000 1,000,000 169,492 267,811 433,794
15 362,520 1,000,000 1,000,000 1,000,000 181,076 295,284 496,294
20 555,508 1,000,000 1,000,000 1,078,791 239,814 457,281 929,993
25 801,815 1,000,000 1,000,000 1,769,408 287,978 658,707 1,653,652
30 1,116,173 1,000,000 1,000,000 3,001,207 313,136 911,582 2,858,293
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
0% 6% 12%
(-.78% Net) (5.22% Net) (11.22% Net)
$ 4,146 $4,993 $ 5,839
17,456 19,987 22,620
30,410 35,482 40,966
42,987 51,472 61,012
55,163 67,950 82,905
67,365 85,360 107,261
79,581 103,709 134,278
92,074 123,278 164,448
104,839 144,096 198,048
118,472 167,032 236,564
133,525 192,574 280,669
145,697 216,499 326,552
157,693 241,565 377,415
169,492 267,811 433,794
181,076 295,284 496,294
239,814 457,281 929,993
287,978 658,707 1,653,652
313,136 911,582 2,858,293
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
The death benefit, accumulated value and surrender value will differ if premiums
are paid in different amounts or frequencies. It is emphasized that the
hypothetical investment results are illustrative only and should not be deemed
to be a representation of past or future investment results. Actual investment
results may be more or less than those shown. The death benefit, accumulated
value and surrender value for a policy would be different from those shown if
actual rates of investment return applicable to the policy averaged 0%, 6% or
12% over a period of years, but also fluctuated above or below that average for
individual policy years. The death benefit, accumulated value and surrender
value for a policy would also be different from those shown, depending on the
investment allocations made to the investment divisions of the separate account
and the different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6% or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
</TABLE>
<TABLE>
<CAPTION>
Illustration 2 PRINCIPAL LIFE INSURANCE COMPANY Initial Face Amount $1,000,000
SURVIVORSHIP VARIABLE UNIVERSAL LIFE Death Benefit Option 1
PLANNED PREMIUM $16,000 MALE AGE 55 PREFERRED NON-SMOKER, FEMALE AGE 50 PREFERRED NON-SMOKER
ASSUMING GUARANTEED CHARGES
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Gross Assuming Hypothetical Gross
Annual Investment Return of Annual Investment Return of
End of Accumulated 0% 6% 12% 0% 6% 12%
Year Premiums (1) (-.78% Net) (5.22% Net) (11.22% Net) (-.78% Net) (5.22% Net) (11.22% Net)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,000,000 $1,000,000 $1,000,000 $ 13,527 $ 14,370 $ 15,212
2 34,440 1,000,000 1,000,000 1,000,000 26,719 29,236 31,854
3 52,962 1,000,000 1,000,000 1,000,000 39,558 44,597 50,045
4 72,410 1,000,000 1,000,000 1,000,000 52,021 60,447 69,921
5 92,831 1,000,000 1,000,000 1,000,000 64,085 76,779 91,626
6 114,272 1,000,000 1,000,000 1,000,000 75,724 93,584 115,322
7 136,786 1,000,000 1,000,000 1,000,000 86,907 110,849 141,186
8 160,425 1,000,000 1,000,000 1,000,000 97,604 128,561 169,417
9 185,246 1,000,000 1,000,000 1,000,000 107,779 146,705 200,234
10 211,309 1,000,000 1,000,000 1,000,000 117,976 166,083 235,048
11 238,674 1,000,000 1,000,000 1,000,000 127,876 186,275 273,590
12 267,408 1,000,000 1,000,000 1,000,000 137,122 206,964 315,931
13 297,578 1,000,000 1,000,000 1,000,000 145,623 228,102 362,468
14 329,257 1,000,000 1,000,000 1,000,000 153,269 249,631 413,660
15 362,520 1,000,000 1,000,000 1,000,000 159,938 271,487 470,040
20 555,508 1,000,000 1,000,000 1,000,000 173,552 383,442 857,285
25 801,815 1,000,000 1,000,000 1,615,713 131,562 491,837 1,510,012
30 1,116,173 1,000,000 2,717,176 577,969 2,587,787
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
0% 6% 12%
(-.78% Net) (5.22% Net) (11.22% Net)
$ 4,027 $4,870 $ 5,712
17,219 19,736 22,354
30,058 35,097 40,545
42,521 50,947 60,421
54,585 67,279 82,126
66,676 84,536 106,275
78,764 102,706 133,044
90,818 121,776 162,631
102,803 141,729 195,257
115,262 163,369 232,333
127,876 186,275 273,590
137,122 206,964 315,931
145,623 228,102 362,468
153,269 249,631 413,660
159,938 271,487 470,040
173,552 383,442 857,285
131,562 491,837 1,510,012
577,969 2,587,787
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
The death benefit, accumulated value and surrender value will differ if premiums
are paid in different amounts or frequencies. It is emphasized that the
hypothetical investment results are illustrative only and should not be deemed
to be a representation of past or future investment results. Actual investment
results may be more or less than those shown. The death benefit, accumulated
value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6% or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, accumulated value and surrender value for a
policy would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6% or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
</TABLE>
<TABLE>
<CAPTION>
Illustration 3 PRINCIPAL LIFE INSURANCE COMPANY Initial Face Amount $1,000,000
SURVIVORSHIP VARIABLE UNIVERSAL LIFE Death Benefit Option 2
PLANNED PREMIUM $16,000 MALE AGE 55 PREFERRED NON-SMOKER, FEMALE AGE 50 PREFERRED NON-SMOKER
ASSUMING CURRENT CHARGES
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Gross Assuming Hypothetical Gross
Annual Investment Return of Annual Investment Return of
End of Accumulated 0% 6% 12% 0% 6% 12%
Year Premiums (1) (-.78% Net) (5.22% Net) (11.22% Net) (-.78% Net) (5.22% Net) (11.22% Net)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,013,645 $1,014,492 $1,015,338 $ 13,645 $ 14,492 $ 15,338
2 34,440 1,026,950 1,029,481 1,032,113 26,950 29,481 32,113
3 52,962 1,039,890 1,044,960 1,050,441 39,890 44,960 50,441
4 72,410 1,052,439 1,060,916 1,070,446 52,439 60,916 70,446
5 92,831 1,064,566 1,077,332 1,092,261 64,566 77,332 92,261
6 114,272 1,076,237 1,094,186 1,116,029 76,237 94,186 116,029
7 136,786 1,087,433 1,111,470 1,141,922 87,433 111,470 141,922
8 160,425 1,098,440 1,129,491 1,170,454 98,440 129,491 170,454
9 185,246 1,109,251 1,148,270 1,201,886 109,251 148,270 201,886
10 211,309 1,120,458 1,168,666 1,237,681 120,458 168,666 237,681
11 238,674 1,132,609 1,191,161 1,278,492 132,609 191,161 278,492
12 267,408 1,144,571 1,214,690 1,323,647 144,571 214,690 323,647
13 297,578 1,156,327 1,239,282 1,373,596 156,327 239,282 373,596
14 329,257 1,167,853 1,264,964 1,428,829 167,853 264,964 428,829
15 362,520 1,179,122 1,291,758 1,489,885 179,122 291,758 489,885
20 555,508 1,236,636 1,450,183 1,913,868 236,636 450,183 913,868
25 801,815 1,280,334 1,638,820 2,607,998 280,334 638,820 1,607,998
30 1,116,173 1,291,024 1,843,182 3,727,763 291,024 843,182 2,727,763
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
0% 6% 12%
(-.78% Net) (5.22% Net) (11.22% Net)
- ---------------------------------------------
$ 4,145 $4,992 $ 5,838
17,450 19,981 22,613
30,390 35,460 40,941
42,939 51,416 60,946
55,066 67,832 82,761
67,190 85,139 106,982
79,291 103,328 133,780
91,654 122,705 163,668
104,275 143,294 196,910
117,743 165,951 234,967
132,609 191,161 278,492
144,571 214,690 323,647
156,327 239,282 373,596
167,853 264,964 428,829
179,122 291,758 489,885
236,636 450,183 913,868
280,334 638,820 1,607,998
291,024 843,182 2,727,763
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
The death benefit, accumulated value and surrender value will differ if premiums
are paid in different amounts or frequencies. It is emphasized that the
hypothetical investment results are illustrative only and should not be deemed
to be a representation of past or future investment results. Actual investment
results may be more or less than those shown. The death benefit, accumulated
value and surrender value for a policy would be different from those shown if
actual rates of investment return applicable to the policy averaged 0%, 6% or
12% over a period of years, but also fluctuated above or below that average for
individual policy years. The death benefit, accumulated value and surrender
value for a policy would also be different from those shown, depending on the
investment allocations made to the investment divisions of the separate account
and the different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6% or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
</TABLE>
<TABLE>
<CAPTION>
Illustration 4 PRINCIPAL LIFE INSURANCE COMPANY Initial Face Amount $1,000,000
SURVIVORSHIP VARIABLE UNIVERSAL LIFE Death Benefit Option 2
PLANNED PREMIUM $16,000 MALE AGE 55 PREFERRED NON-SMOKER, FEMALE AGE 50 PREFERRED NON-SMOKER
ASSUMING CURRENT CHARGES
Death Benefit (2) Accumulated Value (2)
Assuming Hypothetical Gross Assuming Hypothetical Gross
Annual Investment Return of Annual Investment Return of
End of Accumulated 0% 6% 12% 0% 6% 12%
Year Premiums (1) (-.78% Net) (5.22% Net) (11.22% Net) (-.78% Net) (5.22% Net) (11.22% Net)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 16,800 $1,013,526 $1,014,369 $1,015,212 $13,526 $ 14,369 $ 15,212
2 34,440 1,026,714 1,029,230 1,031,847 26,714 29,230 31,847
3 52,962 1,039,538 1,044,575 1,050,020 39,538 44,575 50,020
4 72,410 1,051,974 1,060,391 1,069,855 51,974 60,391 69,855
5 92,831 1,063,989 1,076,661 1,091,484 63,989 76,661 91,484
6 114,272 1,075,550 1,093,364 1,115,045 75,550 93,364 115,045
7 136,786 1,086,617 1,110,469 1,140,689 86,617 110,469 140,689
8 160,425 1,097,150 1,127,942 1,168,577 97,150 127,942 168,577
9 185,246 1,107,099 1,145,743 1,198,877 107,099 145,743 198,877
10 211,309 1,116,989 1,164,634 1,232,924 116,989 164,634 232,924
11 238,674 1,126,484 1,184,154 1,270,356 126,484 184,154 270,356
12 267,408 1,135,205 1,203,929 1,311,116 135,205 203,929 311,116
13 297,578 1,143,032 1,223,840 1,355,427 143,032 223,840 355,427
14 329,257 1,149,825 1,243,739 1,403,514 149,825 243,739 403,514
15 362,520 1,155,425 1,263,450 1,455,603 155,425 263,450 455,603
20 555,508 1,159,229 1,351,485 1,784,935 159,229 351,485 784,935
25 801,815 1,098,039 1,389,085 2,250,504 98,039 389,085 1,250,504
30 1,116,173 1,293,118 2,864,115 293,118 1,864,115
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
0% 6% 12%
(-.78% Net) (5.22% Net) (11.22% Net)
$ 4,026 $ 4,869 $ 5,712
17,214 19,730 22,347
30,038 35,075 40,520
42,474 50,891 60,355
54,489 67,161 81,984
66,502 84,316 105,998
78,475 102,326 132,547
90,364 121,157 161,791
102,123 140,767 193,901
114,275 161,920 230,210
126,484 184,154 270,356
135,205 203,929 311,116
143,032 223,840 355,427
149,825 243,739 403,514
155,425 263,450 455,603
159,229 351,485 784,935
98,039 389,085 1,250,504
293,118 1,864,115
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
The death benefit, accumulated value and surrender value will differ if premiums
are paid in different amounts or frequencies. It is emphasized that the
hypothetical investment results are illustrative only and should not be deemed
to be a representation of past or future investment results. Actual investment
results may be more or less than those shown. The death benefit, accumulated
value and surrender value for a policy would be different from those shown if
actual rates of investment return applicable to the policy averaged 0%, 6% or
12% over a period of years, but also fluctuated above or below that average for
individual policy years. The death benefit, accumulated value and surrender
value for a policy would also be different from those shown, depending on the
investment allocations made to the investment divisions of the separate account
and the different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6% or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
</TABLE>
APPENDIX B
TARGET PREMIUMS
The target premiums for the Policy are based on the joint equivalent age (JEA)
of the insureds. The JEA takes into account the gender*, age, smoking status and
risk classification of each insured. The calculation is as follows:
1. Start with the unadjusted individual ages of insured #1 and insured #2.
Call this (X1) and (X2) respectively.
2. Take each individual age and adjust for gender.
-if Male the gender adjustment is 0
-if Female the gender adjustment is minus 5
-if Unisex rating is used, the gender adjustment is minus 2
3. Take resulting individual ages from step 2 and adjust for smokers if
applicable.
-if Male Smoker the smoker adjustment is plus 3
-if Female Smoker the smoker adjustment is plus 2
-if Unisex Smoker the smoker adjustment is plus 3
4. Take resulting individual ages from step 3 and adjust for substandard
table ratings, if any.
-if table A rating then add 2
-if table B rating then add 4
-if table C rating then add 6
-if table D rating then add 8
-if table E rating then add 10
-if table F rating then add 12
-if table G rating then add 14
-if table H rating then add 15
-if rating is higher than table H then add 16.
5. The result of step 4 is the adjusted individual ages of insured #1 and
insured #1. Call this (X1A) and (X2A) respectively.
6. If (X1A) is greater than 100 then set (X1A) equal to 100.
7. If (X1B) is greater than 100 then set (X1B) equal to 100.
8. Take the difference between (X1A) and (X1B). Call this (XDIFF).
9. Look up (XDIFF) on the table below to find out what to add on to
youngest adjusted age.
XDIFF ADD ON
0 0
1 to 2 1
3 to 4 2
5 to 6 3
7 to 9 4
10 to 12 5
13 to 15 6
16 to 18 7
19 to 23 8
24 to 28 9
29 to 34 10
35 to 39 11
40 to 44 12
45 to 47 13
48 to 50 14
51 to 53 15
54 to 56 16
57 to 60 17
61 to 64 18
65 to 69 19
70 to 75 20
76 to 85 21
10. The JEA (Joint Equivalent Age) is equal to the Minimum of (X1A) and
(X1B) plus ADD ON from the table above.
Example:
Male Nonsmoker age 45 table rating A, Female Smoker age 57.
1. (X1) = 45 and (X2) = 57
2. (X1) = 45 + 0 = 45; and (X2) = 57 - 5 = 52
3. (X1) = 45 + 0 = 45; and (X2) = 52 + 2 = 54
4. (X1) = 45 + 2 = 47; and (X2) = 54 + 0 = 54
5. (XIA) = 47; (X2A) = 54
6. (XIA) is not greater than 100
7. (XIB) is not greater than 100
8. (XDIFF) = (X2A) - (X1A) = 54 - 47 = 7
9. ADD ON = 4
10. JEA = minimum of (XIA) and (X2A) + ADD ON = 47 + 4 = 51
SVUL Target Premium Rates per $1000 of Face
JEA Target JEA Target
less than 20 2.78 61 21.67
20 2.78 62 22.98
21 2.87 63 24.23
22 2.95 64 25.41
23 3.03 65 26.52
24 3.13 66 27.56
25 3.22 67 28.56
26 3.32 68 29.53
27 3.41 69 30.45
28 3.52 70 31.36
29 3.62 71 32.27
30 3.73 72 33.17
31 3.84 73 34.08
32 3.96 74 35.02
33 4.07 75 35.97
34 4.24 76 36.95
35 4.42 77 37.95
36 4.60 78 38.94
37 4.79 79 39.96
38 4.99 80 40.99
39 5.20 81 42.00
40 5.41 82 42.00
41 5.64 83 42.00
42 5.87 84 42.00
43 6.11 85 42.00
44 6.51 86 42.00
45 6.93 87 42.00
46 7.38 88 42.00
47 7.86 89 42.00
48 8.38 90 42.00
49 8.93 greater than 90 42.00
50 9.50
51 10.12
52 10.78
53 11.49
54 12.54
55 13.68
56 14.92
57 16.22
58 17.58
59 18.94
60 20.32
* 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.
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 Mutual 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>
REPRESENTATIONS PURSUANT TO RULE 6e-3(T) This filing is made
pursuant to Rules 6c-3 and 6e-3(T) under the Investment Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940, with respect to the Policies described in the
prospectus. Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risks charge is within
the range of industry practice for comparable contracts.
(3) The Registrant has concluded that there is a reasonable
likelihood that the distribution financing arrangement for the
Variable Life Separate Account will benefit the separate account
and policyowners, and it will keep and make available to the
Commission on request a memorandum setting forth the basis for
this representation.
(4) The Variable Life Separate Account will invest only in
management investment companies which have undertaken to have a
board of directors, a majority of whom are not interested
persons of the Company, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
The methodology used to support the representation made in paragraph (2) above
is based upon an analysis of the mortality and expense risks charges contained
in other variable life insurance policies, including scheduled and flexible
premium products. Registrant undertakes to keep and make available to the
Commission on request the documents used to support the representation in
paragraph (2) above.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The prospectus, consisting of 38 pages;
The undertaking to file reports;
The undertaking pursuant to Rule 484;
Representations pursuant to Rule 6e-3(T);
The signatures;
Written consents of the following persons:
Ernst & Young LLP
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.A1 Resolution of Executive Committee of Board of Directors of
Principal Mutual Life Insurance Company establishing the
Variable Life Separate Account
1.A3A.a Distribution Agreement between Princor Financial Services
Corporation and Principal Mutual Life Insurance Company
1.A3B.a Form of Selling Agreement**
1.A3B.b Registered Representative Agreement
1.A3C Schedule of sales commissions**
1.A5.a Form of Policy
1.A5.a.i Four Year Term Insurance Rider
1.A5.a.ii Policy Split Option Rider
1.A5.a.iii Single Life Term Insurance Rider
1.A5.a.iv Enhanced Death Benefit Rider
1.A5.b Form of Policy (Unisex)
1.A5.b.i Four Year Term Insurance Rider
1.A5.b.ii Policy Split Option Rider (Unisex)
1.A5.b.iii Single Life Term Insurance Rider
1.A5.b.iv Enhanced Death Benefit Rider
1.A6.a Articles of Incorporation, as Amended of Principal
Life Insurance Company
1.A6.b By-laws of Principal Life Insurance Company
1.A10.a Form of Application**
1.A10.b Form of Supplemental Application**
2. Opinion and consent of G. R. Narber, Senior Vice President
and General Counsel
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)
8. Powers of Attorney of Directors of Principal Life
Insurance Company
9. Opinion and Consent of Jeff Fitch, FSA, MAAA
- ---------------------------------
** To be filed by Amendment.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the city of Des Moines, and the state of Iowa, on the 29th day
of January, 1999.
PRINCIPAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
(Registrant)
By: PRINCIPAL LIFE INSURANCE COMPANY
(Depositor)
/s/ David J. Drury
By ______________________________________________
David J. Drury
Chairman and Chief Executive Officer
Attest:
/s/ Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
Signature Title Date
/s/ D. J. Drury Chairman and January 29, 1999
- -------------------- Chief Executive Officer
D. J. Drury
/s/ D. C. Cunningham Vice President and January 29, 1999
- -------------------- Controller (Principal
D. C. Cunningham Accounting Officer)
/s/ M. H. Gersie Senior Vice President January 29, 1999
- -------------------- (Principal Financial
M. H. Gersie Officer)
(R. M. Davis)* Director January 29, 1999
- --------------------
R. M. Davis
(C. D. Gelatt, Jr.)* Director January 29, 1999
- --------------------
C. D. Gelatt, Jr.
(J. B. Griswell)* Director January 29, 1999
- --------------------
J. B. Griswell
(G. D. Hurd)* Director January 29, 1999
- --------------------
G. D. Hurd
(C. S. Johnson)* Director January 29, 1999
- --------------------
C. S. Johnson
(W. T. Kerr)* Director January 29, 1999
- --------------------
W. T. Kerr
(L. Liu)* Director January 29, 1999
- --------------------
L. Liu
(V. H. Loewenstein)* Director January 29, 1999
- --------------------
V. H. Loewenstein
(R. D. Pearson)* Director January 29, 1999
- --------------------
R. D. Pearson
(J. R. Price)* Director January 29, 1999
- --------------------
J. R. Price, Jr.
(D. M. Stewart)* Director January 29, 1999
- --------------------
D. M. Stewart
(E. E. Tallett)* Director January 29, 1999
- --------------------
E. E. Tallett
(D. D. Thornton)* Director January 29, 1999
- --------------------
D. D. Thornton
(F. W. Weitz)* Director January 29, 1999
- --------------------
F. W. Weitz
*By /s/ David J. Drury
------------------------------------
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.A1 Resolution of Executive Committee 12
of Board of Directors of Depositor
establishing Variable Life Separate
Account
1.A3A.a Distribution Agreement Between 17
Depositor and Principal Underwriter
1.A3B.a Form of Selling Agreement *
1.A3B.b Registered Representative Agreement 19
1.A3C Schedule of Sales Commissions *
1.A5.a Form of Policy 22
1.A5.a.i Four Year Term Insurance Rider 38
1.A5.a.ii Policy Split Option Rider 39
1.A5.a.iii Single Life Term Insurance Rider 41
1.A5.a.iv Enhanced Death Benefit Rider 42
1.A5.b Form of Policy (Unisex) 43
1.A5.b.i Four Year Term Insurance Rider 59
1.A5.b.ii Policy Split Option Rider (Unisex) 60
1.A5.b.iii Single Life Term Insurance Rider 62
1.A5.b.iv Enhanced Death Benefit Rider 63
1.A6.a Articles of Incorporation of the Depositor 64
1.A6.b By-laws of the Depositor 68
1.A10.a Form of Application *
1.A10.b Form of Supplemental Application *
2 Opinion and consent of G. R. Narber 77
Senior Vice President and General Counsel
6 Consent of Ernst & Young LLP *
7 Description of Issuance, Transfer and Redemption 78
Procedures Pursuant to Rule 6e-3(T)(b)(12)(iii)
8 Powers of Attorney of Directors of 87
Principal Mutual Life Insurance
Company.
9 Opinion and Consent of Jeff Fitch, FSA, MAAA 93
* To be filed by Amendment.
</TABLE>
Executive Committee Resolution #3120 (passed November 2, 1987)
RESOLVED that Board Resolution No. 12324 of August 19, 1985, is
replaced and superseded as follows:
WHEREAS, Principal Mutual Life Insurance Company intends to issue
individual variable life insurance policies for which a separate account must be
established;
WHEREAS, payments under these policies may be allocated by policy-
owners to one or more investment alternatives;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby created and
established a separate account, to be known as the Variable Life Separate
Account, for the receipt of payments under variable life insurance policies to
be issued by the Company.
BE IT FURTHER RESOLVED, that there are hereby established, for the
purpose of providing alternate investment choices for variable life
policyowners, six separate divisions within the Variable Life Separate Account,
an Aggressive Growth Division, a Bond Division, a Common Stock Division, a High
Yield Division, a Managed Division and a Money Market Division. All income and
expenses and all gains or losses, whether or not realized, experienced with
respect to assets for policies participating in a division of the Variable Life
Separate Account shall be credited to or charged against those assets,
unaffected by income and expenses or gains or losses experienced with respect to
assets for any other division of the Variable Life Separate Account, or any
other separate account, or the general account of the Company.
BE IT FURTHER RESOLVED, that the appropriate officers of the Company,
as shall be designated by the President or Chairman of the Board, are hereby
authorized and directed to prepare, execute and file with the Securities and
Exchange Commission in accordance with the provisions of the Securities Act of
1933, as amended, a registration statement or statements, and such amendments
thereto as may be necessary or appropriate, relating to such variable life
insurance contracts.
BE IT FURTHER RESOLVED, that the officers so designated are hereby
authorized if necessary to prepare, execute and file with the Securities and
Exchange Commission in accordance with the provisions of the Investment Company
Act of 1940, as amended, a registration statement or statements, and such
amendments thereto as may be necessary or appropriate, relating to such unit
investment trust or trusts.
BE IT FURTHER RESOLVED, that the officers so designated are hereby
authorized to take such further action as in their judgment may be necessary or
desirable to effect the registration of such variable life insurance contracts
and of such unit investment trust or trusts.
<PAGE>
Board Resolution #12503 (passed February 22-23, 1988)
RESOLVED, that Board Resolution No. 12057, October 18-19, 1982, is
amended and superseded by the following resolution, and all references in other
resolutions to that resolution, or resolutions which it replaced, are amended to
refer to this superseding resolution:
BE IT RESOLVED, that either the Chief Executive Officer, or the
President, is authorized to designate officers who shall have the power and
authority, acting directly or through other officers and employees to whom they
may delegate the power and authority:
1. To prepare an issue or amend appropriate individual life policies,
annuity contracts, disability and double indemnity riders or
contracts, and settlement option contracts; to determine the
appropriate plans of insurance, contracts, riders, amendments and
benefits to be offered; to determine underwriting practices,
including exclusions, restrictions, amount limits and
classification of risks; to determine premiums, fees or charges,
non-forfeiture values, and policy loan rates; to administer
benefit payments; and to make recommendations with respect to
dividends to be paid in connection with such policies or
contracts.
2. To prepare and issue or amend appropriate individual health
policies or contracts; to determine the appropriate plans of
insurance, contracts, riders, amendments and benefits to be
offered; to determine underwriting practices, including
exclusions, restrictions, amount limits and classification of
risks; to determine the premiums, fees or charges and
non-forfeiture values; to administer benefit payments; and to make
recommendations with respect to dividends to be paid in connection
with such policies or contracts.
3. To prepare and issue or amend appropriate group policies,
contracts, riders, amendments and other forms, including, but not
limited to, life plans, disability benefit plans, health plans,
dental plans, annuity plans and all other forms and plans,
contracts or agreements pertaining to or utilized in connection
with pension, profit sharing and other deferred compensation
plans; to determine the plans and benefits to be offered which may
include coverage on dependents as well as the participants in the
plans; to determine the underwriting practices, including the
exclusions, restrictions, amount limits, and classification of
risks; to determine premiums, fees or charges and values; to
administer benefit payments; and to make recommendations with
respect to dividends to be paid in connection with such
policies or contracts.
4. To prepare, issue or amend appropriate individual or group
contracts, policies or annuities providing for a separate account
or accounts and to establish, maintain, amend and discontinue such
account or accounts as are deemed necessary or advisable.
5. To enter into reinsurance and coinsurance contracts and treaties;
to take such actions as are required to liberalize, restrict or
otherwise change benefits, values and underwriting practices with
respect to any class or classes of persons or policyholders; to
cause the general account or any account maintained by the Company
to be segmented for the purposes of crediting investment results
separately to any class or classes of policyholders; to enter into
contracts or agreements wherein the Company undertakes to provide
formed insurance companies or other subsidiaries, the stock of
which will be owned directly or indirectly by the Company.
6. To do those other things deemed necessary or desirable to carry
out the business of Principal Mutual Life Insurance Company within
the powers of the corporation.
BE IT FURTHER RESOLVED, that either the corporate secretary or the
general counsel is authorized to certify the powers of the corporation and the
powers and authority of the officers or employees.
<PAGE>
MEMORANDUM
January 3, 1996
TO Dave Drury, Officers, S-6, x7-5921
FROM John Aschenbrenner, Ind. Staff, G-12, x7-5927
RE New Divisions for Variable Life Separate Account
In accordance with Principal Mutual Life Insurance Company Board Resolution
No. 12503 passed February 22, 1988, I have created the following new divisions
for the Variable Life Separate Account to reflect the funding options that will
be utilized by the variable life insurance policy Principal Mutual will issue in
the near future:
1. Aggressive Growth Division;
2. Asset Allocation Division;
3. Government Securities Division;
4. Growth Division;
5. World Division;
6. Fidelity Contrafund Division;
7. Fidelity Equity Income Division; and
8. Fidelity High-Income Division.
In addition, I have directed that the name of the Common Stock Division be
changed to the Capital Accumulation Division and the name of the existing
Aggressive Growth Division be changed to the Emerging Growth Division.
/s/ John Aschenbrenner
- -----------------------------------------
John Aschenbrenner
JA/sal
cc Barry Griswell
<PAGE>
Memorandum
DATE: January 20, 1998
TO: Dave Drury, Officers. S-6, X7-5921
FROM: John Aschenbrenner, Ind. Staff, G-12, X7-5927
RE: New Divisions for Variable Life Separate Account
CC: Steve Jones, Barry Griswell
Eleven new divisions are being added to PrinFlex Variable Life to be effective
May 1, 1998. In accordance with Principal Mutual Life Insurance Company Board
Resolution No. 12503 passed February 22, 1988. I have created the following
divisions for the Variable Life Separate Account to reflect the funding options
that will be utilized by variable life insurance policies issued by Principal
Mutual:
1. International SmallCap Division--will invest in shares of the International
SmallCap Account of the Principal Variable Contracts Fund, Inc. The Account
is to be sub-advised by Invista Capital Management:
2. MicroCap Division--will invest in shares of the MicroCap Account of the
Principal Variable Contracts Fund, Inc. The Account is to be sub-advised by
Goldman Sachs Asset Management;
3. MidCap Growth Division--will invest in shares of the MidCap Growth Account
of the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Dreyfus Corporation:
4. Putnam Global Asset Allocation Division--will invest in shares of Putnam VT
Asset Allocation Fund, Inc. The Fund is managed by Putnam Investment
Management, Inc.;
5. Putnam Vista Division--will invest in shares of Putnam VT Vista Fund, lnc.
The Fund is managed by Putnam Investment Management, Inc.;
6. Putnam Voyager Division--will invest in shares of Putnam VT Voyager Fund,
Inc. The Fund is managed by Putnam Investment Management, Inc.;
7. Real Estate Division--will invest in shares of the Real Estate Account of
the Principal Variable Contracts Fund, Inc. The Account is to be managed by
Principal Management Corporation;
8. SmallCap Division-will invest in shares of the SmallCap Account of the
Principal Variable Contracts Fund, Inc. The Account is to be sub-advised by
Invista Capital Management;
9. SmallCap Growth Division-will invest in shares of the SmallCap Growth
Account of the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Berger Associates;
Dave Drury
Page Two
January 20, 1998
10. SmallCap Value Division--will invest in shares of the SmallCap Value
Account of the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by JP Morgan Asset Management;
11. Utilities Division--will invest in shares of the Utilities Account of the
Principal Variable Contracts Fund, Inc. The Account is to be sub-advised by
lnvista Capital Management.
In addition, I have directed that the name of the Capital Accumulation Division
be changed to the Capital Value Division; that the name of the World Division be
changed to the International Division; and that the name of the Emerging Growth
Division be changed to the MidCap Division.
/s/ John Aschenbrenner
- --------------------------------------
John Aschenbrenner
<PAGE>
DATE: January 22,1999
TO: Dave Drury
FROM: John Aschenbrenner, Ind. Staff, G-12, x75927
RE: New Division for Variable Life Separate Account
CC: Steve Jones, Barry Griswell, Joyce Hoffman
One new division is being added to Flexible Premium Variable Universal Life to
be effective May 1, 1999. In accordance with Principal Life Insurance Company
Board Resolution No. 12503, passed February 22, 1988, I have created the
following division for the Variable Life Separate Account to reflect the funding
options that will be utilized by variable life insurance policies issued by
Principal Life:
1. Stock Index 500 Division--will invest in shares of the Stock Index 500
Account of Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Invista Capital Management, LLC;
In addition, effective July 1, 1999, Survivorship Flexible Variable Universal
Life will be introduced and will be using all of the existing divisions (except
the High Yield Division) of the Variable Life Separate Account.
/s/ John Aschenbrenner
- -----------------------------------------
John Aschenbrenner
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made this 29th day of January, 1999,
between Principal Life Insurance Company ("Principal"), a life insurance company
organized under the laws of the State of Iowa, and Princor Financial Services
Corporation ("Princor"), an affiliate of Principal organized under the laws of
the State of Iowa.
WITNESSETH
WHEREAS, Principal has established Variable Life Separate Account
("Separate Account") and registered such Separate Account as an investment
company under the Investment Company Act of 1940 to fund variable life insurance
policies issued by Principal Life Insurance Company;
WHEREAS, Princor is registered with the Securities and Exchange
Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.; and
WHEREAS, Principal desires to issue certain Survivorship Flexible
Premium Variable Universal Life Insurance policies ("Policies") with respect to
the Separate Account which will be sold and distributed by and through Princor,
and Princor is willing to sell and distribute such Policies under the terms and
conditions stated herein;
NOW, THEREFORE, the parties agree as follows:
1. Principal hereby appoints Princor as the principal underwriter of
the Policies issued with respect to the Separate Account, and Princor agrees to
use its best efforts to sell and distribute the Policies through its registered
representatives or through other broker-dealers registered under the Securities
and Exchange Act of 1934 whose registered representatives are authorized by
applicable law to sell variable universal life insurance policies.
2. All payments and other monies payable upon the sale, distribution,
renewal or other transaction involving the Policies shall be the property of and
be paid or remitted directly to Principal, who shall retain all such payments
and monies for its own account except to the extent such payments and monies are
allocated to the Separate Account. Princor shall not be deemed to have any
interest in such payments.
3. For the administrative convenience of the parties, Principal shall
(a) pay to the registered representatives of Princor the commissions
earned on the sale, distribution, renewal or other transaction
involving the Policies as determined in the attached Commission
Schedule, and provide Princor with accurate records of all such
commissions paid on its behalf; and
(b) pay to broker-dealers with whom Princor has entered into a Selling
Agreement for the distribution of the Policies any applicable
dealer allowance or other compensation as provided in such Selling
Agreement, and provide Princor with accurate records of all such
payments paid on its behalf.
4. Principal shall pay to Princor an amount equal to the expenses
incurred by Princor in the performance of this Agreement. Princor shall provide
a statement of expenses to Principal at least semi-annually in a form and manner
agreed to by the parties.
5. Princor shall be solely responsible for the supervision and control
of the conduct and activities of its registered representatives with regard to
the sale and distribution of the Policies.
6. Principal shall assume the responsibility, including the costs
thereof, for all administrative and legal functions pertaining to the Policies
not otherwise specifically assumed by Princor in this agreement, including but
not limited to the following: the preparation, printing and filing of
prospectuses; the development, filing, and compliance with federal and state
securities laws and regulations of the Separate Account; policy development; SEC
registration; filing and compliance with state insurance laws and regulations;
underwriting; policy issue and policyowner service functions; developing sales
and promotional material; and training agents.
7. Principal will prepare and maintain all the books and records in
connection with the offer and sales of variable life insurance policies which
are required to be maintained and preserved in accordance with applicable
securities law; and all such books and records are to be maintained and held by
Principal on behalf of and as agent for the broker-dealer whose property they
are and shall remain; and all such books and records will be made available for
inspection by the Securities and Exchange Commission at all times.
8. Principal shall send to each policyowner or such other person as
appropriate a confirmation as required by law or regulation of any transaction
made with respect to the Policies which shall reflect the true facts of the
transaction and show that confirmation of the transaction is being sent on
behalf of the broker-dealer acting in the capacity of agent for the insurance
company.
9. Princor and Principal may enter into agreements with other
broker-dealers duly licensed under applicable federal and state laws and with
their affiliated general agencies, if any, for the sale and distribution of the
Policies. The commission payable to registered representatives on the sale of
Policies thereunder may not exceed the amount shown on the attached Commission
Schedule.
10. This agreement may be terminated by either party upon 60 days prior
written notice. Princor shall promptly notify the Securities and Exchange
Commission of any such termination.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year written above.
PRINCIPAL LIFE INSURANCE COMPANY
/s/ A. Michael Mcmahon
By:_____________________________________
PRINCOR FINANCIAL SERVICES CORPORATION
/s/ A. S. Filean
By:_____________________________________
The Principal Financial Group Princor Financial Registered Representative's
Des Moines, IA 50392-0200 Services Corporation Agreement
- --------------------------------------------------------------------------------
This agreement by and between Princor Financial Services Corporation
(herein referred to as "Princor" and ___________________________________,
registered representative (herein referred to as "RR", of the City of
___________________________, State of ___________________, for the sale of
registered products is effective on the ______ day of __________________, 19____
and is subject to the following terms and conditions.
Definitions
- --------------------------------------------------------------------------------
a. Throughout this Agreement, the terms "we", "us" and "our" mean Princor. The
terms "you" and "your" mean the RR executing this agreement.
b. Commissions mean payments made pursuant to the commission schedules for
registered products which are in effect at the time of sale. Those
commission schedules are incorporated into this agreement by reference.
c. Application means application or order for the purchase of registered
products.
d. Registered products means investment company shares underwritten by us,
investment company shares and units sold through us, limited partnership
interest, variable life insurance policies, variable annuity contracts, and
such other security products that we are or become qualified to sell.
e. "Advertising", "sales literature" and "sales material" shall have the
meanings given by the applicable securities laws.
Relationship
- ---------------------------------------------------------------------------
a. To the extent permitted by applicable securities laws, your relationship
with us is that of an independent contractor. Nothing contained herein or
elsewhere shall be construed to create an employer/employee relationship.
b. Subject to any applicable regulatory and licensing requirements, you are
responsible for developing your own sales prospects and determining when
and where you will solicit business.
c. You are not required to spend a certain portion of your time as RR.
However, you will be expected to solicit new applications if appropriate
and to service accounts.
d. We reserve the right to reject any applications, orders or payments
remitted by you and to refund to investors payments made by them.
<PAGE>
Duties and Responsibilities
- ----------------------------------------------------------------------------
You are agreeing to:
a. Solicit sales of products on our behalf .
b. Provide service to our clients.
c. Adhere strictly to the rules of the National Association of Securities
Dealers, Inc. (NASD), the acts and regulations of the Securities and
Exchange Commission (SEC), and all statutes and regulations of the states
and of the United States.
d. Follow our Field Representative OSJ Procedures (MM 66) and all other rules,
policies and directives concerning sales practices and conduct established
by us. Said procedures are incorporated herein by reference.
e. Obtain NASD registration and state licenses appropriate for your activities
as RR.
f. Acquire licenses, bonds and professional liability insurance coverage as
required by us or by the law. Provide us with evidence of such and of any
changes thereto.
g. Limit solicitations of applications to the state(s) in which you are
licensed. Solicitations shall be made only after receiving written
authorization from us.
h. Upon notification from us, pay promptly all registration and state license
renewal fees and such other costs as may be directed by us.
i. Immediately upon receipt, forward all applications and all payments.
j. Upon our demand or termination of this agreement, return all monies,
prospectuses, application forms, manuals, and other materials or supplies
furnished to you by us, or by anyone on our behalf.
Limitations
- -----------------------------------------------------------------------
You may not:
a. Incur any liability or debt against us.
b. Make contracts, promise reinstatement of contracts, or attempt to bind us.
c. Allow more time for payment of any amount by a client, applicant,
shareholder or other third party.
d. Extend credit to any person or entity in connection with a securities
account.
e. Accept payments or deposits from any client, applicant, shareholder or
third party except as expressly authorized by us.
f. Initiate legal proceedings in our name.
g. Make any representations concerning applications or products except as
contained in the current prospectus and supplementary sales materials or
sales literature approved by us.
h. Solicit in any manner in any state for which we have not given you written,
pre-approval to sell.
i. Solicit or sell any security, exempt or otherwise, that we have not given
you written, pre-approval to sell.
j. Send applications, or otherwise place orders, directly to a sponsor or
issuer other than Princor.
k. Call yourself a "financial planner", imply that you provide financial
planning services or charge fees for financial planning services unless
you first register as an investment advisor. We must review applications
for registration. You must comply with applicable federal and state
regulations.
Commissions
- -------------------------------------------------------------------------------
a. We will pay you commissions on commissionable transactions which have been
approved and accepted by us.
b. The commission rate will be determined by the commission schedules in
effect at the time of the sale.
c. Commission schedules may be changed at any time by us.
d. We may reduce the amount we pay you by an amount you owe us or our
affiliate(s).
Prior Contract
- --------------------------------------------------------------------------------
This agreement supersedes all other contracts or agreements between you and
Princor. Your right to receive commissions pursuant to prior contracts is not
affected by this agreement.
Assignment
- --------------------------------------------------------------------------------
a. This agreement is not assignable.
b. Other than as provided in Commissions (d) above, no commission payable
under this agreement may be transferred, assigned or made payable to other
than you without our prior written approval.
Disciplinary Action and Termination
- --------------------------------------------------------------------------------
a. This agreement may be terminated by either party at any time upon three
days written notice sent to the last known address of the other party.
b. We may censure or fine you, or terminate your contract without giving prior
notice if we determine that you have committed any fraudulent, dishonest or
illegal acts, violated any provision of this agreement, failed or refused
to comply with the rules, regulations and statutes of the federal or state
government, SEC, or NASD, or failed or refused to comply with our
supervisory procedures or other instructions.
c. If your NASD registration is terminated for any reason, this agreement will
terminate concurrently.
- ------------------------------------ -----------------------------------
Princor Financial Services Corp. Registered Representative Signature
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured.
NON-PARTICIPATING.
This policy is a legal contract between You, as owner, and Us, Principal Life
Insurance Company. Your policy is issued based on the information in the
application and payment of premiums as shown on the current Data Pages. We will
pay the benefits of this policy in accordance with its provisions.
YOUR NET PREMIUMS ARE ADDED TO YOUR POLICY VALUE. YOU MAY ALLOCATE THEM TO ONE
OR MORE OF THE SEPARATE ACCOUNT DIVISIONS AND TO THE FIXED ACCOUNT.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE SEPARATE ACCOUNT WILL VARY FROM
DAY TO DAY. THE AMOUNT IS NOT GUARANTEED. IT MAY INCREASE OR DECREASE DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING DIVISIONS THAT YOU HAVE CHOSEN.
THERE ARE NO MINIMUM GUARANTEES AS TO SUCH PORTION OF YOUR POLICY VALUE.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE FIXED ACCOUNT WILL ACCUMULATE,
AFTER DEDUCTIONS, AT RATES OF INTEREST WE DETERMINE. SUCH RATES WILL NOT BE LESS
THAN 3% A YEAR, COMPOUNDED ANNUALLY.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE VARIABLE OR FIXED AS
DESCRIBED IN THIS POLICY.
10-DAY EXAMINATION OFFER. IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
POLICY. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR POLICY TO EITHER YOUR
AGENT OR OUR HOME OFFICE BEFORE THE LATTER OF: (1) 10 DAYS OF ITS RECEIPT; (2)
45 DAYS AFTER THE APPLICATION WAS SIGNED; (3) 10 DAYS FROM THE DELIVERY OF THE
NOTICE OF THE RIGHT TO CANCEL; OR (4) SUCH LATER DATE AS PROVIDED BY APPLICABLE
STATE LAW. WE WILL REFUND ANY PREMIUM PAID AND YOUR POLICY WILL BE CONSIDERED
VOID FROM ITS INCEPTION. PLEASE READ YOUR POLICY CAREFULLY SO YOU MAY BETTER USE
ITS MANY BENEFITS.
The terms of this policy start on the Policy Date and will stay in force until
the maturity date shown on the Data Pages so long as You satisfy the
requirements as outlined in Your policy.
/s/ Joyce N. Hoffman /s/ David J. Drury
Vice President and Corporate Secretary Chairman and Chief Executive Officer
SF 523
TABLE OF CONTENTS
SUBJECT PAGE
DEFINITIONS IN THIS POLICY.............................................4
PURCHASING AND KEEPING THE CONTRACT IN FORCE...........................5
PLANNED PERIODIC PREMIUMS..............................................6
PREMIUM PAYMENT LIMITS.................................................6
GRACE PERIOD...........................................................6
TERMINATION............................................................7
REINSTATEMENT..........................................................7
PREMIUM INVESTMENT OPTIONS.............................................7
FIXED ACCOUNT..........................................................8
INVESTMENT ACCOUNTS....................................................8
VARIABLE LIFE SEPARATE ACCOUNT.........................................8
BENEFITS WHILE POLICY IS IN FORCE......................................8
YOUR POLICY VALUE......................................................8
TRANSFERS.............................................................10
POLICY LOANS..........................................................12
LOAN INTEREST CHARGE..................................................13
REPAYMENT.............................................................13
SURRENDER OF THE POLICY...............................................13
SURRENDER VALUE.......................................................13
POLICY EXPENSES.......................................................14
COST OF INSURANCE RATES...............................................15
YOUR DEATH PROCEEDS...................................................16
DEATH BENEFIT OPTIONS.................................................16
CHANGES IN DEATH BENEFIT OPTIONS......................................17
YOUR ADJUSTMENT OPTIONS...............................................17
ADJUSTING THE FACE AMOUNT.............................................17
RIGHT TO EXCHANGE POLICY..............................................18
OWNER, BENEFICIARY, ASSIGNMENT........................................18
CHANGES OF OWNER OR BENEFICIARY.......................................19
ASSIGNMENT............................................................19
GENERAL INFORMATION...................................................19
THE CONTRACT..........................................................19
ALTERATIONS...........................................................19
INCONTESTABILITY......................................................19
AGE AND SEX...........................................................19
SUICIDE...............................................................20
STATEMENT OF VALUE....................................................21
A copy of the application and any additional benefits provided by rider follow
the last page of this policy.
(LOGO) Principal Life
Insurance Company
Des Moines, Iowa 50392-0001
DATA PAGE
- --------------------------------------------------------------------------------
Survivorship Flexible Premium Variable Universal Life
- --------------------------------------------------------------------------------
POLICY DATA
Policy Number: Sample
Owner: John Doe
Joint Owner: Jane Doe
Policy Date: July 1, 2000
Policy Maturity Date: June 30, 2065
Death Benefit Option: Option 1
Face Amount: $100,000.00
Insured's Name: John Doe
Insured's Age and Sex: 35 - Male
Insured's Risk Class: Standard Nonsmoker
Insured's Name: Jane Doe
Insured's Age and Sex: 35 - Female
Insured's Risk Class: Standard Nonsmoker
PLANNED PERIODIC PREMIUM: $500.00
Planned Premium Mode: Annual
Target Premium: $407.00
Minimum Monthly Premium* $26.75
Death Benefit Guarantee Monthly Premium $71.25
*Applicable during the first 5 Policy Years only.
This policy is adjustable. If it is adjusted, we will send you new Data Pages.
The Data Pages are to be attached to and made a part of this policy.
This policy contains a fixed loan interest rate of 8.0%
Interest on borrowed funds is credited at 6% through Policy Year ten.
Thereafter, it is credited at 7.75%.
- --------------------------------------------------------------------------------
RIDER DATA
SF 531 Death Benefit Guarantee Rider
Effective Date: July 1, 2000
Expiration Date: June 30, 2065
SF 530 Extended Coverage Rider
Effective Date: July 1, 2000
- --------------------------------------------------------------------------------
ACCOUNT DATA
Monthly Policy
Premium Allocations Charge Allocations
------------------- ------------------
FIXED ACCOUNT 00% 00%
SEPARATE ACCOUNT DIVISIONS
Aggressive Growth 00% 00%
Asset Allocation 00% 00%
Balanced 20% 20%
Bond 20% 20%
Capital Value 00% 00%
Fidelity Contrafund 20% 20%
Fidelity Equity-Income 00% 00%
Fidelity High Income 00% 00%
Government Securities 00% 00%
Growth 20% 20%
International 00% 00%
International SmallCap 00% 00%
MicroCap 00% 00%
MidCap 00% 00%
MidCap Growth 00% 00%
Money Market 20% 20%
Putnam Global Asset Allocation 00% 00%
Putnam Vista 00% 00%
Putnam Voyager 00% 00%
Real Estate 00% 00%
SmallCap 00% 00%
SmallCap Growth 00% 00%
SmallCap Value 00% 00%
Stock Index 500 00% 00%
Utilities 00% 00%
- --------------------------------------------------------------------------------
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
Monthly Rates Per $1,000.00 of Net Amount of Risk
Duration Monthly Rate Duration Monthly Rate
1 0.00033 34 0.88717
2 0.00100 35 1.02242
3 0.00183 36 1.18133
4 0.00292 37 1.37208
5 0.00425 38 1.60392
6 0.00583 39 1.88208
7 0.00775 40 2.20842
8 0.01008 41 2.58142
9 0.01292 42 2.99925
10 0.01617 43 3.45992
11 0.02000 44 3.96725
12 0.02442 45 4.53425
13 0.02958 46 5.17808
14 0.03567 47 5.91625
15 0.04267 48 6.76592
16 0.05100 49 7.72767
17 0.06083 50 8.78858
18 0.07258 51 9.93475
19 0.08650 52 11.15292
20 0.10275 53 12.43533
21 0.12133 54 13.77792
22 0.14242 55 15.18550
23 0.16592 56 16.67150
24 0.19225 57 18.26417
25 0.22242 58 20.01800
26 0.25775 59 22.06433
27 0.30000 60 24.69400
28 0.35133 61 28.48125
29 0.41308 62 34.52242
30 0.48600 63 44.77867
31 0.56975 64 61.99675
32 0.66442 65 83.33333
33 0.76967
Basis of Values: Guaranteed maximum cost of insurance rates are based on 1980
CSO Mortality Table, age last birthday, with distinction for the insured's sex.
The rates will reflect the Insured's risk class(es).
- --------------------------------------------------------------------------------
CHARGES and LIMITS
o The maximum monthly administration charge is $8.00 per month, plus $.08
per $1000 of face amount. The charge of $.08 per $1000 of face amount is
increased by $.05 per $1000 for each Insured that is classified as a
smoker.
o The maximum annual mortality and expense risks charge is .80% of the
portion of the Policy Value in the Separate Account for the first nine
Policy Years. Thereafter, the charge is .30% of the portion of the Policy
Value in the Separate Account.
o The partial surrender transaction charge is the lesser of $25, or 2% of
the amount surrendered.
o During the first ten Policy Years, and for any premiums attributable to
any face increases, the premium expense charge is 5.00% of each premium
received for premium payments less than or equal to the Target Premium
(2.00% of premiums received in excess of Target Premium); plus a charge for
state and local taxes of 2.20% of each premium received; and a federal tax
charge of 1.25% of each premium received. After the first ten Policy Years,
the premium expense charge is 2.00% of each premium received; plus a charge
for state and local taxes of 2.20% of each premium received; and a federal
tax charge of 1.25% of each premium received.
o The first 12 account transfers in a Policy Year are free. Thereafter, we
reserve the right to charge a $25 transaction charge for each transfer.
o The minimum face amount allowed is $100,000.
o The minimum transfer value for scheduled transfers is $2,500.
o The minimum face amount increase allowed is $100,000.
o The minimum partial surrender or loan amount allowed is $500.
o The minimum unscheduled transfer amount allowed is the lesser of $100, or
the balance of the Investment Account from which funds are being
transferred.
o The minimum scheduled transfer amount allowed is $100 from the
Investment Accounts and $50 from the Fixed Account.
A surrender charge will be deducted from your Policy Value if this policy is
surrendered for its net surrender value or if this policy terminates within the
first ten years. The maximum charge for each Policy Year is shown in the table
below.
The table assumes the policy face amount is never increased, and the policy has
not been reinstated.
Table of Maximum Surrender Charges Per Policy
Policy Year Amount
1 $407.00
2 407.00
3 407.00
4 407.00
5 407.00
6 387.63
7 348.84
8 290.72
9 213.19
10 116.28
11 and later 0.00
DEFINITIONS IN THIS POLICY
ADJUSTMENT DATE means the Monthly Date on or next following Our approval of a
requested adjustment.
ATTAINED AGE for each Insured means the Insured's age on the birthday on or
preceding the last Policy Anniversary.
DIVISION is the part of the Separate Account to which Net Premiums may be
allocated which invests in shares of a Mutual Fund. The value of an investment
in a Division is variable and is not guaranteed.
EFFECTIVE DATE is the date on which all requirements for issuance of a policy
have been satisfied.
FIXED ACCOUNT is that part of the Policy Value that reflects the value You have
in Our general account.
INSUREDS means the persons named as the Insureds on the current Data Pages of
this policy. The Insureds may or may not be the owner(s).
INVESTMENT ACCOUNT is that part of the Policy Value that reflects the value You
have in one of the Divisions of the Separate Account.
LOAN ACCOUNT is that part of the Policy Value that reflects the value You have
transferred from the Fixed Account and/or Separate Account as collateral for a
policy loan.
MONTHLY DATE means the day of the month which is the same as the day of the
Policy Date. The Monthly Date will never be the 29th, 30th, or 31st of any
month.
MONTHLY POLICY CHARGE is the amount subtracted from Your Policy Value on each
Monthly Date equal to the sum of the cost of insurance and the cost 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 means 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 is the gross premium less the deductions for the Premium Expense
Charge as shown on the current Data Pages. It is the amount of premium allocated
to the Fixed Account and/or Investment Accounts.
NET SURRENDER VALUE is the Surrender Value less any policy loans and unpaid loan
interest.
NOTICE means any form of communication We receive in Our home office providing
the information We need, either in writing or another manner that We approve in
advance.
POLICY DATE is the date shown on the current Data Pages. The Policy Date will
never be the 29th, 30th, or 31st of any month.
POLICY VALUE is the sum of the values in the Loan Account, Fixed Account, and
Investment Accounts.
POLICY YEARS AND ANNIVERSARIES means the Policy Years and Anniversaries computed
from the Policy Date.
PREMIUM EXPENSE CHARGE is the charge deducted from premium payments to cover a
sales charge, state and local premium taxes and the federal tax charge as shown
on the current Data Pages. PRORATED BASIS means 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.
SEPARATE ACCOUNT means Principal Life Insurance Company Variable Life Separate
Account, a registered unit investment trust with Divisions and segregated
assets, to which Net Premiums may be allocated under this policy and others We
issue.
SURRENDER VALUE is the Policy Value less the surrender charges.
SURVIVING INSURED means the Insured who is living upon the death of the other
Insured. If both Insureds die simultaneously, then the term "Surviving Insured"
shall mean the younger of the two Insureds.
TARGET PREMIUM is a premium amount used to determine the maximum sales charge
that is included as part of the Premium Expense Charge and any applicable
surrender charge under a policy. Your Target Premium is shown on Your current
Data Pages.
UNIT is the accounting measure used to calculate the Separate Account value.
VALUATION DAY is any day that the New York Stock Exchange is open for trading,
and trading is not restricted. We will deem each Valuation Day to end at the
time We determine the net asset value of the underlying Mutual Fund shares held
by the Division of the Separate Account. When We need to determine a Policy
Value or an amount after the end of a Valuation Day, or on a day that is not a
Valuation Day, We will do so at the end of the next Valuation Day.
VALUATION PERIOD means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Day and the time as of
which such value is determined on the next following Valuation Day.
WE, OUR, US means Principal Life Insurance Company.
WRITTEN REQUEST means a form satisfactory to Us, signed and dated by You, and
received at Our home office.
YOU, YOUR means the owner(s) of this policy.
PURCHASING AND KEEPING THE CONTRACT IN FORCE
PREMIUM PAYMENTS
Your first premium is due on the Policy Date. After that, premiums may be paid
at any time while this policy is in force. The amount of Your premiums is
subject to the Premium Payment Limits provision. We will give a receipt to the
premium payor on request.
Your initial Net Premium will be allocated to the Money Market Division of the
Separate Account. Net Premiums will continue to be allocated to the Money Market
Division until 20 days after the Effective Date. After the 20-day period has
expired, Your policy's Policy Value will be transferred to the Divisions and/or
the Fixed Account indicated by Your initial premium allocation percentage(s)
request. If the purchase of this policy falls within the definition of a
replacement under state law, We reserve the right to allocate the initial Net
Premium (or any premium that may result from a replacement) to the Money Market
Division beyond the 20 days as may be necessary.
The initial premium allocation percentages are shown on the Data Pages. Unless
You change them, these percentages apply to future allocations of premiums. For
each Division and the Fixed Account, the allocation percentages must be zero or
a whole number not less than ten nor greater than 100. The sum of the
percentages for all Divisions and the Fixed Account must equal 100.
PLANNED PERIODIC PREMIUMS
You may preauthorize automatic monthly planned periodic premium payments. If You
do not elect to pay automatically, We will send You reminder notices of the
amount and frequency of Your planned periodic premiums as selected in Your
application. These notices serve only as a reminder of Your preference. Premiums
are to be sent to the address We provide in the reminder notices. You may change
the amount and frequency of Your planned periodic premiums by providing Notice
to Us.
The Grace Period provision may apply whether or not You make a planned periodic
premium payment or additional premium payments.
PREMIUM PAYMENT LIMITS
To keep this policy in force You must satisfy the requirements described in the
Grace Period provision.
You may choose to make premium payments that are greater than the planned
periodic premium. However, We will refund any premiums that would disqualify
this policy as "life insurance" as defined in the Internal Revenue Code, as
amended.
If any payment increases the policy's death benefit by more than it increases
the Policy Value, We reserve the right to refund the premium payment. If the
premium payment is not refunded, We may require satisfactory evidence of
insurability.
PAID UP BENEFIT
If You do not make a planned periodic premium payment or additional premium
payments, then this policy will not terminate unless the Net Surrender Value is
not sufficient to pay the Monthly Policy Charge which is due on the Monthly Date
and the Grace Period provision will then apply.
GRACE PERIOD
If the Net Surrender Value on any Monthly Date is less than the Monthly Policy
Charge, a 61 day grace period will begin. However, We guarantee this policy will
stay in force during the first 5 policy years when (A-B) is greater than or
equal to (C), where:
A. Is the sum of premiums paid;
B. Is the sum of all existing loans, loan interest, partial surrenders,
and transaction charges; and
C. Is the sum of the minimum monthly premiums since the Policy Date to the
most recent Monthly Date.
The current minimum monthly premium is shown on the current Data Pages.
The grace period begins when We mail a notice of impending policy termination to
You. This notice will be sent to Your last post office address known to Us.
If by the end of the grace period We do not receive a payment, as calculated in
number 5 of the Reinstatement provision, Your policy terminates as of the date
the first unpaid Monthly Policy Charge was due.
If the Surviving Insured dies during a grace period, We will pay the death
proceeds to the beneficiary(ies).
TERMINATION
All policy privileges and rights of the owner(s) under this policy end:
1. When You surrender Your policy for cash;
2. When the death proceeds are paid;
3. When the policy maturity proceeds are paid; or
4. When the grace period ends as described in the Grace Period provision. In
this case, the privileges and rights of the owner(s) terminate as of the
Monthly Date on which the grace period begins.
REINSTATEMENT
If this policy ends as described in the Grace Period provision and You have not
surrendered Your policy for cash, You may reinstate it provided:
1. Such reinstatement is prior to the maturity date;
2. Not more than three years have elapsed since the policy terminated;
3. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect;
4. You either repay or reinstate any policy loans and unpaid loan interest
on this policy existing at termination; and
5. You make a payment of at least (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 1 minus the maximum Premium Expense Charge.
Reinstatement will be effective on the Monthly Date on or next following the
date We approve it. The Policy Date will remain the original Policy Date and
will not be changed at reinstatement, although Surrender Charges for total
surrender following reinstatement will resume at the rate charged at the time of
the policy's termination, as adjusted for the payment of past due premiums, if
any.
PREMIUM INVESTMENT OPTIONS
ALLOCATIONS
You may allocate Net Premiums to the Fixed Account and/or any of the Investment
Accounts. Allocation percentages must be zero or a whole number not less than
ten nor greater than 100. The sum of the allocation percentages must equal 100.
You may change the allocation percentages by providing Us Notice. Unless You
change the initial premium allocation specified in Your application for this
policy, it will continue to apply to subsequent premium payments. FIXED ACCOUNT
Net Premiums allocated to the Fixed Account will earn interest at rates We
determine at Our discretion. In no event will the guaranteed interest rate be
less than 3% compounded annually.
INVESTMENT ACCOUNTS
The Separate Account is comprised of Divisions shown on the current Data Pages.
Each Division invests in a Mutual Fund with a different investment objective.
You may allocate amounts to one or more of the Divisions. An Investment Account
will be established for You corresponding to each Division of the Separate
Account to which amounts are allocated or transferred under this policy. We will
maintain each of these Investment Accounts for You to keep track of Your values
in each Division. Income, gains and losses, whether or not realized, from each
Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or Our other income, gains
or losses.
VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940, as amended.
Assets are put into the Separate Account to support this policy and to support
other variable life insurance policies We may offer. We own the assets of the
Separate Account. These assets are not part of Our general account. Income,
gains and losses of the Separate Account, whether or not realized, are credited
to or charged against the Separate Account assets, without regard to Our other
income, gains or losses. The assets of the Separate Account will be available to
cover the liabilities of Our general account only to the extent that the assets
of the Separate Account exceed the liabilities of the Separate Account arising
under the variable life insurance policies supported by the Separate Account.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a Mutual
Fund are no longer available for investment, or in Our judgment investment in a
Mutual Fund becomes inappropriate considering the purpose of the Separate
Account, We may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future Net Premium payments. However, no such changes will be
made without notifying You and getting any required approval from the
appropriate state and/or federal regulatory authorities. We will notify You of
any such change.
If We eliminate or combine existing Divisions, or transfer assets in one
Division to another, You may then change Your allocation percentages and
transfer any value in that Division to another Investment Account(s) and/or the
Fixed Account without charge. You may exercise this right until the latter of 60
days after, 1) the effective date of such change or, 2) the date You receive
notice of this right. You may only exercise this right if You have an interest
in the affected Division(s).
BENEFITS WHILE POLICY IS IN FORCE
YOUR POLICY VALUES
Your Policy Value at any time is equal to the sum of the values You have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE
You can get a loan on this policy under certain conditions. When You take out a
loan, We transfer the amount of the loan from the Fixed Account and/or one or
more of the Investment Accounts, into the Loan Account. For details of the Loan
Account see the Policy Loans provision.
FIXED ACCOUNT VALUE
The amount You have in the Fixed Account at any time equals:
1. Net Premiums allocated to it,
PLUS
2. Amounts transferred to it,
PLUS
3. Interest credited to it,
LESS
4. Amounts deducted from it,
LESS
5. Amounts transferred from it,
LESS
6. Amounts surrendered from it.
INVESTMENT ACCOUNT VALUE
Your Investment Account value for each Division is equal to the number of Units
in that Investment Account multiplied by that Division's Unit value. The number
of Units in an Investment Account at any time equals A minus B, where:
A. Is the number of Units credited to the Investment Account because of:
1. Net Premiums allocated to it, and
2. Amounts transferred to it; and
B. Is the number of Units canceled from the Investment Account because of:
1. Amounts deducted from it,
2. Amounts transferred from it, and
3. Amounts surrendered from it.
The number of Units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the Unit value on the Valuation Day
of the transaction.
UNIT VALUES
We will determine the Unit value for each Division of the Separate Account at
the end of each Valuation Day.
The Unit value for each Division was arbitrarily set at $10 as of the Valuation
Day that the Division first purchased Mutual Fund shares. For any subsequent
Valuation Day, the Unit value for that Division is obtained by multiplying the
Unit value for the immediately preceding Valuation Day by the net investment
factor for the particular Division on that subsequent Valuation Day.
NET INVESTMENT FACTOR
The net investment factor for a Division on any Valuation Day is equal to A
divided by B where:
A. Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of such Valuation Day before any policy
transactions are made on that day; and
B. Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of the immediately preceding Valuation Day after
all policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by Us
to be attributable to the operations of the Division.
TRANSFERS
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Investment Accounts
as provided below. To request a transfer, You must provide Us Notice. All
transfers with the same effective dates count as one transfer. If Your request
is received prior to the close of the New York Stock Exchange, the transfer is
made and value is determined as of that day. Requests received after the close
of the New York Stock Exchange will be processed and values determined as of the
next Valuation Day. We reserve the right to not accept transfer requests from
someone requesting them for multiple contracts. We also reserve the right to
modify or revoke transfer privileges and charges.
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to an Investment Account by
making either a scheduled or unscheduled Fixed Account transfer, subject to the
following conditions:
Either unscheduled transfers or scheduled transfers (not both) may occur during
the same Policy Year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS - You may make one unscheduled transfer
from the Fixed Account each Policy Year, as follows:
1. You must provide Us Notice within 30 days following either the
Policy Date or any Policy Anniversary.
2. You must specify the dollar amount or percentage to be
transferred, and the resulting amount must not exceed 25% of Your
Fixed Account value as of the latter of the Policy Date or the
last Policy Anniversary. However, You may transfer up to 100% of
Your Fixed Account value within 30 days after the first and
following Policy Anniversaries if Your Fixed Account value is less
than $1,000.
SCHEDULED FIXED ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You may make
scheduled transfers on a monthly basis from the Fixed Account as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. Your Fixed Account value must equal or exceed the minimum transfer
value shown on the current Data Pages. We reserve the right to
change this amount but it will never exceed $10,000.
3. The monthly transfer will be the dollar amount or percentage You
specify, and that amount must equal or exceed the minimum
scheduled transfer amount shown on the current Data Pages. The
monthly amount transferred cannot exceed 2% of Your Fixed Account
value as of the latter of the Policy Date, last Policy
Anniversary, or date request is received by Us.
4. The transfers will continue until Your Fixed Account value
is exhausted or We receive Notice to stop them.
5. The amount of these scheduled transfers can be changed by You once
each Policy Year, by Written Request or by telephone.
6. If You stop the scheduled transfers, You may not start them again
until six months after the date of the last scheduled transfer.
TRANSFERS FROM INVESTMENT ACCOUNTS
You may transfer amounts from an Investment Account to either the Fixed Account
or another Investment Account by making either a scheduled or unscheduled
Investment Account transfer, subject to the following conditions:
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at
least six months; and
2. Your Fixed Account value immediately after the transfer does not
exceed $1,000,000, except with Our prior approval.
UNSCHEDULED INVESTMENT ACCOUNT TRANSFERS - You may make unscheduled transfers
from an Investment Account, as follows:
1. You must specify the dollar amount or percentage to transfer from
each Investment Account, and the resulting amount must equal or
exceed the lesser of the value of Your Investment Account or the
minimum unscheduled transfer amount shown on the current Data
Pages.
2. We reserve the right to charge a transaction charge as shown on
the current Data Pages for each unscheduled transfer after the
twelfth transfer in a Policy Year.
SCHEDULED INVESTMENT ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You
may make scheduled transfers from an Investment Account, as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. You must specify how often the transfers will occur
(annually, semi-annually, quarterly or monthly).
3. You must specify the dollar amount or percentage to transfer from
each Investment Account, and that amount must equal or exceed the
lesser of the value of Your Investment Account or the minimum
scheduled transfer amount shown on the current Data Pages.
4. The value of each Investment Account from which transfers are made
must equal or exceed the minimum transfer value shown on the
current Data Pages.
The transfers will continue until Your interest in the Investment
Account is exhausted or We receive Notice to stop them.
5. We reserve the right to limit the number of Investment Accounts
from which transfers will be made at the same time. In no event
will the limit ever be less than two.
AUTOMATIC PORTFOLIO REBALANCING
Automatic portfolio rebalancing (APR), allows You to maintain a specific
percentage of Your Policy Value in Your Investment Accounts over time.
APR transfers:
1. Do not begin until the expiration of the Examination Offer (See
Examination Offer on the front cover of Your policy).
2. Are made without a charge and are not counted as unscheduled
transfers when determining any transfer fee.
3. May be made on the frequency You specify, subject to the following:
A. Quarterly APR transfers may be made on a calendar year or
Policy Year basis.
B. Semiannual or annual APR transfers may only be done on a
Policy Year basis.
4. May be made upon Your Written Request or by telephone.
Transfers are made at the end of the next Valuation Period after We receive Your
instructions. APR is not available if You have scheduled transfers from the same
Investment Account, or for values You have in the Fixed Account.
POLICY LOANS
You may obtain a policy loan from Us with this policy as sole security. You may
borrow up to A minus B where:
A. Is 90% of the Surrender Value; and
B. Is any outstanding policy loan and unpaid loan interest at the
time the loan request is processed at the home office.
The minimum loan amount is shown on the current Data Pages.
YOUR LOAN ACCOUNT
If You take a policy loan, a portion of Your Policy Value equal to the loan will
be transferred from the Fixed Account and/or the Investment Accounts to Your
Loan Account until the loan is repaid. The effective date of the transfer is the
date of the loan.
The loan will result in a reduction in the value of the Fixed Account to the
extent amounts are transferred from the Fixed Account to the Loan Account, or in
the cancellation of Units in the Investment Account or Accounts from which the
loan was withdrawn. For each Investment Account, the number of Units canceled
will be equal to the portion of the loan withdrawn divided by the Unit value for
the Valuation Period in which the loan is taken.
You may tell Us the amount of the policy loan to be withdrawn from the Fixed
Account and/or each Investment Account. If You do not tell Us, the loan amount
will be withdrawn in the same proportion as the allocation used for Your Monthly
Policy Charge. Amounts held in Your Loan Account will be part of Our general
account and will be credited with interest from the date of transfer. The
difference between the policy loan rate and the rate credited on the Loan
Account will not exceed 2%.
On each Policy Anniversary, if there has been a loan repayment, this credit is
transferred from the Loan Account to the Fixed Account and the Investment
Accounts. It is allocated among the Fixed Account and the Investment Accounts in
the same manner used to allocate premium payments.
All interest rates stated are effective annual rates. We apply these rates to
properly reflect the actual date We receive any repayments and any changes You
make in loan amounts during a policy month.
LOAN INTEREST CHARGE
Interest charges accrue daily at the annual loan interest rate shown on the
current Data Pages. Interest is due and payable at the end of each Policy Year.
Any interest not paid when due is added to the loan principal and bears interest
at the same rate. The adding of unpaid interest charges to the loan principal
will cause additional amounts to be withdrawn from the Divisions in the same
manner as described above for loans.
REPAYMENT
You may repay all or part of a policy loan as long as the policy is in force.
Any policy loans and unpaid loan interest charges not repaid at the death of the
Surviving Insured or at maturity are deducted from the death or maturity
proceeds.
YOU SHOULD IDENTIFY THE PURPOSE OF EACH PAYMENT. IF WE CANNOT IDENTIFY ITS
PURPOSE, WE WILL CONSIDER IT TO BE A LOAN REPAYMENT IF A LOAN IS OUTSTANDING.
The amount repaid is transferred from Your Loan Account to the Fixed Account
and/or the Investment Accounts in the same manner used to allocate premium
payments.
SURRENDER OF THE POLICY
SURRENDER VALUE AND NET SURRENDER VALUE
The Surrender Value of Your policy equals the Policy Value less the surrender
charges (described in the Surrender Charges provision).
The Net Surrender Value of Your policy is the Surrender Value less any policy
loans and unpaid loan interest. As long as Your policy is in force, You may
surrender it for its Net Surrender Value by sending Us a Written Request.
SURRENDER CHARGES
The Table of Maximum Surrender Charges is shown on the current Data Pages.
Surrender charges vary based on the Target Premium of the policy and will apply
only during the first 10 Policy Years unless changed due to a face amount
increase. A face amount increase has its own surrender charge period which
begins on the Adjustment Date. The total surrender charge on the policy will be
a composite of the surrender charges for the face amount at issue and each
subsequent face amount increase.
Decreases in face amount do not decrease surrender charges on the policy.
PARTIAL SURRENDERS
Each Policy Year after the second Policy Year, You may make up to two partial
surrenders from the Net Surrender Value, subject to the following:
1. Each partial surrender must be in an amount not less than the
minimum amount shown on the current Data Pages; and
2. In the aggregate the total amount surrendered in a Policy Year
will not exceed an amount equal to 75% of the Net Surrender Value
as of the date of the first surrender in a Policy Year.
The transaction charge is shown on the current Data Pages. You may tell Us in
what proportion to allocate the amount of the partial surrender and transaction
charge to be withdrawn from the Fixed Account and/or each Investment Account. If
You do not tell Us, the partial surrender and the transaction charge will be
withdrawn from the Fixed Account and each Investment Account in the same
proportion as the allocations used for Your current Monthly Policy Charge.
Partial surrenders from the Fixed Account will be taken from the most recent
premium payments first (last in, first out).
The amount of the partial surrender plus the transaction charge will result in
the cancellation of Units in the Investment Account from which the partial
surrender occurs. The number of Units canceled will be equal to the amount of
the partial surrender plus the transaction charge divided by the Unit value of
the Division or Divisions for the Valuation Period in which the partial
surrender is effective.
Your Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge.
If Option 1 death benefit is in effect, the face amount is reduced by the amount
of the partial surrender and the transaction charge.
POLICY EXPENSES
MONTHLY POLICY CHARGES
On the Policy Date, and each Monthly Date thereafter, We will deduct a Monthly
Policy Charge.
The deduction for the Monthly Policy Charge is the sum of the following amounts:
1. The cost of insurance (described below) and the cost of additional
benefits provided by any rider in force for the policy month;
2. The current monthly administration charge, which will not exceed
the maximum shown on the current Data Pages; and
3. The current mortality and expense risks charge imposed on the
Investment Account value, which will not exceed the maximum shown
on the current Data Pages.
The Monthly Policy Charge will be withdrawn from the Investment Accounts and/or
The Fixed Account according to the allocation percentages You have chosen.
Your choice for the Monthly Policy Charge allocation may be:
1. The same as the allocation percentages You have chosen for Your
premiums; or
2. Determined on a Prorated Basis; or
3. Any other allocation which We mutually agree upon.
If the amount in an Investment Account and/or The Fixed Account is insufficient
to allow the allocation You have chosen, Your Monthly Policy Charge will be
allocated on a Prorated Basis.
For each Investment Account and/or the Fixed Account, the allocation percentages
must be zero or a whole number not less than ten nor greater than 100. The sum
of the percentages for all the Investment Accounts and the Fixed Account must
equal 100. Changes in allocation percentages may be made by providing Notice to
Us. Once approved by Us, they are effective as of the next Monthly Date.
COST OF INSURANCE
The cost of insurance on each Monthly Date is A multiplied by the result of B
minus C, where:
A. Is the cost of insurance rate as described in the Cost Of Insurance
Rates provision divided by 1,000;
B. Is the death benefit as described in the Your Death Proceeds
provision of this policy at the beginning of the Policy Month,
divided by 1.0024663 (the sum of 1 plus the monthly guaranteed
fixed account interest rate); and
C. Is the Policy Value at the beginning of the policy month calculated
as if the Monthly Policy Charge was zero.
COST OF INSURANCE RATES
The monthly cost of insurance rates are based on the sex, issue age, duration
since issue, risk classification, and smoking status of each Insured. We
determine these rates based on Our expectations as to Our future mortality
experience. Any change in these rates applies to all individuals of the same
class as each Insured. The cost of insurance rates will never be greater than
shown in the Table of Guaranteed Maximum Cost of Insurance Rates on the current
Data Pages. However, different cost of insurance rates may apply to any
underwritten face amount increase. Cost of insurance rates for a face amount
increase are based on the sex, age at time of adjustment, duration since
adjustment, risk classification, and smoking status of each Insured.
PREMIUM EXPENSE CHARGE
We will deduct a Premium Expense Charge as shown on the current Data Pages from
each premium payment. The result will be the Net Premium payment.
OTHER CHARGES
We will charge a surrender charge as described in the Surrender Of The Policy
provision if any of the following occurs during the surrender charge period:
1. You request the Net Surrender Value of Your policy; or
2. You do not pay an amount due at the end of a grace period, and the policy
terminates.
If You take a partial surrender of the Net Surrender Value of Your policy, We
will charge a transaction charge as shown on Your current Data Pages.
YOUR DEATH PROCEEDS
We will pay the death proceeds to the beneficiary(ies) subject to the provisions
of the policy, when We receive proof that both of the Insureds died before the
maturity date. We require notification of the first death as soon as it occurs
or as soon thereafter as is reasonably possible, even though the death proceeds
are not payable until the second death. The death proceeds, determined as of the
date of the Surviving Insured's death, are A minus B where:
A. Is the death benefit described below plus any proceeds from any benefit
rider on the Surviving Insured's life; and
B. Is any policy loans and unpaid loan interest and, if the Surviving
Insured's death occurs during a grace period, any overdue Monthly
Policy Charges.
We will pay interest on death proceeds from the date of the Surviving Insured's
death until date of payment or until applied under a benefit option. It will be
at a rate We determine, but not less than required by state law.
DEATH BENEFIT OPTIONS
This policy provides two death benefit options. The option in effect is shown on
the current Data Pages.
Option 1.
Under Option 1, the death benefit equals the greater of:
1. The policy's face amount; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
Option 2.
Under Option 2, the death benefit equals the greater of:
1. The policy's face amount plus its Policy Value; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
YOUNGER INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 thru 90 105
95+ 101
* These percentages will be updated as required by revisions to the Internal
Revenue Code.
CHANGES IN DEATH BENEFIT OPTIONS
You may change the death benefit option on or after the second Policy
Anniversary. To request a change in the death benefit option, You must send Us a
Written Request. A change approved on a Monthly Date will be effective on that
Monthly Date. A change approved on other than a Monthly Date will be effective
on the next following Monthly Date. Changes in options are limited to two per
Policy Year and are subject to the following conditions:
1. If the change is from Option 1 to Option 2, We will reduce the face amount.
The reduction will be equal to the Policy Value on the effective date of
the change. The face amount after any reduction must be at least the
minimum face amount required by Our then current underwriting guidelines.
We may require proof of insurability which satisfies Us.
2. If the change is from Option 2 to Option 1, We will increase the face
amount. The increase will be equal to the Policy Value on the effective
date of change. No proof of insurability is required.
YOUR MATURITY PROCEEDS
If either Insured is living on the policy's maturity date, We will pay You the
policy's maturity proceeds, which is equal to the death proceeds described in
Your Death Proceeds provision.
YOUR ADJUSTMENT OPTIONS
ADJUSTING THE FACE AMOUNT
While Your policy is in force (but not in a grace period) and both Insureds are
living, You may request an increase in the face amount. While Your policy is in
force (but not in a grace period) You may request a decrease in the face amount.
Decreases may not be made during the first two Policy Years. Any adjustment is
subject to Our approval.
APPROVAL OF AN ADJUSTMENT
Any increase in face amount will be in a risk classification We determine, and
will be approved if:
1. The Attained Age of the oldest Insured is 90 or less, and the Attained Age
of the youngest Insured is 85 or less, and the amount of the increase is at
least the minimum increase shown on the current Data Pages; and
2. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect.
No adjustment will be approved if:
1. The face amount after adjustment would be less than the minimum amount shown
on the current Data Pages; or
2. Your Monthly Policy Charges are being waived under any rider.
REQUESTING AN ADJUSTMENT
You must send Us a Written Request for an adjustment. A request for a face
amount increase must be signed by the Insureds and owner(s). It must show the
face amount desired after adjustment. An adjustment is effective on the
Adjustment Date.
RIGHT TO EXCHANGE POLICY
You may at any time within the first 24 months from the Effective Date, upon
Written Request, make an irrevocable, one time election to transfer all of Your
Investment Account values to the Fixed Account.
OWNER, BENEFICIARY, ASSIGNMENT
OWNERSHIP
The owner(s) is as named in the application unless You change ownership as
provided below. As owner(s), You may exercise every right and enjoy every
privilege provided by Your policy, subject to the rights of any irrevocable
beneficiary(ies). These rights and privileges continue while Your policy is in
force, and end at the Surviving Insured's death. If an owner dies before the
policy terminates, the surviving owner(s), if any, shall succeed to that
person's ownership interest, unless otherwise specified. If all owners die
before the policy terminates, the policy will pass to the estate of the last
surviving owner. With Our consent, You may specify a different arrangement for
contingent ownership.
BENEFICIARY
The beneficiary(ies) named in the application will receive the death proceeds
unless You change the beneficiary designation as provided below. Any death
proceeds payable to a beneficiary(ies) who dies before the Surviving Insured's
death will be paid equally to the surviving beneficiaries named in the
application, unless We have approved another Written Request. If no
beneficiary(ies) survives the Surviving Insured's death, the death proceeds will
be paid to the owner(s) or to the owner's estate in equal percentages unless
otherwise specified.
CHANGE OF OWNER OR BENEFICIARY
You may change the owner(s) or beneficiary(ies) of this policy by Written
Request. Our approval is needed and no change is effective until We approve it.
Once approved, the change is effective as of the date You signed the request. We
have the right to require that You send Us this policy so We can record the
change.
BENEFIT INSTRUCTIONS
While either Insured is alive, You may file instructions for the payment of the
death proceeds. Such instructions, or change of instructions, must be in a
format We specify. When the Surviving Insured's death occurs, the
beneficiary(ies) may choose the arrangement under which death proceeds will be
paid. We must approve the arrangement chosen before any payment is made.
If You change beneficiary(ies), prior benefit instructions are revoked.
ASSIGNMENT
You may assign Your policy as collateral for a loan. The assignment must be in
writing and filed in Our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the owner(s).
The rights of beneficiaries, whenever named, except irrevocable beneficiaries,
become subordinate to those of the assignee.
GENERAL INFORMATION
THE CONTRACT
This policy, the attached application(s) and riders, any amendments to the
application(s), any adjustment and reinstatement application(s), and the current
Data Pages make up the entire contract. Any statements made in the
application(s), an adjustment application(s) or any amendments to the
application(s) will be considered representations and not warranties. No
statement, unless made in an application(s), or amendments thereto, will be used
to void Your policy (or void an adjustment in case of an adjustment
application(s)) or to defend against a claim.
ALTERATIONS
This policy may be altered by mutual agreement, but any alterations must be in
writing and signed by one of Our corporate officers. No one else, including the
agent, may change the contract or waive any provisions.
INCONTESTABILITY
With respect to statements made in the initial application(s) for this policy,
We will not contest this policy after either Insured has been alive for two
years after the Policy Date. With respect to statements made in any subsequent
application(s) for additional coverage or reinstatement application(s), We will
not contest the additional coverage or reinstated coverage resulting from such
application(s) after either Insured has been alive for two years after the date
of the adjustment or reinstatement. The time limits in this Incontestability
provision do not apply to fraudulent misrepresentations.
AGE AND SEX
If the age or sex of either or both of the Insureds has been misstated, the
death benefit will be that which would be purchased by the most recent mortality
charge at the correct age or sex of the Insureds.
DEFERMENT
We will usually pay surrenders, partial surrenders, or policy loans within 5
Valuation Days after We receive a Written Request. We will usually pay any death
benefit within 5 Valuation Days after We receive 1) proof at Our home office of
both Insured's deaths, and 2) any other forms We may require to be completed.
However, We may not be able to determine the value of the assets of Our Separate
Account if:
1. The New York Stock Exchange is closed on other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission;
2. The Securities and Exchange Commission by order permits postponement for
the protection of policyowners; or
3. The Securities and Exchange Commission requires that trading be restricted
or declares an emergency, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to determine
the net asset values of the Mutual Funds.
If any of the above events occur, We reserve the right to defer:
1. Determination and payment of any surrender, partial surrenders, or death
proceeds;
2. Payment of any policy loans;
3. Determination of the Unit values of the Divisions;
4. Any requested transfer between the Divisions; and
5. Application of Your death proceeds or surrender proceeds under Your
Benefit Options.
If payments are delayed and Your request for total surrender, partial surrender,
transfer or policy loan is not canceled by Your written instructions, the amount
of the surrender, transfer or policy loan will be determined the first Valuation
Date following the expiration of the permitted delay. The death proceeds,
surrender or policy loan will be paid, or transfers made, within 5 Valuation
Days thereafter.
SUICIDE
This policy's death proceeds will not be paid if either Insured dies by suicide,
while sane or insane, within 2 years of the Policy Date. Instead, We will return
all premiums paid, less any policy loans and unpaid loan interest. If the
suicide occurs at the death of the first Insured, this amount will be paid to
the owner(s) of the policy. If the suicide occurs at the death of the Surviving
Insured, this amount will be paid to the beneficiary(ies).
Any face amount increase made under the adjustment options will not be paid if
either Insured dies by suicide, while sane or insane, within 2 years of the
Adjustment Date. Instead, We will return the sum of the cost of insurance
charges for the increased amount of protection. If the suicide occurs at the
death of the first Insured, this amount will be paid to the owner(s) of the
policy. If the suicide occurs at the death of the Surviving Insured, this amount
will be paid to the beneficiary(ies).
BASIS OF VALUES
Guaranteed maximum cost of insurance rates are based on the mortality table
referred to on the current Data Pages.
A detailed statement of the method of calculating values and benefits has been
filed with the insurance department of the state in which this policy is
written. The guaranteed values are greater than or equal to those required by
any state law.
STATEMENT OF VALUE
You will receive a statement once each Policy Year until the policy terminates.
The statement will show:
1. The current death benefit;
2. The current Policy and Surrender Values;
3. All premiums paid since the last statement;
4. Any investment gain or loss since the last statement;
5. All charges since the last statement;
6. Any policy loans and unpaid loan interest;
7. Any partial surrenders since the last statement; and
8. The total value of each of Your Investment Accounts and the Fixed Account.
SF 523
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured. NON-PARTICIPATING.
SF 523
FOUR YEAR TERM INSURANCE RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date.
RIDER BENEFIT
This rider provides an additional death benefit in the amount shown on the
current Data Pages. We will pay this rider's death benefit to the
beneficiary(ies) upon our receipt of proof satisfactory to us that both Insureds
died prior to the expiration date of this rider.
PROTECTION PERIOD
This rider provides protection for a limited period of time that ends 4 years
after the Policy Date shown on the current Data Pages. This rider cannot be
renewed beyond the expiration date shown on the current Data Pages.
TERM INSURANCE PREMIUMS
We have the right to change the current monthly rates, however, any rates
payable in subsequent years will never exceed the guaranteed maximum monthly
rates shown in the Guaranteed Maximum Four Year Term Insurance Rider Rates shown
on the Data Pages.
We will review the current monthly rates annually. Any change We make will be
based on Our future expectations of investment earnings, mortality, persistency,
and expenses.
CASH VALUE
This rider provides no cash value.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
TERMINATION
This rider terminates on:
1. The expiration date of this rider shown on the current Data Pages;
2. Termination of Your policy; or
3. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
SF 525
POLICY SPLIT OPTION RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date unless another date is shown on the Data Pages.
SPLIT OPTION
You have the option to split Your policy and exchange it for 2 individual
policies, one on the life of each Insured, upon the occurrence of one of the
exchange events listed below:
1. A final court decree has been issued dissolving the marriage of the
Insureds; or
2. A change occurs in the federal estate tax law which results in a:
a. repeal of the unlimited marital deduction provision; or
b. reduction of at least 50% in the maximum federal estate tax bracket.
No evidence of insurability will be required on either life insured to exercise
this option.
LIMITATIONS AND CONDITIONS
This split option is available, provided:
1. Both Insureds under Your policy are living on the date of the policy split;
2. Your policy is in force and not in a grace period;
3. We receive Your Written Request at Our home office within 180 days after
the effective date of an exchange event;
4. You supply evidence satisfactory to Us of the exchange event if it is a
dissolution of marriage;
5. Your repay any policy loan and unpaid loan interest; and
6. You surrender Your policy to Us.
NEW POLICIES
1. Your policy will be split and exchanged for 2 individual policies (one on
the life of each Insured) of any single life cash value policy available
from Us at the time of the policy split.
2. The new policies will be issued with a current Policy Date.
3. The premiums for the new policies will be based on the age, sex and risk
classification of each Insured at the time of the policy split.
(Continued on next page)
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
4. The face amounts of the new policies must be at least $50,000 and must be
in equal amounts equal to one-half of the face amount of the policy
eligible for this split.
5. Any assignment of the policy will apply to each new policy.
6. Any riders which are a part of the policy will terminate upon the new
policies' Effective Dates. Riders may be made a part of the new policies
only with Our consent and with evidence of insurability.
EXCHANGE ADJUSTMENTS
1. The Surrender Value of the policy will be considered the transferred cash
value. One-half of the Surrender Value of the policy will be allocated to
each new policy.
2. We may charge a one-time administrative expense fee up to the maximum shown
on the current Data Pages.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
TERMINATION
This rider terminates on:
1. The death of either of the Insureds;
2. Termination of Your policy;
3. Your election to split Your policy under this rider;
4. The expiration date of this rider shown on the current Data Pages; or
5. Our receipt of Your written request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require you to send Your policy to the home
office to record the cancellation.
SF 526
SINGLE LIFE TERM INSURANCE RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The effective date
is the same as the Policy Date unless another date is shown on the Data Pages.
RIDER BENEFIT
This rider provides an additional level death benefit in the amount shown on the
current Data Pages. We will pay this rider's death benefit to the
beneficiary(ies) listed for this rider upon our receipt of proof of the
Insured's death. The Insured under this rider and the death benefit amount are
shown on the current Data Pages.
PROTECTION PERIOD
This rider provides protection up to the expiration date shown on the current
Data Pages. This rider cannot be renewed beyond this expiration date.
TERM INSURANCE PREMIUMS
We have the right to change the current monthly rates, however, any rates
payable in subsequent years will never exceed the guaranteed maximum monthly
rates shown in the Table of Guaranteed Maximum Single Life Term Insurance Rider
Rates shown on the Data Pages.
We will review the current monthly rates annually. Any change We make will be
based on Our future expectations of investment earnings, mortality, persistency,
and expenses.
FACE AMOUNT ADJUSTMENTS
You may only increase the face amount of this rider in conjunction with a policy
face amount increase. An increase of the face amount of this rider cannot exceed
50% of the policy face amount increase.
Decreases to the face amount of this rider may not be made during the first 2
Policy Years. The minimum decrease amount is $100,000.
If You decrease the policy face amount, a corresponding face amount decrease of
this rider's face amount must take place if the rider's face amount would
exceeds 50% of the policy face amount after the decrease. There is no minimum
decrease amount applicable to a decrease due to the face amount of this rider
exceeding the 50% of the policy face amount.
CASH VALUE
This rider provides no cash value.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
(Continued on next page)
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
TERMINATION
This rider terminates on:
1. The expiration date of this rider shown on the current Data Pages;
2. The date of the death of the Insured under this rider;
3. Termination of Your policy; or
4. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
SF 528
ENHANCED DEATH BENEFIT RIDER
This rider is part of Your policy. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date unless another date is shown on the Data Pages.
RIDER BENEFIT
The Table of Applicable Percentages under the Death Benefit Options provision of
Your policy is replaced by the following table:
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
YOUNGER INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 thru 80 105
81 109
82 113
83 118
84 122
85 126
86 122
87 118
88 113
89 109
90 105
95+ 101
* These percentages will be updated as required by revisions to the Internal
Revenue Code.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
(Continued on next page
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
TERMINATION
This rider terminates on:
1. Termination of Your policy; or
2. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
SF 529
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured. NON-PARTICIPATING.
This policy is a legal contract between You, as owner, and Us, Principal Life
Insurance Company. Your policy is issued based on the information in the
application and payment of premiums as shown on the current Data Pages. We will
pay the benefits of this policy in accordance with its provisions.
YOUR NET PREMIUMS ARE ADDED TO YOUR POLICY VALUE. YOU MAY ALLOCATE THEM TO ONE
OR MORE OF THE SEPARATE ACCOUNT DIVISIONS AND TO THE FIXED ACCOUNT.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE SEPARATE ACCOUNT WILL VARY FROM
DAY TO DAY. THE AMOUNT IS NOT GUARANTEED. IT MAY INCREASE OR DECREASE DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING DIVISIONS THAT YOU HAVE CHOSEN.
THERE ARE NO MINIMUM GUARANTEES AS TO SUCH PORTION OF YOUR POLICY VALUE.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE FIXED ACCOUNT WILL ACCUMULATE,
AFTER DEDUCTIONS, AT RATES OF INTEREST WE DETERMINE. SUCH RATES WILL NOT BE LESS
THAN 3% A YEAR, COMPOUNDED ANNUALLY.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE VARIABLE OR FIXED AS
DESCRIBED IN THIS POLICY.
10-DAY EXAMINATION OFFER. IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
POLICY. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR POLICY TO EITHER YOUR
AGENT OR OUR HOME OFFICE BEFORE THE LATTER OF: (1) 10 DAYS OF ITS RECEIPT; (2)
45 DAYS AFTER THE APPLICATION WAS SIGNED; (3) 10 DAYS FROM THE DELIVERY OF THE
NOTICE OF THE RIGHT TO CANCEL; OR (4) SUCH LATER DATE AS PROVIDED BY APPLICABLE
STATE LAW. WE WILL REFUND ANY PREMIUM PAID AND YOUR POLICY WILL BE CONSIDERED
VOID FROM ITS INCEPTION. PLEASE READ YOUR POLICY CAREFULLY SO YOU MAY BETTER USE
ITS MANY BENEFITS.
The terms of this policy start on the Policy Date and will stay in force until
the maturity date shown on the Data Pages so long as You satisfy the
requirements as outlined in Your policy.
/s/ Joyce N. Hoffman /s/ David J. Drury
Vice President and Corporate Secretary Chairman and Chief Executive
Officer
SF 524
TABLE OF CONTENTS
SUBJECT
PAGE
DEFINITIONS IN THIS POLICY.....................................................4
PURCHASING AND KEEPING THE CONTRACT IN FORCE...................................5
PLANNED PERIODIC PREMIUMS......................................................6
PREMIUM PAYMENT LIMITS.........................................................6
GRACE PERIOD...................................................................6
TERMINATION....................................................................7
REINSTATEMENT..................................................................7
PREMIUM INVESTMENT OPTIONS.....................................................7
FIXED ACCOUNT..................................................................8
INVESTMENT ACCOUNTS............................................................8
VARIABLE LIFE SEPARATE ACCOUNT.................................................8
BENEFITS WHILE POLICY IS IN FORCE..............................................8
YOUR POLICY VALUE..............................................................8
TRANSFERS.....................................................................10
POLICY LOANS..................................................................12
LOAN INTEREST CHARGE..........................................................13
REPAYMENT.....................................................................13
SURRENDER OF THE POLICY.......................................................13
SURRENDER VALUE...............................................................13
POLICY EXPENSES...............................................................14
COST OF INSURANCE RATES.......................................................15
YOUR DEATH PROCEEDS...........................................................16
DEATH BENEFIT OPTIONS.........................................................16
CHANGES IN DEATH BENEFIT OPTIONS..............................................17
YOUR ADJUSTMENT OPTIONS.......................................................17
ADJUSTING THE FACE AMOUNT.....................................................17
RIGHT TO EXCHANGE POLICY......................................................18
OWNER, BENEFICIARY, ASSIGNMENT................................................18
CHANGES OF OWNER OR BENEFICIARY...............................................19
ASSIGNMENT....................................................................19
GENERAL INFORMATION...........................................................19
THE CONTRACT..................................................................19
ALTERATIONS...................................................................19
INCONTESTABILITY..............................................................19
AGE...........................................................................19
SUICIDE.......................................................................20
STATEMENT OF VALUE............................................................21
A copy of the application and any additional benefits provided by rider follow
the last page of this policy.
(LOGO) Principal Life
Insurance Company
Des Moines, Iowa 50392-0001
DATA PAGE
- --------------------------------------------------------------------------------
Survivorship Flexible Premium Variable Universal Life
- --------------------------------------------------------------------------------
POLICY DATA
Policy Number: Sample
Owner: John Doe
Joint Owner: Jane Doe
Policy Date: July 1, 2000
Policy Maturity Date: June 30, 2065
Death Benefit Option: Option 1
Face Amount: $100,000.00
Insured's Name: John Doe
Insured's Age: 35
Insured's Risk Class: Standard Nonsmoker
Insured's Name: Jane Doe
Insured's Age: 35
Insured's Risk Class: Standard Nonsmoker
PLANNED PERIODIC PREMIUM: $500.00
Planned Premium Mode: Annual
Target Premium: $407.00
Minimum Monthly Premium* $26.92
Death Benefit Guarantee Monthly Premium $71.67
*Applicable during the first 5 Policy Years only.
This policy is adjustable. If it is adjusted, we will send you new Data Pages.
The Data Pages are to be attached to and made a part of this policy.
This policy contains a fixed loan interest rate of 8.0%
Interest on borrowed funds is credited at 6% through Policy Year ten.
Thereafter, it is credited at 7.75%.
- --------------------------------------------------------------------------------
RIDER DATA
SF 531 Death Benefit Guarantee Rider
- -------------------------------------------
Effective Date: July 1, 2000
Expiration Date: June 30, 2065
SF 530 Extended Coverage Rider
- -------------------------------------
Effective Date: July 1, 2000
(continued on next page)
- --------------------------------------------------------------------------------
ACCOUNT DATA Monthly Policy
Premium Allocations Charge Allocations
------------------- ------------------
FIXED ACCOUNT 00% 00%
SEPARATE ACCOUNT DIVISIONS
Aggressive Growth 00% 00%
Asset Allocation 00% 00%
Balanced 20% 20%
Bond 20% 20%
Capital Value 00% 00%
Fidelity Contrafund 20% 20%
Fidelity Equity-Income 00% 00%
Fidelity High Income 00% 00%
Government Securities 00% 00%
Growth 20% 20%
International 00% 00%
International SmallCap 00% 00%
MicroCap 00% 00%
MidCap 00% 00%
MidCap Growth 00% 00%
Money Market 20% 20%
Putnam Global Asset Allocation 00% 00%
Putnam Vista 00% 00%
Putnam Voyager 00% 00%
Real Estate 00% 00%
SmallCap 00% 00%
SmallCap Growth 00% 00%
SmallCap Value 00% 00%
Stock Index 500 00% 00%
Utilities 00% 00%
(continued on next page)
- --------------------------------------------------------------------------------
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
Monthly Rates Per $1,000.00 of Net Amount of Risk
Duration Monthly Rate Duration Monthly Rate
1 0.00033 34 0.92992
2 0.00100 35 1.07167
3 0.00192 36 1.23742
4 0.00300 37 1.43525
5 0.00425 38 1.67325
6 0.00592 39 1.95658
7 0.00792 40 2.28675
8 0.01025 41 2.66158
9 0.01308 42 3.07883
10 0.01642 43 3.53592
11 0.02033 44 4.03675
12 0.02483 45 4.59500
13 0.03000 46 5.22767
14 0.03625 47 5.95233
15 0.04350 48 6.78575
16 0.05200 49 7.72967
17 0.06208 50 8.77308
18 0.07425 51 9.90100
19 0.08850 52 11.10258
20 0.10542 53 12.37167
21 0.12483 54 13.70508
22 0.14675 55 15.10667
23 0.17142 56 16.58942
24 0.19942 57 18.18275
25 0.23158 58 19.94525
26 0.26917 59 21.99908
27 0.31383 60 24.63250
28 0.36792 61 28.42892
29 0.43300 62 34.48792
30 0.50925 63 44.77075
31 0.59692 64 61.99067
32 0.69592 65 83.33333
33 0.80642
Basis of Values: Guaranteed maximum cost of insurance rates are based on 1980
CSO Mortality Table, age last birthday. The rates will reflect the Insured's
risk class(es).
- --------------------------------------------------------------------------------
CHARGES and LIMITS
o The maximum monthly administration charge is $8.00 per month, plus $.08 per
$1000 of face amount. The charge of $.08 per $1000 of face amount is
increased by $.05 per $1000 for each Insured that is classified as a smoker.
(Continued on next page)
o The maximum annual mortality and expense risks charge is .80% of the portion
of the Policy Value in the Separate Account for the first nine Policy Years.
Thereafter, the charge is .30% of the portion of the Policy Value in the
Separate Account.
o The partial surrender transaction charge is the lesser of $25, or 2% of the
amount surrendered.
o During the first ten Policy Years, and for any premiums attributable to any
face increases, the premium expense charge is 5.00% of each premium received
for premium payments less than or equal to the Target Premium (2.00% of
premiums received in excess of Target Premium); plus a charge for state and
local taxes of 2.20% of each premium received; and a federal tax charge of
1.25% of each premium received. After the first ten Policy Years, the
premium expense charge is 2.00% of each premium received; plus a charge for
state and local taxes of 2.20% of each premium received; and a federal tax
charge of 1.25% of each premium received.
o The first 12 account transfers in a Policy Year are free. Thereafter, we
reserve the right to charge a $25 transaction charge for each transfer.
o The minimum face amount allowed is $100,000.
o The minimum transfer value for scheduled transfers is $2,500.
o The minimum face amount increase allowed is $100,000.
o The minimum partial surrender or loan amount allowed is $500.
o The minimum unscheduled transfer amount allowed is the lesser of $100, or
the balance of the Investment Account from which funds are being
transferred.
o The minimum scheduled transfer amount allowed is $100 from the Investment
Accounts and $50 from the Fixed Account.
A surrender charge will be deducted from your Policy Value if this policy is
surrendered for its net surrender value or if this policy terminates within the
first ten years. The maximum charge for each Policy Year is shown in the table
below.
The table assumes the policy face amount is never increased and the policy has
not been reinstated.
Table of Maximum Surrender Charges Per Policy
Policy Year Amount
----------- ------
1 $407.00
2 407.00
3 407.00
4 407.00
5 407.00
6 387.63
7 348.84
8 290.72
9 213.19
10 116.28
11 and later 0.00
DEFINITIONS IN THIS POLICY
ADJUSTMENT DATE means the Monthly Date on or next following Our approval of a
requested adjustment.
ATTAINED AGE for each Insured means the Insured's age on the birthday on or
preceding the last Policy Anniversary.
DIVISION is the part of the Separate Account to which Net Premiums may be
allocated which invests in shares of a Mutual Fund. The value of an investment
in a Division is variable and is not guaranteed.
EFFECTIVE DATE is the date on which all requirements for issuance of a policy
have been satisfied.
FIXED ACCOUNT is that part of the Policy Value that reflects the value You have
in Our general account.
INSUREDS means the persons named as the Insureds on the current Data Pages of
this policy. The Insureds may or may not be the owner(s).
INVESTMENT ACCOUNT is that part of the Policy Value that reflects the value You
have in one of the Divisions of the Separate Account.
LOAN ACCOUNT is that part of the Policy Value that reflects the value You have
transferred from the Fixed Account and/or Separate Account as collateral for a
policy loan.
MONTHLY DATE means the day of the month which is the same as the day of the
Policy Date. The Monthly Date will never be the 29th, 30th, or 31st of any
month.
MONTHLY POLICY CHARGE is the amount subtracted from Your Policy Value on each
Monthly Date equal to the sum of the cost of insurance and the cost 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 means 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 is the gross premium less the deductions for the Premium Expense
Charge as shown on the current Data Pages. It is the amount of premium allocated
to the Fixed Account and/or Investment Accounts.
NET SURRENDER VALUE is the Surrender Value less any policy loans and unpaid loan
interest.
NOTICE means any form of communication We receive in Our home office providing
the information We need, either in writing or another manner that We approve in
advance.
POLICY DATE is the date shown on the current Data Pages. The Policy Date will
never be the 29th, 30th, or 31st of any month.
POLICY VALUE is the sum of the values in the Loan Account, Fixed Account, and
Investment Accounts.
POLICY YEARS AND ANNIVERSARIES means the Policy Years and Anniversaries computed
from the Policy Date.
PREMIUM EXPENSE CHARGE is the charge deducted from premium payments to cover a
sales charge, state and local premium taxes and the federal tax charge as shown
on the current Data Pages. PRORATED BASIS means 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.
SEPARATE ACCOUNT means Principal Life Insurance Company Variable Life Separate
Account, a registered unit investment trust with Divisions and segregated
assets, to which Net Premiums may be allocated under this policy and others We
issue.
SURRENDER VALUE is the Policy Value less the surrender charges.
SURVIVING INSURED means the Insured who is living upon the death of the other
Insured. If both Insureds die simultaneously, then the term "Surviving Insured"
shall mean the younger of the two Insureds.
TARGET PREMIUM is a premium amount used to determine the maximum sales charge
that is included as part of the Premium Expense Charge and any applicable
surrender charge under a policy. Your Target Premium is shown on Your current
Data Pages.
UNIT is the accounting measure used to calculate the Separate Account value.
VALUATION DAY is any day that the New York Stock Exchange is open for trading,
and trading is not restricted. We will deem each Valuation Day to end at the
time We determine the net asset value of the underlying Mutual Fund shares held
by the Division of the Separate Account. When We need to determine a Policy
Value or an amount after the end of a Valuation Day, or on a day that is not a
Valuation Day, We will do so at the end of the next Valuation Day.
VALUATION PERIOD means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Day and the time as of
which such value is determined on the next following Valuation Day.
WE, OUR, US means Principal Life Insurance Company.
WRITTEN REQUEST means a form satisfactory to Us, signed and dated by You, and
received at Our home office.
YOU, YOUR means the owner(s) of this policy.
PURCHASING AND KEEPING THE CONTRACT IN FORCE
PREMIUM PAYMENTS
Your first premium is due on the Policy Date. After that, premiums may be paid
at any time while this policy is in force. The amount of Your premiums is
subject to the Premium Payment Limits provision. We will give a receipt to the
premium payor on request.
Your initial Net Premium will be allocated to the Money Market Division of the
Separate Account. Net Premiums will continue to be allocated to the Money Market
Division until 20 days after the Effective Date. After the 20-day period has
expired, Your policy's Policy Value will be transferred to the Divisions and/or
the Fixed Account indicated by Your initial premium allocation percentage(s)
request. If the purchase of this policy falls within the definition of a
replacement under state law, We reserve the right to allocate the initial Net
Premium (or any premium that results from a replacement) to the Money Market
Division beyond the 20 days as may be necessary.
The initial premium allocation percentages are shown on the Data Pages. Unless
You change them, these percentages apply to future allocations of premiums. For
each Division and the Fixed Account, the allocation percentages must be zero or
a whole number not less than ten nor greater than 100. The sum of the
percentages for all Divisions and the Fixed Account must equal 100.
PLANNED PERIODIC PREMIUMS
You may preauthorize automatic monthly planned periodic premium payments. If You
do not elect to pay automatically, We will send You reminder notices of the
amount and frequency of Your planned periodic premiums as selected in Your
application. These notices serve only as a reminder of Your preference. Premiums
are to be sent to the address We provide in the reminder notices. You may change
the amount and frequency of Your planned periodic premiums by providing Notice
to Us.
The Grace Period provision may apply whether or not You make a planned periodic
premium payment or additional premium payments.
PREMIUM PAYMENT LIMITS
To keep this policy in force You must satisfy the requirements described in the
Grace Period provision.
You may choose to make premium payments that are greater than the planned
periodic premium. However, We will refund any premiums that would disqualify
this policy as "life insurance" as defined in the Internal Revenue Code, as
amended.
If any payment increases the policy's death benefit by more than it increases
the Policy Value, We reserve the right to refund the premium payment. If the
premium payment is not refunded, We may require satisfactory evidence of
insurability.
PAID UP BENEFIT
If You do not make a planned periodic premium payment or additional premium
payments, then this policy will not terminate unless the Net Surrender Value is
not sufficient to pay the Monthly Policy Charge which is due on the Monthly Date
and the Grace Period provision will then apply.
GRACE PERIOD
If the Net Surrender Value on any Monthly Date is less than the Monthly Policy
Charge, a 61 day grace period will begin. However, We guarantee this policy will
stay in force during the first 5 policy years when (A-B) is greater than or
equal to (C), where:
A. Is the sum of premiums paid;
B. Is the sum of all existing loans, loan interest, partial surrenders,
and transaction charges; and
C. Is the sum of the minimum monthly premiums since the Policy Date to the
most recent Monthly Date.
The current minimum monthly premium is shown on the current Data Pages.
The grace period begins when We mail a notice of impending policy termination to
You. This notice will be sent to Your last post office address known to Us.
If by the end of the grace period We do not receive a payment, as calculated in
number 5 of the Reinstatement provision, Your policy terminates as of the date
the first unpaid Monthly Policy Charge was due.
If the Surviving Insured dies during a grace period, We will pay the death
proceeds to the beneficiary(ies).
TERMINATION
All policy privileges and rights of the owner(s) under this policy end:
1. When You surrender Your policy for cash;
2. When the death proceeds are paid;
3. When the policy maturity proceeds are paid; or
4. When the grace period ends as described in the Grace Period provision. In
this case, the privileges and rights of the owner(s) terminate as of the
Monthly Date on which the grace period begins.
REINSTATEMENT
If this policy ends as described in the Grace Period provision and You have not
surrendered Your policy for cash, You may reinstate it provided:
1. Such reinstatement is prior to the maturity date;
2. Not more than three years have elapsed since the policy terminated;
3. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect;
4. You either repay or reinstate any policy loans and unpaid loan interest on
this policy existing at termination; and
5. You make a payment of at least (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 1 minus the maximum Premium Expense Charge.
Reinstatement will be effective on the Monthly Date on or next following the
date We approve it. The Policy Date will remain the original Policy Date and
will not be changed at reinstatement, although Surrender Charges for total
surrender following reinstatement will resume at the rate charged at the time of
the policy's termination, as adjusted for the payment of past due premiums, if
any.
PREMIUM INVESTMENT OPTIONS
ALLOCATIONS
You may allocate Net Premiums to the Fixed Account and/or any of the Investment
Accounts. Allocation percentages must be zero or a whole number not less than
ten nor greater than 100. The sum of the allocation percentages must equal 100.
You may change the allocation percentages by providing Us Notice. Unless You
change the initial premium allocation specified in Your application for this
policy, it will continue to apply to subsequent premium payments. FIXED ACCOUNT
Net Premiums allocated to the Fixed Account will earn interest at rates We
determine at Our discretion. In no event will the guaranteed interest rate be
less than 3% compounded annually.
INVESTMENT ACCOUNTS
The Separate Account is comprised of Divisions shown on the current Data Pages.
Each Division invests in a Mutual Fund with a different investment objective.
You may allocate amounts to one or more of the Divisions. An Investment Account
will be established for You corresponding to each Division of the Separate
Account to which amounts are allocated or transferred under this policy. We will
maintain each of these Investment Accounts for You to keep track of Your values
in each Division. Income, gains and losses, whether or not realized, from each
Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or Our other income, gains
or losses.
VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940, as amended.
Assets are put into the Separate Account to support this policy and to support
other variable life insurance policies We may offer. We own the assets of the
Separate Account. These assets are not part of Our general account. Income,
gains and losses of the Separate Account, whether or not realized, are credited
to or charged against the Separate Account assets, without regard to Our other
income, gains or losses. The assets of the Separate Account will be available to
cover the liabilities of Our general account only to the extent that the assets
of the Separate Account exceed the liabilities of the Separate Account arising
under the variable life insurance policies supported by the Separate Account.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a Mutual
Fund are no longer available for investment, or in Our judgment investment in a
Mutual Fund becomes inappropriate considering the purpose of the Separate
Account, We may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future Net Premium payments. However, no such changes will be
made without notifying You and getting any required approval from the
appropriate state and/or federal regulatory authorities. We will notify You of
any such change.
If We eliminate or combine existing Divisions, or transfer assets in one
Division to another, You may then change Your allocation percentages and
transfer any value in that Division to another Investment Account(s) and/or the
Fixed Account without charge. You may exercise this right until the latter of 60
days after, 1) the effective date of such change or, 2) the date You receive
notice of this right. You may only exercise this right if You have an interest
in the affected Division(s).
BENEFITS WHILE POLICY IS IN FORCE
YOUR POLICY VALUES
Your Policy Value at any time is equal to the sum of the values You have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE
You can get a loan on this policy under certain conditions. When You take out a
loan, We transfer the amount of the loan from the Fixed Account and/or one or
more of the Investment Accounts, into the Loan Account. For details of the Loan
Account see the Policy Loans provision.
FIXED ACCOUNT VALUE
The amount You have in the Fixed Account at any time equals:
1. Net Premiums allocated to it,
PLUS
2. Amounts transferred to it,
PLUS
3. Interest credited to it,
LESS
4. Amounts deducted from it,
LESS
5. Amounts transferred from it,
LESS
6. Amounts surrendered from it.
INVESTMENT ACCOUNT VALUE
Your Investment Account value for each Division is equal to the number of Units
in that Investment Account multiplied by that Division's Unit value. The number
of Units in an Investment Account at any time equals A minus B, where:
A. Is the number of Units credited to the Investment Account because of:
1. Net Premiums allocated to it, and
2. Amounts transferred to it; and
B. Is the number of Units canceled from the Investment Account because of:
1. Amounts deducted from it,
2. Amounts transferred from it, and
3. Amounts surrendered from it.
The number of Units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the Unit value on the Valuation Day
of the transaction.
UNIT VALUES
We will determine the Unit value for each Division of the Separate Account at
the end of each Valuation Day.
The Unit value for each Division was arbitrarily set at $10 as of the Valuation
Day that the Division first purchased Mutual Fund shares. For any subsequent
Valuation Day, the Unit value for that Division is obtained by multiplying the
Unit value for the immediately preceding Valuation Day by the net investment
factor for the particular Division on that subsequent Valuation Day.
NET INVESTMENT FACTOR
The net investment factor for a Division on any Valuation Day is equal to A
divided by B where:
A. Is the net asset value of the underlying Mutual Fund shares held by
that Division at the end of such Valuation Day before any policy
transactions are made on that day; and
B. Is the net asset value of the underlying Mutual Fund shares held by
that Division at the end of the immediately preceding Valuation Day
after all policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by Us
to be attributable to the operations of the Division.
TRANSFERS
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Investment Accounts
as provided below. To request a transfer, You must provide Us Notice. All
transfers with the same effective dates count as one transfer. If Your request
is received prior to the close of the New York Stock Exchange, the transfer is
made and value is determined as of that day. Requests received after the close
of the New York Stock Exchange will be processed and values determined as of the
next Valuation Day. We reserve the right to not accept transfer requests from
someone requesting them for multiple contracts. We also reserve the right to
modify or revoke transfer privileges and charges.
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to an Investment Account by
making either a scheduled or unscheduled Fixed Account transfer, subject to the
following conditions:
Either unscheduled transfers or scheduled transfers (not both) may occur during
the same Policy Year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS - You may make one unscheduled transfer from
the Fixed Account each Policy Year, as follows:
1. You must provide Us Notice within 30 days following either the
Policy Date or any Policy Anniversary.
2. You must specify the dollar amount or percentage to be transferred,
and the resulting amount must not exceed 25% of Your Fixed Account
value as of the later of the Policy Date or the last Policy
Anniversary. However, You may transfer up to 100% of Your Fixed
Account value within 30 days after the first and following Policy
Anniversaries if Your Fixed Account value is less than $1,000.
SCHEDULED FIXED ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You may make
scheduled transfers on a monthly basis from the Fixed Account as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. Your Fixed Account value must equal or exceed the minimum transfer
value shown on the current Data Pages. We reserve the right to
change this amount but it will never exceed $10,000.
3. The monthly transfer will be the dollar amount or percentage You
specify and that amount must equal or exceed the minimum scheduled
transfer amount shown on the current Data Pages. The monthly amount
transferred cannot exceed 2% of Your Fixed Account value as of the
latter of the Policy Date, last Policy Anniversary, or date request
is received by Us.
4. The transfers will continue until Your Fixed Account value is
exhausted or We receive Notice to stop them.
5. The amount of these scheduled transfers can be changed by You once
each Policy Year, by Written Request or by telephone.
6. If You stop the scheduled transfers, You may not start them again
until six months after the date of the last scheduled transfer.
TRANSFERS FROM INVESTMENT ACCOUNTS
You may transfer amounts from an Investment Account to either the Fixed Account
or another Investment Account by making either a scheduled or unscheduled
Investment Account transfer, subject to the following conditions:
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at least six
months; and
2. Your Fixed Account value immediately after the transfer does not exceed
$1,000,000, except with Our prior approval.
UNSCHEDULED INVESTMENT ACCOUNT TRANSFERS - You may make unscheduled transfers
from an Investment Account, as follows:
1. You must specify the dollar amount or percentage to transfer from
each Investment Account, and the resulting amount must equal or
exceed the lesser of the value of Your Investment Account or the
minimum unscheduled transfer amount shown on the current Data
Pages.
2. We reserve the right to charge a transaction charge as shown on the
current Data Pages for each unscheduled transfer after the twelfth
transfer in a Policy Year.
SCHEDULED INVESTMENT ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You may make
scheduled transfers from an Investment Account, as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. You must specify how often the transfers will occur (annually,
semi-annually, quarterly or monthly).
3. You must specify the dollar amount or percentage to transfer from
each Investment Account, and that amount must equal or exceed the
lesser of the value of Your Investment Account or the minimum
scheduled transfer amount shown on the current Data Pages.
4. The value of each Investment Account from which transfers are made
must equal or exceed the minimum transfer value shown on the
current Data Pages.
5. The transfers will continue until Your interest in the Investment
Account is exhausted or We receive Notice to stop them.
6. We reserve the right to limit the number of Investment Accounts
from which transfers will be made at the same time. In no event
will the limit ever be less than two.
AUTOMATIC PORTFOLIO REBALANCING
Automatic portfolio rebalancing (APR), allows You to maintain a specific
percentage of Your Policy Value in Your Investment Accounts over time.
APR transfers:
1. Do not begin until the expiration of the Examination Offer (See
Examination Offer on the front cover of Your policy).
2. Are made without a charge and are not counted as unscheduled
transfers when determining any transfer fee.
3. May be made on the frequency You specify, subject to the following:
A. Quarterly APR transfers may be made on a calendar year or
Policy Year basis.
B. Semiannual or annual APR transfers may only be done on a Policy
Year basis.
4. May be made upon Your Written Request or by telephone.
Transfers are made at the end of the next Valuation Period after We receive Your
instructions. APR is not available if You have scheduled transfers from the same
Investment Account, or for values You have in the Fixed Account.
POLICY LOANS
You may obtain a policy loan from Us with this policy as sole security. You may
borrow up to A minus B where:
A. Is 90% of the Surrender Value; and
B. Is any outstanding policy loan and unpaid loan interest at the time
the loan request is processed at the home office.
The minimum loan amount is shown on the current Data Pages.
YOUR LOAN ACCOUNT
If You take a policy loan, a portion of Your Policy Value equal to the loan will
be transferred from the Fixed Account and/or the Investment Accounts to Your
Loan Account until the loan is repaid. The effective date of the transfer is the
date of the loan.
The loan will result in a reduction in the value of the Fixed Account to the
extent amounts are transferred from the Fixed Account to the Loan Account, or in
the cancellation of Units in the Investment Account or Accounts from which the
loan was withdrawn. For each Investment Account, the number of Units canceled
will be equal to the portion of the loan withdrawn divided by the Unit value for
the Valuation Period in which the loan is taken.
You may tell Us the amount of the policy loan to be withdrawn from the Fixed
Account and/or each Investment Account. If You do not tell Us, the loan amount
will be withdrawn in the same proportion as the allocation used for Your Monthly
Policy Charge. Amounts held in Your Loan Account will be part of Our general
account and will be credited with interest from the date of transfer. The
difference between the policy loan rate and the rate credited on the Loan
Account will not exceed 2%.
On each Policy Anniversary, if there has been a loan repayment, this credit is
transferred from the Loan Account to the Fixed Account and the Investment
Accounts. It is allocated among the Fixed Account and the Investment Accounts in
the same manner used to allocate premium payments.
All interest rates stated are effective annual rates. We apply these rates to
properly reflect the actual date We receive any repayments and any changes You
make in loan amounts during a policy month.
LOAN INTEREST CHARGE
Interest charges accrue daily at the annual loan interest rate shown on the
current Data Pages. Interest is due and payable at the end of each Policy Year.
Any interest not paid when due is added to the loan principal and bears interest
at the same rate. The adding of unpaid interest charges to the loan principal
will cause additional amounts to be withdrawn from the Divisions in the same
manner as described above for loans.
REPAYMENT
You may repay all or part of a policy loan as long as the policy is in force.
Any policy loans and unpaid loan interest charges not repaid at the death of the
Surviving Insured or at maturity are deducted from the death or maturity
proceeds.
YOU SHOULD IDENTIFY THE PURPOSE OF EACH PAYMENT. IF WE CANNOT IDENTIFY ITS
PURPOSE, WE WILL CONSIDER IT TO BE A LOAN REPAYMENT IF A LOAN IS OUTSTANDING.
The amount repaid is transferred from Your Loan Account to the Fixed Account
and/or the Investment Accounts in the same manner used to allocate premium
payments.
SURRENDER OF THE POLICY
SURRENDER VALUE AND NET SURRENDER VALUE
The Surrender Value of Your policy equals the Policy Value less the surrender
charges (described in the Surrender Charges provision).
The Net Surrender Value of Your policy is the Surrender Value less any policy
loans and unpaid loan interest. As long as Your policy is in force, You may
surrender it for its Net Surrender Value by sending Us a Written Request.
SURRENDER CHARGES
The Table of Maximum Surrender Charges is shown on the current Data Pages.
Surrender charges vary based on the Target Premium of the policy and will apply
only during the first 10 Policy Years unless changed due to a face amount
increase. A face amount increase has its own surrender charge period which
begins on the Adjustment Date. The total surrender charge on the policy will be
a composite of the surrender charges for the face amount at issue and each
subsequent face amount increase.
Decreases in face amount do not decrease surrender charges on the policy.
PARTIAL SURRENDERS
Each Policy Year after the second Policy Year, You may make up to two partial
surrenders from the Net Surrender Value, subject to the following:
1. Each partial surrender must be in an amount not less than the minimum amount
shown on the current Data Pages; and
2. In the aggregate the total amount surrendered in a Policy Year will not
exceed an amount equal to 75% of the Net Surrender Value as of the date of
the first surrender in a Policy Year.
The transaction charge is shown on the current Data Pages. You may tell Us in
what proportion to allocate the amount of the partial surrender and transaction
charge to be withdrawn from the Fixed Account and/or each Investment Account. If
You do not tell Us, the partial surrender and the transaction charge will be
withdrawn from the Fixed Account and each Investment Account in the same
proportion as the allocations used for Your current Monthly Policy Charge.
Partial surrenders from the Fixed Account will be taken from the most recent
premium payments first (last in, first out).
The amount of the partial surrender plus the transaction charge will result in
the cancellation of Units in the Investment Account from which the partial
surrender occurs. The number of Units canceled will be equal to the amount of
the partial surrender plus the transaction charge divided by the Unit value of
the Division or Divisions for the Valuation Period in which the partial
surrender is effective.
Your Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge.
If Option 1 death benefit is in effect, the face amount is reduced by the amount
of the partial surrender and the transaction charge.
POLICY EXPENSES
MONTHLY POLICY CHARGES
On the Policy Date, and each Monthly Date thereafter, We will deduct a Monthly
Policy Charge.
The deduction for the Monthly Policy Charge is the sum of the following amounts:
1. The cost of insurance (described below) and the cost of additional benefits
provided by any rider in force for the policy month;
2. The current monthly administration charge, which will not exceed the maximum
shown on the current Data Pages; and
3. The current mortality and expense risks charge imposed on the Investment
Account value, which will not exceed the maximum shown on the current Data
Pages.
The Monthly Policy Charge will be withdrawn from the Investment Accounts and/or
The Fixed Account according to the allocation percentages You have chosen.
Your choice for the Monthly Policy Charge allocation may be:
1. The same as the allocation percentages You have chosen for Your premiums; or
2. Determined on a Prorated Basis; or
3. Any other allocation which We mutually agree upon.
If the amount in an Investment Account and/or The Fixed Account is insufficient
to allow the allocation You have chosen, Your Monthly Policy Charge will be
allocated on a Prorated Basis.
For each Investment Account and/or the Fixed Account, the allocation percentages
must be zero or a whole number not less than ten nor greater than 100. The sum
of the percentages for all the Investment Accounts and the Fixed Account must
equal 100. Changes in allocation percentages may be made by providing Notice to
Us. Once approved by Us, they are effective as of the next Monthly Date.
COST OF INSURANCE
The cost of insurance on each Monthly Date is A multiplied by the result of B
minus C, where:
A. Is the cost of insurance rate as described in the Cost Of Insurance
Rates provision divided by 1,000;
B. Is the death benefit as described in the Your Death Proceeds provision
of this policy at the beginning of the Policy Month, divided by
1.0024663 (the sum of 1 plus the monthly guaranteed fixed account
interest rate); and
C. Is the Policy Value at the beginning of the policy month calculated as
if the Monthly Policy Charge was zero.
COST OF INSURANCE RATES
The monthly cost of insurance rates are based on the issue age, duration since
issue, risk classification, and smoking status of each Insured. We determine
these rates based on Our expectations as to Our future mortality experience. Any
change in these rates applies to all individuals of the same class as each
Insured. The cost of insurance rates will never be greater than shown in the
Table of Guaranteed Maximum Cost of Insurance Rates on the current Data Pages.
However, different cost of insurance rates may apply to any underwritten face
amount increase. Cost of insurance rates for a face amount increase are based on
the age at time of adjustment, duration since adjustment, risk classification,
and smoking status of each Insured.
PREMIUM EXPENSE CHARGE
We will deduct a Premium Expense Charge as shown on the current Data Pages from
each premium payment. The result will be the Net Premium payment.
OTHER CHARGES
We will charge a surrender charge as described in the Surrender Of The Policy
provision if any of the following occurs during the surrender charge period:
1. You request the Net Surrender Value of Your policy; or
2. You do not pay an amount due at the end of a grace period, and the policy
terminates.
If You take a partial surrender of the Net Surrender Value of Your policy, We
will charge a transaction charge as shown on Your current Data Pages.
YOUR DEATH PROCEEDS
We will pay the death proceeds to the beneficiary(ies) subject to the provisions
of the policy, when We receive proof that both of the Insureds died before the
maturity date. We require notification of the first death as soon as it occurs
or as soon thereafter as is reasonably possible, even though the death proceeds
are not payable until the second death. The death proceeds, determined as of the
date of the Surviving Insured's death, are A minus B where:
A. Is the death benefit described below plus any proceeds from any benefit
rider on the Surviving Insured's life; and
B. Is any policy loans and unpaid loan interest and, if the Surviving
Insured's death occurs during a grace period, any overdue Monthly
Policy Charges.
We will pay interest on death proceeds from the date of the Surviving Insured's
death until date of payment or until applied under a benefit option. It will be
at a rate We determine, but not less than required by state law.
DEATH BENEFIT OPTIONS
This policy provides two death benefit options. The option in effect is shown on
the current Data Pages.
Option 1.
Under Option 1, the death benefit equals the greater of:
1. The policy's face amount; or
2. The amount found by multiplying the Policy Value by the applicable
percentage shown below.
Option 2.
Under Option 2, the death benefit equals the greater of:
1. The policy's face amount plus its Policy Value; or
2. The amount found by multiplying the Policy Value by the applicable
percentage shown below.
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
YOUNGER INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 thru 90 105
95+ 101
* These percentages will be updated as required by revisions to the Internal
Revenue Code.
CHANGES IN DEATH BENEFIT OPTIONS
You may change the death benefit option on or after the second Policy
Anniversary. To request a change in the death benefit option, You must send Us a
Written Request. A change approved on a Monthly Date will be effective on that
Monthly Date. A change approved on other than a Monthly Date will be effective
on the next following Monthly Date. Changes in options are limited to two per
Policy Year and are subject to the following conditions:
1. If the change is from Option 1 to Option 2, We will reduce the face amount.
The reduction will be equal to the Policy Value on the effective date of the
change. The face amount after any reduction must be at least the minimum
face amount required by Our then current underwriting guidelines. We may
require proof of insurability which satisfies Us.
2. If the change is from Option 2 to Option 1, We will increase the face
amount. The increase will be equal to the Policy Value on the effective date
of change. No proof of insurability is required.
YOUR MATURITY PROCEEDS
If either Insured is living on the policy's maturity date, We will pay You the
policy's maturity proceeds, which is equal to the death proceeds described in
Your Death Proceeds provision
YOUR ADJUSTMENT OPTIONS
ADJUSTING THE FACE AMOUNT
While Your policy is in force (but not in a grace period) and both Insureds are
living, You may request an increase in the face amount. While Your policy is in
force (but not in a grace period) You may request a decrease in the face amount.
Decreases may not be made during the first two Policy Years. Any adjustment is
subject to Our approval.
APPROVAL OF AN ADJUSTMENT
Any increase in face amount will be in a risk classification We determine, and
will be approved if:
1. The Attained Age of the oldest Insured is 90 or less, and the Attained Age
of the youngest Insured is 85 or less, and the amount of the increase is at
least the minimum increase shown on the current Data Pages; and
2. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect.
No adjustment will be approved if:
1. The face amount after adjustment would be less than the minimum amount shown
on the current Data Pages; or
2. Your Monthly Policy Charges are being waived under any rider.
REQUESTING AN ADJUSTMENT
You must send Us a Written Request for an adjustment. A request for a face
amount increase must be signed by the Insureds and owner(s). It must show the
face amount desired after adjustment. An adjustment is effective on the
Adjustment Date.
RIGHT TO EXCHANGE POLICY
You may at any time within the first 24 months from the Effective Date, upon
Written Request, make an irrevocable, one time election to transfer all of Your
Investment Account values to the Fixed Account.
OWNER, BENEFICIARY, ASSIGNMENT
OWNERSHIP
The owner(s) is as named in the application unless You change ownership as
provided below. As owner(s), You may exercise every right and enjoy every
privilege provided by Your policy, subject to the rights of any irrevocable
beneficiary(ies). These rights and privileges continue while Your policy is in
force, and end at the Surviving Insured's death. If an owner dies before the
policy terminates, the surviving owner(s), if any, shall succeed to that
person's ownership interest, unless otherwise specified. If all owners die
before the policy terminates, the policy will pass to the estate of the last
surviving owner. With Our consent, You may specify a different arrangement for
contingent ownership.
BENEFICIARY
The beneficiary(ies) named in the application will receive the death proceeds
unless You change the beneficiary designation as provided below. Any death
proceeds payable to a beneficiary(ies) who dies before the Surviving Insured's
death will be paid equally to the surviving beneficiaries named in the
application, unless We have approved another Written Request. If no
beneficiary(ies) survives the Surviving Insured's death, the death proceeds will
be paid to the owner(s) or to the owner's estate in equal percentages unless
otherwise specified.
CHANGE OF OWNER OR BENEFICIARY
You may change the owner(s) or beneficiary(ies) of this policy by Written
Request. Our approval is needed and no change is effective until We approve it.
Once approved, the change is effective as of the date You signed the request. We
have the right to require that You send Us this policy so We can record the
change.
BENEFIT INSTRUCTIONS
While either Insured is alive, You may file instructions for the payment of the
death proceeds. Such instructions, or change of instructions, must be in a
format We specify. When the Surviving Insured's death occurs, the
beneficiary(ies) may choose the arrangement under which death proceeds will be
paid. We must approve the arrangement chosen before any payment is made.
If You change the beneficiary(ies), prior benefit instructions are revoked.
ASSIGNMENT
You may assign Your policy as collateral for a loan. The assignment must be in
writing and filed in Our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the owner(s).
The rights of beneficiaries, whenever named, except irrevocable beneficiaries,
become subordinate to those of the assignee.
GENERAL INFORMATION
THE CONTRACT
This policy, the attached application(s) and riders, any amendments to the
application(s), any adjustment and reinstatement application(s), and the current
Data Pages make up the entire contract. Any statements made in the
application(s), an adjustment application(s) or any amendments to the
application(s) will be considered representations and not warranties. No
statement, unless made in an application(s), or amendments thereto, will be used
to void Your policy (or void an adjustment in case of an adjustment
application(s)) or to defend against a claim.
ALTERATIONS
This policy may be altered by mutual agreement, but any alterations must be in
writing and signed by one of Our corporate officers. No one else, including the
agent, may change the contract or waive any provisions.
INCONTESTABILITY
With respect to statements made in the initial application(s) for this policy,
We will not contest this policy after either Insured has been alive for two
years after the Policy Date. With respect to statements made in any subsequent
application(s) for additional coverage or reinstatement application(s), We will
not contest the additional coverage or reinstated coverage resulting from such
application(s) after either Insured has been alive for two years after the date
of the adjustment or reinstatement. The time limits in this Incontestability
provision do not apply to fraudulent misrepresentations.
AGE
If the age of either or both of the Insureds has been misstated, the death
benefit will be that which would be purchased by the most recent mortality
charge at the correct age of the Insureds.
DEFERMENT
We will usually pay surrenders, partial surrenders, or policy loans within 5
Valuation Days after We receive a Written Request. We will usually pay any death
benefit within 5 Valuation Days after We receive 1) proof at Our home office of
both Insured's deaths, and 2) any other forms We may require to be completed.
However, We may not be able to determine the value of the assets of Our Separate
Account if:
1. The New York Stock Exchange is closed on other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission;
2. The Securities and Exchange Commission by order permits postponement for the
protection of policyowners; or
3. The Securities and Exchange Commission requires that trading be restricted
or declares an emergency, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
net asset values of the Mutual Funds.
If any of the above events occur, We reserve the right to defer:
1. Determination and payment of any surrender, partial surrenders, or death
proceeds;
2. Payment of any policy loans;
3. Determination of the Unit values of the Divisions;
4. Any requested transfer between the Divisions; and
5. Application of Your death proceeds or surrender proceeds under Your Benefit
Options.
If payments are delayed and Your request for total surrender, partial surrender,
transfer or policy loan is not canceled by Your written instructions, the amount
of the surrender, transfer or policy loan will be determined the first Valuation
Date following the expiration of the permitted delay. The death proceeds,
surrender or policy loan will be paid, or transfers made, within 5 Valuation
Days thereafter.
SUICIDE
This policy's death proceeds will not be paid if either Insured dies by suicide,
while sane or insane, within 2 years of the Policy Date. Instead, We will return
all premiums paid, less any policy loans and unpaid loan interest. If the
suicide occurs at the death of the first Insured, this amount will be paid to
the owner(s) of the policy. If the suicide occurs at the death of the Surviving
Insured, this amount will be paid to the beneficiary(ies).
Any face amount increase made under the adjustment options will not be paid if
either Insured dies by suicide, while sane or insane, within 2 years of the
Adjustment Date. Instead, We will return the sum of the cost of insurance
charges for the increased amount of protection. If the suicide occurs at the
death of the first Insured, this amount will be paid to the owner(s) of the
policy. If the suicide occurs at the death of the Surviving Insured, this amount
will be paid to the beneficiary(ies).
BASIS OF VALUES
Guaranteed maximum cost of insurance rates are based on the mortality table
referred to on the current Data Pages.
A detailed statement of the method of calculating values and benefits has been
filed with the insurance department of the state in which this policy is
written. The guaranteed values are greater than or equal to those required by
any state law.
STATEMENT OF VALUE
You will receive a statement once each Policy Year until the policy terminates.
The statement will show:
1. The current death benefit;
2. The current Policy and Surrender Values;
3. All premiums paid since the last statement;
4. Any investment gain or loss since the last statement;
5. All charges since the last statement;
6. Any policy loans and unpaid loan interest;
7. Any partial surrenders since the last statement; and
8. The total value of each of Your Investment Accounts and the Fixed Account.
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured. NON-PARTICIPATING.
SF 524
FOUR YEAR TERM INSURANCE RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date.
RIDER BENEFIT
This rider provides an additional death benefit in the amount shown on the
current Data Pages. We will pay this rider's death benefit to the
beneficiary(ies) upon our receipt of proof satisfactory to us that both Insureds
died prior to the expiration date of this rider.
PROTECTION PERIOD
This rider provides protection for a limited period of time that ends 4 years
after the Policy Date shown on the current Data Pages. This rider cannot be
renewed beyond the expiration date shown on the current Data Pages.
TERM INSURANCE PREMIUMS
We have the right to change the current monthly rates, however, any rates
payable in subsequent years will never exceed the guaranteed maximum monthly
rates shown in the Guaranteed Maximum Four Year Term Insurance Rider Rates shown
on the Data Pages.
We will review the current monthly rates annually. Any change We make will be
based on Our future expectations of investment earnings, mortality, persistency,
and expenses.
CASH VALUE
This rider provides no cash value.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
TERMINATION
This rider terminates on:
1. The expiration date of this rider shown on the current Data Pages;
2. Termination of Your policy; or
3. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
SF 525
POLICY SPLIT OPTION RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date unless another date is shown on the Data Pages.
SPLIT OPTION
You have the option to split Your policy and exchange it for 2 individual
policies, one on the life of each Insured, upon the occurrence of one of the
exchange events listed below:
1. A final court decree has been issued dissolving the marriage of the
Insureds; or
2. A change occurs in the federal estate tax law which results in a:
a. repeal of the unlimited marital deduction provision; or
b. reduction of at least 50% in the maximum federal estate tax bracket.
No evidence of insurability will be required on either life insured to exercise
this option.
LIMITATIONS AND CONDITIONS
This split option is available, provided:
1. Both Insureds under Your policy are living on the date of the policy split;
2. Your policy is in force and not in a grace period;
3. We receive Your Written Request at Our home office within 180 days after
the effective date of an exchange event;
4. You supply evidence satisfactory to Us of the exchange event if it is a
dissolution of marriage;
5. Your repay any policy loan and unpaid loan interest; and
6. You surrender Your policy to Us.
NEW POLICIES
1. Your policy will be split and exchanged for 2 individual policies (one on
the life of each Insured) of any single life cash value policy available
from Us at the time of the policy split.
2. The new policies will be issued with a current Policy Date.
3. The premiums for the new policies will be based on the age and risk
classification of each Insured at the time of the policy split.
(Continued on next page)
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
4. The face amounts of the new policies must be at least $50,000 and must be
in equal amounts equal to one-half of the face amount of the policy
eligible for this split.
5. Any assignment of the policy will apply to each new policy.
6. Any riders which are a part of the policy will terminate upon the new
policies' Effective Dates. Riders may be made a part of the new policies
only with Our consent and with evidence of insurability.
EXCHANGE ADJUSTMENTS
1. The Surrender Value of the policy will be considered the transferred cash
value. One-half of the Surrender Value of the policy will be allocated to
each new policy.
2. We may charge a one-time administrative expense fee up to the maximum shown
on the current Data Pages.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
TERMINATION
This rider terminates on:
1. The death of either of the Insureds;
2. Termination of Your policy;
3. Your election to split Your policy under this rider;
4. The expiration date of this rider shown on the current Data Pages; or
5. Our receipt of Your written request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require you to send Your policy to the home
office to record the cancellation.
SF 527
SINGLE LIFE TERM INSURANCE RIDER
This rider is part of Your policy. It is issued in consideration of the
application and payment of its premiums. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The effective date
is the same as the Policy Date unless another date is shown on the Data Pages.
RIDER BENEFIT
This rider provides an additional level death benefit in the amount shown on the
current Data Pages. We will pay this rider's death benefit to the
beneficiary(ies) listed for this rider upon our receipt of proof of the
Insured's death. The Insured under this rider and the death benefit amount are
shown on the current Data Pages.
PROTECTION PERIOD
This rider provides protection up to the expiration date shown on the current
Data Pages. This rider cannot be renewed beyond this expiration date.
TERM INSURANCE PREMIUMS
We have the right to change the current monthly rates, however, any rates
payable in subsequent years will never exceed the guaranteed maximum monthly
rates shown in the Table of Guaranteed Maximum Single Life Term Insurance Rider
Rates shown on the Data Pages.
We will review the current monthly rates annually. Any change We make will be
based on Our future expectations of investment earnings, mortality, persistency,
and expenses.
FACE AMOUNT ADJUSTMENTS
You may only increase the face amount of this rider in conjunction with a policy
face amount increase. An increase of the face amount of this rider cannot exceed
50% of the policy face amount increase.
Decreases to the face amount of this rider may not be made during the first 2
Policy Years. The minimum decrease amount is $100,000.
If You decrease the policy face amount, a corresponding face amount decrease of
this rider's face amount must take place if the rider's face amount would
exceeds 50% of the policy face amount after the decrease. There is no minimum
decrease amount applicable to a decrease due to the face amount of this rider
exceeding the 50% of the policy face amount.
CASH VALUE
This rider provides no cash value.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
(Continued on next page)
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
TERMINATION
This rider terminates on:
1. The expiration date of this rider shown on the current Data Pages;
2. The date of the death of the Insured under this rider;
3. Termination of Your policy; or
4. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
SF 528
ENHANCED DEATH BENEFIT RIDER
This rider is part of Your policy. All policy definitions, provisions, and
exceptions apply to this rider unless changed by this rider. The Effective Date
is the same as the Policy Date unless another date is shown on the Data Pages.
RIDER BENEFIT
The Table of Applicable Percentages under the Death Benefit Options provision of
Your policy is replaced by the following table:
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
YOUNGER INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 thru 80 105
81 109
82 113
83 118
84 122
85 126
86 122
87 118
88 113
89 109
90 105
95+ 101
* These percentages will be updated as required by revisions to the Internal
Revenue Code.
REINSTATEMENT
If this rider terminates, it may not be reinstated.
(Continued on next page
Principal (r) Principal Life
Financial Insurance Company
Group Des Moines, Iowa 50392-0001
Chairman and Chief Executive Officer
TERMINATION
This rider terminates on:
1. Termination of Your policy; or
2. Our receipt of Your Written Request to cancel this rider. The cancellation
will be effective on the Monthly Date on or next following the date We
receive the request. We may require that You send Your policy to Our home
office to record the cancellation.
SF 529
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PRINCIPAL LIFE INSURANCE COMPANY
Effective July 1, 1998
ARTICLE I.
The name of the corporation is Principal Life Insurance Company, by which name
(or by the name Principal Mutual Life Insurance Company which it may continue to
use subject to any applicable law) it shall do business and shall have and
retain all its property, rights and privileges.
ARTICLE II.
The street address of the initial registered office of the corporation is 711
High Street, Des Moines, Iowa 50392, and the name of its initial registered
agent at that office is Gregg R. Narber.
ARTICLE III.
The purposes of this corporation are and it shall have full power to engage in,
pursue, maintain and transact a general life, health and accident insurance and
annuity business, and to insure other risks, perform other services and engage
in other businesses allowed by law. It may issue participating or
nonparticipating contracts. It shall further have the power to enter into
contracts with respect to proceeds of such insurance, to accept and reinsure
risks, to enter into coinsurance agreements, to issue and perform policies and
contracts of all types, including but not limited to individual and group, to
act as trustee or advisor in any capacity, and to offer all services, including
those of a financial, accounting or information technology nature, to all
persons, partnerships, corporations and other business organizations, directly
or indirectly incidental to its business. It shall have all the rights, powers
and privileges granted or permitted by the Constitution and laws of the State of
Iowa governing the conduct of insurance companies and by Subtitle I of Title
XIII of the Iowa Code and all acts amendatory thereof or additional thereto.
The corporation shall be empowered: To sue and be sued, complain and defend, in
its corporate or assumed name; to have a corporate seal which may be altered at
pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced; to purchase, take,
receive, lease, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with, real or tangible or intangible personal property, or any interest
therein, wherever situated; to sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and assets; to
lend money to, and otherwise assist its employees, agents, officers and
directors unless prohibited by law; to purchase, take, receive, subscribe for,
or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with, shares,
options, warrants or other interests in, or obligations of, other domestic or
foreign corporations, associations, partnerships or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality
thereof unless prohibited by law; to make contracts and guarantees and incur
liabilities; to lend and borrow money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as security for
the payment of funds so loaned or invested; to acquire or organize subsidiaries;
to conduct its business, carry on its operations, and have offices and exercise
the powers granted in any state, territory, district or possession of the United
States, or in any foreign country; to make donations for the public welfare, and
for religious, charitable, scientific or educational purposes; to pay pensions
and establish pension plans, pension trusts, profit-sharing plans and other
incentive, insurance and welfare plans for any or all of its directors,
officers, agents and employees; to enter into general partnerships, limited
partnerships or limited liability partnerships whether the corporation be a
limited or general partner, joint ventures, syndicates, pools, associations and
other arrangements for carrying on any or all of the purposes for which the
corporation is organized, jointly or in common with others; and to have and
exercise all powers necessary or convenient to effect any or all of the purposes
for which the corporation is organized.
ARTICLE IV.
The corporation shall have perpetual existence.
ARTICLE V.
The private property of the shareholders, directors and other officers and
managers of the corporation shall in no case be liable for corporate debts, but
shall be exempt therefrom.
ARTICLE VI.
SECTION 1. The aggregate number of shares of stock which the corporation is
authorized to issue is 6,000,000 shares, consisting of (a) 5,000,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), and (b) 1,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"),
issuable in one or more series.
SECTION 2. The Board of Directors of the corporation is hereby expressly
authorized, at any time and from time to time, to divide the shares of Preferred
Stock into one or more series, to issue from time to time in whole or in part
the shares of Preferred Stock or the shares of any series thereof, and in the
resolution or resolutions providing for the issue of shares of Preferred Stock
or of a particular series to fix and determine the voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that may be desired, to the fullest extent now or
hereafter permitted by Section 602 of Chapter 490 of Title XII of the Iowa Code
("Chapter 490"), as amended from time to time, and the other provisions of these
Articles of Incorporation; provided, however, that in no event shall Preferred
Stock have more than one vote per share of Preferred Stock.
SECTION 3. Subject to any other provisions of these Amended and Restated
Articles of Incorporation, holders of Common Stock shall be entitled to receive
such dividends and other distributions in cash, stock or property of the
corporation as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the corporation legally available therefor.
SECTION 4. No shareholder of the corporation shall be entitled to exercise any
right of cumulative voting.
SECTION 5. No shareholder of the corporation shall have any preemptive or
preferential right, nor be entitled as a matter of right to subscribe for or
purchase any part of any new or additional issue of stock of the corporation of
any class or series, whether issued for money or for consideration other than
money, or of any issue of securities convertible into stock of the corporation.
SECTION 6. The corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the corporation shall
have notice thereof, except as expressly provided by applicable law.
SECTION 7. The corporation shall not issue any shares of Voting Stock (as
hereinafter defined) of the corporation or securities convertible into Voting
Stock of the corporation to persons other than Principal Financial Services,
Inc. ("Principal Financial Services") if, as a result of such issuance, the
issued and outstanding Voting Stock of the corporation not held by Principal
Financial Services equals or exceeds that held by Principal Financial Services.
For purposes of this Section 7, "Voting Stock" means securities of any class or
any ownership interest having voting power for the election of directors of the
corporation, other than securities having voting power only to elect additional
directors only because of the occurrence of a contingency. For purposes of the
limitations set forth in this Article VI, any issued and outstanding securities
of the corporation that are convertible into Voting Stock are considered issued
and outstanding Voting Stock of the corporation as though such convertible
securities had been converted into Voting Stock in accordance with their terms.
ARTICLE VII.
The corporate powers of the corporation (except as at the time otherwise
provided by law, these Amended and Restated Articles of Incorporation or the
By-Laws of the corporation) shall be exercised by the Board of Directors, and by
such officers and agents as the Board of Directors may authorize, elect or
appoint. Subject to the rights of any holders of any class or series of
Preferred Stock to elect additional directors under specified circumstances, the
Board of Directors shall consist of not less than nine nor more than 21
directors, the number to be determined from time to time by the shareholders or
a majority of the entire Board of Directors. The Board of Directors, other than
with respect to those directors who may be elected by the holders of any class
or series of Preferred Stock, shall be divided into three classes, as nearly
equal numerically as possible, determined by terms expiring in successive years.
Each director shall serve a term of approximately three years except as
otherwise provided or where it is necessary to fix a shorter term in order to
preserve classification. The term of office of each director shall begin at the
annual meeting at which such director is elected or at the time elected by the
Board of Directors. No decrease in the number of directors shall shorten the
term of any incumbent director. Each director shall serve until a successor is
duly elected and qualified and shall be eligible for re-election. Subject to the
rights of any holders of any class or series of Preferred Stock to elect
additional directors under specified circumstances, any vacancy or vacancies on
the Board of Directors may be filled by the shareholders, by the Board of
Directors at any meeting of the Board of Directors or, if the directors
remaining in office constitute fewer than a quorum of the Board of Directors, by
the affirmative vote of a majority of directors remaining in office. The term of
office of each director of the corporation shall not extend beyond the annual
meeting of the corporation next following the date such director attains age 70,
or such younger age as may be established for all directors by the Board of
Directors, except that the terms of directors holding office prior to the annual
meeting in 1984 may extend to the annual meeting next following the date such
director attains age 72 and except that for officer-directors, other than one
who is or has been Chief Executive Officer of the corporation, the term as
director shall not extend beyond the annual meeting next following the date such
director retires as an active officer of the corporation. Members of the Board
of Directors shall not be required to be policyowners of the corporation.
Subject to the rights of any holders of any class or series of Preferred Stock
to elect additional directors under specified circumstances, any director may be
removed, but only for cause, at a meeting of shareholders called for that
purpose in the manner prescribed by law, upon the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding stock
of the corporation entitled to vote generally in the election of directors.
The Board of Directors shall have the power without the assent or vote of the
shareholders of the corporation to adopt such By-Laws and rules and regulations
for the transaction of the business of the corporation not inconsistent with
these Amended and Restated Articles of Incorporation or the laws of the State of
Iowa, and to amend, alter or repeal such By-Laws, rules and regulations. In
addition to any requirements of law and any other provision of these Articles of
Incorporation, the shareholders of the corporation may adopt, amend, alter or
repeal the By-Laws of the corporation upon the affirmative vote of holders of
more than 50% of the combined voting power of the outstanding stock of the
corporation entitled to vote generally in the election of directors. Advance
notice of nominations for the election of directors and of business to be
brought by shareholders before any meeting of shareholders of the corporation
shall be given in the manner and to the extent provided in the By-Laws of the
corporation. The Board of Directors may fix reasonable compensation of the
directors for their services. The Board of Directors shall elect a President,
and shall authorize, elect or appoint such other officers, agents or committees
as in their judgment may be necessary or advisable.
A director, in determining what is in the best interests of the corporation when
considering a proposal of acquisition, merger or consolidation of the
corporation or a similar proposal, may consider any or all of the following
community interest factors, in addition to consideration of the effects of any
action on shareholders: (i) the effects of action on the corporation's
employees, suppliers, creditors and customers; (ii) the effects of the action on
the communities in which the corporation and its subsidiaries operate; and (iii)
the long-term as well as short-term interests of the corporation and its
shareholders, including the possibility that these interests may be best served
by the continued independence of the corporation.
If on the basis of the community interest factors described above, the Board of
Directors of the corporation determines that a proposal to acquire or merge the
corporation is not in the best interests of the corporation, it may reject the
proposal. If the Board of Directors of the corporation determines to reject any
such proposal, the Board of Directors has no obligation to facilitate, to remove
any barriers to or to refrain from impeding the proposal. Consideration of any
or all of the community interest factors is not a violation of the business
judgment rule or of any duty of the director to the shareholders, or a group of
shareholders, even if the director reasonably determines that a community
interest factor or factors outweigh the financial or other benefits to the
corporation or a shareholder or group of shareholders.
ARTICLE VIII.
The corporation shall indemnify directors, officers, employees and agents of the
corporation as provided in Sections 850 through 858 of Chapter 490, subject to
such limitations as may be established by the Board of Directors. Any repeal or
modification of this Article VIII or of Sections 850 through 858 of Chapter 490
shall not adversely affect any right of indemnification of a director, officer,
employee or agent of the corporation existing at any time prior to such repeal
or modification.
ARTICLE IX.
A director of the corporation shall not be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (a) for a breach of the director's duty of
loyalty to the corporation or its shareholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (c) for a transaction from which the director derives an improper personal
benefit or (d) under Section 833 of Chapter 490, as amended from time to time.
If Chapter 490 is hereafter amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the corporation, in addition to the limitation on personal liability provided
herein, shall be eliminated or limited to the extent of such amendment,
automatically and without any further action, to the maximum extent permitted by
law. Any repeal or modification of the provisions of this Article IX by the
shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation in the personal liability or any other right or
protection of a director of the corporation with respect to any state of facts
existing at or prior to the time of such repeal or modification.
ARTICLE X.
Effective as of such time as the Common Stock shall be registered pursuant to
the provisions of the Securities Exchange Act of 1934, as amended, any action
required or permitted to be taken by the shareholders of the corporation must be
effected at a duly called annual or special meeting of the shareholders of the
corporation, and the ability of the shareholders to consent in writing to the
taking of any action is specifically denied.
ARTICLE XI.
Amendments to these Articles of Incorporation are subject to the approval of the
Iowa Insurance Commissioner and the Iowa Attorney General as provided in Section
508.4 of Title XIII of the Iowa Code.
AMENDED AND RESTATED BY-LAWS
OF
PRINCIPAL LIFE INSURANCE COMPANY
Effective July 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I PRINCIPAL OFFICE..........................................1
ARTICLE II REGISTERED OFFICE AND AGENT...............................1
ARTICLE III MEETINGS OF SHAREHOLDERS .................................1
3.1 Annual Meeting............................................1
3.2 Special Meetings..........................................1
3.3 Notices and Reports to Shareholders.......................1
3.4 Notice of Shareholder Business and Nominations ...........1
3.5 Waiver of Notice..........................................2
3.6 Record Date...............................................2
3.7 Shareholders' List........................................3
3.8 Quorum....................................................3
3.9 Organization..............................................3
3.10 Voting of Shares..........................................3
3.11 Voting by Proxy or Representative.........................3
3.12 Conduct of Business.......................................4
3.13 Action Without Meeting....................................4
ARTICLE IV BOARD OF DIRECTORS........................................4
4.1 Qualifications and General Powers.........................4
4.2 Number and Term of Office.................................4
4.3 Quorum and Manner of Acting...............................4
4.4 Resignation...............................................4
4.5 Compensation of Directors.................................4
4.6 Meetings..................................................4
4.7 Waiver of Notice..........................................5
4.8 Director's Assent Presumed................................5
4.9 Action Without Meeting....................................5
4.10 Dividends.................................................5
4.11 Officers of the Board of Directors........................5
ARTICLE V THE EXECUTIVE COMMITTEE AND OTHER COMMITTEES..............5
5.1 Executive Committee.......................................5
5.2 Powers of Executive Committee.............................5
5.3 Other Committees..........................................5
ARTICLE VI OFFICERS..................................................5
6.1 President.................................................5
6.2 Chief Executive Officer...................................6
6.3 Secretary.................................................6
6.4 Other Officers Elected by Board of Directors..............6
6.5 Other Officers............................................6
6.6 Resignation and Removal...................................6
6.7 Compensation of Officers..................................6
ARTICLE VII SHARES, THEIR ISSUANCE AND TRANSFER.......................6
7.1 Consideration for Shares..................................6
7.2 Certificates for Shares...................................6
7.3 Execution of Certificates.................................6
7.4 Share Record .............................................6
7.5 Cancellation..............................................6
7.6 Transfers of Stock........................................7
7.7 Regulations...............................................7
7.8 Lost, Destroyed or Mutilated Certificates.................7
ARTICLE VIII MISCELLANEOUS PROVISIONS..................................7
8.1 Facsimile Signatures......................................7
8.2 Execution of Instruments..................................7
8.3 Disposition of Funds......................................7
8.4 Fiscal Year...............................................7
8.5 Books and Records.........................................7
8.6 Voting of Stocks Owned by the Corporation.................7
ARTICLE IX INDEMNITY.................................................7
ARTICLE X AMENDMENTS................................................7
<PAGE>
ARTICLE I
PRINCIPAL OFFICE
The location of the principal office of the corporation in the State of Iowa
will be identified in the corporation's annual report filed with the Secretary
of State of the State of Iowa. The corporation may have such other offices
either within or without the State of Iowa as the business of the corporation
may from time to time require.
ARTICLE II
REGISTERED OFFICE AND AGENT
The initial registered agent and office of the corporation are set forth in the
Articles of Incorporation. The registered agent or registered office, or both,
may be changed by resolution of the Board of Directors.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 3.1 Annual Meeting. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting, shall be held on the third Monday in May of
each year at such place and time as the Board of Directors shall each year fix,
or at such other place, time and date as the Board of Directors shall fix.
Section 3.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by law (which for purposes of
these By-Laws shall mean as required from time to time by the Iowa Business
Corporation Act or the Articles of Incorporation of the corporation), may be
called by the Chairman of the Board, the Chief Executive Officer or the Board of
Directors, and shall be called by the Board of Directors upon the written
demand, signed, dated and delivered to the Secretary, of the holders of at least
10% of all the votes entitled to be cast on any issue proposed to be considered
at the meeting. Such written demand shall state the purpose or purposes for
which such meeting is to be called. The time, date and place of any special
meeting shall be determined by the Board of Directors, or, at its direction, by
the Chief Executive Officer.
Section 3.3 Notices and Reports to Shareholders.
(a) Notice of the place, date and time of all meetings of shareholders and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be communicated not fewer than 10 days nor more than 60 days
before the date of the meeting to each shareholder entitled to vote at such
meeting. The Board of Directors, as provided in Section 3.6 of these By-Laws,
may establish a record date for the determination of shareholders entitled to
notice. Notice of adjourned meetings need only be given if required by law or
Section 3.8 of these By-Laws.
(b) If notice of proposed corporate action is required by law to be given
to shareholders not entitled to vote and the action is to be taken by consent of
the voting shareholders, the corporation shall give all shareholders written
notice of the proposed action at least 10 days before the action is taken. The
notice must contain or be accompanied by the same material that would have been
required by law to be sent to shareholders not entitled to vote in a notice of
meeting at which the proposed action would have been submitted to the
shareholders for action.
(c) In the event corporate action is taken without a meeting in accordance
with the Articles of Incorporation of the corporation and Section 3.13 of these
By-Laws by less than unanimous written consent, prompt notice of the taking of
such corporate action shall be given to those shareholders who have not
consented in writing to the taking of such corporate action.
Section 3.4 Notice of Shareholder Business and Nominations.
(a) Annual Meetings of Shareholders.
(i) Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the shareholders may be made
at an annual meeting of shareholders of the corporation (1) by or at the
direction of the Board of Directors or the Chairman of the Board or (2) by
any shareholder of the corporation who is entitled to vote at the meeting,
who complies with the notice procedures set forth in clauses (ii) and (iii)
of this paragraph (a) of Section 3.4 and who was a shareholder of record at
the time such notice was delivered to the Secretary.
(ii) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (2) of paragraph (a)(i)
of this Section 3.4, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the
corporation not less than 90 days nor more than 120 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that
if the date of the annual meeting is advanced by more than 20 days or
delayed by more than 70 days from such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than 120 days
prior to such annual meeting and not later than the close of business on
the later of the 90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting
is first made. In no event shall the adjournment of an annual meeting
commence a new time period for the giving of a shareholder's notice as
described above. Such shareholder's notice shall set forth (1) as to each
person whom the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors or is
otherwise required pursuant to Regulation 14A under Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and Rule 14a-11 thereunder,
including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected; (2) as to
any other business that the shareholder proposes to bring before the
meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and of any
beneficial owner on whose behalf the proposal is made; and (3) as to the
shareholder giving the notice and any beneficial owner on whose behalf the
nomination or proposal is made (A) the name and address of such
shareholder, as they appear on the corporation's books, and of such
beneficial owner and (B) the class and number of shares of the corporation
which are owned beneficially and of record by such shareholder and such
beneficial owner.
(iii) Notwithstanding anything in the second sentence of paragraph
(a)(ii) of this Section 3.4 to the contrary, in the event that the number
of directors to be elected to the Board of Directors is increased and there
is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the
corporation at least 100 days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice under this Section
3.4 shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the corporation not later
than the close of business on the 10th day following the day on which such
public announcement is first made by the corporation.
(b) Special Meetings of Shareholders. Only such business as shall have been
brought before the special meeting of the shareholders pursuant to the
corporation's notice of meeting pursuant to Section 3.3 of these By-Laws shall
be conducted at such meeting. Nominations of persons for election to the Board
of Directors may be made at a special meeting of shareholders at which directors
are to be elected pursuant to the corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) by any shareholder of the
corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this paragraph (b) of Section 3.4 and who is a
shareholder of record at the time such notice is delivered to the Secretary.
Nominations by shareholders of persons for election to the Board of Directors
may be made at such special meeting of shareholders if the shareholder's notice
as required by paragraph (a)(ii) of this Section 3.4 shall be delivered to the
Secretary at the principal executive offices of the corporation not earlier than
the 120th day prior to such special meeting and not later than the close of
business on the later of the 90th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the adjournment of special meeting
commence a new time period for the giving of a shareholder's notice as described
above.
(c) General.
(i) Only persons who are nominated in accordance with the procedures
set forth in this Section 3.4 shall be eligible to serve as directors and
only such business shall be conducted at a meeting of shareholders as shall
have been brought before the annual or special meeting in accordance with
the procedures set forth in this Section 3.4. Except as otherwise provided
by law, the Articles of Incorporation of the corporation or these By-Laws,
the chairperson of the annual or special meeting shall have the power and
duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set
forth in this Section 3.4 and, if any proposed nomination or business is
not in compliance with this Section 3.4, to declare that such defective
proposal or nomination shall be disregarded.
(ii) For purposes of this Section 3.4, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or (15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 3.4, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
mattes set forth in this Section 3.4. Nothing in this Section 3.4 shall be
deemed to affect any rights of (1) shareholders to request inclusion of
proposals in the corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act or (2) the holders of any series of Preferred Stock to
elect directors if so provided under any applicable certificates of
designation relating to the series of Preferred Stock.
Section 3.5 Waiver of Notice.
(a) Any shareholder may waive any notice required by law or these By-Laws
if such waiver is in writing and signed by the shareholder entitled to such
notice, whether before or after the date and time stated in such notice. Such a
waiver shall be equivalent to notice to such shareholder in due time as required
by law or these By-Laws. Any such waiver shall be delivered to the corporation
for inclusion in the minutes or filing with the corporate records of the
corporation.
(b) A shareholder's attendance at a meeting, in person or by proxy, waives
(i) objection to lack of notice or defective notice of such meeting, unless the
shareholder at the beginning of the meeting or promptly upon the shareholder's
arrival objects to holding the meeting or transacting business at the meeting
and (ii) objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented.
Section 3.6 Record Date. The Board of Directors may fix, in advance, a date as
to the record date for any determination of shareholders for any purpose, such
date in every case to be not more than 70 days prior to the date on which the
particular action or meeting requiring such determination of shareholders is to
be taken or held. If no record date is so fixed for the determination of
shareholders, the close of business on the day before the date on which the
first notice of a shareholders' meeting is communicated to shareholders or the
date on which the Board of Directors authorizes a share dividend or a
distribution (other than one involving a repurchase or reacquisition of shares),
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 3.6, such
determination shall apply to any adjournment thereof, unless the Board of
Directors selects a new record date or unless a new record date is required by
law.
Section 3.7 Shareholders' List. After fixing a record date for a meeting, the
corporation shall prepare an alphabetical list of the names of all shareholders
who are entitled to notice of a shareholders' meeting. The list must be arranged
by voting group and within each voting group by class or series of shares, and
show the address of and number of shares held by each shareholder. The
shareholders' list must be available for inspection by any shareholder beginning
two business days after notice of the meeting is given for which the list was
prepared and continuing through the meeting at the corporation's principal
office or at a place in the city where the meeting will be held which such place
shall be identified in the notice of the meeting. A shareholder, or a
shareholder's agent or attorney, is entitled on written demand to inspect and,
subject to the requirements of law, to copy the list, during regular business
hours and at the person's expense, during the period the list is available for
inspection. The corporation shall make the shareholders' list available at the
meeting, and any shareholder, or a shareholder's agent or attorney, is entitled
to inspect the list at any time during the meeting or any adjournment thereof.
Section 3.8 Quorum.
(a) At any meeting of the shareholders, a majority of the votes entitled to
be cast on the matter by a voting group constitutes a quorum of that voting
group for action on that matter, unless the representation of a different number
is required by law, and in that case, the representation of the number so
required shall constitute a quorum. If at the time for which a meeting of
shareholders has been called less than a quorum is present, the chairperson of
the meeting or a majority of the shareholders present or represented by proxy
and entitled to vote thereat may adjourn the meeting to another place, date or
time.
(b) When a meeting is adjourned to another place, date or time, notice need
not be given of the adjourned meeting if the place, date and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than 120 days after the date
for which the meeting was originally noticed, or if a new record date is fixed
for the adjourned meeting, notice of the place, date and time of the adjourned
meeting shall be given in conformity with these By-Laws. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
(c) Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment thereof unless a new record date is or must be set for that
adjourned meeting.
Section 3.9 Organization.
(a) The Chairman of the Board, or in the absence of the Chairman of the
Board, the acting Chairman of the Board, or in his or her absence, such person
as shall be designated by the holders of a majority of the votes present at the
meeting shall call meetings of the shareholders to order and shall act as
presiding officer of such meetings.
(b) The Secretary shall act as secretary at all meetings of the
shareholders, but in the absence of the Secretary at any meeting of the
shareholders, the presiding officer may appoint any person to act as secretary
of the meeting.
Section 3.10 Voting of Shares.
(a) Every shareholder entitled to vote may vote in person or by proxy.
Except as provided in subsection (c) of this Section 3.10 or unless otherwise
provided by law, each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of shareholders.
Unless otherwise provided by law, directors in each class shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. Shareholders do not have the right to
cumulate their votes for directors unless the Articles of Incorporation of the
corporation so provide.
(b) The shareholders having the right to vote shares at any meeting shall
be only those of record on the stock books of the corporation on the record date
fixed by law or pursuant to the provisions of Section 3.6 of these By-Laws.
(c) Absent special circumstances, the shares of the corporation held,
directly or indirectly, by another corporation are not entitled to vote if a
majority of the shares entitled to vote for the election of directors of such
other corporation is held by the corporation. The foregoing does not limit the
power of the corporation to vote any shares held by the corporation in a
fiduciary capacity.
(d) If a quorum exists, action on a matter other than the election of
directors, by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless a
greater number is required by law.
Section 3.11 Voting by Proxy or Representative.
(a) At all meetings of the shareholders, a shareholder entitled to vote may
vote in person or by proxy appointed in writing, which appointment shall be
effective when received by the secretary of the meeting or other officer, agent
or inspector authorized to tabulate votes. An appointment of a proxy is valid
for 11 months from the date of its execution, unless a longer period is
expressly provided in the appointment form.
(b) Shares held by an administrator, executor, guardian, conservator,
receiver, trustee, pledgee or another corporation may be voted as provided by
law.
Section 3.12 Conduct of Business. The person acting as the presiding officer of
any meeting of shareholders shall determine the order of business and procedure
at the meeting, including such regulation of the manner of voting and the
conduct of business as seem to him or her to be in order.
Section 3.13 Action Without Meeting. Except as otherwise set forth in this
Section 3.13 and subject to Section 3.3(c) of these By-Laws and the Articles of
Incorporation of the corporation, any action required or permitted by law to be
taken at a meeting of the shareholders of the corporation may be taken without a
meeting or vote, and without notice, if one or more consents in writing setting
forth the action taken shall be signed and dated by the holders of outstanding
shares having not less than 90% of the votes entitled to be cast at a meeting at
which all shares entitled to vote on the action were present and voted, and are
delivered to the corporation for inclusion in the minutes or filing with the
corporate records of the corporation; provided, however, that a director shall
not be removed by written consents unless written consents are obtained from the
holders of all of the outstanding shares of the corporation that are entitled to
vote on the removal of the director. Written consents from a sufficient number
of shareholders must be obtained within 60 days from the date of the earliest
dated consent for such consents to be effective to take corporate action. If not
otherwise fixed by law or in accordance with these By-Laws, the record date for
determining shareholders entitled to take action without a meeting is the date
the first shareholder signs such a written consent.
ARTICLE IV
BOARD OF DIRECTORS
Section 4.1 Qualifications and General Powers. No director is required to be an
officer, employee, shareholder or policyowner of the corporation or a resident
of the State of Iowa. The business and affairs of the corporation shall be
managed under the direction of the Board of Directors. The Board of Directors
may authorize any officer or officers or agent or agents to enter into any
contract or to execute and deliver any instrument in the name and on behalf of
the corporation, and such authority may be general or confined to specific
instances.
Section 4.2 Number and Term of Office. The Board of Directors shall be elected
in the manner and for the term specified in the Articles of Incorporation of the
corporation and in Section 3.4 of these By-Laws. Each director (whenever
elected) shall hold office until his or her death, resignation or removal,
except that each director who attains retirement age, as set forth in the
Articles of Incorporation of the corporation or as determined by the Board of
Directors, during the term for which elected shall hold office only until the
next annual meeting of shareholders following attainment of retirement age, at
which time a person may be elected as director to complete the unexpired term of
office, if any, for which the director attaining retirement age had been
elected.
Section 4.3 Quorum and Manner of Acting. A quorum of the Board of Directors
consists of a majority of the number of directors prescribed in accordance with
Section 4.2 of these By-Laws. If at any meeting of the Board of Directors less
than a quorum is present, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. At all meetings of directors where a quorum
is present, the act of the majority of the directors present at the meeting
shall be the act of the Board of Directors.
Section 4.4 Resignation. Any director of the corporation may resign at any time
by delivering written notice to the Chairman of the Board, the Board of
Directors, or the corporation. A resignation is effective when the notice is
delivered unless the notice specifies a later effective date.
Section 4.5 Compensation of Directors. Directors who are not officers of the
corporation shall be entitled to an annual retainer and an additional amount for
attendance at each regular or special meeting of the Board of Directors or
meetings of committees of the Board of Directors, plus the expense of attending
such meetings, if any, as may be fixed from time to time by resolution of the
Board of Directors.
Section 4.6 Meetings. Regular meetings of the Board of Directors shall be held
without notice once in each calendar quarter on such date and at such hour and
place, within or without the State of Iowa, as may be fixed by the Board of
Directors, except that the meeting in the second quarter shall be held in the
principal office of the corporation in Des Moines on the date of the annual
meeting of the shareholders of the corporation. The date, time and place of any
regular meeting other than the meeting in the second quarter may be changed by
the Chairman of the Board, if any, or the President, by written notice to all
directors at least 30 days before the regular meeting date, provided that the
date to which any meeting is changed shall not be more than 15 days earlier or
later than the date fixed by the Board of Directors. Special meetings of the
Board of Directors may be called at any time upon two days' written notice given
by the Chairman of the Board, if any, the President or a majority of directors
then in office, which notice shall state the date, time and place of the special
meeting. In the alternative, upon oral or written notice received prior to the
time of the meeting by at least two-thirds of the directors, the Chairman of the
Board, or the acting Chairman of the Board, may call a special meeting of the
Board of Directors to be held through communications equipment which permits all
participants to communicate with each other, with such participation
constituting attendance at such meeting. Any meeting may be continued to the
succeeding day if the Board of Directors does not complete the business coming
before it on the meeting date. At any meeting at which every director shall be
present, even without notice, any business may be transacted.
Section 4.7 Waiver of Notice. A director may waive any notice required by law or
these By-Laws if the waiver is in writing and signed by the director entitled to
such notice, whether before or after the date and time stated in such notice.
Such a waiver shall be equivalent to notice in due time as required by these
By-Laws. Attendance of a director at or participation in a meeting shall
constitute a waiver of notice of such meeting, unless the director at the
beginning of the meeting or promptly upon arrival objects to holding the meeting
or transacting business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
Section 4.8 Director's Assent Presumed. A director who is present at a meeting
of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to the action taken unless the director's dissent
shall be entered in the minutes of the meeting or unless the director shall file
a written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered or certified mail to the Secretary immediately after the adjournment
of the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 4.9 Action Without Meeting. Any action required or permitted by law to
be taken at any meeting of the Board of Directors may be taken without a meeting
of the action is taken by all of the directors then in office and if one or more
consents in writing describing the action so taken shall be signed by each
director then in office and included in the minutes or filed with the corporate
records reflecting the action taken. Action taken under this section is
effective when the last director signs the consent, unless the consent specifies
a different effective date.
Section 4.10 Dividends. Subject to applicable law and any applicable provisions
of the Articles of Incorporation of the corporation, the Board of Directors may
authorize and the corporation may make distribution to its shareholders in cash
or property.
Section 4.11 Officers of the Board of Directors.
(a) The Board of Directors shall elect from its number a Chairman of the
Board to serve at the pleasure of the Board of Directors. The Chairman of the
Board shall, if present, preside at each meeting of the Board of Directors and
shall have such powers and shall perform such duties as may be assigned to him
or her by these By-Laws or by or pursuant to authorization of the Board of
Directors.
(b) The Board of Directors shall by resolution establish a procedure to
provide for an acting Chairman of the Board in the event the current Chairman of
the Board is unable to serve or act in that capacity.
ARTICLE V
THE EXECUTIVE COMMITTEE AND
OTHER COMMITTEES
Section 5.1 Executive Committee. The Board of Directors shall appoint an
Executive Committee composed of five directors, including the Chairman of the
Board and the Chief Executive Officer if other than the Chairman of the Board.
Members of the Executive Committee shall be appointed by and serve at the
pleasure of the Board of Directors. If the Board of Directors has elected a
Chairman of the Board he or she shall, if present, preside at each meeting of
the Executive Committee. In the absence or vacancy in the office of the Chairman
of the Board, the Chief Executive Officer shall preside. If the Chairman of the
Board is also the Chief Executive Officer, any other member of the Executive
Committee, as determined by the members of the Executive Committee present,
shall preside at a meeting of the Executive Committee in the absence of the
Chairman of the Board. The Secretary shall act as secretary of the Executive
Committee and shall keep a record of all proceedings of the Executive Committee.
A majority of the members of the Executive Committee shall constitute a quorum.
Section 5.2 Powers of Executive Committee. The Executive Committee shall have
and may exercise all of the powers of the Board of Directors in the management
and affairs of the corporation except when the Board of Directors is in session.
Actions of the Executive Committee, except when the rights or acts of third
parties would be adversely affected, shall be subject to the approval of the
Board of Directors, which approval shall be implied unless contrary action is
taken by the Board of Directors.
Section 5.3 Other Committees. The Board of Directors, by resolution adopted by
the affirmative vote of a majority of the number of directors then in office,
may establish one or more other committees of the Board of Directors, each
committee to consist of two or more directors appointed by the Board of
Directors. Any such committee shall serve at the pleasure of the Board of
Directors. Each such committee shall have the powers and duties delegated to it
by the Board of Directors, subject to the limitations set forth in applicable
Iowa law. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request of the Chairman
of the Board or the chairperson of such committee.
ARTICLE VI
OFFICERS
Section 6.1 President. The Board of Directors shall elect a President of the
corporation to serve at the pleasure of the Board of Directors. The President,
if not the Chief Executive Officer, shall have such powers and perform such
duties as may be assigned to him or her by these By-Laws, as may from time to
time be assigned to him or her by or pursuant to authorization of the Board of
Directors or by the Chief Executive Officer, and as may be incident to the
office of President.
Section 6.2 Chief Executive Officer. The Board of Directors shall empower either
the Chairman of the Board, if one is elected, or the President to serve as the
Chief Executive Officer of the corporation. The Chief Executive Officer shall
(a) supervise the carrying out of policies adopted or approved by the Board of
Directors, (b) exercise a general supervision and superintendence over all the
business and affairs of the corporation, and (c) possess such other powers and
perform such other duties as may be assigned to him or her by these By-Laws, as
may from time to time be assigned by the Board of Directors and as may be
incident to the office of Chief Executive Officer.
Section 6.3 Secretary. The Board of Directors shall appoint a Secretary to serve
at the pleasure of the Board of Directors. The Secretary shall (a) keep minutes
of all meetings of the shareholders and of the Board of Directors, (b)
authenticate records of the corporation and (c) in general, have such powers and
perform such other duties as may be assigned to him or her by these By-Laws, as
may from time to time be assigned to him or her by the Board of Directors or the
Chief Executive Officer and as may be incident to the office of Secretary.
Section 6.4 Other Officers Elected by Board of Directors. At any meeting of the
Board of Directors, the Board of Directors may elect such other officers of the
corporation as the Board of Directors may deem necessary, to serve at the
pleasure of the Board of Directors. Other officers elected by the Board of
Directors shall have such powers and perform such duties as may be assigned to
them by or pursuant to authorization of the Board of Directors or by the Chief
Executive Officer.
Section 6.5 Other Officers. The Board of Directors may authorize the corporation
to elect or appoint other officers, each of whom shall serve at the pleasure of
the corporation. Officers elected or appointed by the corporation shall have
such powers and perform such duties as may be assigned to them by the
corporation.
Section 6.6 Resignation and Removal. An officer may resign at any time by
delivering notice to the Secretary. A resignation is effective when the notice
is delivered unless the notice specifies a later effective date. Any officer may
be removed, for or without cause, by the Board of Directors at any time.
Section 6.7 Compensation of Officers. The compensation of all officers elected
by the Board of Directors shall be fixed by the Board of Directors. The
compensation of officers elected or appointed by the corporation shall be fixed
as provided by resolution of the Board of Directors.
ARTICLE VII
SHARES, THEIR ISSUANCE AND TRANSFER
Section 7.1 Consideration for Shares. The Board of Directors may authorize
shares to be issued for consideration consisting of any tangible or intangible
property or benefit to the corporation, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the corporation. Before the corporation issues shares, the Board of Directors
must determine that the consideration received or to be received for shares to
be issued is adequate.
Section 7.2 Certificates for Shares. Every shareholder of the corporation shall
be entitled to a certificate or certificates, to be in such form as the Board of
Directors shall prescribe, certifying the number and class of shares of the
corporation owned by such shareholder.
Section 7.3 Execution of Certificates. The certificates for shares of stock
shall be numbered in the order in which they shall be issued and shall be signed
by the Chief Executive Officer or President and the Secretary or an Assistant
Secretary of the corporation. The signatures of the Chief Executive Officer or
President and the Secretary or Assistant Secretary or other persons signing for
the corporation upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation. In case any officer or
other authorized person who has signed or whose facsimile signature has been
placed upon such certificate for the corporation shall have ceased to be such
officer or employee or agent before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer or
employee or agent at the date of the issuance of such certificate.
Section 7.4 Share Record. A record shall be kept by the Secretary, or by any
other officer, employee or agent designated by the Board of Directors, of the
name and address of each shareholder of the corporation, the number and class of
shares held by such shareholder, the number of the certificates representing
such shares and the respective dates of issuance of such certificates and, in
case of cancellation of any such certificate, the respective date of
cancellation.
Section 7.5 Cancellation. Every certificate surrendered to the corporation for
exchange or transfer shall be cancelled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such existing
certificate shall have been so cancelled, except in cases provided in Section
7.8 of these By-Laws. Section 7.6 Transfers of Stock. Transfers of shares of the
capital stock of the corporation shall be made only on the books of the
corporation by the record holder thereof, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary, and
on surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in whose name shares
of stock stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation; provided, however, that whenever
any transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary, shall be so expressed in the
entry of transfer.
Section 7.7 Regulations. The Board of Directors may make such other rules and
regulations as it may deem expedient, not inconsistent with law, concerning the
issue, transfer and registration of certificates for shares of the capital stock
of the corporation.
Section 7.8 Lost, Destroyed or Mutilated Certificates. In the event of the loss,
theft or destruction of any certificate of stock, another may be issued in its
place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Facsimile Signatures. In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these By-Laws,
facsimile signatures of any officer or officers of the corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof. If
any officer whose facsimile signature has been placed upon any form of
instrument shall have ceased to be such officer before an instrument in such
form is issued, such instrument may be issued with the same effect as if he or
she had been such officer at the time of its issue.
Section 8.2 Execution of Instruments. Instruments affecting or relating to real
estate or the investment of funds of the corporation may be executed as
authorized by resolution of the Board of Directors or as may be authorized by
such officers of the corporation as the Board of Directors designates.
Section 8.3 Disposition of Funds. The funds of the corporation shall be paid
out, transferred or otherwise disposed of only in such manner and under such
controls as may be authorized by resolution of the Board of Directors or as may
be authorized by such officers of the corporation as the Board of Directors
designates.
Section 8.4 Fiscal Year. The fiscal year of the corporation shall be from the
first day of January through the last day of December.
Section 8.5 Books and Records. The books and records of the corporation shall be
kept (except that the shareholder list must also be kept at the places described
in Section 3.7 of these By-Laws) at the principal office of the corporation.
Section 8.6 Voting of Stocks Owned by the Corporation. In the absence of a
resolution of the Board of Directors to the contrary, the Chief Executive
Officer and the President are authorized and empowered on behalf of the
corporation to attend and vote, or to grant discretionary proxies to be used, at
any meeting of shareholders of any corporation in which this corporation holds
or owns shares of stock, and in that connection, on behalf of this corporation,
to execute a waiver of notice of any such meeting or a written consent to action
without a meeting. The Board of Directors shall have authority to designate any
officer or person as a proxy or attorney-in-fact to vote shares of stock in any
other corporation in which the corporation may own or hold shares of stock.
ARTICLE IX
INDEMNITY
The Board of Directors shall indemnify, or authorize the officers of the
corporation to indemnify, directly and through insurance coverage, each person
now or hereafter a director, officer, employee or other representative of the
corporation, and that person's heirs and legal representatives, against all
damages, awards, costs and expenses, including counsel fees, reasonably incurred
or imposed in connection with or resulting from any action, suit or proceeding,
or the settlement thereof prior to final adjudication, to which such person is
or may be made a party by reason of being or having been a director, officer,
employee or other representative of the corporation or by reason of service at
the request of the corporation in any capacity with another entity or
organization. Such rights or indemnification shall be in addition to any rights
to which any director, officer, employee or other representative of the
corporation, former, present or future, may otherwise be entitled as a matter of
law and subject to such limitations permitted by law as may be established by
the Board of Directors.
ARTICLE X
AMENDMENTS
These By-Laws may be amended, altered or repealed by the Board of Directors at
any regular or special meeting of the Board of Directors, provided written
notice expressing in substance the proposed change shall have been given to each
director at least two days prior to the date of such regular or special meeting.
Notice of any proposed amendment, alteration or repeal may be waived by any
director by filing a written waiver of notice with the Secretary before, on or
after the meeting date. The shareholders of the corporation may also amend,
alter or repeal these By-Laws as provided in the Articles of Incorporation of
the corporation. Any amendment to these By-Laws shall be submitted to the Iowa
Insurance Commissioner for review not less than thirty (30) days prior to the
effective date of the amendment, or pursuant to such other procedure as is
established by law or regulation.
Principal
Financial Group Principal Life
Insurance Company
Princor Financial
Services Corporation
January 28, 1999
Board of Directors
Principal Life Insurance Company
711 High Street
Des Moines, IA 50392
Re Variable Life Separate Account
Dear Board of Directors
The establishment of the Variable Life Separate Account by the Board of
Directors of Principal Life Insurance Company as a separate account for assets
applicable to variable life insurance policies, pursuant to the then existing
provisions of the Code of Iowa applicable to the establishment of separate
accounts by Iowa domiciled life insurance companies, was supervised by the
office of General Counsel of the Company. I have supervised the preparation of
the Registration Statement on Form S-6 to be filed by Principal Life Insurance
Company with the Securities and Exchange Commission under the Securities Act of
1933 with respect to the Survivorship Flexible Premium Variable Universal Life
Policies.It is my opinion that:
1. The Variable Life Separate Account is a separate account of the Company
duly created and validly existing pursuant to Iowa law, currently
consisting of twenty-six distinct Divisions.
2. The Survivorship Flexible Premium Variable Universal Life Policy, when
issued in accordance with the Prospectuses contained or referred to in the
Registration Statement and upon compliance with applicable local law, will
be legal and binding obligations of the Company enforceable in accordance
with their terms.
3. All income and expenses and all gains and losses, whether or not realized,
of the Variable Life Separate Account, shall be credited to or charged
against those assets, without regard to income and expenses or gains and
losses of the Company.
Board of Directors
Page 2
January 28, 1999
4. The assets of for the policies participating in a Division of the Variable
Life Separate Account, equal to the reserves and other liabilities arising
under the policies, shall not be charged with any liabilities arising from
any other business conducted by the Company.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the caption Legal Opinions in the
prospectus contained in the Registration Statement.
Very truly yours
G. R. Narber
Senior Vice President and
General Counsel
GRN/dr
The Principal Home Office: Des Moines, Iowa USA 50392-0200 (800) 451-5447
Securities offered through Princor Financial Services Corporation, Des Moines,
IA 50392-0200 FAX (515) 248-4745
Principal Life and Princor are members of the Principal Financial Group
DESCRIPTION OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANYS ISSUANCE,
TRANSFER AND REDEMPTION PROCEDURES FOR POLICIES PURSUANT TO RULE
6e-3(T)(b)(12)(iii) UNDER THE INVESTMENT COMPANY ACT OF 1940
This document sets forth the information called for under Rule
6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940 (1940 Act). The
rule provides exemptions from sections 22(c), 22(d), 22(e) and 27(c)(1) of the
1940 Act, and Rule 22c-1 thereunder, for issuance (including face amount
increase), transfer and redemption procedures under PrinFlex Variable Life, the
flexible premium variable life insurance policy (Policy) to the extent necessary
to comply with other provisions of Rule 6e-3(T), state insurance law or
established administrative procedures of Principal Mutual Life Insurance Company
(the Company). To qualify for the exemptions, procedures must be reasonable,
fair and not discriminatory to the interests of the affected contractholders and
for all other holders of contracts of the same class or series funded by the
Separate Account, and must be disclosed in the registration statement filed by
the Separate Account.
Principal Mutual Life Insurance Company believes its procedures meet the
requirements of Rule 6e-3(T)(b)(12)(iii), as described below.
1. Purchases and Related Transactions
Setout below is a summary of the major contract provisions and administrative
procedures relating to purchase transactions. Because of the insurance nature
of the contract, the procedures involved differ in certain significant
respects from the purchase procedures for mutual funds and contractual plans.
(a) Application and Contract
Issue To purchase a Policy, a completed application, including any required
supplements, must be submitted to the Company through the agent or broker
selling the Policy. The Company generally will not issue policies to insure
persons over the age 85 for regularly underwritten Policies and age 70 for
guaranteed issue, expanded non-medical and batch underwriting Policies.
Applicants must furnish satisfactory evidence of insurability, and acceptance
is subject to the Companys insurance underwriting guidelines and suitability
rules and procedures. The Company reserves the right to reject any
application or related premium if in the view of the Company, the Companys
insurance underwriting guidelines and suitability rules and procedures are
not satisfied. The minimum face amount for a Policy at issue is $50,000
($25,000 for guaranteed issue, expanded non-medical and batch underwriting
Policies). The Company reserves the right to revise its rules from time to
time to specify either a higher or lower minimum face amount.
The "Policy Date" is the date established if the Company determines to issue
a Policy. Policy years and anniversaries will be determined from the Policy
Date regardless of when a Policy is delivered. Each Policy also has an
Effective Date. The Policy Date and the Effective Date will be the same
unless (i) a backdated Policy Date is requested, (ii)the application was not
accompanied by a payment in an amount equal to or greater than the minimum
monthly premium, or (iii) additional premiums or application amendments are
required. In such cases, the Effective Date will be the date on which the
required premiums have been received at the Companys home office and any
application amendments have been received, reviewed, and accepted in the
Companys home office. The Company does not date Policies on the 29th, 30th or
31st day of any month of the year. Policies which would otherwise be dated on
these days except for this rule, will be dated on the 28th of the month. The
Policy Date is shown on the Policys data pages.
Upon specific written request of the applicant in the application and subject
to the Companys approval, a Policy may be issued with a backdated Policy
Date. The Policy Date may not be more than three months prior to the date of
the application or such shorter backdating period as required by state law.
Payment of the Minimum Required Premium is required for the period the Policy
is backdated.
If a payment in at least the required minimum initial premium amount is
submitted with the completed application, then a conditional receipt is
delivered to the applicant by the agent or broker selling the Policy,
reflecting receipt of the initial payment and any interim conditional
insurance coverage provided by the conditional receipt. No insurance under a
Policy will take effect until actual physical delivery to and acceptance of a
Policy by the applicant. If the proposed insured dies before actual physical
delivery to and acceptance of a Policy by the applicant, there will be no
coverage under the Policy and coverage will be determined solely under the
terms of the conditional receipt, if any, given to the applicant.
If the Company rejects an application or a policyowner chooses to cancel the
Policy during the free look period, the Company will refund all amounts paid
under the application or Policy. For Policies applied for in the state of
California by policyowners over the age of 60, the Company will return
accumulated value (also known as Policy Value) upon exercise of the free-look
privilege. The postmark date on the envelope containing the Policy and the
written request for cancellation shall determine whether such Policy has been
submitted within the designated period. The refund will ordinarily be made
within five business days after the Company receives the returned Policy.
Consequently, during underwriting and the free look period, the Company bears
the investment risk with respect to any amounts paid under the Policy (except
with respect to Policies applied for in the state of California by
policyowners over the age of 60). However, if the policyowner does not
exercise the free look privilege, the Policy Value will reflect investment
performance during the free look period.
(b) Payment of Premiums
Premiums must be paid to the Company at its home office. There is no fixed
schedule of premium payments on a Policy either as to the amount or timing of
the payments, although a minimum premium is required during the first
twenty-four Policy months (the Minimum Required Premium). Thereafter, the
Policy will remain in force as long as the accumulated value, less any loans
and unpaid loan interest, is sufficient to pay the Monthly Policy Charges
imposed in connection with the Policy.
A policyowner may determine, within the specified limits set forth below, a
planned periodic premium schedule to fit the policyowners insurance needs and
financial abilities. Planned Periodic Premium schedules may provide for
annual, semiannual, quarterly or monthly payments. A pre-authorized
withdrawal allows the company to deduct premiums, on a monthly basis, from
the policyowners checking or other financial institution account. The Company
will send premium reminder notices in accordance with planned periodic
premium schedules to policyowners who are on annual, semi-annual or quarterly
premium payment schedules. Premium payments may also be made by unscheduled
premium payment made to the Company at its home office, or by payroll
deduction where allowed by law and approved by the Company.
(i) Initial Premiums
To apply for a Policy, a completed application, including any required
supplements, must be submitted to the Company through the agent or broker
selling the Policy. If interim coverage is desired, a payment in at least
the required minimum initial premium amount must be submitted along with
the completed application and any required supplements. The required
minimum initial premium amount for any Policy (including a Policy issued
on an application submitted without an accompanying payment) is equal to
the minimum monthly premium shown on the Policys data pages.
(ii) Maximum Premiums In no event can the total of all premiums paid
exceed the current maximum premium limitations required by the Internal
Revenue Code in order to qualify the Policy as a life insurance contract.
The premium limitations are imposed to assure favorable federal income tax
treatment of the Policy and its death benefit. If at any time a premium is
paid which would result in total premiums exceeding the current maximum
premium limitation, the Company will only accept that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of the maximum will be returned and no further premiums
will be accepted until allowed by the current maximum premium limitations
required by the Internal Revenue Code.
(iii) Minimum Premium The current minimum annual planned periodic premium
is $360. The Company reserves the right to change minimum annual planned
periodic premium amounts. No premium payment may be less than $30. Premium
payments less than the minimum amount will be returned to the policyowner.
(iv) Evidence of Insurability If any premium payment would increase a
Policys death benefit by more than it increases the Policy Value, the
Company reserves the right to refund the premium payment. Evidence of
insurability under the Companys current underwriting guidelines then in
effect may be required before acceptance of any such premium.
(c) Allocation of Premiums
The initial premium payment, less the premium expense charge (the charge
deducted from premium payments to cover a sales charge, state and local
premium taxes and federal taxes), is allocated to the Money Market Division
of the Separate Account at the end of the Valuation Period during which the
Premium Payment is received. Any additional premium payments received prior
to the Effective Date and during the first 20 days from the Effective Date,
less premium expense charge, will be allocated to the Money Market Division
at the end of the Valuation Period during which such premiums are received.
On the 21st day after the Effective Date, Policy Value held in the Money
Market Division is automatically transferred to the Divisions of the Separate
Account or to the Fixed Account, or both, in accordance with the policyowners
direction for allocation of premium payments.
For each Division and the Fixed Account, the allocation percentages must be
zero or a whole number not less than ten nor greater than 100. The
policyowner may change the allocation of future premium payments among the
Divisions of the Separate Account and the Fixed Account by written request to
the Company or by telephone as described below without payment of any fee or
penalty. New allocation percentages will be effective as of the end of the
Valuation Period in which the Company receives the policyowners request in
proper form.
(d) Monthly Policy Charge
There is a Monthly Policy Charge from the Policy Value in the Divisions of
the Separate Account and the Fixed Account equal to the cost of insurance
plus the cost of additional benefits provided by rider plus the monthly
administration charge and mortality and expense risks charge in effect on the
Monthly Date (the day of the month which is the same as the day of the Policy
Date). The cost of insurance charge is calculated on each Monthly. It is
based on the sex (where allowed by law), issue age, duration since issue,
smoking status and risk classification of the insured. Current monthly cost
of insurance rates will be determined by the Company based on its
expectations as to future mortality experience. Cost of insurance rates are
guaranteed not to exceed the maximum charge based on the 1980 Smoker and
Nonsmoker Commissioners Standard Ordinary Mortality Tables, age last
birthday. Unisex rates will also be available for use in connection with
employment-related insurance and benefit plans. The cost of insurance rate
for a face amount increase is based on the insureds gender (where allowed by
law), age at time of increase, duration since increase, smoking status and
risk classification of the insured at the time of the increase.
(e) Change in Face Amount
A policyowner may make a written request to increase the face amount of a
Policy at any time, so long as the Policy is not in a grace period and
premiums are not being waived under a rider. A policyowner may make a written
request to decrease the face amount at any time on or after the second Policy
anniversary so long as the Policy is not in a grace period and premiums are
not being waived under a rider. Any written request for adjustment of face
amount is subject to these additional conditions.
(i) Any request for an increase in face amount must be applied for by a
supplemental application and an adjustment application, signed by the
policyowner and the insured, and shall be subject to evidence of
insurability satisfactory to the Company under its underwriting guidelines
then in effect. The minimum increase in face amount is $50,000. The age of
the insured must be 85 or less at the time of the request.
(ii) A request for a decrease in face amount must be applied for by an
adjustment application, signed by the policyowner and the insured, and may
not reduce the face amount of the Policy below $50,000.
(iii) Any increase in face amount will be in a risk classification the
Company determines.
(iv) Any adjustment approved by the Company will become effective on the
monthly date that coincides with or next follows the Companys approval of
the request.
If a payment in an amount equal to or greater than the conditional receipt
premium deposit is submitted with the adjustment application, then a
conditional receipt is given to the policyowner reflecting receipt of the
payment and outlining any interim coverage provided by the conditional
receipt. The payment submitted with the adjustment application will be
considered a premium payment for the Policy and will be allocated to the
Divisions of the Separate Account or to the Fixed Account, or both, in
accordance with the policyholders existing directions for allocation of
premium payments.
Any increase in face amount will carry its own free look period and exchange
right, which will apply only to the increase in face amount, not the entire
Policy. If a face amount increase is canceled pursuant to the above right,
the Company will restore to the Policy Value an amount equal to all Monthly
Policy Charges attributable to the increase in face amount (including rider
costs arising from the increase). The amount restored will be allocated among
the Divisions of the Separate Account or the Fixed Account, or both, as if it
were a Net Premium. This restoration will be made within five business days
after the Company receives the request for cancellation on the appropriate
form. In addition, the surrender charge will be adjusted, if necessary, so
that it will be as though no increase in face amount had occurred.
The exchange right may be exercised during the first 24 policy months
following issuance of Policy data pages reflecting an increased face amount,
but not while the Policy is in a grace period. On the date of exchange, a
portion of the Policy Value attributable to the increase will be transferred
to the fixed benefit policy. The portion of the Policy Value attributable to
the increase in face amount is determined by use of the ratio of the face
amount of the increase over the face amount of the Policy, determined at the
adjustment date for the face amount increase. Premium payments made under the
Policy after exercise of this exchange right will be credited only to the
Policy.
A new policy will be issued upon exercise of the exchange right which will
require payment of its own premiums. A portion of any policy loan and loan
interest may be required to be repaid prior to the exchange or transferred to
the new Policy.
(f) Reinstatement
If the Policy lapses, the policyowner may reinstate the Policy subject to
certain conditions.
An application for reinstatement may be made any time within three years of
lapse. (In some states, the Company is required by law to provide a longer
period of time within which a Policy may be reinstated.) Satisfactory proof
of insurability based upon the Companys current insurance underwriting
guidelines is required. Payment of a reinstatement premium is also required.
The reinstatement premium must be at least the greater of ((1) plus (2)
divided by (3)) or ((4) minus (5)) where:
1. Is the amount by which the Surrender Charge exceeds the Policy Value on
the Monthly Date on or immediately preceding the start of the Grace
Period;
2. Is three Monthly Policy Charges;
3. Is one minus the maximum Premium Expense Charge;
4. Is the Minimum Required Premium due on the second Monthly Date following
the beginning of the Grace Period; and
5. Is the sum of the premiums paid since the Policy Date.
If a loan was outstanding at the time of lapse, the Company will require
repayment or reinstatement of the loan and any unpaid loan interest before
permitting reinstatement of the Policy. Loan interest will not be charged for
the period of lapse. Reinstatement will be effective on the next Monthly Date
following the Companys approval of the reinstatement application.
The Policy Date of the Policy will remain the original policy date and will
not be changed at reinstatement, although surrender charges for total
surrender following reinstatement will resume at the rate charged at the time
of the Policys termination, as adjusted for the payment of past due premiums,
if any.
(g) Repayment of Loan and Loan Interest
A policy loan may be repaid in whole or in part at any time while the Policy
is in force. The minimum loan repayment amount is $30 or the outstanding loan
amount, if less. Loan repayments will be applied effective the date payment
is received in the Home Office. If the policyowner does not designate a
payment as a premium payment, or if the Company cannot identify it as a
premium payment, the Company will apply payments received as loan repayments
if a loan is outstanding. When a loan repayment is made, Policy Value
securing the policy loan in the loan account equal to the loan repayment will
be allocated among the Divisions of the Separate Account and the Fixed
Account in the proportion currently designated by a policyowner for
allocation of premium payments. Unless the Company is instructed otherwise,
the balance of a payment not needed to repay a loan, less the Premium Expense
Charge, will be applied to the Divisions of the Separate Account and the
Fixed Account according to the premium allocation then in effect.
(h) Misstatements of Age or Sex
If the age or sex of the insured has been misstated in an application, the
death benefit under the Policy will be the Policy Value plus the amount which
would be purchased by the most recent mortality charge at the correct age and
sex.
2. Redemptions and Related Transactions Set out below is a summary of the major
contract provisions and administrative procedures relating to redemption
transactions. Because of the insurance nature of the contract, the procedures
involved differ in certain significant respects from procedures for mutual
funds and contractual plans.
(a) Total Surrender and Partial Surrenders
So long as the Policy is in effect, a policyowner may elect to surrender the
Policy and receive its net surrender value determined as of the date the
Company receives the policyowners written request.
A policyowner may, after the second Policy Year and so long as a Policy is in
effect, request a partial surrender from the net surrender value, but no more
than two times per policy year. The minimum amount of a partial surrender is
$500 and the maximum amount that may be surrendered in a Policy Year by
partial surrender is 75% of the net surrender value as of the date of the
first partial surrender. There is a transaction charge of the lesser of $25
or two percent of the amount surrendered for each partial surrender. A
partial surrender will be processed effective the date written request is
received in the home office of the Company.
The Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge. If the option 1 death benefit is in effect
at the time of a partial surrender, then the Policys face amount also is
reduced by the amount of the partial surrender and the transaction charge.
The minimum amount of a partial surrender is $500. Proceeds will ordinarily
be paid within five business days from the date of receipt of a written
request at the Companys home office.
A policyowner may designate the amount of the partial surrender to be
withdrawn from each of the Divisions and the Fixed Account. If no designation
is made, the amount of the partial surrender and the transaction charge will
be withdrawn in the same proportion as allocation instruction in effect for
the Monthly Policy Charge.
During the first ten years of a Policy, a surrender charge will be assessed
in connection with total surrender of a Policy. In addition, each face
increase carries it own set of ten-year surrender charges, causing any total
surrender made after an adjustment date to be subject to a composite
surrender charge. Surrender charges following a Policys reinstatement
commence at the rate in effect at the time of the Policys termination. A
policyowner will never be assessed the surrender charge if total surrender or
termination of the Policy does not occur within the first ten Policy years or
ten years following an adjustment date.
(b) Benefit Claims
As long as the Policy remains in force, the Company will, upon proof of the
insureds death and receipt of all additional claim requirements, and pursuant
to the terms of the Policy, pay the death proceeds to the named beneficiary
in accordance with the designated death benefit option. The amount of the
death benefit payable will be determined as of the date of death, or on the
next following valuation date if the date of death is not a valuation date.
Benefit claims will ordinarily be paid within five business days after all
necessary claim requirements are received.
Unless a settlement option is elected by the policyowner during the insureds
lifetime or by the beneficiary following the insureds death, the proceeds
will be paid in one lump sum. The Company will pay interest from the date of
the insureds death to the date of payment or application under a benefit
option at a rate determined by the Company, but not less than required by
state law. The Company offers beneficiaries and policyowners a wide variety
of settlement options.
The Policy provides two death benefit options: Option 1 and Option 2. The
policyowner designates the death benefit option in the application. Under
Option 1 the death benefit is the greater of the Policys current face amount
or the Policy Value on the date of death multiplied by the applicable
percentage as determined by the then effective tax corridor percentage table
as shown in the Policy. The Option 2 death benefit is the Policys current
face amount plus its Policy Value on the date of death, but not less than the
Policy Value on that date multiplied by the applicable percentage described
above.
The death proceeds, determined as of the date of the insureds death, are: The
death benefit described above, plus the proceeds from any benefit rider on
the insureds life, less any unpaid loan principal and loan interest under the
Policy, and less any overdue Monthly Policy Charges if the insured died
during a grace period.
The amount of the benefit payable at maturity is the Policy Value less any
policy loans and non paid loan interest on the maturity date. This benefit
will only be paid if the insured is living on the policy maturity date. The
Policy will mature on the policy anniversary following the birthday on which
the insured reaches age 95.
(c) Policy Loans
As long as the Policy remains in force and the Policy has net surrender
value, a policyowner may borrow money from the Company using the Policy as
the only security for the loan. The maximum amount that may be borrowed is
90% of the net surrender value of the Policy as of the date a loan request is
processed at the Companys home office. The minimum loan amount is $500.
Proceeds of policy loans ordinarily will be disbursed within five business
days from the date of written request for a loan at the Companys home office.
When a policy loan is taken, a portion of the Policy Value equal to the
amount of the loan will be transferred to the Loan Account from the Divisions
and the Fixed Account in the proportions requested by the policyowner. The
Loan Account is that part of the Policy Value that reflects the value
transferred to the General Account from the Fixed Account, Separate Account,
or both as collateral for a Policy Loan. A Policys Loan Account is part of
the Companys General Account. If no request for allocation of the loaned
amount is made by the policyowner, the loan amount will be withdrawn from the
Divisions and the Fixed Account in the same proportion as the allocation used
for the most recent Monthly Policy Charge.
Any loan interest that is due and unpaid will also be transferred in the same
manner as described above for policy loans. During the first ten Policy
Years, the Loan Account will earn interest at an annual rate six percent, and
thereafter at an effective annual rate of 7.75 percent. On each Policy
Anniversary, if there has been a loan repayment, this credited interest is
transferred from the Loan Account to the Divisions of the Separate Account
and the Fixed Account in the proportion currently designated by a policyowner
for the allocation of premium payments.
The Company will charge interest on any unpaid policy loan. Interest accrues
daily at an effective annual interest rate of eight percent. Interest is due
and payable at the end of each Policy Year. Any interest not paid when due is
added to the loan principal and bears interest at the rate of eight percent.
Adding unpaid interest to the loan principal will cause additional amounts to
be withdrawn from the Divisions and the Fixed Account in the same manner as
described above for loans.
If on any Monthly Date the net surrender value is not sufficient to pay the
Monthly Policy Charge, the 61-day grace period provision may apply (see
Section 2(d) below, Policy Termination and Grace Period). Unpaid policy loans
and loan interest reduce the net surrender value and may cause it to be less
than the Monthly Policy Charge on a Monthly Date.
Upon repayment, the Policy Value securing the repaid portion of the loan in
the Loan Account will be transferred to the Divisions of the Separate Account
and the Fixed Account, applying the same percentages currently in effect for
the allocation of premium payments. Any unpaid policy loans and loan interest
are subtracted from life insurance proceeds payable at the insureds death,
from Policy Value upon total surrender, and from Policy Value payable at
maturity. The claim of the Company for repayment of policy loans and unpaid
loan interest has priority over the claims of any assignee, any beneficiary
or any other person.
(d) Policy Termination and Grace Period
Failure to make a planned periodic premium payment will not necessarily cause
the Policy to terminate. A notice of impending policy termination will be
sent if:
1. Twenty-four months after the Policy Date or later, or at any time after a
policy loan is taken, the net surrender value on any Monthly Date is less
than the Monthly Policy Charge and, if the Policy has a death benefit
guarantee rider, the death benefit guarantee premium requirem has not been
satisfied.
2. During the 24 months following the Policy Date, the sum of the premiums
paid is less than the Minimum Required Premium on a Monthly Date.
The Minimum Required Premium on a Monthly Date is equal to (1) times (2)
where:
1. Is the minimum monthly premium shown on the data page; and
2. Is the number of completed months since the Policy Date.
The grace period begins when the Company mails to the policyowner a notice of
impending policy termination. Th will be sent to the policyowners last post
office address known to the Company. It will show the minimum payment
required to keep the Policy in force. It will also show the 61 day grace
period during which such payment will be accepted.
If the grace period begins because the sum of the premiums paid is less than
the minimum required premium, the minimum payment is (1) minus (2) where:
1. Is the Minimum Required Premium due on the second Monthly Date following
the beginning o the grace period; and
2. Is the sum of the premiums paid since the Policy Date.
If the grace period ends before the Company receives the minimum payment
described above, the Company will pay to the policyowner any remaining value
in the Policy which would be the excess of (1) over (2) where:
1. Is the net surrender value on the Monthly Date on or immediately preceding
the start of the grace period; and
2. Is the two Monthly Policy Charges applicable 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 (1) plus (2)
divided by (3) where:
1. Is the amount by which the Surrender Charge exceeds the Policy Value on
the Monthly Date on or immediately preceding the start of the grace
period;
2. Is three Monthly Policy Charges; and
3. Is 1 minus the maximum Premium Expense Charge.
If the grace period ends before we receive this minimum payment, the Company
will keep any remaining value in the policy.
The Policy will continue in force through the grace period, but if the
required payment is not received by the Company during the 61-day grace
period, the Policy will terminate as of the Monthly Date on or immediately
preceding the start of the grace period. If the insured dies during the grace
period, the death benefit payable under the Policy will be reduced by the
amount of all Monthly Policy Charges due and unpaid at the insureds death, as
well as the amount of any unpaid policy loans and loan interest.
(e) Suicide
The Policy does not cover the risk of suicide within two years from the
Policy Date or two years from the date of any increase in face amount with
respect to such increase, whether the insured is sane or insane. In the event
of suicide within two years of the Policy Date, the only liability of the
Company will be a refund of premiums paid, without interest, less any policy
loans, any partial surrenders, and any surrender charges. In the event of
suicide within two years of an increase in face amount, the only liability of
the Company in respect to such increase in face amount will be a refund of
the cost of insurance charges for such increase.
(f) Postponement of Payment
Payment of any amount upon total or partial surrender, policy loan, or
benefits payable at death or maturity and the right to transfer to and from
an Investment Account may be postponed whenever:
(i) The New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission.
(ii) The Securities and Exchange Commission by order permits postponement
for the protection of policyowners.
(iii) An emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of
the Separate Account assets.
3. Transfers
Thepolicyowner may transfer amounts among the Divisions of the Separate
Account and the Fixed Account on either an unscheduled or a scheduled basis.
(a) Transfers From Divisions of the Separate Account
Unscheduled Transfers. Transfers of amounts from one Division to another or
to the Fixed Account can be made by the policyowner. A transfer from a
Division to the Fixed Account may not be made if a transfer from the Fixed
Account to a Division has been made within the six-month period prior to the
date of the requested transfer or if immediately after the transfer to the
Fixed Account the policyowners Fixed Account Value exceeds $1 million. The
amount to be transferred may be stated as a dollar amount or as a percentage
of the value of the Division from which the transfer is to be made. The
amount transferred from each Division must equal or exceed the lesser of $100
or 100% of the policyowners interest in the Division. Transfers may be
completed by sending a Written Request to the Company at its home office, or
by telephone as described below. (See Service Available by Telephone.)
All or part of the values in one or more Divisions may be transferred at one
time. Transfers from a Division will be executed and values will be
determined in connection with the transfers at the next computed Unit value
after the Company receives the transfer request. There is currently no charge
for the transfer but the Company reserves the right to impose charges (not to
exceed $25 per transfer) on unscheduled transfers after the twelfth such
transfer during a Policy Year. For this purpose, all transfers between and
among Divisions and the Fixed Account will be treated as one transfer, if all
the transfer requests are made at the same time as part of one request. The
Company also reserves the right to reject transfer instructions provided by a
person providing them for multiple contracts.
Scheduled Transfers The policyowner may elect to have automatic transfers
completed on a periodic basis from any Division. Scheduled transfers may be
initiated from a Division only if the value of the Investment Account equals
or exceeds $2,500 when scheduled transfers begin. A policyowner may establish
scheduled transfers by sending a Written Request to the Company at its home
office or by telephone. (See Service Available by Telephone.) Scheduled
transfers will be completed on a monthly, quarterly, semiannual or annual
basis beginning on the Monthly Date following the date the Company receives
the request. The amount of the transfers (minimum of $100) will be the dollar
amount or percentage of the value of the Division as of the later of the
Policy Date or most recent Anniversary Date prior to establishing the
scheduled transfers, as specified by the policyowner. Scheduled transfers
will continue until the Policy Value in the Division from which such
transfers are made is exhausted or until the policyowner notifies the Company
to discontinue such transfers. The Company reserves the right to limit the
number of Divisions from which transfers will be made simultaneously, but in
no event will such limitation be less than two Divisions.
(b) Transfer From The Fixed Account
Transfers from the Fixed Account have special limitations which are described
below. A policyowner may not make both an unscheduled transfer and scheduled
transfers from the Fixed Account during the same Policy Year.
Unscheduled Transfers. An unscheduled transfer in an amount not to exceed 25%
of the policyowners Fixed Account value as of the later of the Policy Date or
the last Anniversary, may be made each Policy Year during the 30-day period
following the Policy Date or Anniversary. A transfer request must be made by
the policyowner within such 30-day period. The minimum transfer amount is
$100 (or, if less, the entire amount of the Fixed Account value).
Scheduled Transfers. The policyowner may elect to have automatic transfers
completed on a monthly basis from the Fixed Account to one or more Investment
Accounts. Scheduled transfers are available from the Fixed Account only if
the policyowners Fixed Account value equals or exceeds $2,500 at the time
scheduled transfers begin. (The Company reserves the right to change that
amount but it will never exceed $10,000.) A policyowner may establish
scheduled transfers by sending a Written Request to the Company at its home
office or by telephone. (See Service Available by Telephone.) Scheduled
transfers will be completed on a monthly basis beginning on the Monthly Date
following the date the Company receives the request. Once each Policy Year, a
policyowner having automatic transfers completed may, upon Written Request or
by telephone (See Service Available by Telephone), change the dollar amount
of scheduled monthly transfers (subject to the $50 minimum), the percentage
of the Fixed Account transferred each month (subject to the $50 minimum and
2% of Fixed Account value maximum), and/or the date as of which the Fixed
Account value figure for calculating the dollar amount of scheduled transfers
expressed as a percentage of Fixed Account value is determined. The updated
Fixed Account value figure is the Fixed Account value as of the immediately
preceding Policy Anniversary, or, if the policyowner so elects, the Fixed
Account value as of the date the Company receives the request. Scheduled
monthly transfers will continue until the Fixed Account value is exhausted or
until the policyowner notifies the Company to discontinue the scheduled
transfers. If the policyowner discontinues the scheduled transfers, these
transfers may not begin again until six months after the date of the last
scheduled transfer.
4. Service Available by Telephone
Unless telephone transaction services are declined on the supplemental
application for a Policy, or at any subsequent time the policyowner notifies
the Company in writing to remove telephone transaction services, certain
transactions, including transfers permitted by the Policy, Policy loans
(Policy loan proceeds will be mailed only to the policyowners address of
record), changes in the allocation of future premium payments and changes in
allocation of the Monthly Policy Charge, may be made pursuant to telephone
instructions. The telephone transactions may be exercised by telephoning
1-800-852-4450. Telephone transfer requests must be received by the close of
the New York Stock Exchange on a day when the Company is open for business to
be effective that day. Requests made after that time or on a day when the
Company is not open for business will be effective the next Business Day.
Although neither the Separate Account nor the Company is responsible for the
authenticity of telephone transaction requests, the right is reserved to
refuse to accept telephone requests when the opinion of the Company it seems
prudent to do so. The policyowner bears the risk of loss caused by fraudulent
telephone instructions the Company reasonably believes to be genuine. The
Company will employ reasonable procedures to assure telephone instructions
are genuine and if such procedures are not followed, the Company may be
liable for losses due to unauthorized or fraudulent transactions. Such
procedures include recording all telephone instructions, requesting personal
identification information such as the callers name, daytime telephone
number, social security number and/or birthday and sending a written
confirmation of the transaction to the policyowners address of record.
Policyowners may obtain additional information and assistance by telephoning
the toll free number. The Company may modify or terminate telephone transfer
procedures at any time.
5. Right to Exchange Policy and Adjustment Computation Required by Rule
6e-3(T)(b)(13)(v)(B)
Once during the first 24 policy months following the Effective Date (except
at any time a Policy is in the grace period) the policyowner may exchange the
Policy for any other form of fixed benefit individual life insurance policy
(other than term insurance) currently made available by the Company for this
purpose on the insureds life. Such request must be postmarked or delivered to
the home office of the Company before the expiration of 24 months after the
Effective Date.
The new policy will provide for either the same death benefit or the same
amount at risk as the Policy did at the time of conversion, at the option of
the policyowner. Premiums for the new policy will be based on the same
gender, issue age, duration since issue, smoking status and risk
classification of the insured under the Policy. An equitable adjustment in
the new policys payments and cash or accumulated values will be made to
reflect variances, if any, in the payments and accumulated values under the
Policy and the new conversion policy. Minimum benefits of the new Policy will
be fixed and guaranteed and the new Policy will not participate in the
experience of the Separate Account. Policy values will be determined as of
the date written request for exchange is received at the Companys home
office. Evidence of insurability will not be required. No charge will be
imposed on transfers resulting from the exercise of this exchange privilege;
however, any unpaid policy loans and loan interest must be repaid prior to
the exchange or transferred to the new conversion Policy. The exchange will
be effective upon proper receipt by the Company of the written request and
return of the Policy. The new conversion Policy will have the same Policy
date as the Policy. The exchange will be subject to any applicable tax
consequences related to such an exchange.
Thepolicyowner may also exchange the Policy for a fixed-benefit, flexible
premium policy in the event the Company eliminates or combines existing
Divisions, or transfers assets in one Division to another. The policyowner
may exercise this right until the later of 60 days after the effective date
of such change or the date the policyowner receives notice of this right. The
death benefit will be the death benefit of the Policy on the date of
exchange.
6. Statement of Value
Each year a statement will be sent to the policyowner which shows the
following:
1. the current death benefit;
2. the current Policy Value and surrender value;
3. all premiums paid since the last statement;
4. all charges since the last statement;
5. any Policy loans and loan interest;
6. any partial surrenders since the last statement;
7. the number of units and unit value; and
8. the total value of each of the policyowners investment accounts;
9. any investment gain or loss since the last statement;
10. the designated beneficiary or beneficiaries;
11. all riders included with the Policy; and
12. a detailed summary of activity which occurred during the Policy Year.
The Company will also send the policyowner the reports required by the
Investment Company Act of 1940.
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 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 29th
day of January, 1999.
/s/ D. J. Drury
_________________________________
D. J. Drury
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 29th
day of January, 1999.
/s/ G. D. Hurd
_________________________________
G. D. Hurd
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 29th
day of January, 1999.
/s/ R. M. Davis
_________________________________
R. M. Davis
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 29th
day of January, 1999.
/s/ C. D. Gelatt, Jr.
_________________________________
C. D. Gelatt, Jr.
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, 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 29th
day of January, 1999.
/s/ J. B. Griswell
_________________________________
J. B. Griswell
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 29th
day of January, 1999.
/s/ C. S. Johnson
_________________________________
C. S. Johnson
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 29th
day of January, 1999.
/s/ W. T Kerr
_________________________________
W. T. Kerr
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 29th
day of January, 1999.
/s/ Lee Liu
_________________________________
Lee Liu
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 29th
day of January, 1999.
/s/ V. H. Loewenstein
_________________________________
V. H. Loewenstein
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 29th
day of January, 1999.
/s/ R. D. Pearson
_________________________________
R. D. Pearson
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 29th
day of January, 1999.
/s/ J. R. Price
_________________________________
J. R. Price
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 29th
day of January, 1999.
/s/ D. M. Stewart
_________________________________
D. M. Stewart
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 29th
day of January, 1999.
/s/ E. E. Tallett
_________________________________
E. E. Tallett
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 29th
day of January, 1999.
/s/ D. D. Thornton
_________________________________
D. D. Thornton
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 29th
day of January, 1999.
/s/ F. W. Weitz
_________________________________
F. W. Weitz
The Principal(R)
Financial Principal
Group Life Insurance Company
January 27, 1999
RE: PRINCIPAL LIFE'S SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL
LIFE INSURANCE POLICY
Dear Sir or Madam:
In my capacity as Senior Actuarial Associate of Principal Life Insurance Company
("Principal Life"), I have provided actuarial advice concerning, and
participated in the design of Principal Life's Survivorship Flexible Premium
Variable Universal Life Insurance Policy (the "Policy"). I also provided
actuarial advice concerning the preparation of a registration statement on form
S-6 for filing with the Securities and Exchange Commission under the Securities
Act of 1933 in connection with the Policy. In my opinion:
a) the federal tax charge of 1.25% of premium for deferred
acquisition costs is reasonable in relation to Principal Life's
increased tax burden under Section 848 of the Internal Revenue
Code of 1986 as amended. In addition, it is my professional
opinion that the 15% rate of return, and the assumptions on which
that rate is based, are reasonable for use in calculating such
charges.
b) the illustrations of death benefits, account values, surrender
values and accumulated premiums in the prospectus are based on the
assumptions stated in the illustrations, consistent with the
provisions on the Policy. Such assumptions, including the assumed
current charge levels are reasonable. The Policy has not been
designed so as to make the relationship between premium and
benefits, as shown in the illustrations, appear to be
correspondingly more favorable to a prospective purchaser of the
Policy at the ages, genders and underwriting classes shown, than
to prospective purchasers at other ages, genders and underwriting
classes. Nor were the particular illustrations selected for the
purpose of making this relationship appear more favorable.
I hereby consent to the use of this opinion as an exhibit to the registration
statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
/s/ Jeff Fitch
Jeff Fitch, FSA, MAAA
Senior Actuarial Associate
Phone: 515-235-5898
Fax: 515-362-0056
Mailing Address: Des Moines, Iowa 50392-0001 (515) 247-5111
