SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
FORM S-6
FILE NO. 333-42257
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: IDS Life of New York Account 8
B. Name of depositor: IDS LIFE INSURANCE COMPANY OF NEW YORK
C. Complete address of depositor's principal executive offices:
20 Madison Avenue Ext. Albany, NY 12203
D. Name and complete address of agent for service:
Mary Ellyn Minenko, Esq.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, Minnesota 55440-0010
It is proposed that this filing will become effective, (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2000 pursuant to paragraph (b) or as soon as practicable
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
E. Title of securities being registered:
Flexible Premium Survivorship Variable Life Insurance Policy
F. Approximate date of proposed public offering: not applicable.
<PAGE>
<PAGE>
FLEXIBLE PREMIUM SURVIVORSHIP
VARIABLE LIFE INSURANCE POLICY
PROSPECTUS
MAY 1, 2000
IDS LIFE OF NEW YORK ACCOUNT 8
ISSUED AND SOLD BY: IDS LIFE INSURANCE COMPANY OF NEW YORK
20 Madison Avenue Extension
Albany, New York 12203
Telephone: (800) 541-2251
This prospectus contains information about the insurance policy that you should
know before investing. You will receive prospectuses for the underlying funds
that are investment options under your policy. Please read all prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS POLICY IS NOT A DEPOSIT OF A BANK OR FINANCIAL INSTITUTION
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS POLICY INVOLVES INVESTMENT
RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL.
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PROSPECTUS -- MAY 1, 2000 1
<PAGE>
TABLE OF CONTENTS
THE POLICY IN BRIEF ......................... 3
KEY TERMS ................................... 6
THE VARIABLE ACCOUNT ........................ 8
THE FUNDS ................................... 9
IDS Life Series Fund - Equity Portfolio ..... 9
IDS Life Series Fund - Government Securities
Portfolio ................................. 9
IDS Life Series Fund - Income Portfolio ..... 9
IDS Life Series Fund - International Equity
Portfolio ................................. 9
IDS Life Series Fund - Managed Portfolio .... 9
IDS Life Series Fund - Money Market
Portfolio ................................. 9
AIM V.I. Growth and Income Fund ............. 9
Putnam VT New Opportunities Fund - Class IA
Shares .................................... 9
Fund objectives ............................. 10
Relationship between funds and
subaccounts ............................... 10
RATES OF RETURN OF THE FUNDS AND
SUBACCOUNTS ............................... 11
THE FIXED ACCOUNT ........................... 13
PURCHASING YOUR POLICY ...................... 13
Application ................................. 13
Right to examine policy ..................... 14
Premiums .................................... 14
KEEPING THE POLICY IN FORCE ................. 15
Death benefit guarantee to age 100 .......... 15
Minimum initial premium period .............. 15
Grace period ................................ 16
Reinstatement ............................... 16
LOADS, FEES AND CHARGES ..................... 17
Premium expense charge ...................... 17
Monthly deduction ........................... 17
Surrender charge ............................ 18
Partial surrender fee ....................... 18
Mortality and expense risk charge ........... 19
Fund expenses ............................... 19
POLICY VALUE ................................ 20
Fixed account value ......................... 20
Subaccount values ........................... 20
PROCEEDS PAYABLE UPON DEATH ................. 23
Change in death benefit option .............. 24
Changes in specified amount ................. 25
Misstatement of age or sex .................. 25
Suicide ..................................... 25
Beneficiary ................................. 25
TRANSFERS BETWEEN THE FIXED ACCOUNT AND
SUBACCOUNTS ............................... 26
Fixed account transfer policies ............. 26
Minimum transfer amounts .................... 26
Maximum transfer amounts .................... 26
Maximum number of transfers per year ........ 26
Two ways to request a transfer, loan or
surrender ................................. 27
Automated transfers ......................... 27
Automated dollar-cost averaging ............. 28
POLICY LOANS ................................ 29
POLICY SURRENDERS ........................... 30
Total surrenders ............................ 30
Partial surrenders .......................... 30
Allocation of partial surrenders ............ 30
Effects of partial surrenders ............... 30
Taxes ....................................... 30
Exchange Right .............................. 31
OPTIONAL INSURANCE BENEFITS ................. 31
Four-Year Term Insurance Rider .............. 31
Policy Split Option Rider ................... 31
PAYMENT OF POLICY PROCEEDS .................. 31
FEDERAL TAXES ............................... 34
IDS Life of New York's tax status ........... 34
Taxation of policy proceeds ................. 34
Modified endowment contracts ................ 35
Other tax considerations .................... 35
IDS LIFE OF NEW YORK ........................ 36
Ownership ................................... 36
State regulation ............................ 37
Distribution of the policy .................. 37
Legal proceedings ........................... 37
Year 2000 ................................... 37
Experts ..................................... 38
MANAGEMENT OF IDS LIFE OF NEW YORK .......... 38
OTHER FUND MANAGERS ......................... 40
OTHER INFORMATION ........................... 40
Substitution of investments ................. 40
Voting rights ............................... 40
Reports ..................................... 41
POLICY ILLUSTRATIONS ........................ 42
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2 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
THE POLICY IN BRIEF
PURPOSE: The purpose of the policy is to provide life insurance protection on
two insureds and to build policy value. The policy provides a death benefit that
is payable to the beneficiary upon the last surviving insured's death. As in the
case of other life insurance policies, it may not be advantageous to purchase
this policy as a replacement for, or an addition to an existing life insurance
policy. The policy allows you, as the owner, to allocate your net premiums or
transfer policy value, to:
THE VARIABLE ACCOUNT, consisting of subaccounts, each of which invests in a fund
with a particular investment objective. You may direct premiums to any or all
eight of these subaccounts. Your policy's value may increase or decrease daily,
depending on the investment return. No minimum amount is guaranteed. (p. 8)
THE FIXED ACCOUNT, which earns interest at rates that are adjusted periodically
by IDS Life of New York. This rate will never be lower than 4%. (p. 13)
PURCHASING YOUR POLICY: To apply, send a completed application and premium
payment to IDS Life of New York's home office. You will need to provide medical
and other evidence that the persons you propose to insure (yourself or someone
else) is insurable according to our underwriting rules before we can accept your
application. (p. 13)
RIGHT TO EXAMINE POLICY: You may return your policy for any reason and receive a
full refund of your premiums by mailing us the policy and a written request for
cancellation within a specified period. (p. 14)
PREMIUMS: In applying for your policy, you state how much you intend to pay and
whether you will pay quarterly, semiannually or annually. You may make
additional unscheduled premium payments subject to certain limits. You cannot
make premium payments on or after the youngest insured's attained insurance age
100. We may refuse premiums in order to comply with the Code. (p. 14)
DBG-100: A feature of the policy guaranteeing that the policy will not lapse
before the youngest insured's attained insurance age 100. This feature is in
effect if you meet certain premium payment requirements. (p. 15)
MINIMUM INITIAL PREMIUM PERIOD: A period of time during the early years of the
policy when the policy will not lapse even if the cash surrender value is less
than the amount needed to pay the monthly deduction. This feature is in effect
if you meet certain premium payment requirements. (p. 15)
GRACE PERIOD: If the cash surrender value of your policy becomes less than the
amount needed to pay the monthly deduction, and neither the DBG-100 nor the
minimum initial premium period is in effect, you will have 61 days to pay the
premium needed so that the next three monthly deductions can be paid. If you
don't, the policy will lapse. (p. 16)
REINSTATEMENT: If your policy lapses, it can be reinstated within five years.
The reinstatement is subject to certain conditions including evidence of
insurability satisfactory to IDS Life of New York and the payment of a
sufficient premium. The DBG-100 can not be reinstated. (p. 16)
LOADS, FEES AND CHARGES: You pay the following charges, either directly (such as
deductions from your premium payments or your policy value), or indirectly (as
deductions from the underlying funds.) These charges primarily compensate
IDS Life of New York for administering and distributing the policy as well as
paying policy benefits and assuming related risks:
- - PREMIUM EXPENSE CHARGE -- charge deducted from each premium payment to cover
some distribution expenses, state and local premium taxes and federal
taxes. (p. 17)
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PROSPECTUS -- MAY 1, 2000 3
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- - MONTHLY DEDUCTION -- charged against the value of your policy each month
(prior to the youngest insured's attained insurance age 100), covering the
cost of insurance, cost of issuing the policy, certain administrative expenses
and optional insurance benefits. (p. 17)
- - SURRENDER CHARGE -- applies if you surrender your policy for its full cash
surrender value, or the policy lapses, during the first 15 years. The
surrender charge is a deferred charge for costs of issuing the policy. We base
it on the initial specified amount. (p. 18)
- - PARTIAL SURRENDER FEE -- applies if you surrender part of the value of your
policy; equals $25 or 2% of the amount surrendered, whichever is
less. (p. 18)
- - MORTALITY AND EXPENSE RISK CHARGE -- applies only to the subaccounts; equals,
on an annual basis, 0.9% of the average daily net asset value of the
subaccounts. (p. 19)
- - FUND EXPENSES -- applies only to the underlying funds and consists of
investment management fees, taxes, brokerage commissions and nonadvisory
expenses. (p. 19)
PROCEEDS PAYABLE UPON DEATH: Prior to the youngest insured's attained insurance
age 100, your policy's death benefit can never be less than the specified
amount, less outstanding indebtedness. The relationship between the policy value
and the death benefit depends on which of two options you choose:
- - OPTION 1 LEVEL AMOUNT: The death benefit is the greater of the specified
amount or a percentage of policy value.
- - OPTION 2 VARIABLE AMOUNT: The death benefit is the greater of the specified
amount plus the policy value or a percentage of policy value.
You may change the death benefit option or specified amount within certain
limits; doing so generally will affect policy charges.
On the youngest insured's attained insurance age 100, the proceeds payable will
be the cash surrender value. (p. 23)
TRANSFERS BETWEEN THE FIXED ACCOUNT AND SUBACCOUNTS: You may, at no charge,
transfer policy value from one subaccount to another or between subaccounts and
the fixed account. (Certain restrictions apply to transfers involving the fixed
account.) We reserve the right to limit transfers to no more than five transfers
per year by phone or mail. You can also arrange for automated transfers on a
monthly, quarterly, semiannual or annual basis. (p. 26)
POLICY LOANS: You may borrow against your policy's cash surrender value. A
policy loan, even if repaid, can have a permanent effect on the death benefit
and policy value. A loan may also have tax consequences if your policy lapses or
you surrender it. (p. 29)
POLICY SURRENDERS: You may cancel this policy while it is in force and receive
its cash surrender value. The cash surrender value is the policy value minus
indebtedness, minus any applicable surrender charges. (p. 30)
EXCHANGE RIGHT: For two years after the policy is issued, you can exchange it
for one that provides benefits that do not vary with the investment return of
the subaccounts. Because the policy itself offers a fixed return option, all you
need to do is transfer all of the policy value in the subaccounts to the fixed
account. (p. 31)
PAYMENT OF POLICY PROCEEDS: We will pay policy proceeds when you surrender the
policy, the last surviving insured dies or upon the youngest insured's attained
insurance age 100. You or the beneficiary may choose whether you want us to make
a lump sum payment or payments under one or more of certain options. (p. 31)
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4 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
FEDERAL TAXES: The death benefit is not considered part of the beneficiary's
income and thus is not subject to federal income taxes. When the proceeds are
paid on the youngest insured's attained insurance age 100, if the amount
received plus any indebtedness exceeds your investment in the policy, the excess
may be taxable as ordinary income. Part or all of any proceeds you receive
through full or partial surrender, lapse, policy loan or assignment of policy
value may be subject to federal income tax as ordinary income. Proceeds other
than death benefits from certain policies, classified as "modified endowments,"
are taxed differently from proceeds of conventional life insurance contracts and
also may be subject to an additional 10% IRS penalty tax if you are younger than
59 1/2. A policy is considered to be a modified endowment if it was applied for
or materially changed after June 21, 1988, and premiums paid in the early years
exceed certain modified endowment limits. (p. 34)
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PROSPECTUS -- MAY 1, 2000 5
<PAGE>
KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR POLICY.
ACCUMULATION UNIT: An accounting unit used to calculate the policy value of the
subaccounts.
ATTAINED INSURANCE AGE: Each insured's insurance age plus the number of policy
anniversaries since the policy date. Attained insurance age changes only on a
policy anniversary.
CASH SURRENDER VALUE: Proceeds received if the policy is surrendered in full or
the amount payable on the youngest insured's attained insurance age 100. The
cash surrender value equals the policy value minus indebtedness, minus any
applicable surrender charges.
CLOSE OF BUSINESS: Closing time of the New York Stock Exchange, normally
4 p.m., Eastern time.
CODE: The Internal Revenue Code of 1986, as amended.
DEATH BENEFIT GUARANTEE TO AGE 100 (DBG-100): A feature of the policy
guaranteeing that the policy will not lapse before the youngest insured's
attained insurance age 100. This feature is in effect if you meet certain
premium payment requirements.
DEATH BENEFIT GUARANTEE TO AGE 100 (DBG-100) PREMIUM: The premium required to
keep the DBG-100 in effect. The DBG-100 premium is shown in your policy. It
depends on each insured's sex, insurance age, risk classification, optional
insurance benefits added by rider and the initial specified amount.
FIXED ACCOUNT: The general investment account of IDS Life of New York. The fixed
account is made up of all of IDS Life of New York's assets other than those held
in any separate account.
FIXED ACCOUNT VALUE: The portion of the policy value that you allocate to the
fixed account, including indebtedness.
FUNDS: Mutual funds or portfolios, each with a different investment objective
(See "The funds.") Each of the subaccounts of the variable account invests in a
specific one of these funds.
IDS LIFE OF NEW YORK: In this prospectus, "we," "us," "our" and "IDS Life of New
York" refer to IDS Life Insurance Company of New York.
INDEBTEDNESS: All existing loans on the policy plus interest that has either
been accrued or added to the policy loan.
INSURANCE AGE: Each insured's age based upon his or her last birthday on the
date of the application.
INSUREDS: The persons whose lives are insured by the policy.
MINIMUM INITIAL PREMIUM PERIOD: A period of time during the early years of the
policy when the policy will not lapse even if the cash surrender value is less
than the amount needed to pay the monthly deduction. This feature is in effect
if you meet certain premium payment requirements.
MONTHLY DATE: The same day each month as the policy date. If there is no monthly
date in a calendar month, the monthly date is the first day of the next calendar
month.
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6 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
NET AMOUNT AT RISK: A portion of the death benefit, equal to the total current
death benefit minus the policy value. This is the amount to which we apply cost
of insurance rates in determining the monthly cost of insurance.
NET PREMIUM: The premium paid minus the premium expense charge.
OWNER: The entity(ies) to which, or individual(s) to whom, we issue the policy,
or to whom you subsequently transfer ownership. In the prospectus "you" and
"your" refer to the owner.
POLICY ANNIVERSARY: The same day and month as the policy date each year the
policy remains in force.
POLICY DATE: The date we issue the policy and from which we determine policy
anniversaries, policy years and policy months.
POLICY VALUE: The sum of the fixed account value plus the variable account
value.
PROCEEDS: The amount payable under the policy as follows:
- - Upon death of the last surviving insured prior to the youngest insured's
attained insurance age 100, proceeds will be the death benefit in effect as of
the date of that insured's death, minus any indebtedness.
- - Upon the youngest insured's attained insurance age 100, proceeds will be the
cash surrender value.
- - On surrender of the policy, the proceeds will be the cash surrender value.
RISK CLASSIFICATION: A group of insureds that IDS Life of New York expects will
have similar mortality experience.
SCHEDULED PREMIUM: A premium you select at the time of application, of a level
amount, at a fixed interval of time.
SPECIFIED AMOUNT: An amount we use to determine the death benefit and the
proceeds payable upon death of the last surviving insured prior to the youngest
insured's attained insurance age 100. We show the initial specified amount in
your policy.
SUBACCOUNT(S): One or more of the investment divisions of the variable account,
each of which invests in a particular fund.
SURRENDER CHARGE: A contingent deferred issue and administration expense charge
we assess against the policy value at the time of surrender during the first 15
years of the policy.
VALUATION DATE: A normal business day, Monday through Friday, on which the New
York Stock Exchange is open. We set the value of each subaccount at the close of
business on each valuation date.
VALUATION PERIOD: The interval commencing at the close of business on each
valuation date and ending at the close of business on the next valuation date.
VARIABLE ACCOUNT: IDS Life Variable Life of New York Account 8 consisting of
subaccounts, each of which invests in a particular fund. The policy value in
each subaccount depends on the performance of the particular fund.
VARIABLE ACCOUNT VALUE: The sum of the values that you allocate to the
subaccounts of the variable account.
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PROSPECTUS -- MAY 1, 2000 7
<PAGE>
THE VARIABLE ACCOUNT
We established the variable account on Sept. 12, 1985, under New York law. It is
registered as a single unit investment trust under the Investment Company Act of
1940. The variable account consists of a number of subaccounts, each of which
invests in shares of a particular fund. This registration does not involve any
SEC supervision of the accounts management or investment practices or policies.
The variable account meets the definition of a separate account under federal
securities laws. Income, capital gains or capital losses of each subaccount are
credited to or charged against the assets of that subaccount alone. State
insurance law provides that we will not charge a variable subaccount with
liabilities of any other subaccount or of any other business conducted by
IDS Life of New York. Other variable life insurance policies that are not
described in this prospectus also invest in subaccounts of the variable account.
At all times, IDS Life of New York will maintain assets in the subaccounts with
total market value at least equal to the reserves and other liabilities required
to cover insurance benefits under all contracts participating in the subaccount.
The U.S. Treasury and the IRS indicated they may provide additional guidance on
investment control. This concerns how many subaccounts an insurance company may
offer and how many exchanges among subaccounts it may allow before the owner
would be currently taxed on income earned within subaccount assets. We do not
know what the additional guidance will be or when action will be taken. We
reserve the right to modify this policy, as necessary, so that the owner will
not be subject to current taxation as the owner of the subaccount assets.
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8 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
THE FUNDS
<TABLE>
<CAPTION>
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
Equity IDS Life Series Fund - Objective: capital appreciation. Invests primarily IDS Life Insurance Company (IDS
Equity Portfolio in common stocks and other securities convertible Life), investment manager;
into common stock. American Express Financial
Corporation (AEFC) investment
advisor.
Government IDS Life Series Fund - Objective: to provide a high current return and IDS Life, investment manager;
Securities Government Securities safety of principal. Invests primarily in debt AEFC, investment advisor
Portfolio obligations issued or guaranteed as to principal
and interest by the U.S. government, its agencies
and instrumentalities.
Income IDS Life Series Fund - Objective: to maximize current income while IDS Life, investment manager;
Income Portfolio attempting to conserve the value of the investment AEFC, investment advisor
and to continue the high level of income for the
longest period of time. At least 50% of net assets
normally will be invested in high-quality,
lower-risk corporate bonds, unrated corporate
bonds believed to have the same investment
qualities and government bonds. Other investments
may include lower-rated corporate bonds, bonds and
common stocks sold together as a unit, preferred
stock and foreign securities.
IDS Life Series Fund - Objective: capital appreciation. Invests primarily IDS Life, investment manager;
International International Equity in common stocks of foreign issuers and foreign AEFC, investment advisor
Equity Portfolio securities convertible into common stock. Other
investments may include certain international
bonds if the portfolio manager believes they have
greater potential for capital appreciation than
equities.
Managed IDS Life Series Fund - Objective: to maximize total investment return IDS Life, investment manager;
Managed Portfolio through a combination of capital appreciation and AEFC, investment advisor
current income. If the investment manager believes
the stock market will be moving higher, it can
emphasize stocks that offer potential for
appreciation. At other times, the manager may
increase the portfolio's holdings in bonds and
money-market securities providing high current
income.
Money Market IDS Life Series Fund - Objective: to provide maximum current income IDS Life, investment manager;
Money Market Portfolio consistent with liquidity and conservation of AEFC, investment advisor
capital. Invests in relatively short-term money
market securities, such as marketable debt
securities issued or guaranteed as to principal
and interest by the U.S. government or its
agencies or instrumentalities, bank certificates
of deposit, bankers' acceptances, letters of
credit and high-grade commercial paper.
YGI AIM V.I. Growth and Objective: to seek growth of capital with a A I M Advisors Inc.
Income Fund secondary objective of current income.
YNO Putnam VT New Objective: seeks long-term capital appreciation by Putnam Investment Management, Inc.
Opportunities Fund - investing principally in common stocks of
Class IA Shares companies in sectors of the economy which Putnam
Management believes possess above-average
long-term growth potential.
</TABLE>
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PROSPECTUS -- MAY 1, 2000 9
<PAGE>
FUND OBJECTIVES
The investment objectives and policies of some of the funds may be similar to
the investment objectives and policies of other mutual funds that the investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results, and those
may differ significantly from other funds with similar investment objectives and
policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the fund prospectuses for facts you
should know before investing. These prospectuses are available by contacting us
at the address or telephone number on the first page of this prospectus.
All funds are available to serve as the underlying investments for variable life
insurance policies. Some funds also are available to serve as investment options
for variable annuities and tax-deferred retirement plans. It is possible that in
the future, it may be disadvantageous for variable annuity accounts and variable
life insurance accounts and/or tax-deferred retirement plans to invest in the
available funds simultaneously.
Although the insurance company and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between annuity
owners, life insurance policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate funds for the variable
annuity, variable life insurance and tax-deferred retirement plan accounts, you
would not bear any expenses associated with establishing separate funds. Please
refer to the fund prospectuses for risk disclosure regarding simultaneous
investments by variable annuity, variable life insurance and tax-deferred
retirement plan accounts.
DIVERSIFICATION: The Internal Revenue Service (IRS) has issued final regulations
relating to diversification requirements under Section 817(h) of the Code. Each
fund intends to comply with these requirements.
RELATIONSHIP BETWEEN FUNDS AND SUBACCOUNTS
Each subaccount buys shares on the appropriate fund at net asset value without a
sales charge. Dividends and capital gain distributions from a fund are
reinvested at net asset value without a sales charge and held by the subaccount
as an asset. Each subaccount redeems fund shares without a charge to the extent
necessary to make death benefit or other payments under the policy.
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10 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
RATES OF RETURN OF THE FUNDS AND SUBACCOUNTS
This section presents rates of return, first for the funds and then for the
corresponding subaccounts. Rates of return are different in the two cases
because those of the subaccounts reflect additional charges. After this date,
the section shows actual rates of return. All charges and expenses mentioned in
the section are explained fully under "Loads, fees and charges."
RATES OF RETURN OF FUNDS In the following table are average annual rates of
return based on the actual investment performance of the funds after deduction
of applicable portfolio expenses (including the investment management fees and
nonadvisory expenses) for the periods indicated assuming reinvestment of
dividends and capital gains. These rates do not reflect charges that apply to
the subaccounts or the policy and therefore do not illustrate how actual
investment performance will affect policy benefits. If these charges were
reflected, the illustrated rate of return would have been lower. Past
performance is no guarantee of future results.
<TABLE>
<CAPTION>
PERIOD ENDING 12/31/99
10 YEARS OR
FUND 1 YEAR 3 YEARS 5 YEARS SINCE COMMENCEMENT
<S> <C> <C> <C> <C>
IDS LIFE SERIES FUND, INC.
Equity Portfolio (Beta
1.31)(1) (1/86)(2) 80.89% 33.69% 31.72% 22.62%
Government Securities
Portfolio (1/86)(2) (1.97) 4.89 6.69 6.87
Income Portfolio (1/86)(2) .44 4.61 7.48 7.78
International Equity
Portfolio (10/94)(2) 37.04 20.93 25.00 23.69
Managed Portfolio (Beta
0.73)(1) (1/86)(2) 24.62 18.91 18.05 15.89
Money Market Portfolio
(1/86)(2) 4.72 4.96 5.01 4.82
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income
Fund (5/94)(2) 34.25 -- 28.18 24.49
PUTNAM VARIABLE TRUST
Putnam VT New Opportunities
Fund - Class IA Shares
(5/94)(2) 69.35 -- 32.89 30.36
</TABLE>
(1) Beta is a volatility measure based on calculations of the fund's monthly
returns compared to the S&P 500 Index. A beta less than 1 indicates
performance that is less volatile than the market; a beta more than 1
indicates performance that is more volatile than the market.
(2) (Commencement date of the fund.)
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PROSPECTUS -- MAY 1, 2000 11
<PAGE>
RATES OF RETURN OF SUBACCOUNTS: Average annual rates of return in the following
table reflect all charges incurred by the funds and charges against the
subaccounts (including the mortality and expense risk charge). The rates do not
reflect the premium expense charge, surrender charge or monthly deduction. If
these charges were reflected, the illustrated rates of return would have
been lower.
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. We show actual performance from the date the
subaccounts began investing in the funds. Although we base performance figures
on historical earnings, past performance does not guarantee future results.
<TABLE>
<CAPTION>
PERIOD ENDING 12/31/99
SINCE COMMENCEMENT OF THE SUBACCOUNTS
10 YEARS OR
SUBACCOUNT INVESTING IN 1 YEAR 3 YEARS 5 YEARS SINCE COMMENCEMENT
<S> <C> <C> <C> <C> <C>
IDS LIFE SERIES FUND, INC.
Equity Equity
Portfolio (8/87)(1) 79.28% 32.50% 30.54% 21.52%
Government Securities Government Securities
Portfolio (8/87)(1) (2.85) 3.95 5.73 5.90
Income Income
Portfolio (8/87)(1) (0.47) 3.66 6.51 6.81
International Equity International Equity
Portfolio (10/94)(1) 35.82 19.85 23.88 22.58
Managed Managed
Portfolio (8/87)(1) 23.50 17.85 16.98 14.77
Money Market Money Market
Portfolio (8/87)(1)
(5.54% - Simple, 5.70% -
Compound)(2) 3.77 4.01 4.08 3.89
AIM VARIABLE INSURANCE FUNDS, INC.
YGI AIM V.I. Growth and
Income Fund (11/96)(1,3) 33.05 -- 27.16 23.37
PUTNAM VARIABLE TRUST
YNO Putnam VT New
Opportunities Fund -
Class IA
Shares (11/96)(1,3) 67.84 -- 31.71 29.16
</TABLE>
(1) (Commencement date of the subaccount.)
(2) The 7-day yield, shown here in parenthesis, more closely reflects the
current earnings of the fund than the total return quotation.
(3) Performance is since commencement date of the funds (5/94) as if the policy
had invested in the fund at that time.
- --------------------------------------------------------------------------------
12 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
THE FIXED ACCOUNT
You can allocate premiums to the fixed account or transfer policy value from the
subaccounts to the fixed account (with certain restrictions, explained in
"Transfers between the fixed account and subaccounts").
The fixed account is the general investment account of IDS Life of New York. It
includes all assets owned by IDS Life of New York other than those in the
variable account and other separate accounts. Subject to applicable law, IDS
Life of New York has sole discretion to decide how assets of the fixed account
will be invested.
Placing policy value in the fixed account does not entitle you to share in the
fixed account's investment experience, nor does it expose you to the account's
investment risk. Instead, IDS Life of New York guarantees that the policy value
you place in the fixed account will accrue interest at an effective annual rate
of at least 4%, independent of the actual investment experience of the account.
IDS Life of New York bears the full investment risk for amounts allocated to the
fixed account. IDS Life of New York is not obligated to credit interest at any
rate higher than 4.0%, although we may do so at our sole discretion. Rates
higher than 4.0% will change from time to time, at the discretion of IDS Life of
New York and will be based on various factors including, but not limited to, the
interest rate environment, returns earned on investments backing these policies,
the rates currently in elect for new and existing IDS Life of New York policies,
product design, competition and IDS Life of New York's review and expenses.
We will not credit interest in excess of 4% on any portion of policy value in
the fixed account against which you have a policy loan outstanding.
Because of exemptive and exclusionary provisions, interests in the fixed account
has not been registered as an investment company under the Investment Company
Act of 1940. Accordingly, neither the fixed account nor any interests in it are
subject to the provisions of these Acts and the staff of the SEC has not
reviewed the disclosures in this prospectus relating to the fixed account.
Disclosures regarding the fixed account may, however, be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
PURCHASING YOUR POLICY
APPLICATION
To apply for coverage, complete an application and send it with your premium
payment to IDS Life of New York's home office. In your application, you:
- - select a specified amount of insurance;
- - select a death benefit option;
- - designate a beneficiary; and
- - state how premiums are to be allocated among the fixed account and/or the
subaccounts.
INSURABILITY: Before issuing your policy, we require satisfactory evidence of
the insurability of the persons whose lives you propose to insure. Our
underwriting department will review your application and any medical information
or other data required to determine whether the proposed individuals are
insurable under our underwriting rules. We may decline your application if we
determine the individual is not insurable and we will return any premiums you
have paid.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 13
<PAGE>
AGE LIMIT: The policy is available only to persons age 35 and older. In
addition, IDS Life of New York generally will not issue a policy to persons over
the insurance age of 85. We may, however, do so at its sole discretion.
RISK CLASSIFICATION: The risk classification for each insured is based on that
insured's health, occupation or other relevant underwriting standards. This
classification will affect the monthly deduction. (See "Loads, fees and charges"
and "Optional insurance benefits.")
OTHER CONDITIONS: In addition to proving insurability, you and the insureds must
also meet certain conditions, stated in the application form, before coverage
will become effective and your policy is issued to you. The lives insured may be
covered under the terms of a conditional insurance agreement prior to a policy
being issued.
INCONTESTABILITY: IDS Life of New York will have two years from the effective
date of your policy to contest the truth of statements or representations in
your application. After the policy has been in force during the lifetime of
either insured for two years from the policy date, IDS Life of New York cannot
contest the policy.
RIGHT TO EXAMINE POLICY
You may return your policy for any reason and receive a full refund of all
premiums paid. To do so, you must mail or deliver the policy to IDS Life of New
York's home office or your financial advisor, with a written request for
cancellation:
- - by the 10th day after you receive it after IDS Life of New York mails or
personally delivers a written notice of withdrawal right; or
- - the 45th day after you sign your application
On the date your request is postmarked or received, the policy will immediately
be considered void from the start.
PREMIUMS
PAYMENT OF PREMIUMS: In applying for your policy, you decide how much you intend
to pay and how often you will make payments. DURING THE EARLY POLICY YEARS UNTIL
THE POLICY VALUE IS SUFFICIENT TO COVER THE SURRENDER CHARGE, IDS LIFE OF
NEW YORK REQUIRES THAT YOU PAY THE MINIMUM INITIAL PREMIUMS.
You may schedule payments annually, semiannually or quarterly. (IDS Life of New
York must approve payment at any other interval. We show this premium schedule
in your policy.
The scheduled premium serves only as an indication of your intent as to the
frequency and amount of future premium payments. You may skip scheduled premium
payments at any time if your cash surrender value is sufficient to pay the
monthly deduction, or if you have paid sufficient premium to keep the DBG-100 or
the minimum initial premium period in effect.
You may also change the amount and frequency of scheduled premium payments by
written request. IDS Life of New York reserves the right to limit the amount of
such changes. Any change in the premium amount is subject to applicable tax laws
and regulations.
Although you have flexibility in paying premiums, the amount and frequency of
your payments will affect the policy value, cash surrender value and length of
time your policy will remain in force, as well as affect whether the DBG-100 or
the minimum initial premium period remain in effect.
PREMIUM LIMITATIONS: You may make unscheduled premium payments at any time and
in an amount of at least $50. IDS Life of New York reserves the right to limit
the number and amount of unscheduled premium payments.
No premium payments, scheduled or unscheduled, are allowed on or after the
youngest insured's attained insurance age 100.
- --------------------------------------------------------------------------------
14 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
Also, in order to receive favorable tax treatment under the Code, premiums paid
during the life of the policy must not exceed certain limitations. To comply
with the Code, we can either refuse excess premiums as they are paid, or refund
excess premiums with interest no later than 60 days after the end of the policy
year in which they were paid.
ALLOCATION OF PREMIUMS: Until the policy date, we hold all premiums in the fixed
account, and we credit interest on the net premiums (gross premiums minus
premium expense charge) at the current fixed account rate. As of the policy
date, we will allocate the net premiums plus accrued interest to the account(s)
you have selected in your application. At that time, we will begin to assess the
various loads, fees and charges.
We convert any amount that you allocate to a subaccount into accumulation units
of that subaccount, as explained under "Policy value." Similarly, when you
transfer value between subaccounts, we convert accumulation units in one
subaccount into cash value, which we then convert into accumulation units of the
second subaccount.
KEEPING THE POLICY IN FORCE
This section includes a description of the policy provisions that determine if
the policy will remain in force or lapse (terminate). It is important that you
understand them so the appropriate premium payments are made to ensure that
insurance coverage meets your objectives.
If you wish to have a guarantee that the policy will remain in force until the
youngest insured's attained insurance age 100 regardless of investment
performance, you should pay at least the DBG-100 premiums.
If you wish to pay a lower premium and are not concerned with a long-term
guarantee that the policy will remain in force regardless of investment
performance, you can pay premiums so that the cash surrender value on each
monthly date is sufficient to pay the monthly deduction. However, during the
minimum initial premium period, you must pay at least the minimum initial
premium until the policy value is greater than the surrender charge and the cash
surrender value is sufficient to pay the monthly deduction.
DEATH BENEFIT GUARANTEE TO AGE 100
The DBG-100 provides that your policy will remain in force until the youngest
insured's attained insurance age 100 even if the cash surrender value is
insufficient to pay the monthly deduction. The DBG-100 will remain in effect, as
long as:
- - the sum of premiums paid; minus
- - partial surrenders minus
- - outstanding indebtedness; equals or exceeds
- - the DBG-100 premiums due since the policy date.
The DBG-100 premium is shown in the policy.
If, on a monthly date, you have not paid enough premiums to keep the DBG-100 in
effect, an additional period of 61 days will be allowed for you to pay a premium
sufficient to bring your total up to the required minimum. If you do not pay
this amount within 61 days, the DBG-100 will terminate. If the DBG-100 is not in
effect, your policy will lapse (terminate) if the cash surrender value is less
than the amount needed to pay the monthly deduction and the minimum initial
premium period is not in effect. Although the policy can be reinstated as
explained below, the DBG-100 cannot be reinstated.
MINIMUM INITIAL PREMIUM PERIOD
To allow you to purchase this policy for the lowest premium possible, you may
choose to pay only the minimum initial premium during the minimum initial
premium period as long as the policy value minus indebtedness equals or exceeds
the monthly
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 15
<PAGE>
deduction. The policy will not enter the grace period during the minimum initial
premium period as shown in your policy under "Policy Data," if:
1. on a monthly date, the policy value minus indebtedness equals or exceeds the
monthly deduction for the policy month following such monthly date; and
2. the sum of all premiums paid, minus any partial surrenders, and minus any
indebtedness equals or exceeds the minimum initial premium, as shown in your
policy under "Policy Data," times the number of months since the policy date,
including the current month.
The minimum initial period is:
3 years if the youngest insured's insurance age is 35-39
2 years if the youngest insured's insurance age is 40-49
1 year if the youngest insured's insurance age is 50 and over
GRACE PERIOD
If the cash surrender value of the policy becomes less than that needed to pay
the monthly deduction and neither the DBG-100 nor the minimum initial premium
period is in effect, you will have 61 days to pay the required premium amount.
If the required premium is not paid, the policy will lapse.
IDS Life of New York will mail a notice to your last known address, requesting
payment of the premium needed so that the next three monthly deductions can be
made. If we receive this premium before the end of the 61-day grace period, we
will use the payment to pay all monthly deductions and any other charges then
due. Any balance will be added to the policy value and allocate it in the same
manner as other premium payments.
If a policy lapses with outstanding indebtedness, any excess of the outstanding
indebtedness over the premium paid generally will be taxable to the owner. (See
"Federal taxes.") If the last surviving insured dies during the grace period,
any overdue monthly deductions will be deducted from the death benefit.
REINSTATEMENT
Your policy may be reinstated within five years after it lapses, unless you
surrendered it for cash. To reinstate, IDS Life of New York will require:
- - a written request;
- - evidence satisfactory to IDS Life of New York that both insureds remain
insurable or evidence for the last surviving insured and due proof that the
first death occurred before the date of lapse;
- - payment of a premium that will keep the policy in force for at least three
months;
- - payment of the monthly deductions that were not collected during the grace
period; and
- - payment or reinstatement of any indebtedness.
The effective date of a reinstated policy will be the monthly date on or next
following the day IDS Life of New York accepts your application for
reinstatement. The suicide period (see "Proceeds payable upon death") will apply
from the effective date of reinstatement. Surrender charges will also be
reinstated.
IDS Life of New York will have two years from the effective date of
reinstatement to contest the truth of statements or representations in the
reinstatement application.
- --------------------------------------------------------------------------------
16 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
LOADS, FEES AND CHARGES
Policy charges compensate IDS Life of New York for:
- - providing the insurance benefits of the policy;
- - issuing the policy;
- - administering the policy;
- - assuming certain risks in connection with the policy; and
- - distributing the policy.
We deduct some of these charges from your premium payments. We deduct others
periodically from your policy value in the fixed account and/or subaccounts. We
may also assess a charge if you surrender your policy or the policy lapses.
PREMIUM EXPENSE CHARGE
We deduct this charge from each premium payment. The amount remaining after the
deduction, called the net premium, is credited to the account(s) you have
selected. The premium expense charge has three parts:
SALES CHARGE: 7.25% of all premiums paid. Partially compensates IDS Life of New
York for expenses in distributing the policy, including agents' commissions,
advertising and printing of prospectuses and sales literature.
PREMIUM TAX CHARGE: 1.0% of each premium payment. Compensates IDS Life of New
York for paying taxes imposed by the State of New York on premiums received by
insurance companies.
FEDERAL TAX CHARGE: 1.25% of each premium payment. Compensates IDS Life of New
York for paying Federal taxes resulting from the sale of the policy and is a
reasonable charge in relation to IDS Life of New York's federal tax burden. IDS
Life of New York reserves the right to change the amount of this charge if
applicable federal law changes IDS Life of New York's federal tax burden subject
to the approval of the Superintendent of Insurance.
MONTHLY DEDUCTION
On each monthly date we deduct from the value of your policy in the fixed
account and/or subaccounts an amount equal to the sum of:
1. the cost of insurance for the policy month;
2. the policy fee shown in your policy; and
3. charges for any optional insurance benefits provided by rider for the policy
month.
We explain each of the three components below.
You specify, in your policy application, what percentage of the monthly
deduction from 0% to 100% will be taken from the fixed account and from each of
the subaccounts. You may change these percentages for future monthly deductions
by written request.
We will take monthly deductions from the fixed account and the subaccounts on a
pro rata basis if:
- - you do not specify the accounts from which the monthly deduction is to be
taken; or
- - the value in the fixed account or any subaccount is insufficient to pay the
portion of the monthly deduction you have specified.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 17
<PAGE>
If the cash surrender value of your policy is not enough to pay the monthly
deduction on a monthly anniversary, the policy may lapse. However, the policy
will not lapse if the DBG-100 or the minimum initial premium period is in
effect. (See Death benefit guarantee to age 100, Minimum initial premium
period;" also "Grace period" and "Reinstatement.")
COMPONENTS OF THE MONTHLY DEDUCTION:
1. COST OF INSURANCE: the cost providing the death benefit under your policy.
The cost of insurance for a policy month is calculated as:
[a X (b - c)] + d
where:
(a) IS THE MONTHLY COST OF INSURANCE RATE based on each insureds insurance age,
duration of coverage, sex and risk classification. Generally, the cost of
insurance rate will increase as the attained insurance age of each insured
increases.
We set the rates based on our expectations as to future mortality experience. We
may change the rates from time to time; any change will apply to all individuals
of the same risk classification. However, rates will not exceed the Guaranteed
Annual Maximum Cost of Insurance Rates shown in your policy, which are based on
the 1980 Commissioners Standard Ordinary Smoker or Nonsmoker Mortality Tables,
Age Last Birthday.
(b) IS THE DEATH BENEFIT on the monthly date divided by 1.0032737 (which reduces
IDS Life of New York's net amount at risk, solely for computing the cost of
insurance, by taking into account assumed monthly earnings at an annual rate of
4%).
(c) IS THE POLICY VALUE on the monthly date. At this point, the policy value has
been reduced by the policy fee and any charges for optional riders.
(d) IS ANY FLAT EXTRA INSURANCE CHARGES assessed as a result of special
underwriting considerations.
2. POLICY FEE: $30 per month for the first 15 policy years. This charge
reimburses IDS Life of New York for expenses of issuing the policy, such as
processing the application (primarily underwriting) and setting up computer
records; and of administering the policy, such as processing claims, maintaining
records, making policy changes and communicating with owners. We reserve the
right to change the charge in the future, but guarantee that it will never
exceed $30 per month.
3. OPTIONAL INSURANCE BENEFIT CHARGES: charges for any optional benefits added
to the policy by rider. (See "Optional insurance benefits.")
SURRENDER CHARGE
If you surrender your policy or the policy lapses during the first 15 policy
years, we will assess a surrender charge. The surrender charge is a contingent
deferred issue and administration expense charge. It reimburses IDS Life of New
York for costs of issuing the policy, such as processing the application
(primarily underwriting) and setting up computer records. This charge is $4 per
thousand dollars of initial specified amount. It remains level during the first
five policy years and then decreases monthly until it is zero at the end of 15
policy years.
PARTIAL SURRENDER FEE
If you surrender part of the value of your policy, you will be charged $25 (or
2% of the amount surrendered, if less). This fee is guaranteed not to increase
for the duration of your policy.
- --------------------------------------------------------------------------------
18 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
MORTALITY AND EXPENSE RISK CHARGE
This charge applies only to the subaccounts and not to the fixed account. It is
equal, on an annual basis, to 0.9% of the daily net asset value of the
subaccounts -- a level guaranteed for the life of the policy. Computed daily,
the charge compensates IDS Life of New York for:
- - MORTALITY RISK -- the risk that the cost of insurance charge will be
insufficient to meet actual claims.
- - EXPENSE RISK -- the risk that the policy fee and the contingent deferred issue
and administration expense charge (described above) may be insufficient to
cover the cost of administering the policy.
Any profit from the mortality and expense risk charge would be available to
IDS Life of New York for any proper corporate purpose including, among others,
payment of sales and distribution expenses, which we do not expect to be covered
by the sales charge discussed earlier. Any further deficit will have to be made
up from IDS Life of New York's general assets.
FUND EXPENSES
The investment managers and advisors receive fees for their services to the
funds. The funds also pay taxes, brokerage commissions and nonadvisory expenses,
such as custodian and trustee fees, registration fees for shares, postage,
fidelity and security bond costs, legal fees and other miscellaneous fees and
charges. The table below will help you understand the expenses that the funds
pay.
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES OF THE FUNDS
MANAGEMENT 12B-1 OTHER
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS FEES FEES EXPENSES TOTAL
<S> <C> <C> <C> <C>
IDS Life Series Fund - Equity Portfolio 0.70% -- 0.03 0.73%(1)
IDS Life Series Fund - Government
Securities Portfolio (after expense
limitation) 0.70% -- 0.10(2) 0.80%(1)
IDS Life Series Fund - Income Portfolio 0.70% -- 0.05 0.75%(1)
IDS Life Series Fund - International
Equity Portfolio 0.95% -- 0.10 1.05%(1)
IDS Life Series Fund - Managed Portfolio 0.70% -- 0.04 0.74%(1)
IDS Life Series Fund - Money Market
Portfolio 0.50% -- 0.10 0.60%(1)
AIM V.I. Growth and Income Fund 0.61% -- 0.16 0.77%(3)
Putnam VT New Opportunities Fund -
Class IA Shares 0.54% -- 0.05 0.59%(3)
</TABLE>
(1) Annual operating expenses for the fiscal year ended April 30, 1999.
(2) IDS Life has agreed to a voluntary limit of 0.1%, on an annual basis, of
the average daily net assets of each of the IDS Life Series Fund Portfolios
for other expenses like taxes and brokerage commissions and for nonadvisory
expenses. If the 0.1% limitation had not been in place, these other
expenses would have been 0.17% for IDS Life Series Fund-Government
Securities Portfolio. IDS Life reserves the right to discontinue limiting
these other expenses at 0.1%. However, its present intention is to continue
the limit until the time that actual expenses are less than the limit
(3) Figures in "Management Fees," "Other Expenses" and "Total" are based on
actual expenses for the fiscal year ended Dec. 31, 1999.
IDS Life of New York has entered into certain agreements under which it is
compensated by the advisors and/or distributors of the AIM V.I. Growth and
Income Fund and Putnam VT New Opportunities Fund for the administrative services
it provides to these funds.
OTHER INFORMATION ON CHARGES
IDS Life of New York may reduce or eliminate various fees and charges when we
incur lower sales costs and/or perform fewer administrative services than usual.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 19
<PAGE>
POLICY VALUE
The value of your policy is the sum of values in the fixed account and each
subaccount of the variable account.
FIXED ACCOUNT VALUE
The value in the fixed account on the policy date (when the policy is issued)
equals the portion of your initial net premium that you have allocated to the
fixed account, plus interest accrued before the policy date, minus the portion
of the monthly deduction for the first policy month that you have allocated to
the fixed account.
On any later date, the value in the fixed account equals:
- - the value on the previous monthly date; plus
- - net premiums allocated to the fixed account since the last monthly date; plus
- - any transfers to the fixed account from the subaccounts, including loan
transfers, since the last monthly date; plus
- - accrued interest on all of the above; minus
- - any transfers from the fixed account to the subaccounts, including loan
repayment transfers, since the last monthly date; minus
- - any partial surrenders or partial surrender fees allocated to the fixed
account since the last monthly date; minus
- - interest on any transfers or partial surrenders, from the date of the transfer
or surrender to the date of calculation; minus
- - any portion of the monthly deduction for the coming month that is allocated to
the fixed account if the date of calculation is a monthly date.
SUBACCOUNT VALUES
The value in each subaccount changes daily, depending on the investment
performance of the fund in which that subaccount invests and on other factors
detailed below. There is no guaranteed minimum subaccount value. You, as owner,
bear the entire investment risk.
CALCULATION OF SUBACCOUNT VALUE: The value in each subaccount on the policy date
equals the portion of your initial net premium allocated to that subaccount plus
interest accrued before the policy date, minus the portion of the monthly
deduction for the first policy month that you have allocated to that subaccount.
The value of each subaccount on each subsequent valuation date equals:
- - the value of the subaccount on the preceding valuation date, multiplied by the
net investment factor for the current valuation period (explained below); plus
- - net premiums received and allocated to the subaccount during the current
valuation period; plus
- - any transfers to the subaccount (from the fixed account or other subaccounts,
including loan repayment transfers) during the period; minus
- - any transfers from the subaccount including loan transfers during the current
valuation period; minus
- - any partial surrenders and partial surrender fees allocated to the subaccount
during the period; minus
- - any portion of the monthly deduction allocated to the subaccount during the
period.
The net investment factor measures the investment performance of a subaccount
from one valuation period to the next. Because performance may fluctuate, the
value of a subaccount may increase or decrease from day to day.
- --------------------------------------------------------------------------------
20 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
ACCUMULATION UNITS: The policy value allocated to each subaccount is converted
into accumulation units. Each time you direct a premium payment or transfer
policy value into one of the subaccounts, a certain number of accumulation units
are credited to your policy for that subaccount. Conversely, each time you take
a partial surrender or transfer value out of a subaccount, a certain number of
accumulation units are subtracted.
Accumulation units are the true measure of investment value in each subaccount.
For subaccounts investing in the funds, they're related to, but not the same as,
the net asset value of the corresponding fund. The dollar value of each
accumulation unit can rise or fall daily, depending on the investment
performance of the underlying fund and on certain charges. Here's how unit
values are calculated:
NUMBER OF UNITS: To calculate the number of units for a particular subaccount,
we divide your investment (net premium or transfer amount) by the current
accumulation unit value.
ACCUMULATION UNIT VALUE: The current value for each subaccount equals the last
value times the current net investment factor.
NET INVESTMENT FACTOR: Determined at the end of each valuation period, this
factor equals
(a DIVIDED BY b) - c
where:
(a) equals:
- - net asset value per share of the fund; plus
- - per-share amount of any dividend or capital gain distribution made by the
relevant fund to the subaccount; plus
- - any credit or minus any charge for reserves to cover any tax liability
resulting from the investment operations of the subaccount.
(b) equals:
- - net asset value per share of the fund at the end of the preceding valuation
period; plus
- - any credit or minus any charge for reserves to cover any tax liability in the
preceding valuation period.
(c) is a percentage factor representing the mortality and expense risk charge,
as described in "Loads, fees and charges," above.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways; in number and in value. Here are the factors that influence those
changes:
The number of accumulation units you own may fluctuate due to:
- - additional purchase payments allocated to the subaccounts;
- - transfers into or out of the subaccount(s);
- - partial surrenders and partial surrender fees;
- - surrender charges; and/or
- - monthly deductions
Accumulation unit values will fluctuate due to:
- - changes in underlying funds(s) net asset value;
- - dividends distributed to the subaccount(s);
- - capital gains or losses of underlying funds;
- - fund operating expenses; and/or
- - mortality and expense risk charges
- --------------------------------------------------------------------------------
22 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
PROCEEDS PAYABLE UPON DEATH
We will pay a benefit to the beneficiary of the policy when the last surviving
insured dies.
If that death is prior to the youngest insured's attained insurance age 100, the
amount payable is based on the specified amount and death benefit option you
have selected, as described below, less any indebtedness.
On the youngest insured's attained insurance age 100, the amount payable is the
cash surrender value.
OPTION 1 (LEVEL AMOUNT): Under this option, the policy's value is part of the
specified amount. The Option 1 death benefit is the greater of:
- - the specified amount on the date of the last surviving insured's death; or
- - the applicable percentage of the policy value on the date of the last
surviving insured's death, if that death occurs on a valuation date, or on the
next valuation date following the date of death. (See table below.)
Youngest insured's attained insurance age in the table below refers to the
youngest life insured or the age such person would have reached.
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE TABLE
YOUNGEST APPLICABLE YOUNGEST APPLICABLE
INSURED'S PERCENTAGE OF INSURED'S PERCENTAGE OF
ATTAINED POLICY ATTAINED POLICY
INSURANCE AGE VALUE INSURANCE AGE VALUE
<S> <C> <C> <C>
40 or younger 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75-95 105
55 150 96 104
56 146 97 103
57 142 98 102
58 138 99 101
59 134 100 100
60 130
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
The percentage is designed to ensure that the policy meets the provisions of
Federal tax law, which require a minimum death benefit in relation to policy
value for your policy to qualify as life insurance.
OPTION 2 (VARIABLE AMOUNT): Under this option, the policy value is added to the
specified amount. The Option 2 death benefit is the greater of:
- - the policy value plus the specified amount; or
- - the applicable percentage of policy value on the date of the last surviving
insured's death, if that death occurs on a valuation date, or on the next
valuation date following the date of death. (See table above.)
<TABLE>
<CAPTION>
EXAMPLES: OPTION 1 OPTION 2
<S> <C> <C>
specified amount $1,000,000 $1,000,000
policy value $ 50,000 $ 50,000
death benefit $1,000,000 $1,050,000
policy value increases to $ 80,000 $ 80,000
death benefit $1,000,000 $1,080,000
policy value decreases to $ 30,000 $ 30,000
death benefit $1,000,000 $1,030,000
</TABLE>
If you want to have premium payments and favorable investment performance
reflected partly in the form of an increasing death benefit, you should consider
Option 2. If you are satisfied with the specified amount of insurance protection
and prefer to have premium payments and favorable investment performance
reflected to the maximum extent in the policy value, you should consider Option
1. Under Option 1, the cost of insurance is lower because IDS Life of
New York's net amount at risk is generally lower; for this reason, the monthly
deduction is less, and a larger portion of your premiums and investment returns
is retained in the policy value.
CHANGE IN DEATH BENEFIT OPTION
You may make a written request to change the death benefit option once per
policy year. A change in the death benefit option also will change the specified
amount. You do not need to provide additional evidence of insurability.
IF YOU CHANGE FROM OPTION 1 TO OPTION 2: The specified amount will decrease by
an amount equal to the policy value on the effective date of the change. You
cannot change from Option 1 to Option 2 if the resulting specified amount would
fall below the minimum amount shown in policy.
IF YOU CHANGE FROM OPTION 2 TO OPTION 1: The specified amount will increase by
an amount equal to the policy value on the effective date of the change.
An increase or decrease in specified amount resulting from a change in the death
benefit option will affect the following cost:
- - Monthly deduction because the cost of insurance benefits depends upon the
specified amount.
- - Minimum monthly premium.
- - Charges for certain optional insurance benefits.
The surrender charge will not be affected.
- --------------------------------------------------------------------------------
24 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
CHANGES IN SPECIFIED AMOUNT
Subject to certain limitations, you may make a written request to decrease the
specified amount at any time. Decreases in specified amount may have tax
implications, discussed in the section "Modified endowment contracts" under
"Federal taxes."
DECREASES: Any decrease in specified amount will take effect on the monthly
anniversary on or next following our receipt of your written request. The
specified amount remaining after the decrease may not be less than the minimum
specified amount shown in the policy. If, following a decrease in specified
amount, the policy would no longer qualify as life insurance under federal tax
law, the decrease may be limited to the extent necessary to meet these
requirements.
A decrease in specified amount will affect your costs as follows:
- - Your monthly deduction will decrease because the cost of insurance charge
depends on the specified amount.
- - Charges for certain optional insurance benefits may decrease.
- - The surrender charge will not change.
No surrender charge is imposed when you request a decrease in the specified
amount.
INCREASES: Increases in specified amount are not permitted. If you wish to
purchase additional insurance, you should purchase an additional policy.
Currently, we do not charge the policy fee for the additional policy.
MISSTATEMENT OF AGE OR SEX
If an insured's age or sex has been misstated, the proceeds payable upon the
last surviving insured's death will be:
- - the policy value on the date of death; plus
- - the amount of insurance that would have been purchased by the cost of
insurance deducted for the policy month during which death occurred, if that
cost had been calculated using rates for the correct age and sex; minus
- - the amount of any outstanding indebtedness on the date of death.
SUICIDE
If either of the insureds dies by suicide while sane or insane within two years
from the policy date, the only amount payable will be the premiums paid, minus
any indebtedness and partial surrenders. The policy will terminate as of the
date of the first death by suicide.
BENEFICIARY
Initially, the beneficiary will be the person you designate in your application
for the policy. You may change the beneficiary by giving written notice to IDS
Life of New York, subject to requirements and restrictions stated in the policy.
If you do not designate a beneficiary, or if the designated beneficiary dies
before the last surviving insured, the beneficiary will be you or your estate.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
TRANSFERS BETWEEN THE FIXED ACCOUNT AND SUBACCOUNTS
You may transfer policy values from one subaccount to another or between
subaccounts and the fixed account. For most transfers, we will process your
transfer request at the end of the valuation period during which your request is
received. There is no charge for transfers. Before transferring policy value,
you should consider the risks involved in switching investments.
We may suspend or modify the transfer privilege at any time with the necessary
approval of the SEC and the New York Superintendent of Insurance. Transfers
involving the fixed account are subject to the restrictions below.
FIXED ACCOUNT TRANSFER POLICIES
- - You must make transfers from the fixed account during a 30-day period starting
on a policy anniversary, except for automated transfers, which can be set up
for monthly, quarterly or semiannual transfer periods.
- - If we receive your request to transfer amounts from the fixed account within
30 days before the policy anniversary, the transfer will become effective on
the anniversary.
- - If we receive your request on or within 30 days after the policy anniversary,
the transfer will be effective on the day we receive it.
- - We will not accept requests for transfers from the fixed account at any other
time.
- - If you have made a transfer from the fixed account to one or more subaccounts,
you may not make a transfer from any subaccount back to the fixed account
until the next policy anniversary. We will waive this limitation once during
the first two policy years if you exercise the policy's right to exchange
provision. (See "Exchange right.")
MINIMUM TRANSFER AMOUNTS
From a subaccount to another subaccount or the fixed account:
- - For mail and phone transfers -- $250 or the entire subaccount balance,
whichever is less.
- - For automated transfers -- $50.
From the fixed account to a subaccount: $250 or the entire fixed account balance
minus any outstanding indebtedness, whichever is less.
- - For automated transfers -- $50.
MAXIMUM TRANSFER AMOUNTS
From a subaccount to another subaccount or the fixed account:
- - None.
From the fixed account to a subaccount:
- - Entire fixed account balance minus any outstanding indebtedness.
MAXIMUM NUMBER OF TRANSFERS PER YEAR
We reserve the right to limit mail and telephone transfers to twelve per policy
year. Twelve automated transfers per policy year are allowed.
- --------------------------------------------------------------------------------
26 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
TWO WAYS TO REQUEST A TRANSFER, LOAN OR SURRENDER
Provide your name, policy number, Social Security Number or Taxpayer
Identification Number when you request a transfer, loan or partial surrender.
1 BY LETTER:
- --------------------------------------------------------------------------------
REGULAR MAIL:
IDS LIFE INSURANCE COMPANY OF NEW YORK
P.O. BOX 5144
ALBANY, NY 12205
EXPRESS MAIL:
IDS LIFE INSURANCE COMPANY OF NEW YORK
20 MADISON AVE. EXTENSION
ALBANY, NY 12203
2 BY PHONE:
- --------------------------------------------------------------------------------
Call between 8 a.m. and 6 p.m. (Monday-Thursday); 8 a.m. and 4:30 p.m. (Friday)
All Eastern Times:
1-800-541-2251 (TOLL FREE) OR
(518) 869-8613 (ALBANY AREA)
- - We answer phone requests promptly, but you may experience delays when call
volume is unusually high. If you are unable to get through, use mail procedure
as an alternative.
- - We will honor any telephone transfer, loan or partial surrender requests
believed to be authentic and will use reasonable procedures to confirm that
they are. These include asking identifying questions and tape recording calls.
As long as we follow these procedures, neither IDS Life of New York nor its
affiliates will be liable for any loss resulting from fraudulent requests.
- - We make telephone transfers, loans and partial surrenders available
automatically. If you do not want telephone transfers, loans and partial
surrenders to be made from your account, please write to IDS Life of New York
and tell us.
AUTOMATED TRANSFERS
In addition to written and phone requests, you can arrange to have policy value
transferred from one account to another automatically. Your financial advisor
can help you set up an automated transfer.
AUTOMATED TRANSFER POLICIES:
- - Minimum automated transfer: $50
- - Only one automated transfer arrangement can be in effect at any time. You can
transfer policy values to one or more subaccounts and the fixed account, but
you can transfer from only one account.
- - You can start or stop this service by written request. You must allow seven
days for us to change any instructions that currently are in place.
- - You cannot make automated transfers from the fixed account in an amount that,
if continued, would deplete the fixed account within 12 months.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
- - If you made a transfer from the fixed account to one or more subaccounts, you
may not make a transfer from any subaccount back to the fixed account until
the next policy anniversary.
- - If you submit your automated transfer request with an application for a
policy, automated transfers will not take effect until the policy is issued.
- - If the value of the account from which you are transferring policy value is
less than the $50 minimum, we will stop the transfer arrangement
automatically.
- - Automated transfers are subject to all other policy provisions and terms
including provisions relating to the transfer of money between the fixed
account and the subaccounts.
AUTOMATED DOLLAR-COST AVERAGING
You can use automated transfers to take advantage of dollar-cost averaging --
investing a fixed amount at regular intervals. For example, you might have a set
amount transferred monthly from a relatively conservative subaccount to a more
aggressive one, or to several others.
This systematic approach can help you benefit from fluctuations in accumulation
unit value, caused by fluctuations in the market value(s) of the underlying
fund. Since you invest the same amount each period, you automatically acquire
more units when the market value falls, fewer units when it rises. The potential
effect is to lower your average cost per unit. There is no charge for
dollar-cost averaging.
HOW DOLLAR-COST AVERAGING WORKS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT ACCUMULATION NUMBER OF UNITS
MONTH INVESTED UNIT VALUE PURCHASED
<S> <C> <C> <C>
By investing an Jan $100 $20 5.00
equal number of Feb 100 16 6.25
dollars each month... Mar 100 9 11.11
you automatically Apr 100 5 20.00
buy more units May 100 7 14.29
when the per unit June 100 10 10.00
market price is low... July 100 15 6.67
and fewer units Aug 100 20 5.00
when the per unit Sept 100 17 5.88
market price is high. Oct 100 12 8.33
</TABLE>
You have paid an average price of only $10.81 per unit over the 10 months, while
the average market price actually was $13.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
- --------------------------------------------------------------------------------
28 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
POLICY LOANS
You may borrow against your policy by written or telephone request. (See chart
under "Transfers between the fixed account and subaccounts" for address and
phone numbers for your requests.) We will process your loan request at the end
of the valuation period during which we receive your request. (Loans by
telephone are limited to $50,000.)
INTEREST RATE: The interest rate for policy loans is 6% per year. After the
policy's 10th anniversary we expect to reduce the loan interest rate to 4% per
year. Interest is charged daily and due at the end of the policy year.
MINIMUM LOAN: $500 or the remaining loan value, whichever is less.
MAXIMUM LOAN:
- - 85% of the policy value minus surrender charges.
We will compute the maximum loan value as of the end of the valuation period
during which we receive your loan request. The amount available at any time for
a new loan is the maximum loan value less any existing indebtedness. When we
compute the amount available, we reserve the right to deduct from the loan value
interest for the period until the next policy anniversary and monthly deductions
that we will take until the next policy anniversary.
PAYMENT OF LOANED FUNDS: Generally, we will pay loans within seven days after we
receive your request (with certain exceptions -- see "Deferral of payments,"
under "Payment of policy proceeds").
ALLOCATION OF LOANS TO ACCOUNTS: If you do not specify whether the loan is to
come from the fixed account or the subaccounts, we will take it from the
subaccounts and the fixed account in proportion to their values, minus
indebtedness. When a loan is made from a subaccount, accumulation units are
redeemed and the proceeds transferred into the fixed account. We will credit the
policy value loaned with 4% annual interest.
REPAYMENTS: We will allocate loan repayments to subaccounts and/or the fixed
account using the premium allocation percentages in effect unless you tell us
otherwise. Repayments must be in amounts of at least $50.
OVERDUE INTEREST: If you do not pay accrued interest when it is due, we will
increase the amount of indebtedness in the fixed account to cover the amount
due. Interest added to a policy loan will be charged the same interest rate as
the loan itself. We will take such interest from the fixed account and/or
subaccounts, using the monthly deduction allocation percentages. If the value in
the fixed account or any subaccount is not enough to pay the interest so
allocated, we will take all of the interest from all of the accounts in
proportion to their value, minus indebtedness.
EFFECTS OF POLICY LOANS: If you do not repay your loan, it will reduce the death
benefit and policy value. Even if you do repay it, your loan can have a
permanent effect on death benefits and policy values, because money borrowed
against the subaccounts will not share in the investment results of the relevant
fund(s).
A loan may terminate the DBG-100 or the minimum initial premium period. The loan
amount is deducted from total premiums paid, which may reduce the total below
the level required to keep the DBG-100 or the minimum initial premium period in
effect.
TAXES: If your policy lapses or you surrender it with an outstanding
indebtedness, and the amount of outstanding indebtedness plus the cash surrender
value is more than the sum of premiums you paid, you generally will be liable
for taxes on the excess. (See "Federal taxes.")
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 29
<PAGE>
POLICY SURRENDERS
You may surrender your policy in full or in part by written or telephone
request. (See chart under "Transfers between the fixed account and
subaccounts.") We will process your surrender request at the end of the
valuation period during which your request is received. We may require that you
return your policy.
We will normally process your payment within seven days; however, we reserve the
right to defer payment. (See "Deferral of payments," under "Payment of policy
proceeds.")
TOTAL SURRENDERS
If you totally surrender your policy, you receive its cash surrender value --
the policy value minus outstanding indebtedness and applicable surrender
charges. (See "Loads, fees and charges.") We will compute the value of each
subaccount as of the end of the valuation period during which we receive your
request.
PARTIAL SURRENDERS
After the first policy year, you may surrender any amount from $500 up to 85% of
the policy's cash surrender value. (Partial surrenders by telephone are limited
to $50,000.) You will be charged a partial surrender fee, described under
"Loads, fees and charges."
ALLOCATION OF PARTIAL SURRENDERS
Unless you specify otherwise, IDS Life of New York will make partial surrenders
from the fixed account and subaccounts in proportion to their values at the end
of the valuation period during which your request is received. In determining
these proportions, we first subtract the amount of any outstanding indebtedness
from the fixed account value.
EFFECTS OF PARTIAL SURRENDERS
- - A partial surrender will reduce the policy value by the amount of the partial
surrender and fee.
- - A partial surrender will reduce the death benefit by the amount of the partial
surrender and fee, or, if the death benefit is based on the applicable
percentage of policy value, by an amount equal to the applicable percentage
times the amount of the partial surrender.
- - A partial surrender may terminate the DBG-100 or the minimum initial premium
period. We deduct the surrender amount from total premiums you paid, which may
reduce the total below the level required to keep the DBG-100 or the minimum
initial premium period in effect.
- - If Option 1 is in effect, a partial surrender will reduce the specified amount
by the amount of the partial surrender and fee.
Because they reduce the specified amount, partial surrenders may affect the cost
of insurance. IDS Life of New York will not allow a partial surrender if it
would reduce the specified amount below the required minimum. (See "Decreases"
under "Proceeds payable upon death.")
- - If Option 2 is in effect, a partial surrender does not affect the specified
amount.
TAXES
Upon surrender, you will generally be liable for taxes on any excess of the cash
surrender value plus outstanding indebtedness over the premium paid. (See
"Federal taxes.")
- --------------------------------------------------------------------------------
30 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
EXCHANGE RIGHT
For two years after the policy is issued, you can exchange it for one that
provides benefits that do not vary with the investment return of the
subaccounts. Because the policy itself offers a fixed return option, all you
need to do is transfer all of the policy value in the subaccounts to the fixed
account. We will automatically credit all future premium payments to the fixed
account unless you request a different allocation.
A transfer for this purpose will not count against the five-transfers-per-year
limit. Also, we will waive any restrictions on transfers into the fixed account
for this type of transfer.
There is no effect on the policy's death benefit, specified amount, net amount
at risk, risk classification(s) or issue age. Only the method of funding the
policy value will be affected.
OPTIONAL INSURANCE BENEFITS
You may choose to add the following benefits to your policy at an additional
cost, in the form of riders (if you meet certain requirements). More detailed
information on these benefits is in your policy.
FOUR-YEAR TERM INSURANCE RIDER (FYT): FYT provides four-year term insurance. An
additional death benefit is paid if both insureds die during the first four
years of the policy.
POLICY SPLIT OPTION RIDER (PSO): PSO permits a policy to be split into two
individual permanent plans of life insurance then offered by IDS Life of New
York for exchange, one on the life of each insured, upon the occurrence of a
divorce of the insureds or certain changes in federal estate tax law. (See
"Federal taxes.")
PAYMENT OF POLICY PROCEEDS
Proceeds will be paid when:
- - you surrender the policy;
- - the last surviving insured dies; or
- - the youngest insured's attained insurance age 100.
We pay all proceeds by check. We will compute the amount of the death benefit
and pay it in a single sum unless you select one of the payment options below.
We will pay interest at a rate not less than 4% per year on single sum death
proceeds, from the date of the last surviving insured's death to the settlement
date (the date on which proceeds are paid in a lump sum or first placed under a
payment option).
PAYMENT OPTIONS: During an insured's lifetime, you may request in writing that
we pay policy proceeds under one or more of the three payment options below.
(The beneficiary may also select a payment option, unless you say that he or she
can't.) You decide how much of the proceeds will be placed under each option
(minimum: $5,000). Any such amount will be transferred to IDS Life of
New York's general account. Unless we agree otherwise, payments under all
options must be made to a natural person.
You may also make a written request to us to change a prior choice of payment
option or, if we agree to elect a payment option other than the three below, if
we agree.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 31
<PAGE>
If you elect a payment option for pre-death proceeds, payments under this option
may be subject to federal income tax as ordinary income. If you elect Option A,
the full pre-death proceeds will be taxed as a full surrender as described in
"Taxation of policy proceeds" and may also be subject to an additional 10%
penalty tax if the policy is a modified endowment. The interest paid under
Option A will be ordinary income subject to income tax in the year earned. The
interest payments will not be subject to the 10% penalty tax.
If you elect Option B or Option C for payment of pre-death proceeds, any
indebtedness at the time of election will be taxed as a partial surrender as
described in "Taxation of policy proceeds" and may also be subject to an
additional 10% penalty tax if the policy is a modified endowment. The remainder
of the proceeds will be used to make payments under the option elected. A
portion of each payment will be taxed as ordinary income and a portion of each
payment will be considered a return of the investment in the policy and will not
be taxed. We describe an owner's investment in the policy in "Taxation of policy
proceeds." All payments made after the investment in the policy is fully
recovered will be subject to tax. Amounts paid under Option B or Option C that
are subject to tax may also be subject to an additional 10% penalty tax. (See
"Penalty tax" under "Federal Taxes.")
Death benefit proceeds applied to any payment option are not considered part of
the beneficiary's income and thus are not subject to federal income tax.
Payments of interest under Option A will be ordinary income subject to tax.
Under Option B or Option C, a portion of each payment will be ordinary income
subject to tax, and a portion of each payment will be considered a return of the
beneficiary's investment in the policy. The beneficiary's investment in the
policy is the death benefit proceeds applied to the payment option. All payments
made after the investment in the policy is fully recovered will be subject to
tax.
OPTION A -- INTEREST PAYMENTS: We will pay interest on any proceeds placed under
this option at a rate of 3% per year compounded annually, at regular intervals
and for a period that is agreeable to both you and us. At the end of any payment
interval, you may withdraw proceeds in amounts of at least $100. At any time,
you may withdraw all of the proceeds that remain, or you may place them under a
different payment option approved by us.
OPTION B -- PAYMENTS FOR A SPECIFIED PERIOD: We will make fixed monthly payments
for any number of years you specify. Here are examples of monthly payments for
each $1,000 placed under this option:
<TABLE>
<CAPTION>
PAYMENT PERIOD (YEARS) MONTHLY PAYMENT PER $1,000 PLACED UNDER OPTION B
<S> <C>
10 $9.61
15 6.87
20 5.51
25 4.71
30 4.18
</TABLE>
We will furnish monthly amounts for other payment periods at your request
without charge.
OPTION C -- LIFETIME INCOME: We will make monthly payments for the life of the
person (payee) who is to receive the income. Payment will be guaranteed for 10,
15 or 20 years. The amount of each monthly payment per $1,000 placed under this
option will be
- --------------------------------------------------------------------------------
32 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
based on the table of settlement rates in effect at the time of the first
payment. The amount depends on the sex and adjusted age of the payee on that
date. Adjusted age means the age of the payee (on the payee's last birthday)
minus an adjustment as follows:
<TABLE>
<CAPTION>
CALENDAR YEAR OF PAYEE'S BIRTH ADJUSTMENT CALENDAR YEAR OF PAYEE'S BIRTH ADJUSTMENT
<S> <C> <C> <C>
Before 1920 0 1945-1949 6
1920-1924 1 1950-1959 7
1925-1929 2 1960-1969 8
1930-1934 3 1970-1979 9
1935-1939 4 1980-1989 10
1940-1944 5 After 1989 11
</TABLE>
The amount of each monthly payment per $1,000 placed under this option will not
be less than amounts shown in the next table.
We will furnish monthly amounts for any adjusted age not shown at your request,
without charge.
<TABLE>
<CAPTION>
ADJUSTED
AGE LIFE INCOME PER $1,000 WITH
PAYEE PAYMENTS GUARANTEED FOR
- -------------------------------------------------------
10 YEARS 15 YEARS 20 YEARS
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
50 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
55 4.62 4.22 4.53 4.18 4.39 4.11
60 5.14 4.66 4.96 4.57 4.71 4.44
65 5.81 5.22 5.46 5.05 5.02 4.79
70 6.61 5.96 5.96 5.60 5.27 5.12
75 7.49 6.89 6.38 6.14 5.42 5.35
</TABLE>
DEFERRAL OF PAYMENTS: We reserve the right to defer payments of cash surrender
value, policy loans or variable death benefits in excess of the specified amount
if:
- - the payments derive from a premium payment made by a check that has not
cleared the banking system (good payment has not been collected);
- - the NYSE is closed (other than customary weekend and holiday closings);
- - in accordance with SEC rules, trading on the NYSE is restricted or, because of
an emergency, it is not practical to dispose of securities held in the
subaccount or determine the value of the subaccount's net assets.
We may delay the payment of any loans or surrenders from the fixed account up to
six months from the date we receive the request. If we postpone the payment of
surrender proceeds more than 30 days, we will pay you interest on the amount
surrendered at an annual rate of 4% for the period of postponement.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 33
<PAGE>
FEDERAL TAXES
The following is a general discussion of the policy's federal income tax
implications. It is not intended as tax advice. Because the effect of taxes on
the value and benefits of your policy depends on your individual situation as
well as IDS Life of New York's tax status, YOU SHOULD CONSULT A TAX ADVISOR TO
FIND OUT HOW THESE GENERAL CONSIDERATIONS APPLY TO YOU. The discussion is based
on our understanding of federal income tax laws as the Internal Revenue Service
(IRS) currently interprets them; both the laws and their interpretation may
change.
The policy is intended to qualify as a life insurance policy for federal income
tax purposes. To that end, the provisions of the policy are to be interpreted to
ensure or maintain this tax qualification. IDS Life of New York reserves the
right to change the policy in order to ensure that it will continue to qualify
as life insurance for tax purposes. We will send you a copy of any changes.
IDS LIFE OF NEW YORK'S TAX STATUS
IDS Life of New York is taxed as a life insurance company under the Code. For
federal income tax purposes, the subaccounts are considered a part of IDS Life
of New York, although their operations are treated separately in accounting and
financial statements. Investment income from the subaccounts is reinvested and
becomes part of the subaccounts' value. This investment income, including
realized capital gains, is not taxed to IDS Life of New York, and therefore no
charge is made against the subaccounts for federal income taxes. IDS Life of New
York reserves the right to make such a charge in the future if there is a change
in the tax treatment of variable life insurance contracts or in IDS Life of New
York's tax status as we currently understand it.
TAXATION OF POLICY PROCEEDS
The death benefit is not considered part of the beneficiary's income and thus is
not subject to federal income taxes. When the proceeds are paid on the youngest
insured's attained insurance age 100, if the amount received plus any
indebtedness exceeds your investment in the policy, the excess may be taxable as
ordinary income. Part or all of any pre-death proceeds received through full
surrender, lapse, partial surrender, policy loan or assignment of policy value,
or payment options may be subject to federal income tax as ordinary income. (See
the following table.) In some cases, the tax liability depends on whether the
policy is a modified endowment (explained following the table). The taxable
amount may also be subject to an additional 10% penalty tax if the policy is a
modified endowment.
<TABLE>
<CAPTION>
SOURCE OF PROCEEDS TAXABLE PORTION OF PRE-DEATH PROCEEDS
<S> <C>
FULL SURRENDER: Amount received plus any indebtedness, minus your
investment in the policy.*
- ------------------------------------------------------------------------------------------------------
LAPSE: Any outstanding indebtedness minus your investment
in the policy.*
- ------------------------------------------------------------------------------------------------------
PARTIAL SURRENDERS Lesser of:
(MODIFIED ENDOWMENTS): the amount received or policy value minus your
investment in the policy.*
- ------------------------------------------------------------------------------------------------------
POLICY LOANS AND ASSIGNMENTS Lesser of:
(MODIFIED ENDOWMENTS): the amount of the loan/assignment or policy value
minus your investment in the policy.*
- ------------------------------------------------------------------------------------------------------
PARTIAL SURRENDERS Generally, if the amount received is greater than
(OTHER POLICIES): your investment in the policy,* the amount in
excess of your investment is taxable. However,
during the first 15 policy years, a different
amount may be taxable if the partial surrender
results in or is necessitated by a reduction in
benefits.
- ------------------------------------------------------------------------------------------------------
POLICY LOANS AND ASSIGNMENTS None
(OTHER POLICIES):
- ------------------------------------------------------------------------------------------------------
PAYMENT OPTIONS: If proceeds of the policy will be paid under one
of the payment options, see the "Payment option"
under "Payment of policy proceeds" section for tax
information.
- ------------------------------------------------------------------------------------------------------
</TABLE>
* The owner's investment is equal to premiums paid, minus the nontaxable
portion of any previous partial surrenders, plus the taxable portion of any
previous policy loans.
- --------------------------------------------------------------------------------
34 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
MODIFIED ENDOWMENT CONTRACTS
In 1988, Congress created a new class of life insurance policies called
"Modified Endowment Contracts." The IRS taxes these policies differently from
conventional life insurance contracts.
Your policy is a modified endowment contract if:
- - you apply for it or materially change it on or after June 21, 1988 and
- - the premiums you pay in the first seven years of the policy, or the first
seven years following a material change, exceed certain limits.
Also, any life insurance policy you receive in exchange for a modified endowment
is itself a modified endowment.
We have procedures for monitoring whether your policy may become a modified
endowment contract. We calculate modified endowment limits when we issue the
policy. We base these limits on the benefits we provide under the policy and on
the risk classification on the insured. We recalculate these limits later if
certain increases or reductions in benefits occur.
REDUCTIONS IN BENEFITS: When benefits are reduced, we recalculate the limits as
if the reduced level of benefits had always been in effect. In most cases, this
recalculation will further restrict the amount of premium that can be paid
without exceeding modified endowment limits. If the premiums you have already
paid exceed the recalculated limits, the policy becomes a modified endowment
even if you do not pay any further premiums.
DISTRIBUTIONS AFFECTED: Modified endowment rules apply to distributions in the
year the policy becomes a modified endowment and in all subsequent years. In
addition, the rules apply to distributions taken two years before the policy
becomes a modified endowment, which are presumed to be taken in anticipation of
that event.
SERIAL PURCHASE OF MODIFIED ENDOWMENTS: The IRS treats all modified endowments
issued by the same insurer (or possibly affiliated companies of the insurer) to
the same owner during any calendar year are treated as one policy in determining
the amount of any loan or distribution that is taxable.
PENALTY TAX: If a policy is a modified endowment, the taxable portion of
pre-death proceeds from a full surrender, lapse, partial surrender, policy loan
or assignment of policy value, or certain payment options may be subject to a
10% penalty tax unless:
- - the distribution occurs after the owner attains age 59 1/2;
- - the distribution is attributable to the owner becoming disabled (within the
meaning of Code Section 72(m)(7); or
- - the distribution is part of a series of substantially equal periodic payments
made at least once a year over the life (or life expectancy) of the owner or
over the joint lives (or life expectancies) of the owner and the owner's
beneficiary.
OTHER TAX CONSIDERATIONS
POLICY SPLIT OPTION RIDER: The Policy Split Option Rider permits a policy to be
split into two individual permanent plans of insurance then offered by IDS Life
of New York for exchange, one on the life of each insured, upon the occurrence
of a divorce of the insureds or certain changes in federal estate tax law. A
policy split could have adverse tax consequences; for example, it is not clear
whether a policy split will be treated as a nontaxable exchange under Sections
1031 through 1043 of the Code. If a policy split is not treated as a nontaxable
exchange, a split could result in the recognition of taxable income in an amount
up to any gain in the policy at the time of the split. In addition, it is not
clear whether, in all circumstances, the individual contracts that result from a
policy split would be treated as life insurance contracts for federal income tax
purposes and, if so treated, whether the individual
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 35
<PAGE>
contracts would be classified as modified endowment contracts. Before you
exercise rights provided by the policy split option, it is important that you
consult with a competent tax advisor regarding the possible consequences of a
policy split.
INTEREST PAID ON POLICY LOANS: If the loan is used for personal purposes, such
interest is not tax-deductible. Other rules apply if the loan is used for trade
or business or investment purposes, or if the policy is owned by a business or a
corporation.
POLICY CHANGES: Changing ownership, exchanging or assigning the policy may have
tax consequences, depending on the circumstances.
OTHER TAXES: Federal estate tax, state and local estate tax, inheritance tax,
gift tax and other tax consequences of ownership or receipt of policy proceeds
will also depend on the circumstances.
TAX-DEFERRED RETIREMENT PLANS: The policy may be used in conjunction with
certain retirement plans that are already tax-deferred under the Code. The
policy will not provide any necessary or additional tax deferral if it is used
to fund a retirement plan that is tax-deferred. Since the rules governing such
use are complex, a purchaser should consult a competent pension consultant.
On July 6, 1983, the Supreme Court held in ARIZONA GOVERNING COMMITTEE V. NORRIS
that optional annuity benefits provided under an employee's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. Since the policy's cost of
insurance rates and purchase rates for certain settlement options distinguish
between men and women, employers and employee organizations should consult with
legal counsel before purchasing the policy for any employment-related insurance
or benefit program.
IDS LIFE OF NEW YORK
IDS Life of New York is a stock life insurance company organized under the laws
of the State of New York in 1972. Our address is 20 Madison Ave. Extension,
Albany, NY 12203.
IDS Life of New York is licensed in New York and North Dakota, and it conducts a
conventional life insurance business in the state of New York. All annuity
contracts and insurance policies issued by IDS Life of New York, including the
policy described in this prospectus, are non-participating.
OWNERSHIP
IDS Life of New York, a New York Corporation, is a wholly-owned subsidiary of
IDS Life, a Minnesota Corporation, which is a wholly-owned subsidiary of
American Express Financial Corporation (AEFC). AEFC, a Delaware Corporation, is
a wholly-owned subsidiary of American Express Company.
The AEFC family of companies offers not only insurance and annuities, but also
mutual funds, investment certificates and a broad range of financial management
services.
Besides managing investments for all funds in the American Express-Registered
Trademark- Funds, AEFC manages investments for itself and its subsidiaries, IDS
Certificate Company and IDS Life Insurance Company. Total assets under
management as of the most recent fiscal year were more than $262 billion.
- --------------------------------------------------------------------------------
36 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
STATE REGULATION
IDS Life of New York is subject to the laws of New York governing insurance
companies and to regulation by the New York Department of Insurance. IDS Life of
New York files an annual statement in a prescribed form with New York's
Department of Insurance. IDS Life of New York's books and accounts are subject
to review by the New York Department of Insurance at all times and a full
examination of its operations is conducted periodically. Such regulation does
not, however, involve any supervision of management or investment practices or
policies.
DISTRIBUTION OF THE POLICY
American Express Financial Advisors Inc., a registered broker/dealer and an
affiliate of IDS Life of New York, is the sole distributor of the policy. IDS
Life of New York pays its representatives a commission of up to 50% of the
initial target premium (annualized) when the policy is sold, plus 2% of all
premiums in excess of the target premium. IDS Life of New York also pays
approximately 27% of the total representative's commission to the field vice
presidents and district sales managers of the selling representative.
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life of New York and its affiliates do business
involving insurers' sales practices, alleged agent misconduct, failure to
properly supervise agents, and other matters. IDS Life is a defendant in three
class action lawsuits of this nature. IDS Life of New York is a named defendant
in one of these suits. RICHARD W. AND ELIZABETH THORESEN VS. AEFC, AMERICAN
CENTURION LIFE ASSURANCE COMPANY, AMERICAN ENTERPRISE LIFE INSURANCE COMPANY,
AMERICAN PARTNERS LIFE INSURANCE COMPANY, IDS LIFE INSURANCE COMPANY AND IDS
LIFE INSURANCE COMPANY OF NEW YORK which was commenced in Minnesota State Court
in October 1998. The action was brought by individuals who purchased an annuity
in a qualified plan. The plaintiffs allege that the sale of annuities in
tax-deferred contributory retirement investment plans (e.g. IRAs) is never
appropriate. The plaintiffs purport to represent a class consisting of all
persons who made similar purchases. The plaintiffs seek damages in an
unspecified amount.
IDS Life of New York is included as a party to a preliminary settlement of all
three class action lawsuits. We believe this approach will put these cases
behind us and provide a fair outcome for our clients. Our decision to settle
does not include any admission of wrongdoing. We do not anticipate that this
proposed settlement, or any other lawsuits in which IDS Life of New York is a
defendant, will have a material adverse effect on our financial condition.
YEAR 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDS Life of New York and
the Variable Account. All of the major systems used by IDS Life of New York and
the Variable Account are utilized by multiple subsidiaries and affiliates of
AEFC. IDS Life of New York's and the Variable Accounts business are heavily
dependent upon AEFC's computer systems and have significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life of New York and the Variable Account, was
conducted to identify the major systems that could be affected by the Year 2000
issue. Steps were taken to resolve potential problems including modification to
existing software and the purchase of new software. As of Dec. 31, 1999, AEFC
had completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. AEFC had also completed an
evaluation of the Year 2000 readiness of other third parties whose system
failures could have an impact on IDS Life of New York's and the Variable
Account's operations.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 37
<PAGE>
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business unit. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the result of actual production since
Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life of New York's and the
Variable Account's business, results of operations, or financial condition as a
result of the Year 2000 issue.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the financial statements
of IDS Life Insurance Company of New York at Dec. 31, 1999 and 1998, and for
each of the three years in the period ended Dec. 31, 1999, and the individual
and combined financial statements of the segregated asset subaccounts of the IDS
Life of New York Account 8 -- Flexible Premium Survivorship Variable Life
Subaccounts (comprised of Subaccounts YEQ, YGS, YIN, YIT, YMA, YMM, YGI, and
YNO) as of December 31, 1999, and for each of the three years in the period then
ended, as set forth in their reports. We've included our financial statements in
the prospectus in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
Actuarial matters included in the prospectus have been examined by Mark Gorham,
F.S.A., M.A.A.A., Actuarial Director, Insurance Product Development as stated in
his opinion filed as an exhibit to the Registration Statement.
MANAGEMENT OF IDS LIFE OF NEW YORK
DIRECTORS
TIMOTHY V. BECHTOLD
Director since April 1999; president since 1998; executive vice president, Risk
Management Products, since December 1999; vice president, Risk Management
Products, IDS Life Insurance Company from January 1995 to December 1999; vice
president, Insurance Product Development, IDS Life Insurance Company from
May 1989 to December 1994.
MAUREEN A. BUCKLEY
Director since April 1999; vice president, chief operating officer and consumer
affairs officer and claims officer since 1998; chief operating officer and
consumer affairs officer, American Centurion Life Assurance Company, since March
1995; supervisor, IDS Life of New York from September 1989 to March 1995.
RODNEY P. BURWELL
Director since April 1999; chairman, Xerxes Corporation (manufacturing), since
1969.
JOHN R. CATTAU
Director since April 1999; vice president, American Express Financial Direct,
since November 1997; manager, American Express Financial Direct from June 1992
to November 1997.
ROBERT R. GREW
Lawyer and Partner, Carter, Ledyard & Milburn, NYC, since 1957.
JEAN B. KEFFELER
Director since April 1999; business and management consultant since 1991.
- --------------------------------------------------------------------------------
38 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
RICHARD W. KLING
Chairman of the board, IDS Life of New York, since April 1994; director,
IDS Life, since February 1984; President, IDS Life, since March 1994; executive
vice president, Marketing and Products, IDS Life, from January 1988 to
March 1994; senior vice president, Risk Management Products, AEFC, since May
1994; vice president, AEFC, from January 1988 to May 1994; director and
president of IDS Life Series Fund, Inc.; chairman of the board of managers and
president of IDS Life Variable Annuity Funds A and B.
THOMAS R. MCBURNEY
Director since April 1999; president, McBurney Management Associates, since
1990.
EDWARD J. MUHL
Director since April 1999; vice chairman, Peterson Consulting LLC, since January
1997; superintendent of insurance, New York State from January 1995 to December
1996; senior vice president, Reliance Insurance Group from November 1991 to
January 1995.
THOMAS V. NICOLOSI
Director since October 1996; group vice president, AEFA, from January 1995 to
present; field vice president, AEFA, from January 1988 to December 1994.
STEPHEN P. NORMAN
Secretary, American Express, since 1982.
RICHARD M. STARR
Director since October 1996; managing counsel, American Express Company, since
March 1995; senior counsel, American Express Company, from May 1992 to March
1995; counsel, American Express Company, from June 1989 to May 1992.
MICHAEL R. WOODWARD
Senior vice president, Field Management, AEFC, since June 1991; region vice
president, Atlantic Region, AEFC, from 1988 to June 1991.
PRINCIPAL OFFICERS OTHER THAN DIRECTORS
DARRELL C. BECKSTROM
Underwriting officer since 1994; underwriting technical manager, IDS Life, since
1990; senior underwriter, IDS Life, from 1987 to 1992.
JEFFREY W. SULLIVAN, M.D.
Medical director since 1998.
LORRAINE R. HART
Vice President -- Investments since December 1999; investment officer since
March 1992; vice president, Insurance Investments, IDS Life, since
October 1989.
ERIC L. MARHOUN
General Counsel and secretary since 1998; group counsel and vice president,
AEFA, since 1997; counsel, AEFA, from 1996 to 1997; associate counsel, AEFA,
from 1995 to 1996; associate, Meagher & Gear, from 1991 to 1995.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 39
<PAGE>
JEFFREY S. HORTON
Vice president and treasurer since December 1999; vice president, treasurer and
assistant secretary, IDS Life, since December 1997; vice president and corporate
treasurer, AEFC, since December 1997; controller, American Express
Technologies -- Financial Services, AEFC, from July 1997 to December 1997;
controller, Risk Management Products, AEFC, from May 1994 to July 1997; director
of financial and analysis, Corporate Treasury, AEFC from June 1990 to May 1994.
WILLIAM A. STOLTZMANN
Counsel and assistant secretary since March 1990.
The officers, employees and sales force of IDS Life of New York are bonded, in
the amount of $100 million, by virtue of a blanket fidelity bond issued to
American Express Company by Saint Paul Fire and Marine, the leading underwriter.
OTHER FUND MANAGERS
A I M ADVISORS, INC.
A I M Advisors, Inc. ("AIM") serves as the fund's investment advisor. AIM has
acted as an advisor since its organization in 1976. Today, AIM, together with
its subsidiaries, advises or manages over 110 investment portfolios encompassing
a broad range of investment objectives.
PUTNAM INVESTMENT MANAGEMENT, INC.
Putnam Management has been managing mutual funds since 1937. Today, the firm
serves as the investment manager for the funds in the Putnam Family.
OTHER INFORMATION
The variable account has filed a registration statement has been filed with the
SEC. For further information concerning the policy, its separate account (the
variable account) and IDS Life of New York, please refer to the registration
statement. You can find the registration statement on the SEC's website at
http://www.sec.gov.
SUBSTITUTION OF INVESTMENTS
We may change the funds from which the subaccounts buy shares if: the existing
funds become unavailable; or in the judgment of IDS Life of New York, the funds
are no longer suitable for the subaccounts. If these situations occur, we have
the right to substitute the funds held in the subaccounts for other registered,
open-end management investment companies as long as we believe it would be in
the best interest of persons having voting rights under the policies.
In the event of any such substitution or change, IDS Life of New York may,
without the consent or approval of owners, amend the policy and take whatever
action is necessary and appropriate. However, we will not make any substitution
or change without any necessary approval of the SEC or state insurance
departments. IDS Life of New York will notify owners within five days of any
substitution or change.
VOTING RIGHTS
As a policy owner with investments in any subaccount, you may vote on important
fund matters. Each share of a fund has one vote. On some issues, such as
election of directors of IDS Life of New York Series Fund, all shares of the IDS
Life of New York Series Fund Portfolios vote together as one series. When
electing directors, all shares of IDS Life of New York Series Fund Portfolios
have
- --------------------------------------------------------------------------------
40 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
cumulative voting rights. Cumulative voting means that shareholders are entitled
to a number of votes equal to the number of shares they hold multiplied by the
number of directors to be elected and they have the right to divide votes among
candidates.
On an issue affecting only one fund -- for example, a fundamental investment
restriction pertaining only to that fund -- its shares vote as a separate
series. If shareholders of a particular fund vote approval of an agreement, the
agreement becomes effective with respect to that fund, whether or not it is
approved by shareholders of the other funds.
IDS Life of New York is the owner of all fund shares and therefore holds all
voting rights. However, IDS Life of New York will vote the shares of each fund
according to instructions we receive from owners. If we do not receive timely
instructions from you, we will vote your shares in the same proportion as the
shares for which we do receive instructions. IDS Life of New York also will vote
fund shares that are not otherwise attributable to owners the same proportion as
those shares in that subaccount for which we receive instructions.
We determine the number of fund shares in each subaccount for which you may give
instructions by applying your percentage interest in the subaccount to the total
number of votes attributable to the subaccount. We will determine that number as
of a date we choose that is 60 days or less before the meeting of the fund. We
will send you notice of each shareholder meeting, together with any proxy
solicitation materials and a statement of the number of votes for which you are
entitled to give instructions.
Under certain conditions, IDS Life of New York may disregard voting instructions
that would change the goals of one or more of the funds or would result in
approval or disapproval of an investment advisory contract. If IDS Life of New
York does disregard voting instructions, we will advise you of that action and
the reasons for it in our next report to owners.
Fractional votes are counted. You will receive notice of each shareholder
meeting, together with any proxy solicitation materials and a statement of the
number of votes for which you are entitled to give instructions.
If required by state insurance officials, IDS Life of New York of New York may
disregard voting instructions that would change the goals of one or more of the
funds or would result in approval or disapproval of an investment advisory
contract. In addition, IDS Life of New York of New York itself may disregard
voting instructions that would require changes in the investment policy or
investment advisor of one or more of the funds, if IDS Life of New York of New
York reasonably disapproves such changes in accordance with applicable federal
regulations. If IDS Life of New York of New York does disregard voting
instructions, it will, in its next report to owners, advise them of that action
and the reasons for it.
REPORTS
At least once a year IDS Life of New York will mail to you, at your last known
address of record, a report containing all information required by law or
regulation, including a statement showing the current policy value.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 41
<PAGE>
POLICY ILLUSTRATIONS
The following tables illustrate how policy values, cash surrender values and
death benefits may change with the investment experience of the subaccount. The
tables show how these amounts might vary, for a male insurance age 55 and a
female insurance age 55, both nonsmokers, if:
- - the annual rate of return of the fund is 0%, 6% or 12%.
- - the cost of insurance rates are current rates or guaranteed rates.
This type of illustration involves a number of detailed assumptions. (See chart,
"Understanding the illustrations.") To the extent that your own circumstances
differ from those assumed in the illustrations, your expected results would also
differ.
Upon request, we will furnish you with comparable tables illustrating death
benefits, policy values and cash surrender values based on the actual ages of
the persons you propose to insure and on an initial specified amount and premium
payment schedule. In addition, after you have purchased a policy, you may
request illustrations based on policy values at the time of request.
UNDERSTANDING THE ILLUSTRATIONS:
RATES OF RETURN: assumes uniform, gross, after-tax, annual rates of 0%, 6%, or
12% for the fund. Results would differ depending on allocations among the
subaccounts, if returns averaged 0%, 6% and 12% for the funds as a whole, but
differed across individual funds.
INSUREDS: assumes a male insurance age 55 and a female insurance age 55, in a
standard risk classification, qualifying for the nonsmoker rate. Results would
be lower if one or both of the insureds were in a substandard risk
classification or did not qualify for the non-smoker rate.
PREMIUMS: assumes a $15,000 premium to be paid in full at the beginning of each
policy year. Results would differ if premiums were paid on a different schedule.
POLICY LOANS AND PARTIAL WITHDRAWALS: assumes that none have been made. (Since
we assume indebtedness is zero, the cash surrender value in all cases equals the
policy value minus the surrender charge.)
EFFECT OF EXPENSES AND CHARGES: The death benefit, policy value and cash
surrender value reflect the following charges:
- - Sales charge: 7.25% of all premiums paid.
- - Premium tax charge: 1.0% of each premium payment.
- - Federal tax charge: 1.25% of each premium payment.
- - Cost of insurance charge for the sex, age and risk classification for each
insured.
- - Policy fee: $30 per month ($30 per month guaranteed maximum).
- - The expenses paid by the fund and charges made against the subaccounts as
described below:
The net investment return of the subaccounts, shown in the tables, is lower than
the gross, after-tax return of the fund because we deducted expenses paid by the
fund and charges made against the subaccounts. These include:
- - the daily investment management fee paid by the funds, assumed to be
equivalent to an annual rate of 0.70% of the fund's aggregate average daily
net assets; the assumed investment managerment fee is approximately equal to a
simple average of the
- --------------------------------------------------------------------------------
42 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
investment management fees of the funds available under the policy. The actual
charges you incur will depend on how you choose to allocate policy value. See
Fund expenses in the Loads, fees and charges section of the prospectus for
additional information;
- - the daily mortality and expense risk charge, equivalent to 0.9% of the daily
net asset value of the subaccounts annually; and
- - a nonadvisory expense charge paid by the funds, assumed to be equivalent to an
annual rate of 0.1% of each funds aggregate average daily net assets for
direct expenses incurred by the fund; currently, this is the maximum direct
expenses the fund will incur after IDS Life limits the direct expenses of some
funds. The actual charges you incur will depend on how you choose to allocate
policy value. See Fund expenses in the Loads, fees and charges section of this
prospectus for additional information.
After deduction of the expenses and charges described above, the illustrated
gross annual investment rates of return correspond to the following approximate
net annual rates of return:
<TABLE>
<CAPTION>
NET ANNUAL RATE OF RETURN NET ANNUAL RATE OF RETURN
GROSS ANNUAL INVESTMENT FOR "GUARANTEED COSTS FOR "CURRENT COSTS
RATE OF RETURN ASSUMED" ILLUSTRATION ASSUMED" ILLUSTRATION
<S> <C> <C>
0% (1.69)% (1.69)%
6 4.21 4.21
12 10.11 10.11
</TABLE>
TAXES: Results shown in the tables reflect the fact that IDS Life of New York
does not currently charge the subaccounts for federal income tax. If we take
such a charge in the future, the portfolios will have to earn more than they do
now in order to produce the death benefits and policy values illustrated.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 43
<PAGE>
POLICY ILLUSTRATIONS
<TABLE>
<CAPTION>
ILLUSTRATION
- -----------------------------------------------------------------------------------------------------------------------
INITIAL SPECIFIED AMOUNT $1,000,000 MALE - INSURANCE AGE 55 - NONSMOKER CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 1 FEMALE - INSURANCE AGE 55 - NONSMOKER ANNUAL PREMIUM $15,000
- -----------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED DEATH BENEFIT POLICY VALUE CASH SURRENDER VALUE
END OF WITH ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,750 $1,000,000 $1,000,000 $1,000,000 $12,873 $13,658 $14,444 $8,873 $9,658 $10,444
2 32,288 1,000,000 1,000,000 1,000,000 25,530 27,894 30,351 21,530 23,894 26,351
3 49,652 1,000,000 1,000,000 1,000,000 37,861 42,613 47,748 33,861 38,613 43,748
4 67,884 1,000,000 1,000,000 1,000,000 49,762 57,726 66,673 45,762 53,726 62,673
5 87,029 1,000,000 1,000,000 1,000,000 61,357 73,370 87,406 57,357 69,370 83,406
6 107,130 1,000,000 1,000,000 1,000,000 72,345 89,348 109,911 68,835 85,748 106,311
7 128,237 1,000,000 1,000,000 1,000,000 83,118 105,796 134,496 79,918 102,596 131,296
8 150,398 1,000,000 1,000,000 1,000,000 93,206 122,528 161,172 90,406 119,728 158,372
9 173,668 1,000,000 1,000,000 1,000,000 102,715 139,571 190,184 100,315 137,171 187,784
10 198,102 1,000,000 1,000,000 1,000,000 111,665 156,958 221,800 109,665 154,958 219,800
11 223,757 1,000,000 1,000,000 1,000,000 119,966 174,619 256,230 118,366 173,019 254,630
12 250,695 1,000,000 1,000,000 1,000,000 127,742 192,687 293,902 126,542 191,487 292,702
13 278,979 1,000,000 1,000,000 1,000,000 134,904 211,101 335,108 134,104 210,301 334,308
14 308,678 1,000,000 1,000,000 1,000,000 141,366 229,807 380,196 140,966 229,407 379,796
15 339,682 1,000,000 1,000,000 1,000,000 147,249 248,938 429,722 147,249 248,938 429,722
20 520,789 1,000,000 1,000,000 1,000,000 167,997 352,728 766,596 167,997 352,728 766,596
25 751,502 1,000,000 1,000,000 1,390,706 157,050 461,226 1,324,482 157,050 461,226 1,324,482
30 1,046,412 1,000,000 1,000,000 2,327,541 53,339 547,683 2,216,705 53,339 547,683 2,216,705
35 1,422,545 0 1,000,000 3,792,346 0 561,352 3,611,758 0 561,352 3,611,758
40 1,902,596 0 1,000,000 6,052,646 0 425,780 5,764,425 0 425,780 5,764,425
45 2,515,277 0 0 9,254,030 0 0 9,162,406 0 0 9,162,406
</TABLE>
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $15,000 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid in different amounts or with
a different frequency.
THE ABOVE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND YOU SHOULD
NOT CONSIDER THEM TO BE A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, POLICY VALUE AND CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE
SHOWN IF RETURNS AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. WE CAN NOT REPRESENT
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
44 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION
- -----------------------------------------------------------------------------------------------------------------------
INITIAL SPECIFIED AMOUNT $1,000,000 MALE - INSURANCE AGE 55 - NONSMOKER CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 1 FEMALE - INSURANCE AGE 55 - NONSMOKER ANNUAL PREMIUM $15,000
- -----------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED DEATH BENEFIT POLICY VALUE CASH SURRENDER VALUE
END OF WITH ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,750 $1,000,000 $1,000,000 $1,000,000 $12,873 $13,658 $14,444 $8,873 $9,658 $10,444
2 32,288 1,000,000 1,000,000 1,000,000 25,530 27,894 30,351 21,530 23,894 26,351
3 49,652 1,000,000 1,000,000 1,000,000 37,861 42,613 47,748 33,861 38,613 43,748
4 67,884 1,000,000 1,000,000 1,000,000 49,762 57,726 66,673 45,762 53,726 62,673
5 87,029 1,000,000 1,000,000 1,000,000 61,357 73,370 87,406 57,357 69,370 83,406
6 107,130 1,000,000 1,000,000 1,000,000 72,345 89,348 109,911 68,835 85,748 106,311
7 128,237 1,000,000 1,000,000 1,000,000 83,118 105,796 134,496 79,918 102,596 131,296
8 150,398 1,000,000 1,000,000 1,000,000 93,206 122,528 161,172 90,406 119,728 158,372
9 173,668 1,000,000 1,000,000 1,000,000 102,715 139,571 190,184 100,315 137,171 187,784
10 198,102 1,000,000 1,000,000 1,000,000 111,560 156,855 221,701 109,560 154,855 219,701
11 223,757 1,000,000 1,000,000 1,000,000 119,550 174,206 255,834 117,950 172,606 254,234
12 250,695 1,000,000 1,000,000 1,000,000 126,712 191,660 292,919 125,512 190,460 291,719
13 278,979 1,000,000 1,000,000 1,000,000 132,862 209,056 333,162 132,062 208,256 332,362
14 308,678 1,000,000 1,000,000 1,000,000 137,924 226,334 376,912 137,524 225,934 376,512
15 339,682 1,000,000 1,000,000 1,000,000 141,819 243,440 424,586 141,819 243,440 424,586
20 520,789 1,000,000 1,000,000 1,000,000 133,698 318,689 740,657 133,698 318,689 740,657
25 751,502 1,000,000 1,000,000 1,332,763 28,958 338,168 1,269,298 28,958 338,168 1,269,298
30 1,046,412 1,000,000 1,000,000 2,213,730 0 192,246 2,108,314 0 192,246 2,108,314
35 1,422,545 0 1,000,000 3,556,762 0 0 3,387,393 0 0 3,387,393
40 1,902,596 0 1,000,000 5,532,845 0 0 5,269,376 0 0 5,269,376
45 2,515,277 0 0 8,165,971 0 0 8,085,120 0 0 8,085,120
</TABLE>
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $15,000 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid in different amounts or with
a different frequency.
THE ABOVE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND YOU SHOULD
NOT CONSIDER THEM TO BE A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, POLICY VALUE AND CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE
SHOWN IF RETURNS AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. WE CAN NOT REPRESENT
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 45
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION
- -----------------------------------------------------------------------------------------------------------------------
INITIAL SPECIFIED AMOUNT $1,000,000 MALE - INSURANCE AGE 55 - NONSMOKER CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 2 FEMALE - INSURANCE AGE 55 - NONSMOKER ANNUAL PREMIUM $15,000
- -----------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED DEATH BENEFIT POLICY VALUE CASH SURRENDER VALUE
END OF WITH ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,750 $1,012,871 $1,013,656 $1,014,442 $12,871 $13,656 $14,442 $8,871 $9,656 $10,442
2 32,288 1,025,525 1,027,888 1,030,345 25,525 27,888 30,345 21,525 23,888 26,345
3 49,652 1,037,847 1,042,598 1,047,730 37,847 42,598 47,730 33,847 38,598 43,730
4 67,884 1,049,725 1,057,682 1,066,621 49,725 57,682 66,621 45,725 53,682 62,621
5 87,029 1,061,283 1,073,280 1,087,296 61,283 73,280 87,296 57,283 69,280 83,296
6 107,130 1,072,292 1,089,168 1,109,685 72,292 89,168 109,685 68,692 85,568 106,085
7 128,237 1,082,878 1,105,481 1,134,085 82,878 105,481 134,085 79,678 102,281 130,885
8 150,398 1,092,812 1,121,993 1,160,449 92,812 121,993 160,449 90,012 119,193 157,649
9 173,668 1,102,104 1,138,711 1,188,975 102,104 138,711 188,975 99,704 136,311 186,575
10 198,102 1,110,766 1,155,644 1,219,882 110,766 155,644 219,882 108,766 153,644 217,882
11 223,757 1,118,690 1,172,680 1,253,285 118,690 172,680 253,285 117,090 171,080 251,685
12 250,695 1,126,006 1,189,945 1,289,563 126,006 189,945 289,563 124,806 188,745 288,363
13 278,979 1,132,607 1,207,327 1,328,880 132,607 207,327 328,880 131,807 206,527 328,080
14 308,678 1,138,386 1,224,708 1,371,418 138,386 224,708 371,418 137,986 224,308 371,018
15 339,862 1,143,475 1,242,210 1,417,630 143,475 242,210 417,630 143,475 242,210 417,630
20 520,789 1,158,144 1,330,920 1,717,417 158,144 330,920 717,417 158,144 330,920 717,417
25 751,502 1,135,016 1,398,674 2,156,241 135,016 398,674 1,156,241 135,016 398,674 1,156,241
30 1,046,412 1,012,373 1,366,625 2,735,967 12,373 366,625 1,735,967 12,373 366,625 1,735,967
35 1,422,545 0 1,085,371 3,399,883 0 85,371 2,399,883 0 85,371 2,399,883
40 1,902,596 0 0 4,166,038 0 0 3,166,038 0 0 3,166,038
45 2,515,277 0 0 4,610,673 0 0 3,610,673 0 0 3,610,673
</TABLE>
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $15,000 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid in different amounts or with
a different frequency.
THE ABOVE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND YOU SHOULD
NOT CONSIDER THEM TO BE A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, POLICY VALUE AND CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE
SHOWN IF RETURNS AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. WE CAN NOT REPRESENT
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
46 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION
- -----------------------------------------------------------------------------------------------------------------------
INITIAL SPECIFIED AMOUNT $1,000,000 MALE - INSURANCE AGE 55 - NONSMOKER CURRENT COSTS ASSUMED
DEATH BENEFIT OPTION 2 FEMALE - INSURANCE AGE 55 - NONSMOKER ANNUAL PREMIUM $15,000
- -----------------------------------------------------------------------------------------------------------------------
PREMIUM
ACCUMULATED DEATH BENEFIT POLICY VALUE CASH SURRENDER VALUE
END OF WITH ANNUAL ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
POLICY INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
YEAR AT 5% 0% 6% 12% 0% 6% 12% 0% 6% 12%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $15,750 $1,012,871 $1,013,656 $1,014,442 $12,871 $13,656 $14,442 $8,871 $9,656 $10,442
2 32,288 1,025,525 1,027,888 1,030,345 25,525 27,888 30,345 21,525 23,888 26,345
3 49,652 1,037,847 1,042,598 1,047,730 37,847 42,598 47,730 33,847 38,598 43,730
4 67,884 1,049,725 1,057,682 1,066,621 49,725 57,682 66,621 45,725 53,682 62,621
5 87,029 1,061,283 1,073,280 1,087,296 61,283 73,280 87,296 57,283 69,280 83,296
6 107,130 1,072,292 1,089,168 1,109,685 72,292 89,168 109,685 68,692 85,568 106,085
7 128,237 1,082,878 1,105,481 1,134,085 82,878 105,481 134,085 79,678 102,281 130,885
8 150,398 1,092,812 1,121,993 1,160,449 92,812 121,993 160,449 90,012 119,193 157,649
9 173,668 1,102,104 1,138,711 1,188,975 102,104 138,711 188,975 99,704 136,311 186,575
10 198,102 1,110,648 1,155,522 1,219,756 110,648 155,522 219,756 108,648 153,522 217,756
11 223,757 1,118,218 1,172,186 1,252,769 118,218 172,186 252,769 116,618 170,586 251,169
12 250,695 1,124,832 1,188,697 1,288,238 124,832 188,697 288,238 123,632 187,497 287,038
13 278,979 1,130,268 1,204,803 1,326,162 130,268 204,803 326,162 129,468 204,003 325,362
14 308,678 1,134,428 1,220,367 1,366,663 134,428 220,367 366,663 134,028 219,967 366,263
15 339,862 1,137,214 1,235,241 1,409,875 137,214 235,241 409,875 137,214 235,241 409,875
20 520,789 1,118,740 1,284,564 1,662,467 118,740 284,564 662,467 118,740 284,564 662,467
25 751,502 0 1,227,701 1,937,570 0 227,701 937,570 0 227,701 937,570
30 1,046,412 0 0 2,126,774 0 0 1,126,774 0 0 1,126,774
35 1,422,545 0 0 1,994,219 0 0 994,219 0 0 994,219
40 1,902,596 0 0 1,170,462 0 0 170,462 0 0 170,462
45 2,515,277 0 0 0 0 0 0 0 0 0
</TABLE>
(1) Assumes no policy loans or partial withdrawals have been made.
(2) Assumes a $15,000 premium is paid at the beginning of each policy year.
Values will be different if premiums are paid in different amounts or with
a different frequency.
THE ABOVE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND YOU SHOULD
NOT CONSIDER THEM TO BE A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, POLICY VALUE AND CASH SURRENDER VALUE WOULD BE DIFFERENT FROM THOSE
SHOWN IF RETURNS AVERAGED 0%, 6% AND 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED
ABOVE AND BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. WE CAN NOT REPRESENT
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 47
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
ANNUAL FINANCIAL INFORMATION
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
IDS LIFE INSURANCE COMPANY OF NEW YORK
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of
IDS Life of New York Account 8 -- Flexible Premium Survivorship Variable Life
Subaccounts (comprised of subaccounts YEQ, YGS, YIN, YIT, YMA, YMM, YGI, and
YNO) as of December 31, 1999, and the related statements of operations and
changes in net assets for each of the three years in the period then ended.
These financial statements are the responsibility of the management of IDS Life
Insurance Company of New York. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1999 with
the affiliated and unaffiliated mutual fund managers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of IDS Life of New York Account 8 -- Flexible
Premium Survivorship Variable Life Subaccounts at December 31, 1999 and the
individual and combined results of its operations and the changes in its net
assets for the periods described above, in conformity with accounting principles
generally accepted in the United States.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
- --------------------------------------------------------------------------------
48 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF NET ASSETS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
DEC. 31, 1999 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
ASSETS
- ----------------------------------------------------------------------------------------------------------------
Investments in shares of mutual
funds and portfolios:
at cost $ 50,118,129 $654,876 $6,151,156 $13,639,674 $36,394,006
---------------------------------------------------------------------------
at market value $104,248,478 $619,477 $5,777,493 $20,113,366 $51,313,357
Dividends receivable -- 2,867 70,484 -- --
Accounts receivable from IDS Life
of New York for contract purchase
payments 19,977 -- 26,202 12,004 --
Receivable from mutual funds and
portfolios for share redemptions -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Total assets 104,268,455 622,344 5,874,179 20,125,370 51,313,357
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------
Payable to IDS Life of New York
for:
Mortality and expense risk fee 78,956 476 4,472 15,236 39,053
Contract terminations -- 68 -- -- 1,265
Payable to mutual funds and
portfolios for investments
purchased -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 78,956 544 4,472 15,236 40,318
- ----------------------------------------------------------------------------------------------------------------
Net assets applicable to Variable
Life contracts in accumulation
period $104,189,499 $621,800 $5,869,707 $20,110,134 $51,273,039
- ----------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 14,138,625 283,131 2,493,277 7,011,444 10,457,248
- ----------------------------------------------------------------------------------------------------------------
Net asset value per accumulation
unit $ 7.37 $ 2.20 $ 2.35 $ 2.87 $ 4.90
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
DEC. 31, 1999 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
ASSETS
- ----------------------------------- --------------------------------------------------------------
Investments in shares of mutual
funds and portfolios:
at cost $2,353,647 $17,817,451 $13,393,886 $140,522,825
--------------------------------------------------------------
at market value $2,353,671 $24,670,146 $23,514,494 $232,610,482
Dividends receivable 11,278 -- -- 84,629
Accounts receivable from IDS Life
of New York for contract purchase
payments -- 93,276 52,031 203,490
Receivable from mutual funds and
portfolios for share redemptions -- 18,698 17,669 36,367
- ----------------------------------- --------------------------------------------------------------
Total assets 2,364,949 24,782,120 23,584,194 232,934,968
- ----------------------------------- --------------------------------------------------------------
LIABILITIES
- ----------------------------------- --------------------------------------------------------------
Payable to IDS Life of New York
for:
Mortality and expense risk fee 1,878 18,698 17,669 176,438
Contract terminations 97,287 -- -- 98,620
Payable to mutual funds and
portfolios for investments
purchased -- 93,276 52,031 145,307
- ----------------------------------- --------------------------------------------------------------
Total liabilities 99,165 111,974 69,700 420,365
- ----------------------------------- --------------------------------------------------------------
Net assets applicable to Variable
Life contracts in accumulation
period $2,265,784 $24,670,146 $23,514,494 $232,514,603
- ----------------------------------- --------------------------------------------------------------
Accumulation units outstanding 1,336,769 11,738,977 9,519,818
- ----------------------------------- --------------------------------------------------------------
Net asset value per accumulation
unit $ 1.69 $ 2.10 $ 2.47
- ----------------------------------- --------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 49
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1999 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------
Dividend income from mutual funds and
portfolios $ -- $ 38,762 $425,512 $ 398,665 $1,270,807
Mortality and expense risk fee 585,629 6,215 52,970 137,144 391,502
- ---------------------------------------------------------------------------------------------------
Investment income (loss) -- net (585,629) 32,547 372,542 261,521 879,305
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NET
- ---------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds and
portfolios:
Proceeds from sales 3,258,742 197,166 653,512 634,066 1,793,507
Cost of investments sold 2,526,521 204,018 678,758 521,229 1,425,666
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 732,221 (6,852) (25,246) 112,837 367,841
Net change in unrealized appreciation or
depreciation of investments 45,611,195 (46,785) (376,233) 4,786,384 8,387,190
- ---------------------------------------------------------------------------------------------------
Net gain (loss) on investments 46,343,416 (53,637) (401,479) 4,899,221 8,755,031
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $45,757,787 $(21,090) $(28,937) $5,160,742 $9,634,336
- ---------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1999 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------- -----------------------------------------------
Dividend income from mutual funds and
portfolios $ 95,076 $ 202,377 $ 131,852 $ 2,563,051
Mortality and expense risk fee 18,496 141,258 115,978 1,449,192
- ---------------------------------------- -----------------------------------------------
Investment income (loss) -- net 76,580 61,119 15,874 1,113,859
- ---------------------------------------- -----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
- ---------------------------------------- -----------------------------------------------
Realized gain (loss) on sales of
investments in mutual funds and
portfolios:
Proceeds from sales 3,500,815 94,692 107,800 10,240,300
Cost of investments sold 3,500,800 77,841 86,666 9,021,499
- ---------------------------------------- -----------------------------------------------
Net realized gain (loss) on investments 15 16,851 21,134 1,218,801
Net change in unrealized appreciation or
depreciation of investments 17 5,089,669 8,641,203 72,092,640
- ---------------------------------------- -----------------------------------------------
Net gain (loss) on investments 32 5,106,520 8,662,337 73,311,441
- ---------------------------------------- -----------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 76,612 $5,167,639 $8,678,211 $74,425,300
- ---------------------------------------- -----------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
50 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1998 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------
Dividend income from mutual funds and
portfolios $ 7,962,668 $ 36,677 $ 394,066 $ 530,817 $3,113,690
Mortality and expense risk fee 437,714 5,325 48,402 101,270 317,793
- ---------------------------------------------------------------------------------------------------
Investment income (loss) -- net 7,524,954 31,352 345,664 429,547 2,795,897
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NET
- ---------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in
mutual funds and portfolios:
Proceeds from sales 881,803 118,640 622,887 292,083 810,846
Cost of investments sold 697,183 117,394 613,975 264,666 694,915
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 184,620 1,246 8,912 27,417 115,931
Net change in unrealized appreciation or
depreciation of investments (3,495,686) 9,354 (117,407) 1,434,548 1,593,673
- ---------------------------------------------------------------------------------------------------
Net gain (loss) on investments (3,311,066) 10,600 (108,495) 1,461,965 1,709,604
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting
from operations $ 4,213,888 $ 41,952 $ 237,169 $1,891,512 $4,505,501
- ---------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1998 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------- -----------------------------------------------
Dividend income from mutual funds and
portfolios $ 67,725 $ 130,855 $ 52,867 $12,289,365
Mortality and expense risk fee 12,392 54,253 44,663 1,021,812
- ---------------------------------------- -----------------------------------------------
Investment income (loss) -- net 55,333 76,602 8,204 11,267,553
- ---------------------------------------- -----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
- ---------------------------------------- -----------------------------------------------
Realized gain (loss) on sales of
investments in
mutual funds and portfolios:
Proceeds from sales 1,840,441 13,030 17,330 4,597,060
Cost of investments sold 1,840,441 11,208 16,292 4,256,074
- ---------------------------------------- -----------------------------------------------
Net realized gain (loss) on investments -- 1,822 1,038 340,986
Net change in unrealized appreciation or
depreciation of investments 2 1,579,781 1,225,925 2,230,190
- ---------------------------------------- -----------------------------------------------
Net gain (loss) on investments 2 1,581,603 1,226,963 2,571,176
- ---------------------------------------- -----------------------------------------------
Net increase (decrease) in net assets
resulting
from operations $ 55,335 $1,658,205 $1,235,167 $13,838,729
- ---------------------------------------- -----------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 51
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1997 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------
Dividend income from mutual funds and
portfolios $1,459,523 $ 37,545 $322,998 $209,995 $2,754,122
Mortality and expense risk fee 354,681 4,929 40,932 62,452 257,676
- ---------------------------------------------------------------------------------------------------
Investment income (loss) -- net 1,104,842 32,616 282,066 147,543 2,496,446
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NET
- ---------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of
investments in
mutual funds and portfolios:
Proceeds from sales 751,190 227,327 476,335 544,898 679,787
Cost of investments sold 596,675 227,369 465,590 504,067 571,899
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 154,515 (42) 10,745 40,831 107,888
Net change in unrealized appreciation or
depreciation of investments 5,965,530 7,613 17,158 80,848 1,711,453
- ---------------------------------------------------------------------------------------------------
Net gain (loss) on investments 6,120,045 7,571 27,903 121,679 1,819,341
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $7,224,887 $ 40,187 $309,969 $269,222 $4,315,787
- ---------------------------------------------------------------------------------------------------
<CAPTION>
SEGREGATED ASSET COMBINED
SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1997 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME
- ---------------------------------------- -----------------------------------------------
Dividend income from mutual funds and
portfolios $ 49,171 $ 3,724 $ -- $ 4,837,078
Mortality and expense risk fee 8,873 11,474 10,317 751,334
- ---------------------------------------- -----------------------------------------------
Investment income (loss) -- net 40,298 (7,750) (10,317) 4,085,744
- ---------------------------------------- -----------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
- ---------------------------------------- -----------------------------------------------
Realized gain (loss) on sales of
investments in
mutual funds and portfolios:
Proceeds from sales 1,548,607 52,916 56,134 4,337,194
Cost of investments sold 1,548,623 50,365 53,706 4,018,294
- ---------------------------------------- -----------------------------------------------
Net realized gain (loss) on investments (16) 2,551 2,428 318,900
Net change in unrealized appreciation or
depreciation of investments 5 180,079 253,559 8,216,245
- ---------------------------------------- -----------------------------------------------
Net gain (loss) on investments (11) 182,630 255,987 8,535,145
- ---------------------------------------- -----------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 40,287 $174,880 $245,670 $12,620,889
- ---------------------------------------- -----------------------------------------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
52 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1999 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
OPERATIONS
- --------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ (585,629) $ 32,547 $ 372,542 $ 261,521 $ 879,305
Net realized gain (loss) on investments 732,221 (6,852) (25,246) 112,837 367,841
Net change in unrealized appreciation or
depreciation of investments 45,611,195 (46,785) (376,233) 4,786,384 8,387,190
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting
from operations 45,757,787 (21,090) (28,937) 5,160,742 9,634,336
- --------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS
- --------------------------------------------------------------------------------------------------------
Contract purchase payments 8,551,838 76,884 937,454 2,690,098 5,781,403
Net transfers* (266,660) (29,547) (297,141) 375,017 16,778
Transfers for policy loans (660,439) 972 (47,618) (148,216) (416,682)
Policy charges (2,555,364) (52,896) (339,475) (548,800) (1,960,792)
Contract terminations:
Surrender benefits (1,845,102) (31,234) (177,402) (431,146) (1,049,766)
Death benefits (161,163) -- (10,084) (23,806) (125,555)
- --------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions 3,063,110 (35,821) 65,734 1,913,147 2,245,386
- --------------------------------------------------------------------------------------------------------
Net assets at beginning of year 55,368,602 678,711 5,832,910 13,036,245 39,393,317
- --------------------------------------------------------------------------------------------------------
Net assets at end of year $104,189,499 $621,800 $5,869,707 $20,110,134 $51,273,039
- --------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- --------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 13,469,431 300,137 2,465,891 6,172,923 9,922,663
Contract purchase payments 1,912,015 38,617 398,861 1,178,548 1,366,155
Net transfers* (88,739) (18,107) (126,846) 162,379 9,127
Transfers for policy loans (152,457) 445 (20,230) (64,174) (98,711)
Policy charges (569,337) (23,883) (144,424) (241,215) (463,652)
Contract terminations:
Surrender benefits (392,808) (14,078) (75,706) (186,276) (248,464)
Death benefits (39,480) -- (4,269) (10,741) (29,870)
- --------------------------------------------------------------------------------------------------------
Units outstanding at end of year 14,138,625 283,131 2,493,277 7,011,444 10,457,248
- --------------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1999 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
OPERATIONS
- ---------------------------------------- ----------------------------------------------------
Investment income (loss) -- net $ 76,580 $ 61,119 $ 15,874 $ 1,113,859
Net realized gain (loss) on investments 15 16,851 21,134 1,218,801
Net change in unrealized appreciation or
depreciation of investments 17 5,089,669 8,641,203 72,092,640
- ---------------------------------------- ----------------------------------------------------
Net increase (decrease) in net assets
resulting
from operations 76,612 5,167,639 8,678,211 74,425,300
- ---------------------------------------- ----------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- ----------------------------------------------------
Contract purchase payments 1,668,505 4,193,541 3,518,254 27,417,977
Net transfers* (978,263) 6,517,721 4,066,144 9,404,049
Transfers for policy loans (23,816) (96,776) (101,160) (1,493,735)
Policy charges (183,207) (615,933) (490,797) (6,747,264)
Contract terminations:
Surrender benefits (11,484) (256,831) (197,525) (4,000,490)
Death benefits (5,647) (30,962) (11,094) (368,311)
- ---------------------------------------- ----------------------------------------------------
Increase (decrease) from contract
transactions 466,088 9,710,760 6,783,822 24,212,226
- ---------------------------------------- ----------------------------------------------------
Net assets at beginning of year 1,723,084 9,791,747 8,052,461 133,877,077
- ---------------------------------------- ----------------------------------------------------
Net assets at end of year $2,265,784 $24,670,146 $23,514,494 $232,514,603
- ---------------------------------------- ----------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- -------------------------------------
Units outstanding at beginning of year 1,054,652 6,205,902 5,471,531
Contract purchase payments 1,003,107 2,384,670 2,096,643
Net transfers* (586,229) 3,721,071 2,429,065
Transfers for policy loans (14,477) (55,821) (61,517)
Policy charges (110,009) (351,569) (293,045)
Contract terminations:
Surrender benefits (6,877) (146,760) (115,821)
Death benefits (3,398) (18,516) (7,038)
- ---------------------------------------- -------------------------------------
Units outstanding at end of year 1,336,769 11,738,977 9,519,818
- ---------------------------------------- -------------------------------------
</TABLE>
* Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life of New York's fixed account.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 53
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1998 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ 7,524,954 $ 31,352 $ 345,664 $ 429,547 $ 2,795,897
Net realized gain (loss) on investments 184,620 1,246 8,912 27,417 115,931
Net change in unrealized appreciation or
depreciation of investments (3,495,686) 9,354 (117,407) 1,434,548 1,593,673
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from
operations 4,213,888 41,952 237,169 1,891,512 4,505,501
- -------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Contract purchase payments 8,276,481 107,907 873,654 2,484,288 5,414,963
Net transfers* 1,632,511 70,271 306,683 949,063 672,497
Transfers for policy loans (597,388) (6,281) (59,506) (88,294) (474,625)
Policy charges (2,260,287) (46,372) (322,016) (469,309) (1,734,889)
Contract terminations:
Surrender benefits (1,145,779) (17,975) (114,726) (177,402) (706,720)
Death benefits (91,634) (11,432) (28,592) (5,766) (72,095)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions 5,813,904 96,118 655,497 2,692,580 3,099,131
- -------------------------------------------------------------------------------------------------------
Net assets at beginning of year 45,340,810 540,641 4,940,244 8,452,153 31,788,685
- -------------------------------------------------------------------------------------------------------
Net assets at end of year $55,368,602 $678,711 $5,832,910 $13,036,245 $39,393,317
- -------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- -------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 11,923,765 256,101 2,183,554 4,819,920 9,079,176
Contracts purchase payments 2,194,522 49,057 376,239 1,257,681 1,478,004
Net transfers* 434,065 32,510 132,004 468,519 183,037
Transfers for policy loans (157,095) (2,916) (25,559) (44,324) (130,705)
Policy charges (598,903) (21,244) (138,639) (236,945) (474,255)
Contract terminations:
Surrender benefits (303,797) (8,261) (49,418) (88,984) (193,111)
Death benefits (23,126) (5,110) (12,290) (2,944) (19,483)
- -------------------------------------------------------------------------------------------------------
Units outstanding at end of year 13,469,431 300,137 2,465,891 6,172,923 9,922,663
- -------------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1998 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
OPERATIONS
- ---------------------------------------- ----------------------------------------------------
Investment income (loss) -- net $ 55,333 $ 76,602 $ 8,204 $ 11,267,553
Net realized gain (loss) on investments -- 1,822 1,038 340,986
Net change in unrealized appreciation or
depreciation of investments 2 1,579,781 1,225,925 2,230,190
- ---------------------------------------- ----------------------------------------------------
Net increase (decrease) in net assets
resulting from
operations 55,335 1,658,205 1,235,167 13,838,729
- ---------------------------------------- ----------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- ----------------------------------------------------
Contract purchase payments 656,161 2,530,326 2,188,943 22,532,723
Net transfers* 244 2,932,508 2,341,436 8,905,213
Transfers for policy loans 16,135 (62,454) (73,041) (1,345,454)
Policy charges (138,571) (281,819) (251,476) (5,504,739)
Contract terminations:
Surrender benefits (5,617) (59,290) (46,630) (2,274,139)
Death benefits (13,421) -- -- (222,940)
- ---------------------------------------- ----------------------------------------------------
Increase (decrease) from contract
transactions 514,931 5,059,271 4,159,232 22,090,664
- ---------------------------------------- ----------------------------------------------------
Net assets at beginning of year 1,152,818 3,074,271 2,658,062 97,947,684
- ---------------------------------------- ----------------------------------------------------
Net assets at end of year $1,723,084 $9,791,747 $8,052,461 $133,877,077
- ---------------------------------------- ----------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- -------------------------------------
Units outstanding at beginning of year 734,855 2,465,393 2,226,094
Contracts purchase payments 409,620 1,863,213 1,717,997
Net transfers* (1,409) 2,172,226 1,815,859
Transfers for policy loans 10,000 (44,267) (54,454)
Policy charges (86,424) (207,286) (197,732)
Contract terminations:
Surrender benefits (3,504) (43,377) (36,233)
Death benefits (8,486) -- --
- ---------------------------------------- -------------------------------------
Units outstanding at end of year 1,054,652 6,205,902 5,471,531
- ---------------------------------------- -------------------------------------
</TABLE>
* Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life of New York's fixed account.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
54 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SEGREGATED ASSET SUBACCOUNTS
YEAR ENDED DEC. 31, 1997 YEQ YGS YIN YIT YMA
<S> <C> <C> <C> <C> <C>
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Investment income (loss) -- net $ 1,104,842 $ 32,616 $ 282,066 $ 147,543 $ 2,496,446
Net realized gain (loss) on investments 154,515 (42) 10,745 40,831 107,888
Net change in unrealized appreciation or
depreciation of investments 5,965,530 7,613 17,158 80,848 1,711,453
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from
operations 7,224,887 40,187 309,969 269,222 4,315,787
- -------------------------------------------------------------------------------------------------------
CONTRACT TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Contract purchase payments 7,441,563 119,153 784,805 2,330,345 4,816,210
Net transfers* 2,009,267 (100,924) 142,593 1,512,734 1,374,196
Transfers for policy loans (598,478) (5,109) (66,319) (61,032) (441,258)
Policy charges (1,997,018) (46,144) (286,765) (361,587) (1,554,701)
Contract terminations:
Surrender benefits (1,045,185) (37,707) (233,575) (99,532) (793,080)
Death benefits (69,049) (6,354) (6,276) (1,487) (16,407)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) from contract
transactions 5,741,100 (77,085) 334,463 3,319,441 3,384,960
- -------------------------------------------------------------------------------------------------------
Net assets at beginning of year 32,374,823 577,539 4,295,812 4,863,490 24,087,938
- -------------------------------------------------------------------------------------------------------
Net assets at end of year $45,340,810 $ 540,641 $4,940,244 $8,452,153 $31,788,685
- -------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- -------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 10,218,855 295,283 2,032,494 2,922,492 8,043,384
Contract purchase payments 2,193,598 60,085 358,800 1,327,806 1,469,705
Net transfers* 603,566 (51,527) 64,605 866,461 425,487
Transfers for policy loans (176,623) (2,557) (29,936) (34,345) (134,833)
Policy charges (588,039) (23,054) (131,741) (205,879) (475,355)
Contract terminations:
Surrender benefits (308,629) (19,111) (107,894) (55,746) (244,414)
Death benefits (18,963) (3,018) (2,774) (869) (4,798)
- -------------------------------------------------------------------------------------------------------
Units outstanding at end of year 11,923,765 256,101 2,183,554 4,819,920 9,079,176
- -------------------------------------------------------------------------------------------------------
<CAPTION>
COMBINED
SEGREGATED ASSET SUBACCOUNTS VARIABLE
YEAR ENDED DEC. 31, 1997 YMM YGI YNO ACCOUNT
<S> <C> <C> <C> <C>
OPERATIONS
- ---------------------------------------- ----------------------------------------------------
Investment income (loss) -- net $ 40,298 $ (7,750) $ (10,317) $ 4,085,744
Net realized gain (loss) on investments (16) 2,551 2,428 318,900
Net change in unrealized appreciation or
depreciation of investments 5 180,079 253,559 8,216,245
- ---------------------------------------- ----------------------------------------------------
Net increase (decrease) in net assets
resulting from
operations 40,287 174,880 245,670 12,620,889
- ---------------------------------------- ----------------------------------------------------
CONTRACT TRANSACTIONS
- ---------------------------------------- ----------------------------------------------------
Contract purchase payments 890,628 828,706 881,192 18,092,602
Net transfers* (455,707) 2,014,043 1,557,633 8,053,835
Transfers for policy loans (71,130) (5,786) (11,001) (1,260,113)
Policy charges (104,917) (68,945) (77,116) (4,497,193)
Contract terminations:
Surrender benefits (20,637) (16,584) (20,126) (2,266,426)
Death benefits (43,028) -- -- (142,601)
- ---------------------------------------- ----------------------------------------------------
Increase (decrease) from contract
transactions 195,209 2,751,434 2,330,582 17,980,104
- ---------------------------------------- ----------------------------------------------------
Net assets at beginning of year 917,322 147,957 81,810 67,346,691
- ---------------------------------------- ----------------------------------------------------
Net assets at end of year $1,152,818 $3,074,271 $2,658,062 $97,947,684
- ---------------------------------------- ----------------------------------------------------
ACCUMULATION UNIT ACTIVITY
- ---------------------------------------- -------------------------------------
Units outstanding at beginning of year 605,111 147,682 83,723
Contract purchase payments 577,058 697,652 805,177
Net transfers* (292,656) 1,695,960 1,434,487
Transfers for policy loans (45,562) (4,945) (9,924)
Policy charges (68,238) (57,282) (69,750)
Contract terminations:
Surrender benefits (13,385) (13,674) (17,619)
Death benefits (27,473) -- --
- ---------------------------------------- -------------------------------------
Units outstanding at end of year 734,855 2,465,393 2,226,094
- ---------------------------------------- -------------------------------------
</TABLE>
* Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life of New York's fixed account.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 55
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
IDS Life of New York Account 8 (the Variable Account) was established under New
York law on Sept. 12, 1985 as a segregated asset account of IDS Life Insurance
Company of New York (IDS Life of New York). The Variable Account is registered
as a single unit investment trust under the Investment Company Act of 1940, as
amended (the 1940 Act). Operations of the Variable Account commenced on
Aug. 31, 1987.
The Variable Account is comprised of various subaccounts. Each subaccount
invests exclusively in shares of the following portfolios or funds (the Funds),
which are registered under the 1940 Act as diversified open-end management
investment companies and have the following investment managers.
<TABLE>
<CAPTION>
SUBACCOUNT INVESTS EXCLUSIVELY IN SHARES OF INVESTMENT MANAGER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
YEQ IDS Life Series Fund -- Equity Portfolio IDS Life Insurance Company(1)
YGS IDS Life Series Fund -- Government Securities Portfolio IDS Life Insurance Company(1)
YIN IDS Life Series Fund -- Income Portfolio IDS Life Insurance Company(1)
YIT IDS Life Series Fund -- International Equity Portfolio IDS Life Insurance Company(1)
YMA IDS Life Series Fund -- Managed Portfolio IDS Life Insurance Company(1)
YMM IDS Life Series Fund -- Money Market Portfolio IDS Life Insurance Company(1)
YGI AIM V.I. Growth and Income Fund A I M Management Group Inc.
YNO Putnam VT New Opportunities Fund - Class IA Shares Putnam Investment Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) American Express Financial Corporation (AEFC) is the investment advisor.
The assets of each subaccount of the Variable Account are not chargeable with
liabilities arising out of the business conducted by any other segregated asset
account or by IDS Life of New York.
American Express Financial Advisors Inc., an affiliate of IDS Life of New York,
serves as distributor of the Flexible Premium Survivorship Variable Life Policy.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS IN THE FUNDS
Investments in shares of the Funds are stated at market value which is the net
asset value per share as determined by the respective Fund. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the Funds are reinvested in
additional shares of the Funds and are recorded as income by the subaccounts on
the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
- --------------------------------------------------------------------------------
56 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
IDS Life of New York is taxed as a life insurance company. The Variable Account
is treated as part of IDS Life of New York for federal income tax purposes.
Under existing federal income tax law, no income taxes are payable with respect
to any investment income of the Variable Account.
3. MORTALITY AND EXPENSE RISK FEE AND POLICY CHARGES
IDS Life of New York makes contractual assurances to the Variable Account that
possible future adverse changes in administrative expenses and mortality
experience of the policy owners and beneficiaries will not affect the Variable
Account. The mortality and expense risk fee paid to IDS Life of New York is
computed daily and is equal, on an annual basis, to 0.9% of the average daily
net asset value of the subaccount. A monthly deduction is made for the cost of
insurance and the policy fee. The cost of insurance for the policy month is
determined on the monthly date by determining the net amount at risk, as of that
day, and by then applying the cost of insurance rates to the net amount at risk
which IDS Life of New York is assuming for the succeeding month. The monthly
deduction will be taken from the subaccounts as specified in the application for
the policy.
IDS Life of New York deducts a policy fee of $30 per month for the first 15
years. This charge reimburses IDS Life of New York for expenses incurred in
administering the policy, such as processing claims, maintaining records, making
policy changes and communicating with owners of policies. IDS Life of New York
does not anticipate that it will make any profit on this charge. IDS Life of New
York reserves the right to change this charge in the future, but guarantees that
it will never exceed $30 per month.
4. OPTIONAL INSURANCE BENEFIT CHARGE
Each month IDS Life of New York deducts charges for any optional insurance
benefits added to the policy by rider.
5. PREMIUM EXPENSE CHARGE
IDS Life of New York deducts charges for three separate items from each premium
payment. The total of these charges is called the premium expense charge.
Details regarding these three charges follows.
A sales charge of 7.25% of each premium payment is deducted to compensate IDS
Life of New York for expenses in distributing the policy, including agents'
compensation, advertising and printing the prospectus and sales literature.
The policy provides that a charge of 1% of each premium payment is deducted to
cover the premium taxes imposed by the state of New York.
The policy provides that a charge of 1.25% of each premium payment will be
deducted to cover the federal taxes resulting from the sale of the policy. IDS
Life of New York reserves the right to change this charge in the future if
applicable federal law changes.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 57
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
6. SURRENDER CHARGE
There are surrender charges for full surrender in the first 15 years of the
policy. They are generally level for 5 years and decreasing the next 10 years.
The surrender charge is $4.00 per $1,000 of the amount used to determine the
death benefit (specified amount). This surrender charge reimburses IDS Life of
New York for the cost of issuing the policy. Charges by IDS Life of New York for
surrenders are not identified on an individual segregated asset account basis.
Charges for all segregated asset accounts amounted to $993,347 in 1999, $886,431
in 1998 and $688,445 in 1997. Such charges are not treated as a separate expense
of the subaccounts or Variable Account. They are ultimately deducted from
surrender benefits paid by IDS Life of New York.
7. INVESTMENT IN SHARES
The subaccounts' investment in shares of the Funds as of Dec. 31, 1999 were as
follows:
<TABLE>
<CAPTION>
SUBACCOUNT INVESTMENT SHARES NAV
- -------------------------------------------------------------------
<S> <C> <C> <C>
IDS Life Series Fund -- Equity
YEQ Portfolio 2,092,703 $49.82
IDS Life Series Fund -- Government
YGS Securities Portfolio 64,436 9.61
IDS Life Series Fund -- Income
YIN Portfolio 616,847 9.37
IDS Life Series Fund --
YIT International Equity Portfolio 834,669 24.10
IDS Life Series Fund -- Managed
YMA Portfolio 2,221,289 23.10
IDS Life Series Fund -- Money
YMM Market Portfolio 2,353,853 1.00
YGI AIM V.I. Growth and Income Fund 780,948 31.59
Putnam VT New Opportunities Fund -
YNO Class IA Shares 540,066 43.54
- -------------------------------------------------------------------
</TABLE>
8. INVESTMENT TRANSACTIONS
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31,
SUBACCOUNT INVESTMENT 1999 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IDS Life Series Fund -- Equity
YEQ Portfolio $ 5,795,202 $14,149,333 $ 7,620,803
IDS Life Series Fund --
Government Securities
YGS Portfolio 191,569 247,569 172,859
IDS Life Series Fund -- Income
YIN Portfolio 999,574 1,624,048 1,092,864
IDS Life Series Fund --
YIT International Equity Portfolio 2,811,966 3,401,869 4,017,372
IDS Life Series Fund --
YMA Managed Portfolio 4,958,516 6,658,468 6,573,036
IDS Life Series Fund -- Money
YMM Market Portfolio 4,131,370 2,410,705 1,784,114
AIM V.I. Growth and Income
YGI Fund 9,859,243 5,153,905 2,798,870
Putnam VT New Opportunities
YNO Fund - Class IA Shares 6,901,504 4,188,738 2,378,386
- ----------------------------------------------------------------------------------
Combined Variable Account $35,648,944 $37,834,635 $26,438,304
- ----------------------------------------------------------------------------------
</TABLE>
9. YEAR 2000 (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDS Life of New York and
the Variable Account. All of the major systems used by IDS Life of New York and
the Variable Account are maintained by AEFC and
- --------------------------------------------------------------------------------
58 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
are utilized by multiple subsidiaries and affiliates of AEFC. IDS Life of New
York's and the Variable Account's businesses are heavily dependent upon AEFC's
computer systems and have significant interaction with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life of New York and the Variable Account, was
conducted to identify the major systems that could be affected by the Year 2000
issue. Steps were taken to resolve any potential problems including modification
to existing software and the purchase of new software. As of Dec. 31, 1999, AEFC
had completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC
had also completed an evaluation of the Year 2000 readiness of third parties
whose system failures could have an impact on IDS Life of New York's and the
Variable Account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life of New York's and the
Variable Account's business, results of operations, or financial condition as a
result of the Year 2000 issue.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 59
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUBACCOUNT YEQ (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- EQUITY PORTFOLIO)
Accumulation unit
value at beginning
of period $4.11 $3.80 $3.17 $2.66 $1.94 $1.91 $1.70 $1.63 $0.98 $1.04
Accumulation unit
value at end of
period $7.37 $4.11 $3.80 $3.17 $2.66 $1.94 $1.91 $1.70 $1.63 $0.98
Number of
accumulation units
outstanding at end
of period
(000 omitted) 14,139 13,469 11,924 10,219 7,545 6,265 4,382 2,916 1,668 1,061
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YGS (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- GOVERNMENT SECURITIES PORTFOLIO)
Accumulation unit
value at beginning
of period $2.26 $2.11 $1.96 $1.94 $1.66 $1.76 $1.58 $1.50 $1.30 $1.23
Accumulation unit
value at end of
period $2.20 $2.26 $2.11 $1.96 $1.94 $1.66 $1.76 $1.58 $1.50 $1.30
Number of
accumulation units
outstanding at end
of period
(000 omitted) 283 300 256 295 301 284 244 159 112 69
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YIN (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- INCOME PORTFOLIO)
Accumulation unit
value at beginning
of period $2.37 $2.26 $2.11 $2.06 $1.72 $1.81 $1.59 $1.47 $1.29 $1.23
Accumulation unit
value at end of
period $2.35 $2.37 $2.26 $2.11 $2.06 $1.72 $1.81 $1.59 $1.47 $1.29
Number of
accumulation units
outstanding at end
of period
(000 omitted) 2,493 2,466 2,184 2,032 1,614 1,408 1,308 744 517 369
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YIT(1) (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- INTERNATIONAL EQUITY PORTFOLIO)
Accumulation unit
value at beginning
of period $2.11 $1.75 $1.66 $1.36 $0.98 $1.00 -- -- -- --
Accumulation unit
value at end of
period $2.87 $2.11 $1.75 $1.66 $1.36 $0.98 -- -- -- --
Number of
accumulation units
outstanding at end
of period
(000 omitted) 7,011 6,173 4,820 2,922 759 130 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YMA (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- MANAGED PORTFOLIO)
Accumulation unit
value at beginning
of period $3.97 $3.50 $2.99 $2.64 $2.24 $2.24 $1.89 $1.73 $1.32 $1.23
Accumulation unit
value at end of
period $4.90 $3.97 $3.50 $2.99 $2.64 $2.24 $2.24 $1.89 $1.73 $1.32
Number of
accumulation units
outstanding at end
of period
(000 omitted) 10,457 9,923 9,079 8,043 6,737 6,000 4,308 2,720 1,912 1,236
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YMM (INVESTING IN SHARES OF IDS LIFE SERIES FUND -- MONEY MARKET PORTFOLIO)
Accumulation unit
value at beginning
of period $1.63 $1.57 $1.52 $1.46 $1.39 $1.35 $1.33 $1.29 $1.24 $1.16
Accumulation unit
value at end of
period $1.69 $1.63 $1.57 $1.52 $1.46 $1.39 $1.35 $1.33 $1.29 $1.24
Number of
accumulation units
outstanding at end
of period
(000 omitted) 1,337 1,055 735 605 352 196 193 147 191 167
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
60 VARIABLE SECOND-TO-DIE LIFE INSURANCE -- NEW YORK
<PAGE>
IDS LIFE OF NEW YORK ACCOUNT 8 -- FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE
SUBACCOUNTS
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUBACCOUNT YGI(2) (INVESTING IN SHARES OF AIM V.I. GROWTH AND INCOME FUND)
Accumulation unit
value at beginning
of period $1.58 $1.25 $1.00 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $2.10 $1.58 $1.25 $1.00 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period
(000 omitted) 11,739 6,206 2,465 148 -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
SUBACCOUNT YNO(2) (INVESTING IN SHARES OF PUTNAM VT NEW OPPORTUNITIES FUND - CLASS IA SHARES)
Accumulation unit
value at beginning
of period $1.47 $1.19 $0.98 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $2.47 $1.47 $1.19 $0.98 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period
(000 omitted) 9,520 5,472 2,226 84 -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on Oct. 28, 1994.
(2) Operations commenced on Nov. 22, 1996.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 61
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
FINANCIAL INFORMATION
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
IDS LIFE INSURANCE COMPANY OF NEW YORK
We have audited the accompanying balance sheets of IDS Life Insurance Company of
New York (a wholly-owned subsidiary of IDS Life Insurance Company) as of
December 31, 1999 and 1998, and the related statements of income, stockholder's
equity and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IDS Life Insurance Company of
New York at December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
February 3, 2000
Minneapolis, Minnesota
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-1
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, ($ THOUSANDS) 1999 1998
<S> <C> <C>
ASSETS
- -----------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $432,004; 1998, $503,909) $ 434,343 $ 473,592
Available for sale, at fair value
(amortized cost:
1999, $579,014; 1998, $561,325) 555,574 578,591
- -----------------------------------------------------------------
989,917 1,052,183
Mortgage loans on real estate 154,062 166,835
Policy loans 27,528 25,421
Other investments -- 566
- -----------------------------------------------------------------
Total investments 1,171,507 1,245,005
Cash and cash equivalents 8,131 3,007
Amounts recoverable from reinsurers 6,914 4,077
Accounts receivable 567 842
Premiums due 199 204
Accrued investment income 18,365 19,893
Deferred policy acquisition costs 136,229 129,477
Deferred income taxes 3,881 --
Other assets 723 1,042
Separate account assets 1,957,703 1,491,679
- -----------------------------------------------------------------
Total assets $3,304,219 $2,895,226
- -----------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- -----------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $ 821,992 $ 875,507
Universal life-type insurance 156,420 152,195
Traditional life, disability income and
long-term care insurance 64,278 55,910
Policy claims and other policyholders'
funds 2,584 3,105
Deferred income taxes -- 7,912
Amounts due to brokers -- 4,507
Other liabilities 21,432 24,945
Separate account liabilities 1,957,703 1,491,679
- -----------------------------------------------------------------
Total liabilities 3,024,409 2,615,760
- -----------------------------------------------------------------
Stockholder's equity:
Capital stock, $10 par value per
share;
200,000 shares authorized, issued and
outstanding 2,000 2,000
Additional paid-in capital 49,000 49,000
Accumulated other comprehensive (loss)
income:
Net unrealized securities (losses) gains (14,966) 11,014
- -----------------------------------------------------------------
Retained earnings 243,776 217,452
- -----------------------------------------------------------------
Total stockholder's equity 279,810 279,466
- -----------------------------------------------------------------
Total liabilities and stockholder's
equity $3,304,219 $2,895,226
=================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-2 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
REVENUES:
- --------------------------------------------------------------------------------------------
Traditional life, disability income and long-term care
insurance premiums $ 15,613 $ 13,852 $ 12,376
Policyholder and contractholder charges 22,502 20,467 18,319
Mortality and expense risk fees 17,019 13,980 11,312
Net investment income 95,514 100,871 106,274
Net realized gains on investments 1,386 2,163 547
- --------------------------------------------------------------------------------------------
Total revenues 152,034 151,333 148,828
- --------------------------------------------------------------------------------------------
BENEFITS AND EXPENSE:
- --------------------------------------------------------------------------------------------
Death and other benefits:
Traditional life, disability income and long-term care
insurance 5,579 5,553 3,633
Universal life-type insurance and investment contracts 6,313 4,320 3,852
Increase in liabilities for future policy benefits for for
traditional life, disability income and long-term care
insurance 6,098 3,662 3,979
Interest credited on universal life-type insurance and
investment contracts 50,767 55,073 62,294
Amortization of deferred policy acquisition costs 15,787 18,362 17,201
Other insurance and operating expenses 9,925 8,917 10,220
- --------------------------------------------------------------------------------------------
Total benefits and expenses 94,469 95,887 101,179
- --------------------------------------------------------------------------------------------
Income before income taxes 57,565 55,446 47,649
Income taxes 19,241 19,098 16,471
- --------------------------------------------------------------------------------------------
Net income $ 38,324 $ 36,348 $ 31,178
============================================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-3
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN (LOSS) INCOME, RETAINED
THREE YEARS ENDED DECEMBER 31, 1999 ($ THOUSANDS) EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
COMPREHENSIVE INCOME:
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $ 229,863 $ 2,000 $ 49,000 $ 6,937 $171,926
Net income 31,178 -- -- -- 31,178
Unrealized holding gains arising during the year,
net of deferred policy acquisition costs of ($1)
and taxes of ($3,412) 6,337 -- -- 6,337 --
Reclassification adjustment for gains included in
net income, net of tax of $54 (99) -- -- (99) --
Other comprehensive income 6,238 -- -- 6,238 --
- ---------------------------------------------------------------------------------------------------------------------
Comprehensive income 37,416 -- --
Cash dividends to parent (10,000) -- -- -- (10,000)
- ---------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME:
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 257,279 2,000 49,000 13,175 193,104
Net income 36,348 -- -- -- 36,348
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of $22
and taxes of $1,415 (2,628) -- -- (2,628) --
Reclassification adjustment for losses included in
net income, net of tax of ($252) 467 -- -- 467 --
- ---------------------------------------------------------------------------------------------------------------------
Other comprehensive loss (2,161) -- -- (2,161) --
Comprehensive income 34,187 -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (12,000) -- -- -- (12,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 279,466 2,000 49,000 11,014 217,452
COMPREHENSIVE INCOME:
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 279,466 2,000 49,000 11,014 217,452
Net income 38,324 -- -- -- 38,324
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of $737
and of taxes of $13,537 (25,140) -- -- (25,140) --
Reclassification adjustment for gains included in
net income, net of tax of $452 (840) -- -- (840) --
- ---------------------------------------------------------------------------------------------------------------------
Other comprehensive loss (25,980) -- -- (25,980) --
Comprehensive income 12,344 -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (12,000) -- -- -- (12,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $ 279,810 $ 2,000 $ 49,000 $(14,966) $243,776
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-4 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
IDS LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -----------------------------------------------------------------------------------------------
Net income $ 38,324 $ 36,348 $ 31,178
Adjustments to reconcile net income to net cash provided by
operating activities:
Policy loans, excluding universal life-type insurance:
Issuance (3,063) (3,110) (3,073)
Repayment 2,826 2,660 1,897
Change in accrued investment income 1,528 312 863
Change in amounts recoverable from reinsurer (2,837) (1,760) (1,345)
Change in premiums due 5 (12) (50)
Change in accounts receivable 275 (119) 218
Change in other assets 319 (47) (95)
Change in deferred policy acquisition costs, net (6,015) (2,841) (7,431)
Change in liabilities for future policy benefits for
traditional life, disability income and long-term care
insurance 8,368 5,441 5,131
Change in policy claims and other policyholders' funds (522) (908) 858
Deferred income tax provision (benefit) 2,196 (2,369) (960)
Change in other liabilities (3,513) (3,986) 3,468
Accretion of discount, net (1,794) (342) (352)
Net realized gain on investments (1,386) (2,163) (547)
Policyholder and contractholder charges, non-cash (9,875) (9,661) (8,772)
Other, net 1,859 118 715
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 26,695 $ 17,561 $ 21,703
CASH FLOWS FROM INVESTING ACTIVITIES:
- -----------------------------------------------------------------------------------------------
Fixed maturities held to maturity:
Maturities, sinking fund payments and calls $ 37,852 $ 46,629 $ 36,511
Sales 790 16,173 12,616
Fixed maturities available for sale:
Purchases (155,690) (86,072) (101,818)
Maturities, sinking fund payments and calls 50,515 96,578 84,229
Sales 89,683 13,180 27,055
Other investments, excluding policy loans:
Purchases (3,598) (9,121) (33,243)
Sales 16,671 21,113 14,233
Change in amounts due from brokers -- -- 995
Change in amounts due to brokers (4,507) (24,547) 26,047
- -----------------------------------------------------------------------------------------------
Net cash provided by investing activities 31,716 73,933 66,625
CASH FLOWS FROM FINANCING ACTIVITIES:
- -----------------------------------------------------------------------------------------------
Activity related to universal life-type insurance and
investment contracts:
Considerations received 68,978 76,009 112,732
Surrenders and death benefits (159,161) (205,946) (251,259)
Interest credited to account balances 50,767 55,073 62,294
Universal life-type insurance policy loans:
Issuance (5,057) (5,222) (4,848)
Repayment 3,186 3,599 2,753
Cash dividend to parent (12,000) (12,000) (10,000)
- -----------------------------------------------------------------------------------------------
Net cash used in financing activities (53,287) (88,487) (88,328)
- -----------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 5,124 3,007 --
Cash and cash equivalents at beginning of year 3,007 -- --
- -----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 8,131 $ 3,007 $ --
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS ($ THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
IDS Life Insurance Company of New York (the Company) is engaged in the insurance
and annuity business in the state of New York. The Company's principal products
are deferred annuities and universal life insurance which are issued primarily
to individuals. It offers single premium and flexible premium deferred annuities
on both a fixed and variable dollar basis. Immediate annuities are offered as
well. The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including waiver
of premium and accidental death benefits). The Company also markets disability
income and long-term care insurance.
BASIS OF PRESENTATION
The Company is a wholly owned subsidiary of IDS Life Insurance Company (IDS
Life), which is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American Express
Company. The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States which vary in
certain respects from reporting practices prescribed or permitted by the New
York Department of Insurance as reconciled in Note 11.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENTS
Fixed maturities that the Company has both the positive intent and the ability
to hold to maturity are classified as held to maturity and carried at amortized
cost. All other fixed maturities and all marketable equity securities are
classified as available for sale and carried at fair value. Unrealized gains and
losses on securities classified as available for sale are reported as a separate
component of accumulated other comprehensive (loss) income, net of deferred
policy acquisition costs and deferred income taxes.
Realized investment gains or losses are determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed securities
in determining the constant effective yield used to recognize interest income.
Prepayment estimates are based on information received from brokers who deal in
mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less reserves for
mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in an allowance for
mortgage loan losses. The allowance for mortgage loan losses is maintained at a
level that management believes is adequate to absorb estimated losses in the
portfolio. The level of the allowance account is determined based on several
factors, including historical experience, expected future principal and interest
payments, estimated collateral
- --------------------------------------------------------------------------------
F-6 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
values, and current economic and political conditions. Management regularly
evaluates the adequacy of the allowance for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
The cost of interest rate caps is amortized to investment income over the life
of the contracts and payments received as a result of these agreements are
recorded as investment income when realized.
Policy loans are carried at the aggregate of the unpaid loan balances which do
not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
STATEMENTS OF CASH FLOWS
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost which approximates fair value.
Supplementary information to the statements of cash flows for the years ended
December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $20,670 $22,470 $17,811
Interest on borrowings 124 1,600 1,026
</TABLE>
RECOGNITION OF PROFITS ON ANNUITY CONTRACTS AND INSURANCE POLICIES
Profits on fixed deferred annuities are recognized by the Company over the lives
of the contracts, using primarily the interest method. Profits represent the
excess of investment income earned from investment of contract considerations
over interest credited to contract owners and other expenses.
The retrospective deposit method is used in accounting for universal life-type
insurance. This method recognizes profits over the lives of the policies in
proportion to the estimated gross profits expected to be realized.
Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and expenses
are associated with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association is
accomplished by means of the provision for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of insurance
charges, issue and administrative fees and surrender charges. These charges also
include the minimum death benefit guarantee fees received from the variable life
insurance separate accounts. Mortality and expense fees are received from the
variable annuity and variable life insurance separate accounts.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally sales compensation, policy
issue costs, underwriting and certain sales expenses, have been deferred on
insurance and annuity contracts. The deferred acquisition costs for most single
premium deferred annuities
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-7
<PAGE>
and installment annuities are amortized primarily using the interest method. The
costs for universal life-type insurance and certain installment annuities are
amortized as a percentage of the estimated gross profits expected to be realized
on the policies. For traditional life, disability income and long-term care
insurance policies, the costs are amortized over an appropriate period in
proportion to premium revenue.
Amortization of deferred policy acquisition costs requires the use of
assumptions including interest margins, mortality margins, persistency rates,
maintenance expense levels and, for variable products, separate account
performance. For universal life-type insurance and deferred annuities, actual
experience is reflected in the Company's amortization models monthly. As actual
experience differs from the current assumptions, management considers the need
to change key assumptions underlying the amortization models prospectively. The
impact of changing prospective assumptions is reflected in the period that such
changes are made and is generally referred to as an unlocking adjustment. Net
unlocking adjustments in 1999, 1998 and 1997 were not significant.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
Liabilities for future benefits on traditional life insurance are based on the
net level premium method, using anticipated mortality, policy persistency and
interest earning rates. Anticipated mortality rates are based on established
industry mortality tables. Anticipated policy persistency rates vary by policy
form, issue age and policy duration with persistency on cash value plans
generally anticipated to be better than persistency on term insurance plans.
Anticipated interest rates range from 4% to 10%, depending on policy form, issue
year and policy duration.
Liabilities for future disability income and long-term care policy benefits
include both policy reserves and claim reserves. Policy reserves are based on
the net level premium method, using anticipated morbidity, mortality, policy
persistency and interest earning rates. Anticipated morbidity and mortality
rates are based on established industry morbidity and mortality tables.
Anticipated policy persistency rates vary by policy form, issue age, policy
duration and, for disability income policies, occupation class. Anticipated
interest rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 7% over 4 to 10
years.
Claim reserves are calculated based on claim continuance tables and anticipated
interest earnings. Anticipated claim continuance rates are based on established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 5% to 8%.
REINSURANCE
The maximum amount of life insurance risk retained by the Company is $750 on any
policy insuring a single life and $1,500 on any policy insuring a joint-life
combination. Risk not retained is reinsured with other life insurance companies,
primarily on a yearly renewable term basis. Long-term care policies are
primarily reinsured on a coinsurance basis. The Company retains all disability
income and waiver of premium risk. Beginning in 2000, the Company will retain
all accidental death benefit risk.
FEDERAL INCOME TAXES
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
- --------------------------------------------------------------------------------
F-8 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1999 and 1998 are $366, and
$3,647, respectively, payable to IDS Life for federal income taxes.
SEPARATE ACCOUNT BUSINESS
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance contract
owners. The Company receives mortality and expense risk fees from the variable
annuity separate accounts.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
For variable life insurance, the Company guarantees that the rates at which
insurance charges and administrative fees are deducted from contract funds will
not exceed contractual maximums. The Company also guarantees that the death
benefit will continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP requires the
capitalization of certain costs incurred after the date of adoption to develop
or obtain software for internal use. Software utilized by the Company is owned
by AEFC and capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments," providing
guidance for the timing of recognition of liabilities related to guaranty fund
assessments. The Company had historically carried a balance in other liabilities
on the balance sheet for potential guaranty fund assessment exposure. Adoption
of the SOP did not have a material impact on the Company's results of operations
or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation. The
ultimate financial effect of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company's statutory-basis financial statements are prepared in accordance
with accounting practices prescribed or permitted by the New York Insurance
Department. Currently, "prescribed" statutory practices are interspersed
throughout state insurance laws and regulations, the NAIC ACCOUNTING PRACTICES
AND PROCEDURES MANUAL and a variety of other NAIC publications. "Permitted"
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-9
<PAGE>
statutory accounting practices encompass all accounting practices that are not
prescribed: such practices may differ from state to state, may differ from
company to company within a state, and may change in the future.
In 1998, the NAIC adopted codified statutory accounting principles
("Codification") effective January 1, 2001. Codification will likely change, to
some extent, prescribed statutory accounting practices and may result in changes
to the accounting practices that the Company uses to prepare its statutory-basis
financial statements. Codification will require adoption by the various states
before it becomes the prescribed statutory basis of accounting for insurance
companies domesticated within those states. Accordingly, before Codification
becomes effective for the Company, the State of New York must adopt Codification
as the prescribed basis of accounting on which domestic insurers must report
their statutory-basis results to the Insurance Department. New York has not yet
made a decision regarding whether or not it will accept Codification. While
management has not yet determined the impact of Codification to the Company's
statutory-basis financial statements, it does not believe the impact will be
material.
RECLASSIFICATIONS
Certain 1998 and 1997 amounts have been reclassified to conform to the 1999
presentation.
2. INVESTMENTS
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values are
determined by established procedures involving, among other things, review of
market indices, price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government agency
obligations $ 2,490 $ 20 $ 150 $ 2,360
Corporate bonds and
obligations 384,241 6,066 7,058 383,249
Mortgage-backed securities 47,612 103 1,320 46,395
- ----------------------------------------------------------------------------------------
$434,343 $ 6,189 $ 8,528 $432,004
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
AVAILABLE FOR SALE COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
State and municipal
obligations $ 104 $ 6 $ -- $ 110
Corporate bonds and
obligations 374,846 2,324 20,325 356,845
Mortgage-backed securities 204,064 580 6,025 198,619
- ----------------------------------------------------------------------------
$579,014 $ 2,910 $26,350 $555,574
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
F-10 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government agency
obligations $ 2,871 $ 159 $ -- $ 3,030
Corporate bonds and
obligations 417,648 29,795 474 446,969
Mortgage-backed securities 53,073 844 7 53,910
- ----------------------------------------------------------------------------
$473,592 $30,798 $ 481 $503,909
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
AVAILABLE FOR SALE COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
State and municipal
obligations $ 105 $ 9 $ -- $ 114
Corporate bonds and
obligations 336,985 15,939 6,296 346,628
Mortgage-backed securities 224,235 7,614 -- 231,849
- ----------------------------------------------------------------------------
$561,325 $23,562 $ 6,296 $578,591
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
The amortized cost and fair value of investments in fixed maturities at December
31, 1999 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
HELD TO MATURITY
- ------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 14,966 $ 15,118
Due from one to five years 213,933 214,972
Due from five to ten years 111,707 111,314
Due in more than ten years 46,125 44,205
Mortgage-backed securities 47,612 46,395
- ------------------------------------------------------------
$434,343 $432,004
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
- ------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 14,422 $ 14,657
Due from one to five years 37,204 37,477
Due from five to ten years 214,169 203,150
Due in more than ten years 109,155 101,671
Mortgage-backed securities 204,064 198,619
- ------------------------------------------------------------
$579,014 $555,574
- ------------------------------------------------------------
</TABLE>
During the years ended December 31, 1999, 1998 and 1997, fixed maturities
classified as held to maturity were sold with amortized cost of $790, $16,175
and $12,737, respectively. Net gains and losses on these sales were not
significant. The sale of these fixed maturities was due to significant
deterioration in the issuers' creditworthiness.
Fixed maturities available for sale were sold during 1999 with proceeds of
$89,683 and gross realized gains and losses of $1,917 and $625, respectively.
Fixed maturities available for sale were sold during 1998 with proceeds of
$13,180 and gross realized gains and losses of $1,159 and $440, respectively.
Fixed maturities available for sale were sold during 1997 with proceeds of
$27,055 and gross realized gains and losses of $461 and $309, respectively.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-11
<PAGE>
At December 31, 1999, bonds carried at $254 were on deposit with the state of
New York as required by law.
At December 31, 1999, investments in fixed maturities comprised 85 percent of
the Company's total invested assets. These securities are rated by Moody's and
Standard & Poor's (S&P), except for securities carried at approximately $147
million which are rated by AEFC internal analysts using criteria similar to
Moody's and S&P. A summary of investments in fixed maturities, at amortized
cost, by rating on December 31 is as follows:
<TABLE>
<CAPTION>
RATING 1999 1998
- ----------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $ 250,577 $ 280,669
Aa/AA 12,992 15,815
Aa/A 25,489 16,327
A/A 150,187 151,838
A/BBB 68,417 68,640
Baa/BBB 354,331 366,776
Baa/BB 23,562 39,666
Below investment grade 127,802 95,186
- ----------------------------------------------------------------
$1,013,357 $1,034,917
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
At December 31, 1999, 94 percent of the securities rated Aaa/AAA are GNMA, FNMA
and FHLMC mortgage-backed securities. No holdings of any other issuer are
greater than one percent of the Company's total investments in fixed maturities.
At December 31, 1999, approximately 13 percent of the Company's investments were
mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
REGION SHEET TO PURCHASE SHEET TO PURCHASE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
West North Central $ 22,686 $ -- $ 24,725 $ --
East North Central 25,195 -- 29,134 59
South Atlantic 31,748 -- 34,175 598
Middle Atlantic 17,672 -- 18,350 --
Pacific 6,751 -- 9,706 --
Mountain 35,608 -- 36,636 --
New England 8,209 -- 7,851 --
East South Central 7,394 -- 7,521 --
West South Central 0 -- 237 --
- --------------------------------------------------------------------------------
155,262 -- 168,335 657
Less allowance for losses 1,200 -- 1,500 --
- --------------------------------------------------------------------------------
$154,062 $ -- $166,835 $657
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
F-12 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
PROPERTY TYPE SHEET TO PURCHASE SHEET TO PURCHASE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Apartments $ 54,118 $ -- $ 59,019 $ --
Department/retail stores 49,810 -- 54,018 624
Office buildings 22,090 -- 23,902 --
Industrial buildings 16,938 -- 18,590 33
Nursing/retirement 5,058 -- 5,153 --
Medical buildings 7,248 -- 7,416 --
Hotels/motels -- -- 237 --
- --------------------------------------------------------------------------------
155,262 -- 168,335 657
Less allowance for losses 1,200 -- 1,500 --
- --------------------------------------------------------------------------------
$154,062 $ -- $166,835 $657
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory authority to
80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. The fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value of the
mortgage commitments is $nil.
At December 31, 1999 and 1998, the Company's recorded investment in impaired
loans was $nil and $1,268, with allowances of $nil and $300, respectively.
During 1999 and 1998, the average recorded investment in impaired loans was $nil
and $1,282, respectively.
The Company recognized $2, $123 and $126 of interest income related to impaired
loans for the years ended December 31, 1999, 1998 and 1997, respectively.
The following table presents changes in the allowance for investment losses
related to all loans:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1 $1,500 $1,500 $1,300
Provision (reduction) for
investment losses (300) -- 200
- -----------------------------------------------------------
Balance, December 31 $1,200 $1,500 $1,500
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $78,342 $ 85,164 $ 92,007
Interest on mortgage loans 12,895 14,599 14,228
Other investment income 4,764 3,365 1,715
Interest on cash equivalents 350 64 91
- ----------------------------------------------------------------
96,351 103,192 108,041
Less investment expenses 837 2,321 1,767
- ----------------------------------------------------------------
$95,514 $100,871 $106,274
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-13
<PAGE>
Net realized gains (losses) on investments for the years ended December 31 is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities $1,086 $2,018 $ 844
Mortgage loans 300 -- (200)
Other investments -- 145 (97)
- -----------------------------------------------------------
$1,386 $2,163 $ 547
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(40,706) $(3,347) $9,599
</TABLE>
3. INCOME TAXES
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ending December 31 consists of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $16,426 $20,192 $16,371
Deferred 2,196 (2,369) (960)
- --------------------------------------------------------------
18,622 17,823 15,411
State income taxes-current 619 1,275 1,060
- --------------------------------------------------------------
Income tax expense $19,241 $19,098 $16,471
- --------------------------------------------------------------
- --------------------------------------------------------------
</TABLE>
Increases (decreases) to the income tax provision applicable to pretax income
based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
PROVISION RATE PROVISION RATE PROVISION RATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $20,148 35.0% $19,406 35.0% $16,677 35.0%
Increases (decreases) are
attributable to:
Tax-excluded interest and
dividend income (509) (0.9) (660) (1.2) (569) (1.2)
State tax, net of federal
benefit 402 0.7 829 1.5 689 1.4
Other, net (800) (1.4) (477) (0.9) (326) (0.6)
- -------------------------------------------------------------------------------
Total income taxes $19,241 33.4% $19,098 34.4% $16,471 34.6%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
A portion of life insurance company income earned prior to 1984 was not subject
to current taxation but was accumulated, for tax purposes, in a "policyholders'
surplus account." At December 31, 1999, the Company had a policyholders' surplus
account balance of $798. The policyholders' surplus account is only taxable if
dividends to the stockholder exceed the stockholder's surplus account or if the
Company is liquidated. Deferred income taxes of $279 have not been established
because no distributions of such amounts are contemplated.
- --------------------------------------------------------------------------------
F-14 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Policy reserves $28,245 $29,318
Investments 6,980 --
Other 6,690 6,502
- ----------------------------------------------------------
Total deferred income tax assets 41,915 35,820
- ----------------------------------------------------------
- ----------------------------------------------------------
Deferred income tax liabilities:
Deferred policy acquisition costs 38,033 36,673
Investments -- 7,059
- ----------------------------------------------------------
Total deferred income tax liabilities 38,033 43,732
- ----------------------------------------------------------
Net deferred income tax assets
(liabilities) $ 3,882 ($7,912)
- ----------------------------------------------------------
- ----------------------------------------------------------
</TABLE>
The Company is required to establish a valuation allowance for any portion of
the deferred income tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred tax assets and, therefore, no such valuation
allowance has been established.
4. STOCKHOLDER'S EQUITY
Retained earnings available for distribution as dividends to IDS Life are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by the New York Department of Insurance. All dividend
distributions must be approved by the New York Department of Insurance.
Statutory unassigned surplus aggregated $155,952 and $132,702 as of
December 31, 1999 and 1998, respectively (see Note 3 with respect to the income
tax effect of certain distributions and Note 11 for a reconciliation of net
income and stockholder's equity per the accompanying financial statements to
statutory net income and surplus).
BENEFIT PLANS
The Company participates in the American Express Company Retirement Plan which
covers all permanent employees age 21 and over who have met certain employment
requirements. Employer contributions to the plan are based on participants' age,
years of service and total compensation for the year. Funding of retirement
costs for this plan complies with the applicable minimum funding requirements
specified by ERISA. The Company's share of the total net periodic pension cost
was $27, $37 and $39 in 1999, 1998 and 1997, respectively.
The Company has a "Sales Benefit Plan" which is an unfunded, noncontributory
retirement plan for all eligible financial advisors. Total plan costs for 1999,
1998 and 1997, which are calculated on the basis of commission earnings of the
individual financial advisors, were $1,446, $1,480 and $1,965, respectively.
Such costs are included in deferred policy acquisition costs.
The Company also participates in defined contribution pension plans of American
Express Company which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of either each
employee's eligible compensation or basic contributions. Costs of these plans
charged to operations in 1999, 1998 and 1997 were $218, $252 and $312,
respectively.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-15
<PAGE>
The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees and retired
financial advisors. The plans include participant contributions and
service-related eligibility requirements. Upon retirement, such employees are
considered to have been employees of AEFC. Costs of these plans charged to
operations in 1999, 1998 and 1997 were $nil.
6. INCENTIVE PLAN AND RELATED PARTY OPERATING EXPENSES
The Company maintains a "Persistency Payment Plan." Under the terms of this
plan, financial advisors earn additional compensation based on the volume and
persistency of insurance sales. The total costs for the plan for 1999, 1998 and
1997 were $96, $140 and $1,490, respectively. Such costs are included in
deferred policy acquisition costs.
Charges by IDS Life and AEFC for the use of joint facilities, marketing services
and other services aggregated $13,042, $9,403 and $11,589 for 1999, 1998 and
1997, respectively. Certain of these costs are included in deferred policy
acquisition costs.
7. COMMITMENTS AND CONTINGENCIES
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in one of
these lawsuits. It is expected the settlement will provide $215 million of
benefits to more than 2 million participants. The agreement in principle to
settle also provides for release by class members of all insurance and annuity
market conduct claims dating back to 1985 and is subject to a number of
contingencies including a definitive agreement and court approval. The portion
of the settlement allocated to the Company did not have a material impact on the
Company's financial position or results from operations.
At December 31, 1999 and 1998, traditional life insurance and universal
life-type insurance in force aggregated $5,448,451 and $4,941,727 respectively,
of which $272,276 and $248,280 were reinsured at the respective year ends.
In addition, the Company has a stop loss reinsurance agreement with IDS Life
covering ordinary life benefits. IDS Life agrees to pay all death benefits
incurred each year which exceed 125 percent of normal claims, where normal
claims are defined in the agreement as .095 percent of the mean retained life
insurance in force. Premiums ceded to IDS Life amounted to $150, $134 and $115
for the years ended December 31, 1999, 1998 and 1997, respectively. Claim
recoveries under the terms of this reinsurance agreement were $nil, $nil and
$963 in 1999, 1998 and 1997, respectively.
Premiums ceded to reinsurers other than IDS Life amounted to $2,873, $2,178 and
$1,583 for the years ended December 31, 1999, 1998 and 1997, respectively. Claim
recoveries from reinsurers other than IDS Life amounted to $473, $228 and $1,366
for the years ended December 31, 1999, 1998 and 1997, respectively.
Reinsurance contracts do not relieve the Company from its primary obligations to
policyholders.
The Company has an agreement to assume a block of extended term life insurance
business. The amount of insurance in force related to this agreement was
$237,038 and $267,806 at December 31, 1999 and 1998, respectively. The
accompanying statement of income includes premiums of $nil for the years ended
December 31, 1999, 1998 and 1997, and decreases in liabilities for future policy
benefits of $1,277, $1,742 and $1,889 related to this agreement for the years
ended December 31, 1999, 1998 and 1997, respectively.
- --------------------------------------------------------------------------------
F-16 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
8. LINES OF CREDIT
The Company has an available line of credit with AEFC aggregating $25,000. The
interest rate for any borrowing is established by reference to various indicies
plus 20 to 45 basis points depending on the term. There were no borrowings
outstanding under this agreement at December 31, 1999 or 1998.
9. DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into transactions involving derivative financial instruments
to manage its exposure to interest rate risk, including hedging specific
transactions. The Company does not hold derivative instruments for trading
purposes. The Company manages risks associated with these instruments as
described below.
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate. The Company is not
impacted by market risk related to derivatives held for non-trading purposes
beyond that inherent in cash market transactions. Derivatives are largely used
to manage risk and, therefore, the cash flow and income effects of the
derivatives are inverse to the effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. The Company monitors credit risk related to derivative
financial instruments through established approval procedures, including setting
concentration limits by counterparty and industry, and requiring collateral,
where appropriate. The Company's counterpart is rated A or better by Moody's and
Standard & Poor's.
Credit risk related to interest rate caps is measured by replacement cost of the
contracts. The replacement cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance sheet.
Notional amounts far exceed the related credit exposure.
The Company's holdings of derivative financial instruments are as follows:
<TABLE>
<CAPTION>
NOTIONAL CARRYING FAIR TOTAL CREDIT
DECEMBER 31, 1999 AMOUNT AMOUNT VALUE EXPOSURE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $200,000 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $200,000 $566 $ 2 $ 2
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The interest rate caps expire in the year 2000.
Interest rate caps are used to manage the Company's exposure to interest rate
risk. These instruments are used primarily to protect the margin between
interest rates earned on investments and the interest rates credited to related
annuity contract holders.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-17
<PAGE>
10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. Fair
values of life insurance obligations, receivables and all non-financial
instruments, such as deferred acquisition costs, are excluded. Off-balance sheet
intangible assets, such as the value of the field force, are also excluded.
Management believes the value of excluded assets and liabilities is significant.
The fair value of the Company, therefore, cannot be estimated by aggregating the
amounts presented.
<TABLE>
<CAPTION>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS AMOUNT VALUE AMOUNT VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 434,343 $ 432,004 $ 473,592 $ 503,909
Available for sale 555,574 555,574 578,591 578,591
Mortgage loans on real
estate (Note 2) 154,062 152,942 166,835 178,559
Other:
Derivative financial
instruments (Note 9) -- -- 566 2
Separate accounts assets
(Note 1) 1,957,703 1,957,703 1,491,679 1,491,679
</TABLE>
<TABLE>
<CAPTION>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL LIABILITIES AMOUNT VALUE AMOUNT VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Future policy benefits for
fixed annuities $ 732,752 $ 715,213 $ 788,780 $ 765,430
Separate account liabilities 1,722,028 1,668,067 1,355,430 1,302,422
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $83,646 and $81,358, respectively, and policy loans of $5,594 and
$5,369, respectively. The fair value of these benefits is based on the status of
the annuities at December 31, 1999 and 1998. The fair value of deferred
annuities is estimated as the carrying amount less any surrender charges and
related loans. The fair value for annuities in non-life contingent payout status
is estimated as the present value of projected benefit payments at rates
appropriate for contracts issued in 1999 and 1998.
At December 31, 1999 and 1998, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less applicable surrender charges
and less variable insurance contracts carried at $235,675 and $136,249,
respectively.
- --------------------------------------------------------------------------------
F-18 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
11. STATUTORY INSURANCE ACCOUNTING PRACTICES
Reconciliations of net income for the years ended December 31 and stockholder's
equity at December 31, as shown in the accompanying financial statements, to
that determined using statutory accounting practices are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Net income, per accompanying
financial statements $ 38,324 $ 36,348 $ 31,178
Deferred policy acquisition costs (6,015) (2,841) (7,432)
Adjustments of future policy
benefit liabilities (4,615) (6,199) (4,928)
Deferred income tax benefit 2,196 (2,369) (960)
Provision for losses on investments (161) 862 296
IMR gain/loss transfer and
amortization (154) (1,451) (119)
Adjustment to separate account
reserves 5,498 2,767 10,267
Other, net 766 (350) 430
- -----------------------------------------------------------------
Net income, on basis of statutory
accounting practices $ 35,839 $ 26,767 $ 28,732
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Stockholder's equity, per
accompanying financial statements $279,810 $279,466 $257,279
Deferred policy acquisition costs (136,229) (129,477) (126,614)
Adjustments of future policy
benefit liabilities 2,845 4,697 9,452
Deferred income taxes (3,881) 7,912 11,445
Asset valuation reserve (16,164) (15,516) (16,698)
Adjustments of separate account
liabilities 61,721 56,223 53,456
Adjustments of investments to
amortized cost 23,440 (17,266) (20,613)
Premiums due, deferred and advance 1,485 1,381 1,237
Deferred revenue liability 3,021 2,482 1,941
Allowance for losses 1,200 1,500 1,645
Non-admitted assets (421) (450) (552)
Interest maintenance reserve (3,155) (3,001) (1,551)
Other, net (5,416) (2,915) (1,463)
- -----------------------------------------------------------------
Stockholder's equity, on basis of
statutory accounting practices $208,256 $185,036 $168,963
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
12. YEAR 2000 (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company. All of the
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the major
systems that could be affected by the Year 2000 issue. Steps were taken to
resolve potential problems including modification to existing software and the
purchase of new software. As of December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on the Company's operations.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY OF NEW YORK F-19
<PAGE>
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. At December 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
F-20 IDS LIFE INSURANCE COMPANY OF NEW YORK
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE SECOND-TO-DIE LIFE INSURANCE
PROSPECTUS FOR:
- - FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY ISSUED BY
IDS LIFE INSURANCE COMPANY OF NEW YORK
IDS LIFE INSURANCE COMPANY OF NEW YORK
20 Madison Avenue Extension LOGO
Albany, New York 12203 LOGO
S-6185 F (5/00)
(REG2)
PART II
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission hereto or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The By-Laws of IDS Life Insurance Company of New York provide that:
To the extent permitted and in the manner prescribed by law, the Corporation
shall indemnify any person made, or threatened to be made, a party to any
action, suit or proceeding, civil or criminal, by reason of the fact that he,
his testator or intestate, is or was Director or officer of the Corporation or
of any other corporation of any type or kind, domestic or foreign, which he
served in any capacity at the request of the Corporation, against judgments,
fines, amounts paid in settlement and reasonable expenses (which the Corporation
may advance), including attorney's fees, actually and necessarily incurred as a
result of such action, suit or proceeding, or any appeal therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION PURSUANT TO SECTION 205 OF THE NATIONAL SECURITIES MARKET
IMPROVEMENT ACT OF 1996
The sponsoring insurance company represents that the fees and charges deducted
under the contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
insurance company.
REPRESENTATIONS PURSUANT TO RULE 6e-3 (T)
This filing is made pursuant to Rule 6c-3 and 6e-3 (T) under the Investment
Company Act of 1940.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 61 pages.
The undertakings to file reports.
The signatures.
The following exhibits:
1. A. Copies of all exhibits required by paragraph A of instructions
for Exhibits in Form N-8B-2 to the Registration Statement.
(1) Resolution of Board of Directors of IDS Life of New
York authorizing the Trust, adopted September 12,
1985, filed as Exhibit 1.A.(1) to Registrant's Form
N-8B-2 with Port-Effective Amendment No. 11 , File
No. 33-15290 is incorporated herein by reference.
(2) Not applicable.
(3) (a) Not applicable.
(b) (1) Form of Explanation of New York
Sales Agreement*
(2) Form of Personal Financial Planner's
Agreement with IDS Financial
Services Inc.*
(3) Form of Personal Financial Planner's
Agreement with IDS Life Insurance
Company of New York*
(4) Form of Field Trainer's Rider to
Personal Financial
Planner's Agreement.*
(5) Form of District Manager's Rider to
Personal Financial Planner's
Agreement.*
(6) Form of New York District Manager -
Insurance Rider to Personal
Financial Planner Agreement.*
(7) Form of Division Manager's Agreement
with IDS Financial Services Inc.*
(8) Form of New York Division Manager -
Insurance Rider to Division
Manager's Agreement with IDS
Financial Services Inc.*
(9) Form of Field President Agreement
with American Express
Financial Advisors Inc.**
<PAGE>
(10) Form of Recruiting and Training
Manager License Agreement with IDS
Life Insurance Company of New
York.**
(11) Form of Group Vice President
Agreement with American Express
Financial Advisors Inc.**
(12) Form of IDS Paraplanner License
Agreement with IDS Life Insurance
Company of New York.**
(c) Schedules of Sales Commissions****
(4) Not applicable.
(5) Flexible Premium Survivorship Variable Life Insurance
Policy.**
(6) (a) Certificate of Incorporation of IDS Life
Insurance Company of New York, dated July
23, 1957.*
(b) Amended By-Laws of IDS Life Insurance
Company of New York.*
(7) Not applicable.
(8) (a) Form of Investment Management and
Services Agreement dated December 17, 1985,
between IDS Life of New York and IDS Life of
New York Series Fund, Inc.*
(b) Form of Investment Advisory Agreement dated
July 11, 1984, between IDS Life of New York
and IDS Financial Services Inc. relating to
the Variable Account.*
(c) Addendum to Investment Management and
Services Agreement.***
(d) Addendum to Investment Advisory
Agreement.***
(9) None.
(10) (a) Application form for the Flexible Premium
Survivorship Variable Life Insurance
Policy.**
(b) Application form for Life and Disability
Income Insurance.**
(11) IDS Life Insurance Company of New York's Description
of Transfer and Redemption Procedures and Method of
Conversion to Fixed Benefit Policies.***
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
2. Opinion of counsel is filed electronically herewith.
<PAGE>
3. Not applicable.
4. Not applicable.
5. Not applicable.
6. Actuarial Opinion of Mark Gorham, F.S.A, M.A.A.A., Actuarial Director -
Insurance Product Development is filed electronically herewith.
7. Written actuarial consent of Mark Gorham, F.S.A, M.A.A.A., Actuarial
Director - Insurance Product Development is filed electronically
herewith.
8. Written auditor consent of Ernst & Young LLP is filed
electronically herewith.
9. Power of Attorney to sign amendments to this Registration Statement
dated April 14, 1999 filed electronically as Exhibit 9 to
Post-Effective Amendment No. 1 to Registration Statement, File No.
333-42257, is incorporated herein by reference.
* All of these exhibits are incorporated by reference to Amendment No. 3 to the
Registration Statement to form N-8B-2 File No. 811-05213.
** All of these exhibits are incorporated by reference to Amendment No. 4 to the
Registration Statement to form N-8B-2 File No. 811-05213.
*** All of these exhibits are incorporated by reference to the original
Registration Statement to form S-6, File No. 333-42257
**** All of these exhibits are incorporated by reference to Pre-Effective No. 1
to the Registration Statement to Form S-6, File No. 333-42257.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, IDS Life Insurance Company of New York, on behalf of the
Registrant, certifies that it meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on behalf of the Registrant by the undersigned, thereunto
duly authorized, in this City of Minneapolis, and State of Minnesota on the 25th
day of April, 2000.
IDS Life of New York Account 8
(Registrant)
By IDS Life Insurance Company of New York
(Sponsor)
By /s/ Richard W. Kling*
Richard W. Kling, Director and
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 25th day of April, 2000:
Signature Title
/s/ Richard W. Kling* Director and Chairman of the
Richard W. Kling Board
/s/ Timothy V. Bechtold* Director and President
Timothy V. Bechtold
/s/ Maureen A. Buckley* Director, Vice President, Chief
Maureen A. Buckley Operating Officer, Consumer Affairs
Officer and Claims Officer
/s/ Rodney P. Burwell* Director
Rodney P. Burwell
/s/ John R. Cattau* Director
John R. Cattau
/s/ Robert R. Grew* Director
Robert R. Grew
/s/ Jeffrey S. Horton* Vice President and Treasurer
Jeffrey S. Horton
/s/ Jean B. Keffeler* Director
Jean B. Keffeler
/s/ Thomas R. McBurney* Director
Thomas R. McBurney
<PAGE>
/s/ Edward J. Muhl* Director
Edward J. Muhl
/s/ Thomas V. Nicolosi* Director
Thomas V. Nicolosi
/s/ Stephen P. Norman* Director
Stephen P. Norman
/s/ Richard M. Starr* Director
Richard M. Starr
/s/ Philip C. Wentzel* Vice President and Controller
Philip C. Wentzel
/s/ Michael R. Woodward* Director
Michael R. Woodward
*Signed pursuant to Power of Attorney dated April 14, 1999 filed electronically
as Exhibit No. 9 to this Amendment to the Registration Statement on Form S-6,
File No. 333-42257 and is incorporated herein by reference.
By: /s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Counsel and Assistant Secretary
Exhibit 2: Opinion amd Consent of Counsel, dated April 25, 2000.
Exhibit 6: Actuary Opinion, dated April 24, 2000.
Exhibit 7: Actuary Consent, dated April 24, 2000.
Exhibit 8: Auditors Consent, dated April 24, 2000.
April 25, 2000
IDS Life Insurance Company of New York
20 Madison Avenue Ext.
Albany, NY 12203
RE: IDS Life of New York Account 8, Form S-6
Post-Effective Amendment No. 2
File No. 333-42257/811-5213
Ladies and Gentlemen:
I am familiar with the establishment of the IDS Life of New York Account 8
("Account"), which is a separate account of IDS Life Insurance Company of New
York ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do
business in each jurisdiction where it transacts business. The Company
has all corporate powers required to carry on its business and to issue
the contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company, when offered and sold in
accordance with the prospectus contained in the Registration Statement
and in compliance with applicable law, will be legally issued and
represent binding obligations of the Company in accordance with their
terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Counsel and Assistant Secretary
April 24, 2000
IDS Life Insurance Company of New York
20 Madison Avenue Extension
Albany, New York 12203
Gentlemen:
This opinion is furnished in connection with Post-Effective Amendment No. 2 to
the registration by IDS Life Insurance Company of New York of a Flexible Premium
Survivorship Variable Life Insurance Policy ("the Policy"), File No.333-42257,
under the Securities Act of 1933. The prospectus included on Form S-6 in the
post-effective amendment to the registration statement describes the Policy. I
am familiar with the Policy, the Post-effective amendment, the registration
statement and the exhibits thereto. In my opinion, the illustrations of Death
Benefits, Policy Values, and Surrender Values included in the section of the
prospectus entitled "illustrations", under the assumptions stated in that
section, are consistent with the provisions of the Policy.
I hereby consent to the use of this opinion as an exhibit to the post-effective
amendment to the registration statement and to the reference of my name under
the heading "Experts" in this prospectus.
Very truly yours,
/s/ Mark Gorham
Mark Gorham, F.S.A., M.A.A.A.
Actuarial Director - Insurance Product Development
Minneapolis, Minnesota
April 24, 2000
CONSENT OF ACTUARY
The Board of Directors
IDS Life Insurance Company of New York
I consent to the reference to me under the caption "Experts" and to use the use
of my opinion dated April 24, 2000 on the illustrations used by IDS Life
Insurance Company of New York in the Prospectus for the Flexible Premium
Survivorship Variable Life Insurance Policy offered by IDS Life Insurance
Company of New York as part of Post-Effective Amendment #2 (Form S-6, File No.
333-42257) to the Registration Statement being filed under the Securities Act of
1933.
/s/ Mark Gorham
Mark Gorham, F.S.A., M.A.A.A.
Actuarial Director - Insurance Product Development
Minneapolis, Minnesota
April 24, 2000
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 3, 2000 with respect to the financial
statements of IDS Life Insurance Company of New York and to the use of our
report dated March 17, 2000 with respect to the financial statements of IDS Life
of New York Account 8 included in Post-Effective Amendment No. 2 to the
Registration Statement (Form S-6, No. 333-42257) and related Prospectus for the
registration of the Flexible Premium Survivorship Variable Life Insurance
Policies to be offered by IDS Life Insurance Company of New York.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Minneapolis, Minnesota
April 24, 2000
