Registration No. 02-78001
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ______ _____
Post-Effective Amendment No. __16__ __X__
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. __12__ _____
(Check appropriate box or boxes)
Principal Mutual Life Insurance Company Separate Account B
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
Principal Mutual Life Insurance Company
- --------------------------------------------------------------------------------
(Name of Depositor)
The Principal Financial Group, Des Moines, Iowa 50392
- --------------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (515) 248-3842
M. D. Roughton, The Principal Financial Group Des Moines, Iowa 50392
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Registrant has heretofore registered an indefinite amount of such Separate
Account B Variable Annuity Contracts under the Securities Act of 1933 pursuant
to Rule 24f-2; Registrant filed a 24f-2 notice for the fiscal year ending
December 31, 1995 on February 28, 1996.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1996 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for
a previously filed post- effective amendment.
<PAGE>
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
PENSION BUILDER - GROUP VARIABLE ANNUITY CONTRACTS
FOR QUALIFIED PLANS FOR SELF-EMPLOYED INDIVIDUALS
AND THEIR EMPLOYEES
Registration Statement on Form N-4
Cross Reference Sheet
Form N-4 Item Caption in Prospectus
Part A
1. Cover Page Principal Mutual Life Insurance
Company Separate Account B
Pension Builder - Group
Variable Annuity Contracts
For Self-Employed Individuals
and Their Employees
2. Definitions Glossary of Special Terms
3. Synopsis Summary, Expense Table, Example
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant, Summary, Introduction, Description of
Depositor, and Portfolio Companies Principal Mutual Life Insurance
Company, Principal Mutual Life
Insurance Company Separate Account
B, Voting Rights
6. Deductions Summary, Deductions Under the Contracts,
Contingent Deferred Sales Charge,
Administration Charge, Separate
Payment of Administration Charge,
Mortality and Expense Risks Charge,
Premium Taxes, Distribution of These
Contracts
7. General Description of Variable Summary, The Contract, Contract Values
Annuity Contracts and Accounting Before Annuity Commence-
ment Date, Annuity Benefits, Payment
on Death of Participant, Withdrawals
and Transfers, Other Contractual
Provisions, Contractowners' Inquiries
8. Annuity Period Annuity Benefits
9. Death Benefit Payment on Death of Participant,
Federal Tax Status
10. Purchases and Contract Value Summary, Introduction, The Contract,
Contract Values and Accounting Before
Annuity Commencement Date, Other
Contractual Provisions, Distribution
of These Contracts
11. Redemptions Summary, Introduction, Annuity Benefits,
Withdrawals, and Transfers
12. Taxes Summary, Introduction, Annuity Benefits,
Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the State- Table of Contents of the Statement
ment of Additional Information of Additional Information
Part B Statement of Additional Information
Caption**
15. Cover Page Principal Mutual Life Insurance
Company Separate Account B Pension
Builder-Group Variable Annuity
Issued By Principal Mutual Life
Insurance Company
16. Table of Contents Table of Contents
17. General Information and History General Information and History
18. Services Independent Accountants
19. Purchase of Securities Being Deductions Under the Contracts,
Offered Summary, Withdrawals and Transfers,
Distribution of These Contracts
20. Underwriters Summary, Distribution of These
Contracts, Underwriting Commissions
21. Calculation of Performance Data Calculation of Yield and Total Return
22. Annuity Payments Annuity Benefits
23. Financial Statements Financial Statements
** Prospectus caption given where
appropriate.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
PENSION BUILDER - GROUP VARIABLE ANNUITY CONTRACTS
FOR TAX-DEFERRED RETIREMENT PLANS
Issued by Principal Mutual Life Insurance Company (the "Company")
Prospectus dated May 1, 1996
This Prospectus concisely sets forth information about Principal Mutual
Life Insurance Company Separate Account B, Pension Builder Group Variable
Annuity Contracts (the "Contract" or the "Contracts") that an investor ought to
know before investing. It should be read and retained for future reference.
Additional information about the Contracts, including a Statement of
Additional Information, dated May 1, 1996, has been filed with the Securities
and Exchange Commission. The Statement of Additional Information is incorporated
by reference into this Prospectus. The table of contents of the Statement of
Additional Information appears on page 24 of this Prospectus. A copy of the
Statement of Additional Information can be obtained, free of charge, upon
request by writing or telephoning:
Princor Financial Services Corporation
a Member of
The Principal Financial Group
Des Moines, IA 50392-0200
Telephone: 1-800-247-4123
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus is valid only when accompanied by the current prospectus
for Principal Capital Accumulation Fund, Inc., Principal Government Securities
Fund, Inc. and Principal Money Market Fund, Inc. These prospectuses should be
kept for future reference.
TABLE OF CONTENTS
Page
Glossary of Special Terms ................................................. 3
Expense Table ........................................................... 5
Example .................................................................. 6
Condensed Financial Information ........................................... 6
Summary ................................................................ 8
Introduction .............................................................. 8
Description of Principal Mutual Life Insurance Company .................... 9
Principal Mutual Life Insurance Company Separate Account B ................ 10
Deductions under the Contracts ............................................ 10
Contingent Deferred Sales Charge...................................... 10
Administration Charge ................................................ 11
Separate Payment of Administration Charge ............................ 11
Mortality and Expense Risks Charge ................................... 12
Premium Taxes ........................................................ 12
Surplus Distribution at Sole Discretion of the Company .................... 12
The Contract ............................................................. 12
Contract Values and Accounting Before Annuity Commencement Date ...... 12
Participant's Investment Accounts ................................ 12
Unit Value ....................................................... 13
Net Investment Factor ............................................ 13
Hypothetical Example of Calculation of Unit Value for the
Capital Accumulation Division and Government
Securities Division.......................................... 13
Hypothetical Example of Calculation of Unit Value for
the Money Market Division................................... 14
Annuity Benefits .................................................... 14
Selecting a Variable Annuity ..................................... 14
Forms of Variable Annuities ...................................... 14
Basis of Annuity Conversion Rates ................................ 15
Determining the Amount of the First Monthly Annuity Payment ...... 16
Determining the Amount of the Second and Subsequent
Monthly Annuity Payments .................................... 16
Hypothetical Example of Calculation of Annuity Payments .......... 16
Payment on Death of Participant ...................................... 17
Prior to Annuity Commencement Date ............................... 17
Subsequent to Annuity Commencement Date .......................... 17
Withdrawals and Transfers ............................................ 17
Cash Withdrawals ................................................. 17
Transfers to the Contract ........................................ 18
Transfers Between Divisions ...................................... 18
Transfers to the Associated Fixed Contract ....................... 18
Special Situation Involving Alternate Funding Agents ............. 18
Postponement of Cash Withdrawal or Transfer ...................... 19
Other Contractual Provisions ......................................... 19
Contribution Limits .............................................. 19
Assignment ....................................................... 19
Cessation of Contributions ....................................... 19
Limitation as to Participants..................................... 19
Substitution of Securities........................................ 19
Changes in a Contract ............................................ 20
Statement of Values............................................... 20
Distribution of these Contracts............................................ 20
Voting Rights ......................................................... 20
Federal Tax Status......................................................... 21
Page
State Regulation .......................................................... 22
Legal Opinions ........................................................... 22
Legal Proceedings ......................................................... 22
Registration Statement..................................................... 22
Other Variable Annuity Contracts........................................... 22
Independent Auditors ...................................................... 22
Financial Statements....................................................... 22
Appendix 1 ............................................................... 23
Appendix 2 ............................................................... 23
Contractholders' Inquiries................................................. 23
Table of Contents of the Statement of Additional Information............... 24
This Prospectus does not constitute an offer of, or solicitation of any
offer to acquire, any interest or participation in the Contracts in any
jurisdiction in which such an offer or solicitation may not lawfully be made. No
person is authorized to give any information or to make any representations in
connection with the Contracts other than those contained in this Prospectus.
GLOSSARY OF SPECIAL TERMS
Administration Charge -- A charge deducted once each Contribution Year prior to
the Annuity Commencement Date from the Investment Accounts of each Participant,
either on the last day of the Contribution Year or the date the Investment
Accounts are applied or paid in full (a total redemption).
Annuity Change Factor -- The factor used to determine the change in value of a
Variable Annuity in the course of payment.
Annuity Commencement Date -- The first day of any month on which Annuity
Payments to a Participant begin, as provided by the Retirement Plan.
Annuity Payments -- Periodic payments made to a Participant pursuant to the
annuity certificate issued to the Participant at the commencement of benefits.
Annuity Reserve Account -- The reserve held for Variable Annuities in course of
payment in a Division of Separate Account B for these Contracts.
Associated Fixed Contract -- A fixed-dollar annuity contract issued by the
Company for use in connection with tax-deferred retirement plans or programs.
Commuted Value -- The dollar value, as of a given date, of remaining Annuity
Payments. It is determined by the Company using the interest rate assumed in
determining the initial amount of monthly income and assuming no variation in
the amount of monthly payments after the date of determination.
Compensation -- The amount derived from personal services which is includable in
the gross income of the Participant for the taxable year.
Contingent Deferred Sales Charge -- The charge deducted from certain cash
withdrawals from a Participant's Investment Accounts before the Annuity
Commencement Date.
Contract-- Each contract issued by the Company with any of the following form
numbers: GP A 5921, GP A 5925 and GP A 5927.
Contractholder -- The entity to which the Contract will be issued, which will
normally be an Employer, an association, or a trust established for the benefit
of Participants and their beneficiaries.
Contribution -- Amounts contributed under the Contracts by or on behalf of
Participants which are subject to Sections 403(b), 408 or 219 of the Internal
Revenue Code.
Contribution Year --
(a) For Individual Retirement Annuities designed for ongoing deductible
Contributions -- the taxable year of a Participant. The first Contribution
Year of a Participant will commence the date the Company receives an
initial Contribution and terminate at the end of that taxable year.
(b) For Rollover Individual Retirement Annuities -- the twelve-month period
commencing on the date the Participant's first Contribution is received and
each twelve-month period thereafter.
(c) For Tax Deferred Annuities -- the twelve-month period which coincides with
the Plan Year.
Division -- The part of Separate Account B which is invested in shares of a
single Mutual Fund.
Employer -- The person or entity which employs a Participant. For an unemployed
Participant for whom Contributions are made by a spouse, the term Employer means
the person or entity which employs that spouse. For a Participant covered by a
Tax Deferred Annuity arrangement, the term Employer means such Participant's
employer which is either an organization described in Section 501(c)(3) of the
Internal Revenue Code or which is a public school or other agency or
instrumentality of a state or political subdivision of a state described in
Internal Revenue Code Sections 403(b) or 170(b)(1)(A)(ii) and which has made the
Tax Deferred Annuity arrangement available to its employees.
Individual Retirement Annuity-- A plan or program adopted by or on behalf of
individuals pursuant to Section 408 of the Internal Revenue Code.
Internal Revenue Code -- The Internal Revenue Code of 1954, as amended, and
regulations promulgated thereunder. Reference to the Internal Revenue Code means
such Internal Revenue Code or the corresponding provisions of any subsequent
revenue code and any regulations thereunder.
Investment Account -- An account established under a Contract for a Participant
with respect to a Division of Separate Account B.
Investment Account Value -- The value of an Investment Account on any date is
equal to the number of units then credited to such Investment Account multiplied
by the Unit Value for that Division for the Valuation Period in which such date
occurs.
Mutual Fund -- Principal Capital Accumulation Fund, Inc., Principal Government
Securities Fund, Inc., Principal Money Market Fund, Inc., or shares of other
registered open-end investment companies substituted therefor.
Net Investment Factor -- The factor used to determine the change in Unit Value
during a Valuation Period.
Participant -- A natural person for whom Contributions have been or are being
made under the Contract.
Plan Year -- For Tax Deferred Annuities the accounting year of the Retirement
Plan. If the Retirement Plan does not have any accounting year, the Company will
establish a twelve-month period as the Plan Year.
Retirement Plan -- A retirement plan or program under which benefits are to be
provided to Participants pursuant to a Contract described herein.
Rollover Individual Retirement Annuity -- An Individual Retirement Annuity
designed for single premium rollover Contributions pursuant to Internal Revenue
Code Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3) or
409(b)(3)(c).
Separate Account B -- A separate account established by the Company under Iowa
law to receive Contributions under the Contracts offered by this Prospectus and
other contracts issued by the Company. It is divided into a Capital Accumulation
Division (formerly known as Common Stock Division) (invested in Principal
Capital Accumulation Fund, Inc.), a Money Market Division (invested in Principal
Money Market Fund, Inc.) and a Government Securities Division (invested in
Principal Government Securities Fund, Inc.). Additional Divisions may be added
in the future.
Tax Deferred Annuity -- A plan or program adopted by public school systems or
other Employers pursuant to Section 403(b) of the Internal Revenue Code.
Total and Permanent Disability -- The condition of a Participant when, as the
result of sickness or injury, the participant is prevented from engaging in any
substantial gainful activity and is eligible for and receiving a disability
benefit under Title II of the Federal Social Security Act.
Unit Value -- A measure used to determine the value of an Investment Account.
Valuation Date -- The date as of which the net asset value of a Mutual Fund is
determined.
Valuation Period -- The period between the time as of which the net asset value
of a Mutual Fund is determined on one Valuation Date and the time as of which
such value is determined on the next following Valuation Date.
Variable Annuity -- A series of periodic payments, the amounts of which will
increase or decrease to reflect the investment experience of a Division of
Separate Account B for the Contract.
Written Notification -- Actual delivery to the Company at its home office in Des
Moines, Iowa of an appropriate writing on a form supplied or approved by the
Company.
EXPENSE TABLE
The following tables depict fees and expenses applicable to a Participant's
account under the Contract. The purpose of the table is to assist the
contractowner in understanding the various costs and expenses that a
contractowner will bear directly or indirectly. The table reflects expenses of
the separate account as well as the expenses of the mutual funds in which the
separate account invests. In certain circumstances, state premium taxes will
also be applicable. The example below should not be considered a representation
of past or future expenses; actual expenses may be greater or lesser than those
shown. See "Deductions under the Contracts."
Contractowner Transaction Expenses
Sales Load Imposed on
Purchases (as a percentage
of purchase payments) None
Deferred Sales Load (as a
percentage of amount
surrendered)
For Withdrawals Occurring During Year:
1 2 3 4 5 6 7 8 9 10 Thereafter
- - - - - - - - - -- ----------
7% 6.3% 5.6% 4.9% 4.2% 3.5% 2.8% 2.1% 1.4% .7% 0%
Surrender Fees None
Exchange Fee None
Annual Contract Fee $25 plus an amount equal to the following:
- ----------------------
.5% of the First
Total Value of All x $50,000 of the Participant's
Investment Accounts ------------------------------
of Participant Investment Accounts
Total Value of all
Investment Accounts
of Participant(1)
Separate Account Annual Expenses
(as a percentage of average account
value)
Mortality and Expense Risk Fees 1.4965% (1.0001% for Rollover Individual
Retirement Annuity)
Account Fees and Expenses None
Total Separate Account Annual
Expenses 1.4965%
Annual Expenses of Mutual Funds
(as a percentage of average net
assets of the following
mutual funds)
Principal Capital Principal Government Principal Money
Accumulation Fund Securities Fund Market Fund
Management Fees .49% .50% .50%
Other Expenses .02% .05% .08%
Total Mutual Fund
Annual Expenses .51% .55% .58% .
(1) If Contributions for a Participant are made under the Contract as part of a
Retirement Plan sponsored by, or program of, the Employer of the
Participant and the Company receives all of that portion of the
contributions under such a plan or program directed to annuity contracts
for all employees participating in the plan or program, then the
denominator will be the aggregate value of all the accounts of all the
Participants of the Employer.
EXAMPLE
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------- ------- ------- --------
If you surrender your contract Capital
at the end of the applicable Accumulation
time period: Division $96 $136 $177 $285
You would pay the following Government
expenses on a $1,000 investment, Securities
assuming 5% annual return on Division $97 $137 $179 $289
assets:
Money Market
Division $97 $138 $180 $292
If you annuitize at the end Capital
of the applicable time period Accumulation
or do not surrender your Division $25 $75 $129 $276
contract:
You would pay the following Government
expenses on a $1,000 investment, Securities
assuming 5% annual return on Division $25 $77 $131 $280
assets:
Money Market
Division $25 $78 $133 $283
<TABLE>
<CAPTION>
CONDENSED FINANCIAL INFORMATION
Selected data for a Pension Builder accumulation unit outstanding
throughout the period ended December 31:
Capital Accumulation Division
Pension Builder --
IRA/TSA
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------------------------------------------------ ---- ---- ---- ----
Accumulation unit value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $2.624 $2.650 $2.495 $2.313 $1.693 $1.907 $1.665 $1.477 $1.409 $1.231
End of period 3.409 2.624 2.650 2.495 2.313 1.693 1.907 1.665 1.477 1.409
Number of accumulation 9,967 16,649 21,269 20,148 18,477 18,109 16,256 14,236 12,703 7,190
units outstanding at end
of period (in thousands)
Pension Builder --
Rollover IRA
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------------------------------------------------ ---- ---- ---- ----
Accumulation unit value:
Beginning of period $2.845 $2.859 $2.679 $2.471 $1.800 $2.017 $1.753 $1.547 $1.468 $1.276
End of period 3.715 2.845 2.859 2.679 2.471 1.800 2.017 1.753 1.547 1.468
Number of accumulation 2,115 5,598 8,602 8,207 7,535 6,750 6,111 5,328 4,824 2,212
units outstanding at end
of period (in thousands)
</TABLE>
<TABLE>
<CAPTION>
Government Securities Division
Pension Builder--
IRA/TSA(1)
1995 1994 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------ ---- ---- ----
Accumulation unit value:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $1.570 $1.669 $1.539 $1.462 $1.269 $1.176 $1.032 $ .967 $1.000
End of period 1.841 1.570 1.669 1.539 1.462 1.269 1.176 1.032 .967
Number of accumulation 3,738 5,947 7,432 6,200 4,912 3,732 2,782 2,115 1,001
units outstanding at end
of period (in thousands)
Pension Builder--
Rollover IRA(1)
1995 1994 1993 1992 1991 1990 1989 1988 1987
------------------------------------------------ ---- ---- ----
Accumulation unit value:
Beginning of period $1.631 $1.726 $1.584 $1.497 $1.293 $1.192 $1.041 $ .971 $1.000
End of period 1.923 1.631 1.726 1.584 1.497 1.293 1.192 1.041 .971
Number of accumulation 1,772 4,117 7,878 5,933 4,602 3,356 2,086 1,369 886
units outstanding at end
of period (in thousands)
<FN>
(1) Commenced operations on April 14, 1987.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Money Market Division
Pension Builder --
IRA/TSA
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------------------------------------------------ ---- ---- ---- ----
Accumulation unit value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $1.696 $1.659 $1.640 $1.608 $1.541 $1.448 $1.348 $1.276 $1.217 $1.163
End of period 1.764 1.696 1.659 1.640 1.608 1.541 1.448 1.348 1.276 1.217
Number of accumulation 1,327 1,997 2,905 3,841 4,639 5,366 5,302 3,142 2,070 752
units outstanding at end
of period (in thousands)
Pension Builder--
Rollover IRA
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------------------------------------------------ ---- ---- ---- ----
Accumulation unit value:
Beginning of period $1.739 $1.692 $1.664 $1.624 $1.548 $1.447 $1.341 $1.263 $1.199 $1.140
End of period 1.817 1.739 1.692 1.664 1.624 1.548 1.447 1.341 1.263 1.199
Number of accumulation 440 2,227 2,894 3,699 3,999 3,300 3,865 1,509 747 381
units outstanding at end
of period (in thousands)
</TABLE>
Financial statements are contained in the Statement of Additional Information.
SUMMARY
How can I invest in a Contract?
The Pension Builder Group variable annuity contracts (the "Contract" or the
"Contracts") described in this Prospectus are designed for use in connection
with tax-deferred Retirement Plans in the form of (1) Tax Deferred Annuity plans
or programs adopted by public school systems or other agencies of a state or its
subdivisions or certain tax exempt organizations pursuant to Section 403(b) of
the Internal Revenue Code of 1954, and (2) Individual Retirement Annuity plans
or programs adopted pursuant to Section 408 of the Internal Revenue Code. These
Contracts will be sold primarily by persons who are insurance agents of or
brokers for Principal Mutual Life Insurance Company. In addition, these persons
will usually be registered representatives of Princor Financial Services
Corporation, which acts as distributor for the Contract. See "Distribution of
these Contracts."
What is the minimum amount that may be invested?
There is no required minimum. See "Other Contractual Provisions".
Do I get an initial ten-day free look at a newly purchased Contract?
Yes. A Participant may terminate initial participation under the Contract
without penalty by returning the certificate issued when the Contract is first
purchased to the home office of the Company within ten days after the
Participant's initial receipt of the certificate. See "Introduction."
How can I withdraw my investment?
Subject to any Retirement Plan limitations or any reduction for vesting
provided for in the Retirement Plan as to amounts available, the Participant may
withdraw cash from the Investment Accounts at any time prior to the Annuity
Commencement Date subject to any charges that may be applied. For tax years
beginning after December 31, 1988, distributions from Tax Deferred Annuities may
begin only after the Participant attains age 59 1/2, separates from service,
dies or becomes disabled, or incurs a hardship. See "Withdrawals and Transfers."
Note that withdrawals before age 59 1/2 may involve an income tax penalty. See
"Federal Tax Status."
INTRODUCTION
The Contracts described in this Prospectus are designed for use in
connection with tax-deferred Retirement Plans in the form of (1) Tax Deferred
Annuity plans or programs adopted by public school systems or other agencies of
a state or its subdivisions or certain tax exempt organizations pursuant to
Section 403(b) of the Internal Revenue Code and (2) Individual Retirement
Annuity plans or programs adopted pursuant to Section 408 of the Internal
Revenue Code. The Contracts provide for the accumulation of values and the
payment of annuity benefits on a variable basis. A certificate is issued to each
Participant describing the benefits under the Contract. A Participant may
terminate initial participation under the Contract without penalty by returning
the certificate issued when the Contract is first purchased to the home office
of the Company within ten days after the Participant's initial receipt of the
certificate.
All Contributions for Participants are allocated to one or more of the
Divisions of Separate Account B. Currently there are three Divisions: the
Capital Accumulation Division (formerly known as the Common Stock Division), the
Money Market Division and the Government Securities Division. Additional
Divisions may be added in the future. Each Participant controls the allocation
by filing a Written Notification with the Company.
The Capital Accumulation Division invests only in shares of Principal
Capital Accumulation Fund, Inc., the Money Market Division invests only in
shares of Principal Money Market Fund, Inc. and the Government Securities
Division invests only in shares of Principal Government Securities Fund, Inc.
These three corporations are diversified, open-end investment management
companies, typically known as Mutual Funds. The Investment Manager for the
Mutual Funds is Princor Management Corporation. Principal Capital Accumulation
Fund and Principal Money Market Fund are also used to fund variable life
insurance contracts. See "Eligible Purchasers and Purchase of Shares" in the
Funds' prospectus for a discussion of the potential risks associated with "mixed
funding."
The investment objective of Principal Capital Accumulation Fund, Inc. is
long-term capital appreciation and growth of future investment income. The
assets of this Mutual Fund consist principally of a portfolio of common stocks.
The value of the investments held by this Mutual Fund fluctuates daily and is
subject to the risks of changing economic conditions as well as the risks
inherent in the ability of this Mutual Fund's management to anticipate changes
in such investments necessary to meet changes in economic conditions.
Historically, the value of a diversified portfolio of common stocks such as
invested in by Principal Capital Accumulation Fund held for an extended period
of time has tended to rise during periods of inflation. There has, however, been
no exact correlation, and for some periods the values of such common stocks
declined while the rate of inflation increased.
Principal Money Market Fund, Inc. has an investment objective of obtaining
maximum current income available from short-term securities consistent with
preservation of principal and maintenance of liquidity by investing all of its
assets in a portfolio of money market instruments. This Mutual Fund invests in
United States dollar denominated instruments having a maturity of 397 days or
less that the Manager, subject to the oversight of the Fund's board of
directors, determines present minimal credit risks and which at the time of
acquisition are "Eligible Securities" as that term is defined in regulations
issued under the Investment Company Act of 1940. See the Fund's prospectus for
details. The value of the investments held by this Mutual Fund may fluctuate,
although the net asset value per share is normally expected to remain at $1.00.
However, its yield will vary with changes in short-term interest rates. Over the
last two decades there has been a general correlation between short-term
interest rates and the cost of living, but there has been no exact correlation
and for some periods such rates have declined while the cost of living has
risen.
Principal Government Securities Fund, Inc. has an investment objective of a
high level of current income, liquidity and safety of principal. The Fund seeks
to achieve this objective through the purchase of obligations issued or
guaranteed by the United States Government or its agencies, with up to 55% of
the Fund's assets invested in Government National Mortgage Association
Certificates ("GNMA Certificates"). Fund shares, however, are not guaranteed by
the United States Government. The value of the Fund's investments fluctuates as
interest rates change. The value rises when rates decline and falls when rates
increase. Expected prepayments of mortgages included in a GNMA certificate can
affect the market value of the certificate, and actual prepayments can affect
the return ultimately received.
Additional information concerning these Mutual Funds, including their
investment policies and restrictions, investment management fees and operating
expenses is given in the prospectus for the Funds. A Prospectus for the Mutual
Funds is attached to and follows this Prospectus. It should be read carefully in
conjunction with this Prospectus before investing.
Each Division purchases shares of the Mutual Funds at net asset value. In
addition, all distributions made by a Mutual Fund with respect to shares held by
Divisions of Separate Account B are reinvested in additional shares of the same
Mutual Fund. Contract benefits are provided and charges are made in effect by
redeeming Mutual Fund shares at net asset value. Values under the Contracts,
both before and after the commencement of Annuity Payments, will increase or
decrease to reflect the investment performance of the Mutual Funds and
Participants assume the risks of such change in values.
From time to time the Separate Account advertises its Money Market
Division's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the division refers to the income generated by an investment in the
division over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the division is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. Neither yield quotation
reflects sales load deducted from purchase payments which, if included, would
reduce the "yield" and "effective yield."
Also, from time to time, the Separate Account will advertise the average
annual total return of its various divisions. The average annual total return
for any of the divisions is computed by calculating the average annual
compounded rate of return over the stated period that would equate an initial
$1,000 investment to the ending redeemable contract value. In this calculation
the ending value is reduced by a contingent deferred sales charge that decreases
from 7% to 0% over a period of 10 years. The Separate Account may also advertise
total return figures of its Divisions for a specified period that do not take
into account the sales charge in order to illustrate the change in the
Division's unit value over time. See "Deductions Under the Contracts" for a
discussion of contingent deferred sales charges.
See the Statement of Additional Information for further information
regarding the computation of yield, effective yield and total return.
DESCRIPTION OF PRINCIPAL MUTUAL LIFE INSURANCE COMPANY (The "Company")
Principal Mutual Life Insurance Company is a mutual life insurance company
with its home office at The Principal Financial Group, Des Moines, Iowa 50392,
telephone number 515-247-5111. It was originally incorporated under the laws of
the State of Iowa in 1879 as Bankers Life Association, changed its name to
Bankers Life Company in 1911 and changed its name to Principal Mutual Life
Insurance Company in 1986. It is a member of The Principal Financial Group, a
diversified family of insurance and financial services corporations.
Principal Mutual Life Insurance Company is authorized to do business in the
50 states of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and the Canadian Provinces of Alberta, British Columbia, Manitoba,
Ontario and Quebec. The Company offers a full range of products and services for
businesses, groups and individuals including individual insurance, pension plans
and group/employee benefits. The Company has ranked in the upper one percent of
life insurers in assets and premium income and has consistently received
excellent ratings from the major rating firms based upon the Company's claims
paying ability. The Company has $51.3 billion in assets under management and
serves more than 9.3 million individuals and their families.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
Separate Account B was established on January 12, 1970 pursuant to a
resolution (as amended) of the Executive Committee of the Board of Directors of
the Company. Under Iowa insurance laws and regulations the income, gains or
losses, whether or not realized, of Separate Account B are credited to or
charged against the assets of Separate Account B without regard to the other
income, gains or losses of the Company. In addition, all income, gains or
losses, whether or not realized, and expenses with respect to a Division of
Separate Account B for these Contracts shall be credited to or charged against
that Division without regard to income, gains or losses, or expenses of any
other Division of Separate Account B. Furthermore, the assets of each Division
of Separate Account B for these Contracts shall not be charged by the Company
with any liabilities arising from any other contracts issued by the Company or
from any other Division of Separate Account B. These assets are held with
relation to the Contracts described in this Prospectus and such other variable
annuity contracts as may be issued by the Company and designated as
participating in the various Divisions of Separate Account B. Also, although the
assets maintained in Separate Account B attributable to the Contracts will not
be charged with any liabilities arising out of any other business conducted by
the Company, the reverse is not true. Hence, all obligations arising under the
Contracts, including the promise to make Annuity Payments, are general corporate
obligations of the Company.
Separate Account B was registered on July 17, 1970 with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940, as amended. Such registration does not involve supervision by the
Commission of the investments or investment policies of Separate Account B.
The Company is taxed as an insurance company under the Internal Revenue
Code. The operations of Separate Account B are part of the total operations of
the Company but are treated separately for accounting and financial statement
purposes and are considered separately in computing the Company's tax liability.
Separate Account B is not affected by federal income taxes paid by the Company
with respect to its other operations, and under existing federal income tax law,
investment income and capital gains attributable to Separate Account B are not
taxed. The Company reserves the right to charge Separate Account B with, and to
create a reserve for, any tax liability which the Company determines may result
from maintenance of Separate Account B. To the best of the Company's knowledge,
there is no current prospect of any such liability.
DEDUCTIONS UNDER THE CONTRACTS
An Administration Charge, a mortality and expense risks charge and, in
certain circumstances, state premium taxes are deducted under the Contract.
Also, in certain circumstances, a Contingent Deferred Sales Charge may be
deducted from certain cash withdrawals from a Participant's Investment
Account(s) before the Annuity Commencement Date. Total expenses of the
Registrant for the fiscal year ended December 31, 1995 were 1.91% of the average
net assets.
There are also deductions from and expenses paid out of the assets of
Principal Capital Accumulation Fund, Principal Money Market Fund, and Principal
Government Securities Fund. These are described in the prospectus.
A. Contingent Deferred Sales Charge
There is no initial sales charge. However, any cash withdrawal before the
Annuity Commencement Date on behalf of a Participant may be subject to a
Contingent Deferred Sales Charge equal to a percentage of the amount being
withdrawn. The percentage will be determined according to the following
table:
Number of Contribution Years
A Participant Has Been Contingent Deferred Sales
Covered Under the Contract Charge Percentage
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 0.7
10 or more 0.0
The charge will be made by reducing the Investment Account Value from which
the withdrawal is made by an amount equal to the charge (see "Cash
Withdrawals").
The Contingent Deferred Sales Charge does not apply to withdrawals made as
a result of the Participant's death or Total and Permanent Disability. The
charge also does not apply to transfers between Investment Accounts or
transfers to an Associated Fixed Contract or to amounts applied to provide
Variable Annuity payments. The charge may apply to amounts transferred to
an Alternate Funding Agent or Alternate Funding Vehicle, except transfers
to an Alternate Funding Vehicle that is an annuity contract issued by
Principal Mutual Life Insurance Company or an Alternate Funding Vehicle
that participates in an exchange offer for which an SEC order has been
obtained.
The amount of any Contingent Deferred Sales Charge will never exceed 9% of
the purchase payments to which the charge relates. For this purpose,
withdrawals will be related to purchase payments on a first-in, first-out
basis and "purchase payments" will include purchase payments made under any
Associated Fixed Contract from which transfers have been made. See
"Transfers to the Contract."
The Contingent Deferred Sales Charge, when applicable, will be applied by
the Company to unamortized expenses relating to the sale of the Contracts
including but not limited to commissions paid to sales personnel, the costs
of preparation of sales literature and other promotional activity. If
revenues from the Contingent Deferred Sales Charge are not sufficient to
cover sales expenses, the short fall could be viewed as being provided for
out of other revenues or the Company's surplus, including revenues
attributable to the mortality and expense risks charge.
B. Administration Charge
An Administration Charge will be deducted once each Contribution Year
proportionately from the Investment Accounts of each Participant and will
be equal to the sum of 1. and 2.:
1. $25.
2. An amount equal to a percentage of the total value of all Investment
Accounts of the Participant under the Contract. This percentage shall
be 0.5% of the first $50,000 in such accounts divided by the total
value of such accounts. (See Appendix 2 for example of computation of
Administration Charge.)
Individual Retirement Annuities established under the Contract by a working
and a nonworking spouse Participant will be combined for purposes of
calculating the Administration Charge.
If Contributions for a Participant are made under the Contract as part of a
Retirement Plan sponsored by, or program of, the Employer of the
Participant and the Company receives all of that portion of the
contributions under such a plan or program directed to annuity contracts
for all employees participating in the plan or program, then the percentage
determined in 2. above will be based on the value of the aggregate of all
accounts of all the Participants of the Employer. By this means, the charge
determined by 2. will be deducted pro rata from the Investment Accounts of
all the Participants based on their proportionate value of the aggregate of
the accounts. The portion of the charge determined by 1. will be deducted
from Participant's Investment Accounts on a per capita basis.
The Administration Charge applicable to each Participant will be deducted
from the Participant's Investment Accounts on the earlier of (i) the date
the accounts are paid or applied in full (a total redemption) or (ii) the
last day of the Contribution Year. The deduction will be effected by
cancelling a number of the units in each Investment Account of the
Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Contract for the applicable Division for
the Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant. The Company does not expect to recover
from the charge any amount above its accumulated expenses associated with
the Contracts. However, since a portion of the charge is based on a percent
of a Participant's Investment Account Values, amounts derived from larger
Investment Accounts may to an extent cover expenses associated with smaller
Investment Accounts depending upon the relative degree of Investment
Account activity.
C. Separate Payment of Administration Charge
An Employer may, by a revocable written agreement with the Company, agree
to pay separately all or a portion of the Administration Charge for
Participants who are employees of the Employer. A Participant in an
Individual Retirement Annuity (but not a Rollover Individual Retirement
Annuity) may similarly agree, by a revocable written agreement with the
Company, to pay separately all or a portion of the Administration Charge.
D. Mortality and Expense Risks Charge
Variable Annuity Payments will not be affected by adverse mortality
experience or by any excess in the actual sales and administrative expenses
over the charges provided for in the Contract. The Company assumes the
risks that (i) Annuity Payments will continue for a longer period than
anticipated and (ii) the deductions under the Contracts will be
insufficient to cover the actual costs. For assuming these risks, the
Company, in determining Unit Values and Variable Annuity Payments, makes a
charge as of the end of each Valuation Period against the assets of
Separate Account B held with respect to the Contract. The charge is
equivalent to a simple annual rate of 1.4965% (1.0001% for a Rollover
Individual Retirement Annuity). The Company does not believe that it is
possible to specifically identify that portion of the 1.4965% deduction
applicable to the separate risks involved, but estimates that a reasonable
approximate allocation would be .2490% for the mortality risks and 1.2475%
(0.7511% for a Rollover Individual Retirement Annuity) for the expense
risks. The mortality and expense risks charge may be changed by the Company
at any time at least one year after the Contract has been issued by giving
not less than 60 days prior written notice to the Contractholder, Employer
and Participants. However, the charge may not exceed 2.00% on an annual
basis, and only one change may be made in any one year period. Further, no
increase in the charge in excess of 1.75% on an annual basis may be made
without the prior approval of the Securities and Exchange Commission. Any
change in the mortality and expense risks charge will not affect Variable
Annuities in the course of payment. If the charge is insufficient to cover
the actual costs of the mortality and expense risks assumed, the financial
loss will fall on the Company; conversely, if the charge proves more than
sufficient, the excess will be a gain to the Company.
E. Premium Taxes
Certain state and local governments impose a premium tax upon annuity
considerations received by insurance companies. The Company will charge
against the Participant's Investment Account Values the amount of any
premium taxes levied by a state or any other government entity. Premium
taxes currently imposed by states range from 0% (in more than 40 states) to
2.25%. (See Appendix 1 for premium tax rates.) Unless otherwise required by
law, the deduction will be made at the time Investment Account Values are
applied to effect the form of variable annuity selected by the Participant.
The applicable rates imposed by the states and other governmental entities
which impose premium taxes on annuity considerations are subject to being
changed or amended by the respective legislative body or by administrative
interpretations or by judicial acts. IT IS NOT POSSIBLE TO DESCRIBE
PRECISELY THE AMOUNT OF PREMIUM TAX PAYABLE ON ANY TRANSACTION INVOLVING
THE CONTRACTS. Such premium taxes will depend, among other things, on the
state of residence of the Participant and the insurance tax laws of such
states.
SURPLUS DISTRIBUTION AT SOLE DISCRETION OF THE COMPANY
It is not anticipated that any divisible surplus will ever be distributable
to these Contracts in the future because the Contracts are not expected to
result in a contribution to the divisible surplus of the Company. However, if
any distribution of divisible surplus is made, it will be made to Participants'
Investment Accounts in the form of additional units.
THE CONTRACT
The Contract will normally be issued to an Employer or association or a
trust established for the benefit of Participants and their beneficiaries. The
Company will also issue a pre-retirement certificate to each Participant
describing the benefits under the Contract. If the Company Home Office in Des
Moines, Iowa receives and accepts a completed application for a Contract with or
before the initial purchase payment, it will, within two days after receiving
that payment, invest the entire amount in the Division or Divisions that are
chosen. (If no Division is chosen on the completed application for a Contract,
the Company will invest the entire amount in the Money Market Division.) If the
application for the purchase of a Contract is not received and accepted within
five business days after the Company receives the initial purchase payment, the
Company will return the payment. If the application is received and accepted
within the five-day period, that payment will be invested in the Division or
Divisions of choice at the Unit Value or Values next calculated after the
application has been accepted.
A. Contract Values and Accounting Before Annuity Commencement Date
1. Participant's Investment Accounts
During the period of time before the commencement of Annuity Payments,
an Investment Account will be established for each Participant for each
type of Contribution permitted under the Contract for each Division of
Separate Account B. For Tax Deferred Annuities the types of
Contributions are Contributions by the Employer pursuant to a salary
modification agreement, other Employer Contributions or other
Contributions that the Company agrees to accept.
For Individual Retirement Annuities, the types of Contributions are
generally Employer Contributions, Participant Contributions or rollover
Contributions arising from amounts previously deducted by the
Participant and accumulated under an account, annuity or bond as
provided for in Internal Revenue Code Sections 408 or 409.
For Rollover Individual Retirement Annuities, generally the only type
of Contribution is a rollover Contribution pursuant to Internal Revenue
Code Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3) or
409(b)(3)(C).
Investment Accounts will be maintained until the Investment Account
Values are either (a) applied to effect Variable Annuity benefits for
the Participant, (b) paid to the Participant or Participant's
beneficiary or (c) transferred in accordance with the provisions of the
Contract.
Each Contribution for a Participant will be allocated to the Division
or Divisions of Separate Account B designated by Written Notification
and will result in a credit of units to the appropriate Investment
Account. The number of units so credited will be determined by dividing
the portion of the Contributions allocated to a Division by the Unit
Value for that Division for the Valuation Period within which the
Contribution was received by the Company at its home office in Des
Moines, Iowa.
2. Unit Value
The Unit Value for a Contract which participates in a Division of
Separate Account B determines a Participant's Investment Account
Values. The Unit Value for each Contract in each Division is determined
on each day on which the net asset value of its underlying Mutual Fund
is determined. The Unit Value for a Valuation Period is determined as
of the end of that period. The investment performance of the underlying
Mutual Fund and deducted expenses affect the Unit Value.
For these Contracts, the Unit Value for each Division was fixed at
$1.00 for the Valuation Period in which the first amount of money was
credited to the Division. A Division's Unit Value for any later
Valuation Period is equal to its Unit Value for the immediately
preceding Valuation Period multiplied by the Net Investment Factor (see
below) for that Division for the later Valuation Period.
3. Net Investment Factor
Each Net Investment Factor is the quantitative measure of the
investment performance of each Division of Separate Account B.
For any specified Valuation period the Net Investment Factor for a
Division for a Contract is equal to
(a) the quotient obtained by dividing (i) the net asset value of a
share of the underlying Mutual Fund as of the end of the Valuation
Period, plus the per share amount of any dividend or other
distribution made by the Mutual Fund during the Valuation Period
(less an adjustment for taxes, if any) by (ii) the net asset value
of a share of the Mutual Fund as of the end of the immediately
preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
interest rate for the number of days within the Valuation Period
at an annual rate of 1.4965% (1.0001% for a Rollover Individual
Retirement Annuity).
The amounts derived from applying the rate specified in subparagraph
(b) above and the amount of any taxes referred to in subparagraph (a)
above will be accrued daily and will be transferred from Separate
Account B at the discretion of the Company.
4. Hypothetical Example of Calculation of Unit Value for the Capital
Accumulation Division and Government Securities Division (excluding
Rollover Individual Retirement Annuity)
The computation of the Unit Value may be illustrated by the following
hypothetical example. Assume that the current net asset value of a
Mutual Fund share is $14.8000; that there were no dividends or other
distributions made by the Mutual Fund and no adjustment for taxes since
the last determination; that the net asset value of a Mutual Fund share
last determined was $14.7800; that the last Unit Value was $1.0185363;
and that the Valuation Period was one day. To determine the current Net
Investment Factor, divide $14.8000 by $14.7800 which produces 1.0013532
and deduct from this amount the mortality and expense risks charge of
0.0000410, which is the rate for one day that is equivalent to a simple
annual rate of 1.4965%. The result, 1.0013122, is the current Net
Investment Factor. The last Unit Value ($1.0185363) is then multiplied
by the current Net Investment Factor (1.0013122) which produces a
current Unit Value of $1.0198728.
5.Hypothetical Example of Calculation of Unit Value for the Money Market
Division (excluding Rollover Individual Retirement Annuity)
The computation of the Unit Value may be illustrated by the following
hypothetical example. Assume that the current net asset value of a
Mutual Fund share is $1.0000; that a dividend of .0328767 cents per
share was declared by the Mutual Fund prior to calculation of the net
asset value of the Mutual Fund share and that no other distributions
and no adjustment for taxes were made since the last determination;
that the net asset value of a Mutual Fund share last determined was
$1.0000; that the last Unit Value was $1.0162734; and that the
Valuation Period was one day.
To determine the current Net Investment Factor, add the current net
asset value ($1.0000) to the amount of the dividend ($.000328767) and
divide by the last net asset value ($1.0000), which when rounded to
seven places equals 1.0003288. Deduct from this amount the mortality
and expense risks charge of .0000410 (the proportionate rate for one
day based on a simple annual rate of 1.4965%). The result (1.0002878)
is the current Net Investment Factor. The last Unit Value ($1.0162734)
is then multiplied by the current Net Investment Factor (1.0002878),
resulting in a current Unit Value of $1.0165659.
B. Annuity Benefits
1. Selecting a Variable Annuity
Variable Annuity Payments will be made to a Participant beginning on
the Annuity Commencement Date and continuing thereafter on the first
day of each month. A Participant may select an Annuity Commencement
Date by Written Notification to the Company. The date selected may be
the first day of any month the Plan allows which is at least one month
after the Written Notification. For Participants in a Tax Deferred
Annuity, after 1988, the annuity commencement date cannot begin before
the participant is age 59 1/2, separated from service, or is totally
disabled.
As a general rule the annuity commencement for Individual Retirement
Annuities and Tax Deferred Annuities cannot be later than April 1 of
the calendar year following the calendar year in which the Participant
attains age 70 1/2. Participants in Individual Retirement Annuities may
delay the commencement date if they notify us in writing that the
distribution requirements are being met by distributions from other
individual retirement arrangements. Until 1989, a Tax Deferred Annuity
Participant may delay the Annuity Commencement Date until April 1 of
the calendar year following the calendar year in which the Participant
terminated employment. In addition, Tax Deferred Annuity benefits which
accrued before January 1, 1987 do not have to be distributed until age
75 or the first day of the month after termination of employment.
Beginning January 1, 1989, amounts which were required to be
distributed under the rules of the Internal Revenue Code, but were not
distributed, are subject to a 50% excise tax.
At any time not less than one month preceding the desired Annuity
Commencement Date, a Participant may, by Written Notification, select
one of the annuity options described below (see "Forms of Variable
Annuities"). If no annuity option has been selected at least one month
before the Annuity Commencement Date, and if the Retirement Plan does
not provide one, payments to an unmarried Participant will be made
under the annuity option providing Variable Life Annuity with Monthly
Payments Certain for Ten Years, i.e. providing monthly payments for
life with the provision that if the Participant dies prior to receiving
all payments due in the first ten years, any remaining payments due in
that period will be paid to the designated beneficiary unless the
beneficiary requests in writing that the Commuted Value of the
remaining payments be paid in a single sum. Payments to a married
Participant will be made under the annuity option providing a Variable
Life Annuity with One-Half Survivorship, i.e. payments during the
Participant's lifetime and providing further that one-half of the
amount otherwise payable to the Participant will be continued to the
Participant's spouse as contingent annuitant so long as the spouse
survives the Participant.
2. Forms of Variable Annuities
Because of certain restrictions contained in the Internal Revenue Code
and regulations thereunder, an annuity option is not available under a
Tax Deferred Annuity unless (i) the joint or contingent annuitant is
the Participant's spouse or (ii) on the Participant's Annuity
Commencement Date, the present value of the amount to be paid to the
Participant while living is greater than 50% of the present value of
the total benefit to the Participant and the Participant's beneficiary
(or joint or contingent annuitant, if applicable).
Similarly, for Individual Retirement Annuities and Rollover Individual
Retirement Annuities, an annuity option is not available unless (i) no
benefits are provided which extend beyond the life of the Participant
or the lives of the Participant and the Participant's spouse or (ii) no
benefits are provided which extend over a period longer than the life
expectancy of the Participant or the life expectancy of the Participant
and spouse.
A Participant may elect to have Investment Account Values applied under
one of the following annuity options. However, if the monthly Annuity
Payment would be less than $20, the Company may, at its sole option,
pay the Investment Account Values in full settlement of all benefits
otherwise available.
Variable Life Annuity with Monthly Payments Certain for Zero, Five,
Ten, Fifteen or Twenty Years or Installment Refund Period -- a Variable
Annuity which provides monthly payments to the Participant during the
Participant's lifetime, and further provides that if, at the death of
the Participant, monthly payments have been made for less than a
minimum period selected by the Participant, any remaining payments for
the balance of such period shall be paid to a designated beneficiary
unless the beneficiary requests in writing that the Commuted Value of
the remaining payments be paid in a single sum. (Designated
beneficiaries entitled to take the remaining payments or the Commuted
Value thereof rather than continuing monthly payments should consult
with their tax advisor to be made aware of the differences in tax
treatment.)
The minimum period may be either zero, five, ten, fifteen or twenty
years or the period (called "installment refund period") consisting of
the number of months determined by dividing the amount applied under
the option by the initial payment. If, for example, a Participant had
$14,400 to apply under a life option with an installment refund period,
and if the first monthly payment provided by that amount, as determined
from the applicable annuity conversion rates, would be $100, the
minimum period would be 144 months ($14,400 divided by $100 per month)
or 12 years. A variable life annuity with an installment refund period
guarantees a minimum number of payments, but not the amount of any
monthly payment or the amount of aggregate monthly payments.
Under the Variable Life Annuity with Zero Years Certain, which provides
monthly payments to the Participant during the Participant's lifetime,
it would be possible for the Participant to receive only one Annuity
Payment if the Participant died prior to the due date of the second
payment since payment is made only during the lifetime of the
Participant.
Joint and Survivor Variable Life Annuity with Monthly Payments Certain
for Ten Years -- a Variable Annuity which provides monthly payments for
a minimum period of ten years and thereafter during the joint lifetimes
of that participant and the joint annuitant named at the time this
option is elected, and continuing after the death of either payee for
the amount that would have been payable to them jointly during the
remaining lifetime of the survivor. In the event the Participant and
the joint annuitant do not survive beyond the minimum ten year period,
any remaining payments for the balance of such period will be paid to a
designated beneficiary unless the beneficiary requests in writing that
the Commuted Value of the remaining payments be paid in a single sum.
(Designated beneficiaries entitled to take the remaining payments or
the Commuted Value thereof rather than continuing monthly payments
should consult with their tax advisor to be made aware of the
differences in tax treatment.)
Joint and Two-Thirds Survivor Variable Life Annuity -- a Variable
Annuity which provides monthly payments during the joint lives of the
Participant and the person designated by the Participant as joint
annuitant with two-thirds of the amount that would have been payable to
them jointly continuing to the survivor upon the death of either.
Variable Life Annuity with One-Half Survivorship -- a Variable Annuity
which provides monthly payments during the life of the Participant with
one-half of the amount otherwise payable continuing to the contingent
annuitant designated by the Participant so long as the contingent
annuitant lives.
Under the Joint and Two-thirds Survivor Variable Life Annuity and under
the Variable Life Annuity with One-Half Survivorship, it would be
possible for the Participant and/or contingent or joint annuitant to
receive only one annuity payment if both died prior to the due date of
the second payment since payment is made only during their lifetimes.
Other Options -- Other Variable Annuity options permitted under the
applicable Retirement Plan may be arranged by mutual agreement of the
Participant and the Company.
3. Basis of Annuity Conversion Rates
Because women as a class live longer than men, it has been common that
retirement annuities of equal cost for women and men of the same age
will provide women less periodic income at retirement. The Supreme
Court of the United States ruled in Arizona Governing Committee vs.
Norris that sex distinct annuity tables under an employer-sponsored
benefit plan result in discrimination that is prohibited by Title VII
of the Federal Civil Rights Act of 1964. The Court further ruled that
sex distinct annuity tables will be deemed discriminatory only when
used with values accumulated from employer contributions made after
August 1, 1983, the date of the ruling.
Title VII applies only to employers with 15 or more employees. However,
certain State Fair Employment Laws and Equal Payment Laws may apply to
employers with less than 15 employees.
It is unclear at this time what degree of employer involvement will
result in an Individual Retirement Annuity or Tax Deferred Annuity
being considered a benefit of employment and therefore subject to the
Court's ruling.
The Variable Annuity Contracts described in this Prospectus offer both
sex distinct and (effective August 1, 1983) sex neutral annuity
conversion rates. The annuity rates are used to convert a Participant's
pre-retirement account value to a monthly lifetime income at
retirement. Usage of either sex distinct or sex neutral annuity rates
will be determined by the Employer.
For each form of Variable Annuity, the annuity conversion rates
determine how much the first monthly Annuity Payment will be for each
$1,000 of the Participant's Investment Account Value applied to effect
the Variable Annuity. The conversion rates vary with the form of
annuity, date of birth, and (unless sex neutral rates are used) the sex
of the Participant and the joint or contingent annuitant, if any. The
sex distinct guaranteed annuity conversion rates are based upon (i) an
interest rate of 2.5% per annum and (ii) mortality according to the
"1983 Table a for Individual Annuity Valuation" projected with Scale G
to the year 2020, females set back six years in age. The sex neutral
rates are determined for all Participants in the same way as female
rates, as described above. The guaranteed annuity conversion rates may
be changed, but no change which would provide less initial monthly
Annuity Payment will take effect for a current Participant.
The Contract provides that an interest rate of not less than 2.5% per
annum will represent the assumed investment return. Currently the
assumed investment return used in determining the amount of the first
monthly payment is 4% per annum. This rate may be increased or
decreased by the Company in the future but in no event will it be less
than 2.5% per annum. If, under the Contract, the actual investment
return (as measured by an Annuity Change Factor, defined below) should
always equal the assumed investment return, Variable Annuity Payments
would remain level. If the actual investment return should always
exceed the assumed investment return, Variable Annuity Payments would
increase; conversely, if it should always be less than the assumed
investment return, Variable Annuity Payments would decrease.
The current 4% assumed investment return is higher than the 2.5%
interest rate reflected in the annuity conversion rates contained in
the Contract. With a 4% assumption, Variable Annuity Payments will
commence at a higher level, will increase less rapidly when actual
investment return exceeds 4%, and will decrease more rapidly when
actual investment return is less than 4%, than would occur with a lower
assumption.
4. Determining the Amount of the First Monthly Annuity Payment
For each Investment Account the initial amount of monthly annuity
income provided by each $1,000 applied to effect a Variable Annuity
shall be based on the option selected and the Investment Account Value,
after reduction for any premium tax, determined as of the end of the
Valuation Period one month before the Annuity Commencement Date. The
initial monthly income payment will be determined on the basis of the
annuity conversion rates applicable on such date to such conversions
under all contracts of this class issued by the Company. However, the
basis for the annuity conversion rates will not produce less initial
monthly income than the annuity conversion rate basis described above.
5. Determining the Amount of the Second and Subsequent Monthly Annuity
Payments
The second and subsequent monthly Annuity Payments will be computed
separately for each Division of Separate Account B selected by the
Participant and will increase or decrease in response to the investment
experience of the Mutual Fund underlying the Division. The amount of
each payment will be determined by multiplying the amount of the
monthly Annuity Payment due in the immediately preceding calendar month
by the Annuity Change Factor for the Division for the Contract for the
calendar month in which the Annuity Payment is due.
Each Annuity Change Factor for a Division for a calendar month is the
quotient of (a) divided by (b), below:
(a) The number which results from dividing (i) the Contract's Unit
Value for the Division for the first Valuation Date in the
calendar month beginning one month before the given calendar month
by (ii) the Contract's Unit Value for the Division for the first
Valuation Date in the calendar month beginning two months before
the given calendar month.
(b) An amount equal to one plus the effective interest rate for the
number of days between the two Valuation Dates specified in
subparagraph (a) above at the interest rate assumed to determine
the initial payment of variable benefits to the Participant.
6. Hypothetical Example of Calculation of Annuity Payments (excluding
Individual Rollover Retirement Annuity)
Assume that on the date one month before the Annuity Commencement Date
the Participant has an Investment Account Value of $37,592. Using the
appropriate annuity conversion factor (assuming $5.88 per $1,000
applied) the Investment Account Value provides a first monthly Annuity
Payment of $221.04. To determine the amount of the Participant's second
monthly payment assume that the Unit Value as of the first Valuation
Date in the preceding calendar month was $1.3712044 and the Unit Value
as of the first Valuation Date in the second preceding calendar month
was $1.3273110. The Annuity Change Factor is determined by dividing
$1.3712044 by $1.3273110, which equals 1.0330694, and dividing the
result by an amount corresponding to the amount of one increased by an
assumed investment return of 4% (which for a thirty day period is
1.0032288). 1.0330694 divided by 1.0032288 results in an Annuity Change
Factor for the month of 1.0297446. Applying this factor to the amount
of Annuity Payment for the previous month results in a current monthly
payment of $227.61 ($221.04 multiplied by 1.0297446 equals $227.61).
C. Payment on Death of Participant
1. Prior to Annuity Commencement Date
If a Participant dies prior to the Annuity Commencement Date, the
Company, upon receipt of due proof of death, will, in accordance with
prior instructions from the Participant, either (i) establish
Investment Accounts for the beneficiary to hold the Investment Account
Values of the Participant or (ii) if an Associated Fixed Contract has
been issued, cancel all Investment Account units as of the date of
receipt of proof of death and transfer the Investment Account Values
(determined as of the end of the Valuation Period in which proof of
death was received) to the Associated Fixed Contract. In lieu of the
foregoing, the Company may pay all or part of the Investment Account
values to the beneficiary in a single sum, provided that if the
Participant had elected that the Investment Account Values be
transferred to an Associated Fixed Contract, the beneficiary's written
request for the payment must be given before the date the transfer is
to be effective.
A beneficiary of a Participant may elect to have all or a part of the
amount available under any Associated Fixed Contract transferred to
this Contract to establish Investment Accounts for the beneficiary or
to have all or a part of the amount available under this Contract
transferred to any Associated Fixed Contract. If the value of the
Investment Accounts is less than $1,750, the Company may at its option
pay the beneficiary the value of such accounts in lieu of all other
benefits. A spouse beneficiary may elect to have the Investment Account
Values applied to provide Annuity Payments or paid in a single sum. A
beneficiary other than the Participant's spouse must receive a
distribution of all values within five years of the Participant's
death.
If a Participant under a Contract funding a Tax Deferred Annuity dies
prior to Annuity Commencement Date, the Company, upon receipt of due
proof of death, will, in accordance with prior instructions from the
Participant, either (i) pay the value of the Participant's Investment
Accounts to the beneficiary in a single sum or (ii) if an Associated
Fixed Contract has been issued, cancel all Investment Account units as
of the date of receipt of the proof of death and transfer the
Investment Account Values (determined as of the end of the Valuation
Period in which proof of death was received) to the Associated Fixed
Contract. Prior to any payment or transfer by the Company, the
beneficiary may change the election made by the Participant or,
alternatively, elect to have the Participant's Investment Account
Values applied to purchase a supplementary contract from the Company
for annuity benefits. Such a purchase must conform to the requirements
of the supplementary contract.
Under all Contracts, a beneficiary must begin to receive Annuity
Payments or receive a single sum payment not later than five years
after the Participant's death. An election to receive Annuity Payments
must be made prior to the single sum payment to the beneficiary.
Annuity income must be payable as lifetime annuity income with no
benefits beyond the beneficiary's life or life expectancy. In addition,
the amount of the monthly Annuity Payments must be at least $20, or the
Company may at its option pay the beneficiary the value of the
Investment Accounts in lieu of all other benefits. The first Annuity
Payment will be made on the first day of the calendar month specified
in the election, but in no event prior to the date one month after any
transfer from any Associated Fixed Contract is effective. The amount to
be applied will be determined as of one month prior to the date the
first monthly payment is due. The beneficiary must be a natural person
in order to elect Annuity Payments. The election must be by Written
Notification. The annuity conversion rates applicable to a beneficiary
shall be the annuity conversion rates the Company makes available to
all beneficiaries under contracts of this class. The beneficiary will
receive a written description of the options available.
2. Subsequent to Annuity Commencement Date
Upon the death of a Participant receiving monthly Annuity Payments, no
benefits will be available except as may be provided under the form of
annuity selected. If provided for under the form of annuity, the
beneficiary will continue receiving any remaining payments unless the
beneficiary requests in writing that the Commuted Value of the
remaining payments be paid in a single sum.
D. Withdrawals and Transfers
1. Cash Withdrawals
The Contracts are designed for and intended to be used to fund
Retirement Plans. However, subject to any Retirement Plan limitations,
any restrictions imposed by provisions of the Internal Revenue Code or
any reduction for vesting provided for in the Retirement Plan as to
amounts available, the Participant may withdraw cash from the
Investment Accounts at any time prior to the Annuity Commencement Date
subject to any charges that may be applied. Distributions from Tax
Deferred Annuities may begin only after the Participant attains age 59
1/2, separates from service, dies or becomes disabled, or in the case
of hardship.
The procedure with respect to cash withdrawals is as follows:
(a) The Participant's Investment Account Values will be determined at
the end of the Valuation Period in which the withdrawal request is
received and will be paid to the Participant within seven days
thereafter. The Company may require that any request be
accompanied by the certificate issued to the Participant.
(b) No more than two partial cash withdrawals can be made in a
twelve-month period without the Company's express consent.
(c) The amount available may be subject to the Contingent Deferred
Sales Charge and, in the case of a total withdrawal, will be
subject to the Administration Charge.
(d) The amount available is also subject to any restriction in the
Participant's Retirement Plan.
Any cash withdrawal made will result in the cancellation of a number of
units in each Investment Account of the Participant from which values
have been withdrawn. The number of units cancelled from the Investment
Account will be equal to the amount withdrawn divided by the Unit Value
for its Division of Separate Account B for the Valuation Period in
which the cancellation is effective. Units will also be cancelled to
cover any charges assessed under (c) above.
(Special Note: Under the Texas Education Code, Participants under
contracts issued in connection with Optional Retirement Programs for
certain employees of Texas institutions of higher education are
prohibited from making withdrawals except in the event of termination
of employment, retirement or death of the Participant.)
2. Transfers to the Contract
If an Associated Fixed Contract has been issued by the Company, and
except as otherwise provided by the applicable Retirement Plan, a
Participant may, by Written Notification, transfer all or a portion of
the proceeds available under the Associated Fixed Contract to the
Investment Account(s) under the Contract at any time at least one month
before Annuity Commencement Date, subject to the terms of the
Associated Fixed Contract.
3. Transfers Between Divisions
Upon Written Notification, all or a portion of the value of an
Investment Account in one Division may be transferred to an Investment
Account in another Division available under the Contract. Transfers may
be made at any time at least one month before the Annuity Commencement
Date. However, only two transfers from any Investment Account may be
made in a twelve-month period without the express consent of the
Company.
A transfer will be effective as of the end of the Valuation Period in
which the request is received. Any amount transferred will result in
the cancellation of units in the Investment Account from which the
transfer is made. The number of units cancelled will be equal to the
amount transferred from that account divided by the Unit Value of the
Division for the Valuation Period in which the transfer is effective.
The transferred amount will result in the crediting of units in the
Investment Account to which the transfer is made. The number of units
credited will be equal to the amount transferred to that account
divided by the Unit Value of the Division for the Valuation Period in
which the transfer is effective.
4. Transfers to the Associated Fixed Contract
Except as otherwise provided by the applicable Retirement Plan, a
Participant may by Written Notification transfer all or a portion of
available Investment Account Values to the Associated Fixed Contract at
any time at least one month before Annuity Commencement Date. Such
transfers are subject to the same provisions regarding frequency of
transfer, effective date of transfer and cancellation of units as
described above in "Transfers Between Divisions".
5. Special Situation Involving Alternate Funding Agents
The Contracts may be subject to provisions of an Employer sponsored
Retirement Plan which allows the Investment Account Values of all
Participants of the Retirement Plan to be transferred to an Alternate
Funding Agent with or without the consent of the Participants.
Transfers to an Alternate Funding Agent require Written Notification
from the person or persons specified by the Retirement Plan.
The amount to be transferred will be equal to the Investment Account
Values determined as of the end of the Valuation Period in which the
Written Notification is received. Such transfers may be subject to the
Contingent Deferred Sales Charge.
Alternate Funding Agent means an insurance company or custodian
designated by Written Notification and authorized to receive any amount
or amounts transferred from the Contract as to a Participant or
Participants and to apply such amount or amounts for the exclusive
benefit of the Participant or Participants under a retirement plan
which continues to meet the requirements of the Internal Revenue Code,
without any obligation on the part of the Company in regard to the
application.
6. Postponement of Cash Withdrawal or Transfer
Any cash withdrawal or transfer to be made from the Contract or between
Divisions in accordance with the preceding paragraphs will be made
within seven days after Written Notification for such payment or
transfer is received by the Company. However, such withdrawal or
transfer may be deferred during any period when the right to redeem
Mutual Fund shares is suspended as permitted under provisions of the
Investment Company Act of 1940, as amended. The right to redeem shares
may be suspended during any period when (a) trading on the New York
Stock Exchange is restricted as determined by the Securities and
Exchange Commission or such Exchange is closed for other than weekends
and holidays; (b) an emergency exists, as determined by the Securities
and Exchange Commission, as a result of which (i) disposal by the
Mutual Fund of securities owned by it is not reasonably practicable or
(ii) it is not reasonably practicable for the Mutual Fund fairly to
determine the value of its net assets; or (c) the Commission by order
so permits for the protection of security holders. If any deferment of
transfer or withdrawal is in effect and has not been cancelled by
Written Notification to the Company within the period of deferment, the
amount to be transferred or withdrawn shall be determined as of the
first Valuation Date following expiration of the permitted deferment,
and transfer or withdrawal will be made within seven days thereafter.
E. Other Contractual Provisions
1. Contribution Limits
The Contract prescribes no limits on the minimum Contributions which
may be made on behalf of a Participant. Maximum Contributions for Tax
Deferred Annuities are limited to (a) amounts excludable from gross
income of Participants pursuant to the exclusion allowance provision of
Section 403(b) of the Internal Revenue Code, and (b) the contribution
limitation as specified in Section 415(c) of the Internal Revenue Code
unless otherwise allowed by the Company. Maximum Contributions for
Individual Retirement Annuities are limited to (a) amounts deductible
by a Participant under Internal Revenue Code Section 219 or (b) amounts
previously deducted by the Participant under Internal Revenue Code
Section 219 and accumulated in another funding vehicle, unless
otherwise allowed by the Company. Maximum Contributions for Rollover
Individual Retirement Annuities are limited to amounts the Participant
is entitled to roll over under Internal Revenue Code Sections
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or 409(b)(3)(C).
2. Assignment
No rights available or benefits payable under the Contract to any
Participant, beneficiary or contingent or joint annuitant are
assignable, transferable or subject to pledge, and all such rights and
benefits shall be exempt from the claims of creditors to the maximum
extent permitted by law.
A Participant's Investment Account Values are non-forfeitable;
provided, however, if the Retirement Plan specifically so provides, a
Participant's Investment Account Values shall be reduced to the extent
required by the vesting provisions of the Retirement Plan as of the
date the Company receives Written Notification of the event requiring
the reduction.
3. Cessation of Contributions
A cessation of Contributions with respect to all Participants under a
Retirement Plan shall occur at the election of the Employer upon
Written Notification to the Company or as of the date on which no
Investment Accounts subject to the Retirement Plan remain under the
Contract. Following a cessation of Contributions all terms of the
Contract will continue to apply except that no further Contributions
may be made.
4. Limitation as to Participants
If at any time Princor Management Corporation is not the investment
manager of the Mutual Funds, the Company may give written notice to the
Contractholder that no additional persons may be covered under the
Contract as Participants.
5. Substitution of Securities
If shares of a Mutual Fund are not available at some time in the
future, or if in the judgment of the Company further investment in such
shares would be no longer appropriate, there may be substituted
therefor, or Contributions received after a date specified by the
Company may be applied to purchase (i) shares of another registered
open-end investment company or (ii) securities or other property as the
Company should in its discretion select. Any necessary approval of the
Securities and Exchange Commission or of owners of or participants
under contracts participating in Separate Account B shall be obtained
before any substitution is made.
6. Changes in a Contract
The terms of a Contract may be changed at any time by written agreement
between the Company and the Contractholder without the consent of any
Participant, beneficiary, or joint or contingent annuitant. However,
except as required by law or regulation, no such change shall apply to
Variable Annuities which were in the course of payment prior to the
effective date of the change. If the Contractholder is the trustee of
the trust established to hold a Contract for the benefit of
participating units, the Contractholder may be limited in its exercise
of this amendment right. A majority of the participating units which
are Employers under the Contract may have to agree to the proposed
change in the Contract before the change can be made. The Company will
notify any Participant affected by any change under this paragraph.
The Company may unilaterally change the Contract at any time in order
to meet the requirements of any law or regulation issued by any
governmental agency to which the Company is subject. In addition, the
Company may, on 60 days prior notice to the Contractholder, the
Employer, and each Participant, unilaterally change the basis for
determining Investment Account Values, the Net Investment Factor and
the Annuity Change Factor; the guaranteed annuity conversion rates; and
the provisions with respect to transfers to or from an Associated Fixed
Contract or between Divisions. However, no change in the guaranteed
annuity conversion rates will take effect for a current Participant
which would reduce the amount of the Participant's minimum initial
monthly payment.
Furthermore, the Company may, on 60 days notice to the Contractholder,
the Employer, and each Participant affected by the change, unilaterally
change the mortality and expense risks charge. However, such a change
can only be made after the Contract has been in effect for at least one
year and provided that (a) the charge shall in no event exceed 2.00%
within the period of five years from the issuance of the Contract, (b)
the charge shall not be changed more frequently than once in any one
year period and (c) no change shall apply to annuities which were in
the course of payment prior to the effective date of the change.
Finally, the Company reserves the right to limit or refuse further
Contributions under the Contract upon 60 days notice to the
Contractholder, the Employer, and each Participant.
7. Statement of Values
The Company will furnish each Participant at least once during each
year a statement showing the number of units credited to the
Participant's Investment Accounts, Unit Values for the accounts and the
resulting Investment Account Values.
DISTRIBUTION OF THESE CONTRACTS
These Contracts, which are continuously offered, will be sold primarily by
persons who are insurance agents of or brokers for the Company authorized by
applicable law to sell life and other forms of personal insurance and variable
annuities. In addition, these persons will usually be registered representatives
of Princor Financial Services Corporation, a Member of The Principal Financial
Group, Des Moines, Iowa, a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. Princor Financial Services Corporation receives from the Company
an overwriting and expense fee of 1% of Contributions received under the
Contracts. These Contracts may also be sold through other selected
broker-dealers registered under the Securities Exchange Act of 1934. Princor
Financial Services Corporation is also the principal underwriter for various
registered investment companies organized by the Company. Princor Financial
Services Corporation is a wholly-owned subsidiary of Principal Holding Company.
Principal Holding Company is a holding company and a wholly-owned subsidiary of
the Company.
VOTING RIGHTS
The Company shall vote Mutual Fund shares held in Separate Account B at
regular and special meetings of shareholders of each Mutual Fund, but will
follow voting instructions received from persons having the voting interest in
the Mutual Fund shares.
The number of Mutual Fund shares as to which a person has the voting
interest will be determined by the Company as of a date which will not be more
than ninety days prior to the meeting of the Mutual Fund, and voting
instructions will be solicited by written communication at least ten days prior
to the meeting.
During the accumulation period, the Participant is the person having the
voting interest in the Mutual Fund shares attributable to each Investment
Account. The number of Mutual Fund shares held in Separate Account B which are
attributable to each Investment Account is determined by dividing the Investment
Account Value by the net asset value of one Mutual Fund share.
During the annuity period, the person then entitled to Annuity Payments has
the voting interest in the Mutual Fund shares attributable to the Variable
Annuity. The number of Mutual Fund shares held in Separate Account B which are
attributable to each Variable Annuity is determined by dividing the reserve for
the Variable Annuity by the net asset value of one Mutual Fund share. The
Participant's voting interest in the Mutual Fund shares attributable to the
Variable Annuity will ordinarily decrease during the annuity period since the
reserve for the Variable Annuity decreases due to the reduction in the expected
payment period.
Mutual Fund shares for which participants or payees of variable annuities
are entitled to give voting instructions, but for which none are received, and
shares of the Fund owned by the Company will be voted in the same proportion as
the aggregate shares for which voting instructions have been received.
Proxy material will be provided to each person having a voting interest
together with an appropriate form which may used to give voting instructions to
the Company.
If the Company determines pursuant to applicable law that Mutual Fund
shares held in Separate Account B need not be voted pursuant to instructions
received from persons otherwise having the voting interest as provided above,
then the Company may vote Mutual Fund shares held in Separate Account B in its
own right.
FEDERAL TAX STATUS
Investment gains of the Mutual Funds credited to Separate Account B are not
taxable to a Participant until received in the form of a cash withdrawal from an
Investment Account or in the form of Variable Annuity Payments. Cash withdrawals
will generally be taxed as ordinary income in the year received, but may be
eligible for the income averaging provisions of the Internal Revenue Code. Each
Variable Annuity Payment will be taxed as ordinary income in accordance with
Section 72 of the Internal Revenue Code.
As a general rule, however, a Participant receiving Annuity Payments at the
time of retirement will be in a lower income tax bracket due to reduced income
and larger exemptions.
Under Section 403(b) of the Internal Revenue Code, contributions for
employees made under a Tax Deferred Annuity by a public school or other Employer
are excludable from the gross income of the employees in the year made to the
extent that the aggregate contributions per year for such employees do not
exceed the exclusion allowance set forth in Section 403(b)(2) of the Internal
Revenue Code. (In addition, contributions are limited by the restrictions of
Section 415(c) of the Internal Revenue Code.) Adjustments in the tax base are
allowed where a portion of the cost of the benefit being distributed has been
paid by the Participant out of funds not excludable from the Participant's gross
income tax in the year made, rather than having been paid by the Participant's
Employer out of funds that were excludable from the Participant's gross income
tax in the year made.
Distributions from a Tax Deferred Annuity may begin only after the
participant attains age 59 1/2, separates from service, dies or becomes
disabled, or in the case of hardship.
Under Sections 219 and 408 of the Internal Revenue Code, an individual who
has earned income may establish an Individual Retirement Annuity plan or program
for the accumulation of retirement savings on a tax-deferred basis for such
individual and such individual's nonemployed spouse. The individual may
establish and make contributions into such a plan or this may be done by the
individual's employer or union. These contributions may be invested in, among
other things, annuity contracts including the variable annuity contract offered
by this Prospectus. The law provides that such contributions will be deductible,
though only to the extent allowed by the Internal Revenue Code. No deduction is
allowed for contributions made during or after the year in which the individual
attains age 70 1/2, and contributions during or after that year, as well as
contributions in excess of the limits, are excess contributions and may result
in certain adverse tax consequences.
All distributions under Individual Retirement Annuities and Tax Deferred
Annuities will be taxed as ordinary income. Thus, these distributions will not
be eligible for capital gains treatment or the special averaging rules
applicable to lump sum distributions from some types of qualifying plans. As a
general rule, any distribution that is not in the form of a life annuity, made
before the participant attains age 59 1/2 (except in the event of death or
disability) will be a premature distribution and be subject to a 10% penalty.
There is an exception to this rule for Tax Deferred Annuities. Distributions
from Tax Deferred Annuities which are due to separation from service after age
55 or which are used for certain medical expenses are not subject to the
penalty.
Distributions from Individual Retirement Annuities and Tax Deferred
Annuities must begin before April 1 of the calendar year following the calendar
year in which the participant attains age 70 1/2. There is an exception to this
rule for Tax Deferred Annuities. Tax Deferred Annuity benefits which accrued
prior to January 1, 1987 do not have to be distributed until age 75 or
termination of employment.
If a participant fails to make a required distribution a 50% excise tax may
be assessed on the amount required to be distributed. In addition, as a general
rule, distributions over $150,000 a year, and lump sum distributions greater
than $750,000 are subject to a 15% excise tax.
When a Participant under an Individual Retirement Annuity or Tax Deferred
Annuity dies before the Annuity Commencement Date, all values must be
distributed to the Participant's beneficiary within five years. The 5-year
payout rule does not apply to benefits paid to a surviving spouse under a joint
and survivor annuity option, nor to benefits paid to a surviving beneficiary
under a permitted term certain period. If the surviving spouse is the designated
beneficiary, distribution of benefits need not begin until the date on which the
Participant would have attained age 70 1/2 years, and the benefits must be
distributed over the life of the surviving spouse or over a period not exceeding
the life expectancy of the spouse. A similar rule applies to other designated
beneficiaries, except that the distribution of benefits must commence not later
than one year after the date of death of the participant.
It should be recognized that the description of the federal income tax
status of amounts received under the Contracts are not exhaustive and do not
purport to cover all situations.
A qualified tax advisor should be consulted for complete information. (For
the federal tax status of the Company and Separate Account B, see "Principal
Mutual Life Insurance Company Separate Account B".)
STATE REGULATION
The Company is subject to the laws of the State of Iowa governing insurance
companies and to regulation by the Insurance Department of the State of Iowa. An
annual statement in a prescribed form must be filed by March 1 in each year
covering the operations of the Company for the preceding year and its financial
condition on December 31st of such year. Its books and assets are subject to
review or examination by the Commissioner of Insurance of the State of Iowa or
his representatives at all times, and a full examination of its operations is
conducted periodically by the National Association of Insurance Commissioners.
Iowa law and regulations also prescribe permissible investments, but this does
not involve supervision of the investment management or policy of the Company.
In addition, the Company is subject to the insurance laws and regulations
of other states and jurisdictions in which it is licensed to operate. Generally,
the insurance departments of these states and jurisdictions apply the laws of
the state of domicile in determining the field of permissible investments.
LEGAL OPINIONS
Legal matters applicable to the issue and sale of the Contracts, including
the right of the Company to issue Contracts under Iowa Insurance Law, have been
passed upon by Gregg R. Narber, Senior Vice President and General Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which Separate Account B is a
party or which would materially affect Separate Account B.
REGISTRATION STATEMENT
This Prospectus omits some information contained in the Statement of
Additional Information (or Part B of the Registration Statement) and Part C of
the Registration Statement which the Company has filed with the Securities and
Exchange Commission. The Statement of Additional Information is hereby
incorporated by reference into this Prospectus. A copy of the Statement of
Additional Information can be obtained upon request, free of charge, by writing
or telephoning Princor Financial Services Corporation. You may obtain a copy of
Part C of the Registration Statement filed with the Securities and Exchange
Commission, Washington, D.C. from the Commission upon payment of the prescribed
fees.
OTHER VARIABLE ANNUITY CONTRACTS
The Company currently offers other Variable Annuity Contracts that
participate in Separate Account B. In the future, additional group or individual
variable annuity contracts may be designated by the Company as participating in
Separate Account B.
INDEPENDENT AUDITORS
The financial statements of Principal Mutual Life Insurance Company
Separate Account B and Principal Mutual Life Insurance Company which are
included in the Statement of Additional Information have been audited by Ernst &
Young LLP, independent auditors, for the periods indicated in their reports
thereon which appear in the Statement of Additional Information.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this
Prospectus should be considered only as bearing on the ability of the Company to
meet its obligations under the Policy. They should not be considered as bearing
on the investment performance of the assets held in the Separate Account.
APPENDIX 1
Premium taxes applicable to Contracts described in this Prospectus:
403(b) 408 Individual
Tax Deferred Retirement
Annuities Accounts
Alabama 1.00% 1.00%
California 0.50 0.50
District of Columbia 2.25 2.25
Kentucky 2.00 2.00
West Virginia 1.00 1.00
All other states -- --
APPENDIX 2
Set forth below is an example of the manner in which the Administration
Charge is computed.
The Administration Charge has two components -- a fixed charge of $25 and a
charge equal to 0.5% of the first $50,000 of a Participant's Investment Account
Values. The amount of the percentage charge is determined by multiplying the
total value of the Participant's Investment Accounts by a percentage the
numerator of which is 0.5% of the first $50,000 and the denominator of which is
the total value of the Investment Accounts. Assume that a Participant's
Investment Account Value based on the Capital Accumulation Division is $40,000
and the Investment Account Value based on the Money Market Division is $60,000.
In this case, the total Investment Account Value of $100,000 is multiplied by
0.25% ($250/$100,000) resulting in a charge of $250. The combined charge of $275
($25 plus $250) is deducted proportionately from the Investment Accounts of the
Participant, $110 (40% of $275) from the Investment Account Value based on the
Capital Accumulation Division and $165 (60% of $275) from the Investment Account
Value based on the Money Market Division.
Assume that in the example above all of the annuity contributions under the
Retirement Plan of the Employer are payable to the Company. As a result, the
percentage used to determine the second component of the charge is based on the
aggregate Investment Account Values of all Participants of the Employer. For
example, assume that there is one other Participant with a total Investment
Account Value of $200,000. The total Investment Account Value of each
Participant is multiplied by a percentage the numerator of which is $250 (0.5% x
$50,000) and the denominator of which is $300,000, or 0.08333%. The Participant
with a total Investment Account Value of $100,000 is subject to an
Administration Charge of $108.33, $25 plus $83.33 (0.0008333 x $100,000), and
the Participant with a total Investment Account Value of $200,000 is subject to
an Administration Charge of $191.67, $25 plus $166.67 (0.0008333 x $200,000). In
effect, the $250 charge based on the Participants' aggregate Investment Account
Values has been allocated proportionately between them.
CONTRACTHOLDERS' INQUIRIES
Contractholders' inquiries should be directed to Princor Financial Services
Corporation, a Member of The Principal Financial Group, Des Moines, Iowa
50392-0200, (515) 247-5711.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The table of contents for the Statement of Additional Information is
provided below.
TABLE OF CONTENTS
Page
General Information and History ......................................... 3
Independent Auditors .................................................. 3
Underwriting Commissions ............................................... 3
Calculation of Yield and Total Return .................................. 3
Financial Statements:
Principal Mutual Life Insurance Company Separate Account B ......... 5
Report of Independent Auditors ............................... 22
Principal Mutual Life Insurance Company ........................... 23
Report of Independent Auditors ................................ 45
To obtain a copy of the Statement of Additional Information, free of
charge, write or telephone:
Princor Financial Services Corporation
a Member of
The Principal Financial Group
Des Moines, Iowa 50392-0200
Telephone: 1-800-247-4123
<PAGE>
PART B
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
PENSION BUILDER - GROUP VARIABLE ANNUITY CONTRACTS
ISSUED BY PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Statement of Additional Information
dated May 1, 1996
This Statement of Additional Information provides information about
Principal Mutual Life Insurance Company Separate Account B Pension Builder -
Group Variable Annuity Contracts (the "Contract" or the "Contracts") in addition
to the information that is contained in the Contract's Prospectus, dated May 1,
1996.
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus, a copy of which can be obtained free
of charge by writing or telephoning:
Princor Financial Services Corporation
a Member of
The Principal Financial Group
Des Moines Iowa 50392-0200
Telephone: 1-800-247-4123
BB 4363 B-7
<PAGE>
TABLE OF CONTENTS
Page
General Information and History .......................................... 3
Independent Auditors ..................................................... 3
Underwriting Commissions .................................................. 3
Calculation of Yield and Total Return...................................... 3
Financial Statements:
Principal Mutual Life Insurance Company Separate Account B............ 5
Report of Independent Auditors.................................... 22
Principal Mutual Life Insurance Company............................... 23
Report of Independent Auditors.................................... 45
GENERAL INFORMATION AND HISTORY
Principal Mutual Life Insurance Company was formerly known as Bankers Life
Company. The Company's name was changed to Principal Mutual Life Insurance
Company effective July 1, 1986.
INDEPENDENT AUDITORS
Ernst & Young LLP, Des Moines, Iowa, serve as independent auditors for Principal
Mutual Life Insurance Company Separate Account B and Principal Mutual Life
Insurance Company and perform audit and accounting services for Separate Account
B and The Company.
UNDERWRITING COMMISSIONS
Aggregate dollar amount of underwriting commissions paid to and retained by
Princor Financial Services Corporation:
Year Paid To Retained by
---- ------------- -----------
1995 $5,326,848.77 $26,014.78
1994 $2,347,858.73 $60,600.11
1993 $443,683.87 $95,009.83
CALCULATION OF YIELD AND TOTAL RETURN
From time to time the Account advertises its Money Market Division's "yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of the division refers
to the income generated by an investment in the division over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the
division is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. Neither yield quotation reflects sales load deducted from purchase
payments which, if included, would reduce the "yield" and "effective yield." The
7-day yields of the Money Market Division for the period ending December 31,
1995 are:
Annualized Yield Effective Yield
---------------- ---------------
TSA/IRA 3.56% 3.62%
Rollover IRA 4.06% 4.14%
From time to time, the Separate Account will advertise the average annual total
return of its various divisions. The average annual total return for any of the
divisions is computed by calculating the average annual compounded rate of
return over the stated period that would equate an initial $1,000 investment to
the ending redeemable contract value. In this calculation the ending value is
reduced by a contingent deferred sales charge that decreases from 7% to 0% over
a period of 10 years. The Separate Account may also advertise total return
figures of its Divisions for a specified period that does not take into account
the sales charge in order to illustrate the change in the Division's unit value
over time. See "Deductions Under the Contracts" for a discussion of contingent
deferred sales charges.
The average annual total returns for the period ending December 31, 1995 are:
With Contingent Without Contingent
Deferred Sales Charge Deferred Sales Charge
--------------------- ---------------------
One Five Ten One Five Ten
Year Year Year Year Year Year
---- ---- ---- ---- ---- ----
Capital Accumulation
Division
TSA/IRA 20.25% 13.49% 10.13% 29.31% 14.47% 10.21%
Rollover IRA 20.85% 14.06% 10.68% 29.95% 15.04% 10.76%
Government Securities
Division
TSA/IRA 8.52% 6.28% 7.34%(1) 16.69% 7.19% 7.52%(1)
Rollover IRA 9.06% 6.80% 7.88%(1) 17.27% 7.72% 8.05%(1)
(1) Period from April 14, 1987 - December 31, 1995
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statement of Net Assets
December 31, 1995
Assets
Investments (Note 1):
Aggressive Growth Division:
Principal Aggressive Growth Fund, Inc. - 1,483,620 shares at net asset value of
<S> <C>
$12.94 per share (cost - $18,325,213) $ 19,198,047
Asset Allocation Division:
Principal Asset Allocation Fund, Inc. - 975,797 shares at net asset value of
$11.11 per share (cost - $10,437,689) 10,841,100
Balanced Division:
Principal Balanced Fund, Inc. - 1,522,049 shares at net asset value
of $13.97 per share (cost - $20,112,401) 21,263,022
Bond Division:
Principal Bond Fund, Inc. - 1,588,119 shares at net asset value of $11.73 per
share (cost - $18,122,886) 18,628,633
Capital Accumulation Division:
Principal Capital Accumulation Fund, Inc. - 3,728,696 shares at net asset value
of $27.80 per share (cost - $92,908,561) 103,657,763
Emerging Growth Division:
Principal Emerging Growth Fund, Inc. - 1,665,414 shares at net
asset value of $25.33 per share (cost - $37,189,023) 42,184,948
Government Securities Division:
Principal Government Securities Fund, Inc. - 4,307,388 shares at
net asset value of $10.55 per share (cost - $44,523,062) 45,442,936
Growth Division:
Principal Growth Fund, Inc. - 3,049,334 shares at net asset value of $12.43 per
share (cost - $33,989,529) 37,903,233
Money Market Division:
Principal Money Market Fund, Inc. - 22,309,488 shares at net asset value (cost)
of $1.00 per share 22,309,488
World Division:
Principal World Fund, Inc. - 2,349,081 shares at net asset value of $10.72 per
share (cost - $23,424,723) 25,182,149
===================
Net assets $346,611,319
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statement of Net Assets (continued)
Unit
Units Value
----------------------------
----------------------------
Net assets are represented by:
Aggressive Growth Division:
Contracts in accumulation period - The Principal
<S> <C> <C> <C>
Variable Annuity 1,323,663 $14.50 $ 19,198,047
Asset Allocation Division:
Contracts in accumulation period - The Principal
Variable Annuity 911,657 11.89 10,841,100
Balanced Division:
Contracts in accumulation period:
Personal Variable 327,372 1.21 395,555
Premier Variable 3,316,975 1.21 4,018,252
The Principal Variable Annuity 1,373,157 12.27 16,849,215
-------------------
-------------------
21,263,022
Bond Division:
Contracts in accumulation period:
Personal Variable 101,036 1.23 124,183
Premier Variable 1,207,749 1.23 1,488,447
The Principal Variable Annuity 1,401,301 12.14 17,016,003
-------------------
-------------------
18,628,633
Capital Accumulation Division:
Currently payable annuity contracts:
Bankers Flexible Annuity 10,014 17.70 177,260
Pension Builder Plus - Rollover IRA 67,563 3.72 251,017
Contracts in accumulation period:
Bankers Flexible Annuity 324,861 17.70 5,751,347
Pension Builder Plus 9,967,305 3.41 33,981,462
Pension Builder Plus - Rollover IRA 2,115,464 3.72 7,859,055
Personal Variable 2,336,347 1.50 3,500,687
Premier Variable 14,824,208 1.51 22,380,360
The Principal Variable Annuity 2,231,777 13.33 29,756,575
-------------------
-------------------
103,657,763
Emerging Growth Division:
Contracts in accumulation period:
Personal Variable 287,939 1.27 365,808
Premier Variable 1,895,863 1.27 2,415,033
The Principal Variable Annuity 3,059,324 12.88 39,404,107
-------------------
-------------------
42,184,948
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statement of Net Assets (continued)
Unit
Units Value
----------------------------
Net assets are represented by (continued):
Government Securities Division:
Contracts in accumulation period:
<S> <C> <C> <C>
Pension Builder Plus 3,738,233 $ 1.84 $ 6,882,964
Pension Builder Plus - Rollover IRA 1,771,981 1.92 3,407,555
Personal Variable 1,889,788 1.26 2,371,868
Premier Variable 7,159,023 1.26 9,053,348
The Principal Variable Annuity 2,023,123 11.73 23,727,201
-------------------
-------------------
45,442,936
Growth Division:
Contracts in accumulation period:
Personal Variable 277,708 1.25 346,944
Premier Variable 2,859,893 1.25 3,582,532
The Principal Variable Annuity 2,619,339 12.97 33,973,757
-------------------
-------------------
37,903,233
Money Market Division:
Contracts in accumulation period:
Pension Builder Plus 1,327,197 1.76 2,339,446
Pension Builder Plus - Rollover IRA 439,501 1.82 797,914
Personal Variable 1,143,063 1.12 1,278,235
Premier Variable 2,958,777 1.13 3,335,350
The Principal Variable Annuity 1,370,204 10.63 14,558,543
-------------------
-------------------
22,309,488
World Division:
Contracts in accumulation period:
Personal Variable 159,698 1.09 173,584
Premier Variable 1,672,346 1.09 1,822,554
The Principal Variable Annuity 2,145,969 10.80 23,186,011
-------------------
-------------------
25,182,149
===================
Net assets $346,611,319
===================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statement of Operations
Year ended December 31, 1995
Aggressive Asset
Growth Allocation Balanced
Combined Division Division Division
--------------------------------------------------------------
--------------------------------------------------------------
Investment income
Income:
<S> <C> <C> <C> <C>
Dividends (Note 1) $ 8,765,352 $ 169,797 $ 363,337 $ 636,546
Capital gains distributions 11,188,947 1,879,337 270,245 392,158
--------------------------------------------------------------
--------------------------------------------------------------
19,954,299 2,049,134 633,582 1,028,704
Expenses (Note 2):
Mortality and expense risks 2,690,588 125,688 80,633 122,571
Administration charges 345,587 7,043 1,214 1,975
Contingent sales charges 227,015 4,176 2,173 4,526
--------------------------------------------------------------
--------------------------------------------------------------
3,263,190 136,907 84,020 129,072
--------------------------------------------------------------
--------------------------------------------------------------
Net investment income 16,691,109 1,912,227 549,562 899,632
Realized and unrealized gains (losses) on
investments (Note 4)
Net realized gains (losses) on investments 2,865,382 448,426 74,402 103,410
Change in net unrealized appreciation/
depreciation of investments 31,314,846 912,921 490,584 1,347,509
--------------------------------------------------------------
==============================================================
Net increase in net assets resulting from
operations $50,871,337 $3,273,574 $1,114,548 $2,350,551
==============================================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Accumulation Emerging Government Money Market
Bond Division Division Growth Securities Growth Division Division World Division
Division Division
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 918,871 $ 2,051,110 $ 353,883 $2,482,944 $ 495,175 $879,065 $ 414,624
- 8,040,992 330,442 - 257,829 - 17,944
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
918,871 10,092,102 684,325 2,482,944 753,004 879,065 432,568
103,748 950,830 306,214 357,325 258,835 171,164 213,580
1,284 223,785 13,050 64,967 4,604 25,185 2,480
7,310 114,476 10,588 38,738 10,167 26,112 8,749
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
112,342 1,289,091 329,852 461,030 273,606 222,461 224,809
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
806,529 8,803,011 354,473 2,021,914 479,398 656,604 207,759
50,961 1,908,275 241,047 (303,527) 254,149 - 88,239
679,932 12,768,964 5,294,039 3,801,338 3,955,502 - 2,064,057
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
$1,537,422 $23,480,250 $5,889,559 $5,519,725 $4,689,049 $656,604 $2,360,055
===========================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
Aggressive Asset
Growth Allocation Balanced
Combined Division Division Division
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at January 1, 1994 $137,066,766 $ $ $ -
- -
Increase (decrease) in net assets
Operations:
Net investment income 6,189,070 28,335 66,422 151,699
Net realized gains (losses) on investments 145,940 316 (74) (635)
Change in net unrealized appreciation/
depreciation of investments (9,269,736) (40,087) (87,173) (196,888)
----------------------------------------------------------------
----------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (2,934,726) (11,436) (20,825) (45,824)
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 162,307,213 3,729,494 3,048,277 3,914,946
Contract terminations (40,138,840) (3,855) (100) -
Death benefit payments (45,257) (4,629) - -
Flexible withdrawal option payments (98,120) (1,190) (1,931) (4,660)
Transfer payments to other contracts (78,225,382) (23,882) - (44,750)
Annuity payments (45,771) - - -
Mortality guarantee transfer (1,830) - - -
----------------------------------------------------------------
----------------------------------------------------------------
Increase (decrease) in net assets from principal
transactions 43,752,013 3,695,938 3,046,246 3,865,536
----------------------------------------------------------------
----------------------------------------------------------------
Total increase (decrease) 40,817,287 3,684,502 3,025,421 3,819,712
----------------------------------------------------------------
Net assets at December 31, 1994 177,884,053 3,684,502 3,025,421 3,819,712
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Accumulation Emerging Government Money Market
Bond Division Division Growth Securities Growth Division Division World Division
Division Division
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ $96,467,365 $ $29,762,953 $ $10,836,448 $
- - - -
194,093 3,292,499 322,224 1,751,663 51,605 277,374 53,156
267 671,701 (1,080) (527,977) 5,584 - (2,162)
(174,185) (4,877,919) (298,114) (3,246,941) (41,798) - (306,631)
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
20,175 (913,719) 23,030 (2,023,255) 15,391 277,374 (255,637)
3,076,098 29,730,601 10,224,130 19,469,052 8,448,347 71,213,235 9,453,033
- (26,290,355) (5,153) (10,515,456) (5,272) (3,308,423) (10,226)
- (11,029) (14,169) (3,039) (4,690) - (7,701)
(2,423) (3,620) (26,751) (7,540) (23,355) - (26,650)
(37,501) (9,201,231) (235,391) (6,409,017) (329,097) (61,909,148) (35,365)
- (45,771) - - - - -
- (1,830) - - - - -
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
3,036,174 (5,823,235) 9,942,666 2,534,000 8,085,933 5,995,664 9,373,091
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
3,056,349 (6,736,954) 9,965,696 510,745 8,101,324 6,273,038 9,117,454
- -----------------------------------------------------------------------------------------------------------
3,056,349 89,730,411 9,965,696 30,273,698 8,101,324 17,109,486 9,117,454
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Statements of Changes in Net Assets (continued)
Aggressive Asset
Growth Allocation Balanced
Combined Division Division Division
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net assets at January 1, 1995 $177,884,053 $ 3,684,502 $ 3,025,421 $ 3,819,712
Increase (decrease) in net assets
Operations:
Net investment income 16,691,109 1,912,227 549,562 899,632
Net realized gains (losses) on investments 2,865,382 448,426 74,402 103,410
Change in net unrealized appreciation/
depreciation of investments 31,314,846 912,921 490,584 1,347,509
----------------------------------------------------------------
----------------------------------------------------------------
Net increase in net assets resulting from
operations 50,871,337 3,273,574 1,114,548 2,350,551
Changes from principal transactions:
Purchase payments, less sales charges, per
payment fees and applicable premium taxes 283,284,033 14,908,019 7,493,760 17,579,517
Contract terminations (51,871,322) (147,494) (76,769) (243,855)
Death benefit payments (616,609) (111,616) (30,363) (22,485)
Flexible withdrawal option payments (591,573) (23,563) (12,654) (56,396)
Transfer payments to other contracts (112,300,367) (2,385,375) (672,843) (2,164,022)
Annuity payments (48,233) - - -
----------------------------------------------------------------
----------------------------------------------------------------
Increase (decrease) in net assets from principal
transactions 117,855,929 12,239,971 6,701,131 15,092,759
----------------------------------------------------------------
----------------------------------------------------------------
Total increase 168,727,266 15,513,545 7,815,679 17,443,310
----------------------------------------------------------------
================================================================
Net assets at December 31, 1995 $346,611,319 $19,198,047 $10,841,100 $21,263,022
================================================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Accumulation Emerging Government Money Market
Bond Division Division Growth Securities Growth Division World Division
Division Division Division
- -----------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,056,349 $ 89,730,411 $ 9,965,696 $30,273,698 $ 8,101,324 $17,109,486 $ 9,117,454
806,529 8,803,011 354,473 2,021,914 479,398 656,604 207,759
50,961 1,908,275 241,047 (303,527) 254,149 - 88,239
679,932 12,768,964 5,294,039 3,801,338 3,955,502 - 2,064,057
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
1,537,422 23,480,250 5,889,559 5,519,725 4,689,049 656,604 2,360,055
15,702,412 37,285,598 28,874,128 24,062,104 29,628,926 92,190,303 15,559,266
(274,508) (34,074,636) (420,250) (9,547,633) (428,438) (6,320,639) (337,100)
(44,089) (80,185) (14,885) (129,425) (44,665) (97,824) (41,072)
(73,005) (87,530) (52,968) (96,784) (50,522) (85,680) (52,471)
(1,275,948) (12,547,912) (2,056,332) (4,638,749) (3,992,441) (81,142,762) (1,423,983)
- (48,233) - - - - -
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
14,034,862 (9,552,898) 26,329,693 9,649,513 25,112,860 4,543,398 13,704,640
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
15,572,284 13,927,352 32,219,252 15,169,238 29,801,909 5,200,002 16,064,695
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
$18,628,633 $103,657,763 $42,184,948 $45,442,936 $37,903,233 $22,309,488 $25,182,149
=============================================================================================================
</TABLE>
<PAGE>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements
December 31, 1995
1. Investment and Accounting Policies
Principal Mutual Life Insurance Company Separate Account B is a segregated
investment account of Principal Mutual Life Insurance Company (Principal Mutual)
and is registered under the Investment Company Act of 1940 as a unit investment
trust, with no stated limitations on the number of authorized units. As directed
by eligible contractholders, Separate Account B invests solely in shares of
Principal Aggressive Growth Fund, Inc., Principal Asset Allocation Fund, Inc.,
Principal Balanced Fund, Inc., Principal Bond Fund, Inc., Principal Capital
Accumulation Fund, Inc., Principal Emerging Growth Fund, Inc., Principal
Government Securities Fund, Inc., Principal Growth Fund, Inc., Principal Money
Market Fund, Inc., and Principal World Fund, Inc., diversified open-end
management investment companies organized by Principal Mutual. Investments are
stated at the closing net asset values per share on December 31, 1995.
The average cost method is used to determine realized gains and losses on
investments. Dividends are taken into income on an accrual basis as of the
ex-dividend date.
Principal Mutual no longer accepts contributions for Bankers Flexible Annuity
contracts. Beginning in early 1996, it is anticipated that contributions will
also no longer be accepted for Pension Builder Plus contracts, with transfer and
withdrawal options of affected contractholders to be communicated at that time.
2. Expenses
Principal Mutual is compensated for the following expenses:
Bankers Flexible Annuity Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate of
0.48% of the asset value of each contract. An annual administration charge of $7
for each participant's account is deducted as compensation for administrative
expenses. The mortality and expense risk and annual administration charges
amounted to $26,286 and $1,187, respectively, during the year ended December 31,
1995. A sales charge of up to 7% was deducted from each contribution made on
behalf of each participant. The sales charge was deducted from the contributions
by Principal Mutual prior to their transfer to Separate Account B.
Pension Builder Plus Contracts - Mortality and expense risks assumed by
Principal Mutual are compensated for by a charge equivalent to an annual rate of
1.4965% (1.0001% for a Rollover Individual Retirement Annuity) of the asset
value of each contract. A contingent sales charge of up to 7% may be deducted
from withdrawals made during the first 10 years of a contract, except for death
or permanent disability. An annual administration charge will be deducted
ranging from a minimum of $25 to a maximum of $275 depending upon a
participant's investment account values and the
<PAGE>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
2. Expenses (continued)
number of participants under the retirement plan and their participant
investment account value. The charges for mortality and expense risks,
contingent sales, and annual administration amounted to $836,135, $131,273, and
$285,909, respectively, during the year ended December 31, 1995.
Personal Variable Contracts - Mortality and expense risks assumed by Principal
Mutual are compensated for by a charge equivalent to an annual rate of 0.55% of
the asset value of each contract. A contingent sales charge of up to 5% may be
deducted from withdrawals from an investment account which correlates to a plan
participant made during the first seven years from the date the first
contribution which relates to such participant is accepted by Principal Mutual.
This charge does not apply to withdrawals made from investment accounts which
correlate to a plan participant as a result of the plan participant's death or
permanent disability. An annual administration charge of $31 (1994 - $28) for
each participant's account plus 0.35% of the annual average balance of
investment account values which correlate to a plan participant will be deducted
on a quarterly basis. The charges for mortality and expense risks, contingent
sales and annual administration amounted to $29,903, $16,882, and $17,673,
respectively, during the year ended December 31, 1995.
Premier Variable Contracts - Mortality and expense risks assumed by Principal
Mutual are compensated for by a charge equivalent to an annual rate of 0.33% of
the asset value of each contract. An annual administration charge of $300 for
each contract account plus .35% of the annual average balance of investment
account values under the contract will be billed or deducted on a quarterly
basis. The charges for mortality expense risks and annual administration
amounted to $117,935 and $1,813, respectively, during the year ended December
31, 1995. There were no contingent sales charges provided for in these
contracts.
The Principal Variable Annuity (initially available in 1994) - Mortality and
expense risks assumed by Principal Mutual are compensated for by a charge
equivalent to an annual rate of 1.25% of the asset value of each contract. A
contingent sales charge of up to 6% may be deducted from the withdrawals made
during the first six years of a contract, except for death, annuitization,
permanent disability, confinement in a health care facility, or terminal
illness. An annual administration charge of the lessor of two percent of the
accumulated value or $30 is deducted at the end of the contract year. Principal
Mutual reserves the right to charge an additional administrative fee of up to
0.15% of the asset value of each Division. This fee is currently being waived.
The mortality expense risks, contingent sales, and annual administration
amounted to $1,680,329, $78,860, and $39,005, respectively, during the year
ended December 31, 1995.
3. Federal Income Taxes
Operations of Separate Account B are a part of the operations of Principal
Mutual. Under current practice, no federal income taxes are allocated by
Principal Mutual to the operations of Principal Mutual Life Insurance Company
Separate Account B.
<PAGE>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
4. Purchases and Sales of Investment Securities
<TABLE>
<CAPTION>
The aggregate units and cost of purchases and proceeds from sales of investments
were as follows:
Year ended December 31, 1995
----------------------------------------------------------------------
Units Amount Units Amount
Purchased Purchased Redeemed Redeemed
----------------------------------------------------------------------
----------------------------------------------------------------------
Aggressive Growth Division:
<S> <C> <C> <C> <C>
The Principal Variable Annuity 1,162,971 $16,957,154 201,095 $ 2,804,956
Asset Allocation Division:
The Principal Variable Annuity 678,626 8,127,343 70,172 876,650
Balanced Division:
Personal Variable 334,553 385,447 11,639 14,109
Premier Variable 4,677,390 5,246,438 1,485,326 1,592,984
The Principal Variable Annuity 1,080,849 12,976,336 78,060 1,008,737
----------------------------------------------------------------------
----------------------------------------------------------------------
6,092,792 18,608,221 1,575,025 2,615,830
Bond Division:
Personal Variable 123,065 148,020 22,243 25,730
Premier Variable 1,840,967 2,123,674 663,884 722,145
The Principal Variable Annuity 1,184,200 14,349,589 83,479 1,032,017
----------------------------------------------------------------------
----------------------------------------------------------------------
3,148,232 16,621,283 769,606 1,779,892
Capital Accumulation Division:
Bankers Flexible Annuity (2,074) 586,673 26,790 484,160
Pension Builder Plus 1,177,659 6,843,608 7,859,266 22,762,416
Pension Builder Plus - Rollover IRA
1,886,220 1,378,668 5,357,391 11,244,730
Personal Variable 1,106,595 1,748,682 408,298 529,070
Premier Variable 9,404,706 13,956,170 8,547,118 10,455,522
The Principal Variable Annuity 1,739,038 22,863,899 206,288 2,651,689
----------------------------------------------------------------------
----------------------------------------------------------------------
15,312,144 47,377,700 22,405,151 48,127,587
Emerging Growth Division:
Personal Variable 292,833 348,128 18,735 22,981
Premier Variable 2,320,114 2,651,113 543,652 613,426
The Principal Variable Annuity 2,252,301 26,559,212 165,780 2,237,880
----------------------------------------------------------------------
----------------------------------------------------------------------
4,865,248 29,558,453 728,167 2,874,287
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
4. Purchases and Sales of Investment Securities (continued)
Year ended December 31, 1995
----------------------------------------------------------------------
Units Amount Units Amount
Purchased Purchased Redeemed Redeemed
----------------------------------------------------------------------
Government Securities Division:
<S> <C> <C> <C> <C>
Pension Builder Plus 586,364 $ 1,344,275 2,795,319 $ 4,747,357
Pension Builder Plus - Rollover IRA
117,394 407,431 2,462,194 4,357,297
Personal Variable 724,111 966,857 408,940 483,072
Premier Variable 4,015,136 5,118,317 3,286,750 3,736,310
The Principal Variable Annuity 1,576,129 18,708,169 125,206 1,549,586
----------------------------------------------------------------------
----------------------------------------------------------------------
7,019,134 26,545,049 9,078,409 14,873,622
Growth Division:
Personal Variable 288,529 338,347 15,831 18,761
Premier Variable 3,384,751 3,805,395 634,749 707,988
The Principal Variable Annuity 2,193,600 26,238,189 338,161 4,062,924
----------------------------------------------------------------------
----------------------------------------------------------------------
5,866,880 30,381,931 988,741 4,789,673
Money Market Division:
Pension Builder Plus 259,307 585,027 928,805 1,623,965
Pension Builder Plus - Rollover IRA
73,307 206,073 1,861,305 3,275,611
Personal Variable 4,808,023 5,271,738 4,407,096 4,786,833
Premier Variable 19,308,743 21,221,953 18,140,572 19,805,796
The Principal Variable Annuity 6,262,716 65,784,577 5,594,373 58,377,161
----------------------------------------------------------------------
----------------------------------------------------------------------
30,712,096 93,069,368 30,932,151 87,869,366
World Division:
Personal Variable 147,751 154,436 9,257 10,003
Premier Variable 2,079,728 2,137,579 544,500 566,419
The Principal Variable Annuity 1,337,260 13,699,818 126,959 1,503,012
----------------------------------------------------------------------
----------------------------------------------------------------------
3,564,739 15,991,833 680,716 2,079,434
----------------------------------------------------------------------
======================================================================
78,422,862 $303,238,335 67,429,233 $168,691,297
======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
4. Purchases and Sales of Investment Securities (continued)
Year ended December 31, 1994
----------------------------------------------------------------------
Units Amount Units Amount
Purchased Purchased Redeemed Redeemed
----------------------------------------------------------------------
----------------------------------------------------------------------
Aggressive Growth Division:
<S> <C> <C> <C> <C>
The Principal Variable Annuity 365,021 $ 3,764,495 3,234 $ 40,222
Asset Allocation Division:
The Principal Variable Annuity 303,404 3,120,664 201 7,996
Balanced Division:
Personal Variable 4,458 4,510 - 1
Premier Variable 134,069 137,040 9,158 9,075
The Principal Variable Annuity 374,366 3,932,274 3,998 47,513
----------------------------------------------------------------------
----------------------------------------------------------------------
512,893 4,073,824 13,156 56,589
Bond Division:
Personal Variable 214 229 - -
Premier Variable 30,684 32,652 18 27
The Principal Variable Annuity 304,552 3,243,070 3,972 45,657
----------------------------------------------------------------------
----------------------------------------------------------------------
335,450 3,275,951 3,990 45,684
Capital Accumulation Division:
Bankers Flexible Annuity 2,374 301,977 51,727 734,507
Pension Builder Plus 2,446,494 9,006,081 7,066,481 19,561,666
Pension Builder Plus - Rollover IRA
949,817 3,764,900 3,969,948 11,681,145
Personal Variable 1,472,634 1,771,211 339,067 396,040
Premier Variable 10,159,761 12,414,226 4,172,940 4,837,072
The Principal Variable Annuity 704,037 7,483,988 5,010 62,689
----------------------------------------------------------------------
----------------------------------------------------------------------
15,735,117 34,742,383 15,605,173 37,273,119
Emerging Growth Division:
Personal Variable 13,841 14,069 - 6
Premier Variable 122,378 124,838 2,977 2,976
The Principal Variable Annuity 1,000,413 10,426,294 27,610 297,329
----------------------------------------------------------------------
----------------------------------------------------------------------
1,136,632 10,565,201 30,587 300,311
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
4. Purchases and Sales of Investment Securities (continued)
Year ended December 31, 1994
----------------------------------------------------------------------
Units Amount Units Amount
Purchased Purchased Redeemed Redeemed
----------------------------------------------------------------------
Government Securities Division:
<S> <C> <C> <C> <C>
Pension Builder Plus 1,705,948 $ 3,472,965 3,191,017 $ 5,229,829
Pension Builder Plus - Rollover IRA
1,343,428 2,767,254 5,104,801 8,454,316
Personal Variable 1,592,426 1,856,027 826,327 909,485
Premier Variable 6,358,242 7,432,287 2,480,866 2,736,826
The Principal Variable Annuity 582,127 6,197,216 9,927 109,630
----------------------------------------------------------------------
----------------------------------------------------------------------
11,582,171 21,725,749 11,612,938 17,440,086
Growth Division:
Personal Variable 5,010 5,023 - 1
Premier Variable 109,908 110,749 17 35
The Principal Variable Annuity 798,340 8,399,024 34,440 377,222
----------------------------------------------------------------------
----------------------------------------------------------------------
913,258 8,514,796 34,457 377,258
Money Market Division:
Pension Builder Plus 824,944 1,537,336 1,733,074 2,976,732
Pension Builder Plus - Rollover IRA
658,567 1,300,232 1,324,777 2,327,495
Personal Variable 6,290,739 6,573,245 5,731,682 5,968,932
Premier Variable 31,282,964 32,799,567 30,393,364 31,815,309
The Principal Variable Annuity 2,902,432 29,495,563 2,200,571 22,344,437
----------------------------------------------------------------------
----------------------------------------------------------------------
41,959,646 71,705,943 41,383,468 65,432,905
World Division:
Personal Variable 21,212 21,051 8 18
Premier Variable 137,240 135,769 122 151
The Principal Variable Annuity 944,065 9,365,533 8,397 95,937
----------------------------------------------------------------------
----------------------------------------------------------------------
1,102,517 9,522,353 8,527 96,106
----------------------------------------------------------------------
======================================================================
73,946,109 $171,011,359 68,695,731 $121,070,276
======================================================================
</TABLE>
Purchases include reinvested dividends and capital gains.
Money Market purchases include transactions where investment allocations are not
known at the time of the deposit. Redemptions reflect subsequent allocations to
directed investment divisions.
<PAGE>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
5. Net Assets
<TABLE>
<CAPTION>
Net assets at December 31, 1995 consisted of the following:
Accumulated Net Net Unrealized
Investment Appreciation
Unit Income of Investments
Combined Transactions
-------------------------------------------------------------------
Aggressive Growth Division:
<S> <C> <C> <C> <C>
The Principal Variable Annuity $ 19,198,047 $16,585,472 $ 1,739,741 $ 872,834
Asset Accumulation Division:
The Principal Variable Annuity 10,841,100 9,858,412 579,277 403,411
Balanced Division:
Personal Variable 395,555 359,859 16,939 18,757
Premier Variable 4,018,252 3,685,129 130,683 202,440
The Principal Variable Annuity 16,849,215 15,107,991 811,800 929,424
-------------------------------------------------------------------
-------------------------------------------------------------------
21,263,022 19,152,979 959,422 1,150,621
Bond Division:
Personal Variable 124,183 118,401 4,895 887
Premier Variable 1,488,447 1,397,785 50,150 40,512
The Principal Variable Annuity 17,016,003 15,672,902 878,753 464,348
-------------------------------------------------------------------
-------------------------------------------------------------------
18,628,633 17,189,088 933,798 505,747
Capital Accumulation Division:
Bankers Flexible Annuity 5,928,607 1,372,769 3,151,941 1,403,897
Pension Builder Plus 33,981,462 22,315,837 7,447,921 4,217,704
Pension Builder Plus - Rollover IRA
8,110,072 5,394,422 1,747,988 967,662
Personal Variable 3,500,687 2,876,197 329,409 295,081
Premier Variable 22,380,360 18,395,190 2,038,475 1,946,695
The Principal Variable Annuity 29,756,575 25,472,959 2,365,453 1,918,163
-------------------------------------------------------------------
-------------------------------------------------------------------
103,657,763 75,827,374 17,081,187 10,749,202
Emerging Growth Division:
Personal Variable 365,808 336,153 4,506 25,149
Premier Variable 2,415,033 2,161,763 31,411 221,859
The Principal Variable Annuity 39,404,107 34,039,475 615,715 4,748,917
-------------------------------------------------------------------
-------------------------------------------------------------------
42,184,948 36,537,391 651,632 4,995,925
Government Securities Division:
Pension Builder Plus 6,882,964 5,704,191 991,052 187,721
Pension Builder Plus - Rollover IRA
3,407,555 2,825,811 531,974 49,770
Personal Variable 2,371,868 2,174,499 165,545 31,824
Premier Variable 9,053,348 8,177,753 654,665 220,930
The Principal Variable Annuity 23,727,201 21,870,768 1,426,804 429,629
-------------------------------------------------------------------
-------------------------------------------------------------------
45,442,936 40,753,022 3,770,040 919,874
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance
Company Separate Account B
Notes to Financial Statements (continued)
5. Net Assets (continued)
Accumulated Net Net Unrealized
Investment Appreciation
Unit Income of Investments
Combined Transactions
-------------------------------------------------------------------
Growth Division:
<S> <C> <C> <C> <C>
Personal Variable $ 346,944 $ 320,239 $ 5,282 $ 21,423
Premier Variable 3,582,532 3,184,495 54,938 343,099
The Principal Variable Annuity 33,973,757 30,003,254 421,321 3,549,182
-------------------------------------------------------------------
37,903,233 33,507,988 481,541 3,913,704
Money Market Division:
Pension Builder Plus 2,339,446 2,142,956 196,490 -
Pension Builder Plus - Rollover IRA
797,914 727,279 70,635 -
Personal Variable 1,278,235 1,269,540 8,695 -
Premier Variable 3,335,350 3,314,495 20,855 -
The Principal Variable Annuity 14,558,543 14,487,342 71,201 -
-------------------------------------------------------------------
-------------------------------------------------------------------
22,309,488 21,941,612 367,876 -
World Division:
Personal Variable 173,584 163,826 2,034 7,724
Premier Variable 1,822,554 1,708,566 21,627 92,361
The Principal Variable Annuity 23,186,011 21,301,001 227,669 1,657,341
-------------------------------------------------------------------
-------------------------------------------------------------------
25,182,149 23,173,393 251,330 1,757,426
-------------------------------------------------------------------
===================================================================
$346,611,319 $294,526,731 $26,815,844 $25,268,744
===================================================================
</TABLE>
<PAGE>
Report of Independent Auditors
Board of Directors and Participants
Principal Mutual Life Insurance Company
We have audited the accompanying statement of net assets of Principal Mutual
Life Insurance Company Separate Account B (comprising, respectively, the
Aggressive Growth, Asset Allocation, Balanced, Bond, Capital Accumulation,
Emerging Growth, Government Securities, Growth, Money Market and World
Divisions) as of December 31, 1995, and the related statements of operations for
the year then ended, and changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the transfer agent. 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 Principal Mutual Life Insurance
Company Separate Account B at December 31, 1995, and the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
February 7, 1996
<PAGE>
Principal Mutual Life Insurance Company
Statements of Financial Position
December 31
1995 1994
---------------------------
(In Millions)
Assets
Bonds $21,798 $20,626
Preferred stocks 93 69
Common stocks 1,330 914
Investment in subsidiaries 546 501
Commercial mortgage loans 9,794 8,901
Residential mortgage loans 234 287
Investment real estate 1,313 1,155
Properties held for Company use 204 159
Policy loans 711 683
Cash and short-term investments 913 485
Accrued investment income 467 468
Separate account assets 12,957 9,197
Other assets 908 672
---------------------------
Total assets $51,268 $44,117
===========================
Liabilities
Insurance reserves $ 6,297 $ 6,007
Annuity reserves 25,770 24,311
Reserves for policy dividends 578 583
Other policy liabilities 748 618
Investment valuation reserves 1,041 792
Tax liabilities 241 189
Separate account liabilities 12,891 9,099
Other liabilities 1,494 591
---------------------------
Total liabilities 49,060 42,190
Surplus
Surplus notes 298 298
Unassigned and other surplus funds 1,910 1,629
---------------------------
Total surplus 2,208 1,927
---------------------------
Total liabilities and surplus $51,268 $44,117
===========================
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Statements of Operations and Surplus
Year ended December 31
1995 1994 1993
------------------------------------------
(In Millions)
Income
<S> <C> <C> <C>
Premiums and annuity and other considerations $11,940 $10,718 $ 9,983
Net income from investments 2,651 2,520 2,369
Other income 25 505 18
------------------------------------------
Total income 14,616 13,743 12,370
Benefits and expenses
Benefit payments other than dividends 9,268 8,211 6,729
Dividends to policyowners 309 317 410
Additions to policyowner reserves 3,439 3,756 3,890
Insurance expenses and taxes 1,199 1,145 1,029
------------------------------------------
Total benefits and expenses 14,215 13,429 12,058
------------------------------------------
Income before federal income taxes and realized capital gains
(losses) 401 314 312
Federal income taxes 140 130 48
------------------------------------------
Net gain from operations before realized capital gains (losses)
261 184 264
Realized capital gains (losses) 2 (32) (52)
------------------------------------------
Net income $ 263 $ 152 $ 212
==========================================
Surplus
Surplus at beginning of year $ 1,927 $ 1,641 $ 1,440
Net income 263 152 212
Issuance of surplus notes - 298 -
Increase in investment valuation reserves (249) (131) (43)
Increase in non-admitted assets and related items (45) (51) (59)
Net unrealized capital gains 326 47 57
Adjustment for prior years' federal income taxes - (63) -
Net policyowner reserve adjustments 1 31 18
Other adjustments - net (15) 3 16
------------------------------------------
Surplus at end of year $ 2,208 $ 1,927 $ 1,641
==========================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Statements of Cash Flows
Year ended December 31
1995 1994 1993
------------------------------------------
(In Millions)
CASH PROVIDED
Proceeds from operating activities
<S> <C> <C> <C>
Premiums and annuity and other considerations received $11,923 $10,711 $ 9,967
Net investment income received 2,723 2,509 2,421
Benefit payments other than dividends (9,277) (8,186) (6,700)
Dividends paid to policyowners (317) (293) (396)
Insurance expenses and taxes paid (1,198) (1,159) (1,007)
Federal income taxes paid (125) (67) (119)
Transfers for separate account operations (1,549) (1,396) (1,120)
Other (3) 7 (5)
------------------------------------------
Net cash provided from operations 2,177 2,126 3,041
Proceeds from investments sold, matured or repaid
Bonds and stocks 12,028 10,951 20,072
Mortgage loans 1,276 2,043 6,852
Real estate and other invested assets 70 168 37
Tax on capital gains (22) (25) (29)
------------------------------------------
Total cash provided from investments 13,352 13,137 26,932
Issuance of surplus notes - 298 -
Other cash provided 793 - 85
------------------------------------------
Total cash provided 16,322 15,561 30,058
CASH APPLIED
Cost of investments acquired
Bonds and stocks acquired (13,234) (13,709) (22,434)
Mortgage loans acquired or originated (2,265) (1,611) (7,253)
Real estate and other invested assets acquired (195) (91) (132)
------------------------------------------
Total cash applied to investments (15,694) (15,411) (29,819)
Other cash applied (200) (135) (72)
------------------------------------------
Total cash applied (15,894) (15,546) (29,891)
SHORT-TERM BORROWINGS
Proceeds of short-term borrowings 990 3,152 1,743
Repayment of short-term borrowings (990) (3,152) (1,743)
------------------------------------------
Net cash provided by short-term borrowings - - -
------------------------------------------
Net increase in cash and short-term investments 428 15 167
Cash and short-term investments at beginning of year 485 470 303
------------------------------------------
Cash and short-term investments at end of year $ 913 $ 485 $ 470
==========================================
See accompanying notes.
</TABLE>
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements
December 31, 1995
1. Nature of Operations and Significant Accounting Policies
Description of Business
Principal Mutual Life Insurance Company (the Company) is primarily engaged in
the marketing and management of life insurance, annuity, health and pension
products. In addition, the Company provides various other financial services
through its subsidiaries.
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company's financial statements and accompanying notes
requires management to make estimates and assumptions that affect the amounts
reported and disclosed. These estimates and assumptions could change in the
future as more information becomes known, which could impact the amounts
reported and disclosed in the financial statements and accompanying notes.
Basis of Presentation
The Company's financial statements have been prepared on the basis of accounting
practices prescribed or permitted by the Insurance Division of the Department of
Commerce of the State of Iowa (statutory accounting practices), which practices
are currently regarded as generally accepted accounting principles (GAAP) for
mutual life insurance companies.
Beginning in 1996, however, under the requirements of Financial Accounting
Standards Board (FASB) Interpretation No. 40, "Applicability of Generally
Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises,"
as amended, financial statements prepared on the basis of statutory accounting
practices will no longer be described as prepared "in conformity with GAAP." The
Accounting Standards Executive Committee of the American Institute of Certified
Public Accountants and the FASB issued authoritative accounting and reporting
pronouncements in January 1995, effective for calendar year 1996, addressing how
mutual life insurance companies should account for certain insurance activities.
Applying the provisions of these authoritative accounting and reporting
pronouncements may result in surplus and net income that differ from the amounts
reported under existing statutory accounting practices. The Company has not yet
determined the impact of these pronouncements on its financial statements. The
Company plans to issue general-purpose financial statements for calendar year
1996 that follow these authoritative pronouncements and will be described as
prepared in conformity with GAAP. These statutory-basis financial statements,
however, will continue to be required by insurance regulatory authorities.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
The National Association of Insurance Commissioners (NAIC) currently is in the
process of recodifying statutory accounting practices, the result of which is
expected to constitute the only source of "prescribed" statutory accounting
practices. Accordingly, that project, which is not expected to be completed
before 1997, 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.
Subsidiaries
Investment in subsidiaries is reported at equity in net assets determined on a
statutory basis for insurance subsidiaries and on the basis of prescribed
valuation alternatives for non-insurance subsidiaries, resulting in carrying
values periodically approved by the Securities Valuation Office of the NAIC.
Total assets of these unconsolidated subsidiaries amounted to $2.6 billion at
December 31, 1995 and $2.1 billion at December 31, 1994, and total revenues were
$1,190 million in 1995, $911 million in 1994 and $669 million in 1993. During
1995, 1994 and 1993, the Company included $(48) million, $(2) million and $(37)
million, respectively, in net income from investments representing the current
year net losses of its subsidiaries.
Investments
Investments in bonds, short-term investments, and commercial and residential
mortgage loans are reported principally at cost (unpaid principal balance),
adjusted for amortization of premiums and accrual of discounts, both computed
using the interest method; policy loans and investments in preferred stocks
primarily at cost; common stocks at market value based on the latest quoted
market prices; and investments in real estate and properties held for Company
use generally at cost less encumbrances and accumulated depreciation. For the
loan-backed and structured securities included in the bond portfolio, the
Company recognizes income using the prospective method which results in a new
constant effective yield based on currently anticipated prepayments as
determined by broker-dealer surveys or internal estimates. Properties acquired
through loan foreclosures with cumulative carrying values of $946 million at
December 31, 1995, and $830 million at December 31, 1994, are recorded at the
lower of cost (principal balance of the former mortgage loan) or fair market
value at the time of foreclosure or receipt of deed in lieu of foreclosure. This
becomes the new cost basis of the real estate and is subject to further
potential carrying value reductions as a result of depreciation and quarterly
valuation determinations. Depreciation expense is computed primarily on the
basis of accelerated and straight-line methods over the estimated useful lives
of the assets. Other admitted assets are valued as prescribed by the Iowa
Insurance laws. Net realized capital gains and losses on investments are
determined using the specific identification basis.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
The Asset Valuation Reserve (AVR) provides a reserve for losses from investments
in bonds, preferred and common stocks, mortgage loans, real estate, and other
invested assets, with related increases or decreases being recorded directly to
surplus. At December 31, 1995 and 1994, the AVR was $1,041 million and $792
million, respectively. At both December 31, 1995 and 1994, other liabilities
include additional investment reserves of $36 million and $51 million,
respectively, of which $9 million is required by statutory accounting practices
as a provision for potential losses on specific mortgages in default. Unrealized
capital gains and losses on investments, including changes in mortgage and
security reserves, are recorded directly in surplus. Comparable adjustments are
also made to the AVR.
The Interest Maintenance Reserve (IMR) primarily defers certain interest-related
gains and losses (net of tax) on fixed income securities which are amortized
into net income from investments over the estimated remaining lives of the
investments sold. At December 31, 1995 and 1994, the IMR, which is included in
other liabilities, was $109 million and $52 million, respectively.
In connection with preparation of its statement of cash flows, the Company
considers all highly liquid investments with a maturity of one year or less when
purchased to be short-term investments.
Fair Values of Financial Instruments
The Company has accumulated information to disclose the fair values of certain
financial instruments, whether or not recognized in the statement of financial
position, as required by the FASB. The FASB excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
The aggregate fair value asset amounts for investments (including cash and
short-term investments, policy loans and accrued investment income and excluding
investment in subsidiaries and investment real estate) are presented in Note 2
(carrying value: 1995 - $35.3 billion, 1994 - $32.4 billion; fair value: 1995 -
$37.5 billion, 1994 - $31.9 billion). Fair value information for derivatives
held or issued for purposes other than trading is presented in Note 3.
Information for certain of the Company's reserves and liabilities that are
investment-type contracts (insurance, annuity and other policy contracts that do
not involve significant mortality or morbidity risk) is presented in Note 4
(carrying value: 1995 - $21.4 billion, 1994 - $20.0 billion; fair value: 1995 -
$22.0 billion, 1994 - $19.5 billion). Those referenced notes also describe the
methods and assumptions utilized by the Company in estimating its fair value
disclosures for financial instruments. Those techniques utilized in estimating
the fair values of financial instruments are affected by the assumptions used,
including discount rates and estimates of the amount and timing of future cash
flows. Care should be exercised in deriving conclusions about the Company's
business, its value or financial position based on the fair value information of
certain financial instruments presented in the referenced notes.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
Futures and Forward Contracts and Interest Rate and Equity Swaps
The Company uses financial futures contracts, forward purchase commitments and
interest rate swaps to hedge risks associated with interest rate fluctuations
and uses equity swaps to hedge risks associated with market fluctuations of
certain unaffiliated common stocks. Realized capital gains and losses on those
contracts which hedge risks associated with interest rate fluctuations are
amortized over the remaining lives of the underlying assets, primarily by
including them in the IMR. Realized capital gains and losses on equity swaps are
recognized in the period incurred.
Reserves for Insurance, Annuity and Accident and Health Policies
The reserves for life, health and annuity policies, all developed by actuarial
methods, are established and maintained on the basis of mortality and morbidity
tables using assumed interest rates and valuation methods that will provide, in
the aggregate, reserves that are greater than the minimum valuation required by
law or guaranteed policy cash values. The cumulative effects of changes in
valuation bases at the beginning of the year for previously established
policyowner reserves are included as adjustments to surplus. Significant
decreases in valuation bases are approved by the Insurance Division of the
Department of Commerce of the State of Iowa.
The liability for unpaid accident and health claims is determined using
statistical analyses and case basis evaluations. This liability is an estimate
of the ultimate net cost of all reported and unreported losses that are unpaid.
This liability is determined using estimates of future trends in claim severity,
frequency, and other factors that could vary as claims are ultimately settled.
Although considerable variability is inherent in such estimates, the Company
believes that the liability for unpaid claims is adequate. These estimates are
continually reviewed and, as adjustments to this liability become necessary,
such adjustments are reflected in current operations.
Recognition of Premium Revenues and Costs
For life and annuity contracts, premiums are recognized as revenues over the
premium-paying period, whereas commissions and other costs applicable to the
acquisition of new business are charged to operations as incurred.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
1. Nature of Operations and Significant Accounting Policies (continued)
Reinsurance
The Company reinsures certain of its risks. Reinsurance premiums, expenses, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies issued and the terms of
the reinsurance contracts. Premiums ceded to other companies (1995 - $27
million, 1994 - $21 million and 1993 - $19 million) are reported as a reduction
of premium income, and insurance reserves applicable to reinsurance ceded have
also been reported as reductions of these items (1995 - $33 million and 1994 -
$24 million). The Company is contingently liable with respect to reinsurance
ceded to other companies in the event the reinsurer is unable to meet the
obligations that it has assumed.
Separate Accounts
The separate accounts presented in the financial statements represent the fair
market value of funds that are separately administered by the Company for
contracts with equity, real estate and fixed-income investments. The separate
account contract owner, rather than the Company, bears the investment risk of
these funds. The Company receives a fee for administrative and investment
advisory services.
Separate account assets and liabilities are disclosed in the aggregate in the
statements of financial position. The statements of operations include the
premiums, increases in reserves, benefits, and other items arising from the
operations of the separate accounts of the Company. The statements of surplus
reflect the gain from operations and surplus of the separate accounts. Such gain
from operations and surplus arises from the transfer by the Company of funds to
the separate accounts to facilitate their operations.
Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform to the 1995 presentation.
2. Investments
Investments in debt securities, preferred stocks, and other fixed maturity
instruments are generally held for investment purposes to maturity, and,
therefore, are carried in the financial statements at amortized cost. The
Company's liabilities, to which such fixed maturity investments are closely
matched, are long-term in nature so the Company does not expect to be required
to sell such securities prior to maturity.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
The carrying values and estimated market values of investments in bonds and
preferred stocks as of December 31, 1995 and 1994, are as follows (in millions):
Gross Gross Estimated
Carrying Value Unrealized Unrealized Market
Gains Losses Value
---------------------------------------------------------------
December 31, 1995
Bonds:
<S> <C> <C> <C> <C>
United States Government and agencies $ 232 $ 4 $ - $ 236
States and political subdivisions 230 21 - 251
Corporate - public 4,374 328 16 4,686
Corporate - private 13,877 1,332 15 15,194
Mortgage-backed securities 3,085 134 4 3,215
---------------------------------------------------------------
21,798 1,819 35 23,582
Preferred stocks 93 12 - 105
---------------------------------------------------------------
$21,891 $1,831 $35 $23,687
===============================================================
December 31, 1994
Bonds:
United States Government and agencies $ 111 $ 1 $ 4 $ 108
States and political subdivisions 198 2 12 188
Corporate - public 3,986 74 142 3,918
Corporate - private 13,678 365 391 13,652
Mortgage-backed securities 2,653 2 166 2,489
---------------------------------------------------------------
20,626 444 715 20,355
Preferred stocks 69 4 2 71
---------------------------------------------------------------
$20,695 $448 $717 $20,426
===============================================================
</TABLE>
Market values of public bonds and preferred stocks have been determined by the
Company from public quotations, when available, or bonds have been assigned a
market rate by the Securities Valuation Office of the NAIC. Private placement
securities are valued by discounting the expected total cash flows. Market rates
used are applicable to the yield, credit quality and average maturity of each
security.
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
The carrying values and estimated market values of bonds at December 31, 1995,
by expected maturity, are as follows (in millions):
Carrying Value Estimated Market
Value
------------------------------------
<S> <C> <C>
Due in one year or less $ 747 $ 768
Due after one year through five years 6,878 7,271
Due after five years through ten years 6,189 6,695
Due after ten years 3,176 3,657
------------------------------------
16,990 18,391
Mortgage-backed and other securities without
a single maturity date 4,808 5,191
------------------------------------
Total $21,798 $23,582
====================================
</TABLE>
<TABLE>
<CAPTION>
The carrying value and estimated market value of mortgage loans at December 31,
1995 and 1994, are as follows (in millions):
1995 1994
----------------- -----------------
Estimated Estimated Market
Carrying Value Market Carrying Value Value
Value
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial mortgage loans $9,794 $10,129 $8,901 $8,580
Residential mortgage loans 234 262 287 299
</TABLE>
Market values of commercial mortgage loans are valued by discounting the
expected total cash flows using market rates that are applicable to the yield,
credit quality, and maturity of each loan. Market values of residential mortgage
loans are valued by a pricing and servicing model using market rates that are
applicable to the yield, rate structure, credit quality, size, and maturity of
each loan. The carrying value for policy loans approximates the fair value.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Major categories of income from investments are summarized as follows (in
millions):
Year ended December 31
1995 1994 1993
------------------------------------------
Bonds $1,761 $1,622 $1,549
Preferred stocks 6 3 2
Common stocks 35 22 26
Investment in subsidiaries (48) (2) (37)
Mortgage loans 808 766 811
Investment real estate 211 179 129
Policy loans 48 44 44
Cash and short-term investments 29 20 6
Other 18 48 1
------------------------------------------
2,868 2,702 2,531
Less investment expenses 217 182 162
------------------------------------------
Net income from investments $2,651 $2,520 $2,369
==========================================
<TABLE>
<CAPTION>
The major components of realized capital gains (losses) on investments reflected
in operations, and unrealized capital gains (losses) on investments reflected
directly in surplus, are summarized as follows (in millions):
Realized Unrealized
1995 1994 1993 1995 1994 1993
--------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Bonds $101 $(133) $150 $ (17) $32 $(32)
Preferred stocks (1) - (11) 1 (7) 11
Common stocks 32 6 29 398 7 23
Mortgage loans (24) (34) (81) 9 3 41
Investment real estate 7 3 1 5 6 (1)
Investment in subsidiaries 1 32 - (6) 6 (5)
Other 4 45 (44) (1) - 20
------------------------------ -----------------------------
Net capital gains (losses) 120 (81) 44 389 47 57
Related federal income taxes (41) 6 (26) (63) - -
Transferred (to) from interest
maintenance reserve (77) 43 (70) - - -
============================== =============================
Total capital gains (losses) $ 2 $ (32) $(52) $326 $47 $57
============================== =============================
</TABLE>
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Proceeds from sales of investments (excluding maturity proceeds) in debt
securities were $6.5 billion in both 1995 and 1994, and $11.9 billion in 1993.
Gross gains of $93 million, $53 million and $173 million and gross losses of $54
million, $213 million and $65 million in 1995, 1994 and 1993, respectively, were
realized on those sales. Of the 1995, 1994 and 1993 proceeds, $6.1 billion, $5.7
billion and $11.5 billion, respectively, relates to sales of mortgage-backed
securities. The Company actively manages its mortgage-backed securities
portfolio to control prepayment risk. Gross gains of $66 million, $19 million
and $152 million and gross losses of $17 million, $139 million and $29 million
in 1995, 1994 and 1993, respectively, were realized on sales of mortgage-backed
securities. At December 31, 1995, the Company had security purchases payable
totaling $426 million relating to the purchases of mortgage-backed securities at
forward dates.
The Company has a revolving credit agreement with Principal Residential
Mortgage, Inc., a wholly-owned subsidiary which conducts the Company's mortgage
banking operations, of up to $800 million, which had a balance of $458 million
outstanding at December 31, 1995.
Commercial mortgage loans and corporate private placement bonds originated or
acquired by the Company represent its primary areas of credit risk exposure. At
December 31, 1995 and 1994, the commercial mortgage portfolio is diversified by
geographic region and specific collateral property type as follows:
<TABLE>
<CAPTION>
Geographic Distribution Property Type Distribution
---------------------------------- --------------------------------------
December 31 December 31
1995 1994 1995 1994
----------------------- -----------------------
<S> <C> <C> <C> <C> <C>
South Atlantic 22% 21% Industrial 43% 47%
Pacific 34 38 Office 26 24
Mid Atlantic 17 17 Retail 26 24
North Central 14 13 Other 5 5
South Central 7 6
New England 4 3
Mountain 2 2
</TABLE>
The corporate private placement bond portfolio is diversified by issuer and
industry. Restrictive bond covenants are monitored by the Company to regulate
the activities of issuers and control their leveraging capabilities. Under the
NAIC bond classification system, 99.8% and 99.7% of the Company's bond portfolio
were carried at amortized cost at December 31, 1995 and 1994, respectively, with
the remainder carried at the lower of amortized cost or market value.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
2. Investments (continued)
Effective December 29, 1995, the Company entered into short-term equity swap
agreements to mitigate its exposure to declines in the value of about one-half
of its marketable common stock portfolio. Under the agreements, the return on
that portion of the Company's marketable common stock portfolio was swapped for
a fixed short-term interest rate. At December 31, 1995, there was no realized or
unrealized gains or losses recorded on the equity swap agreements and,
accordingly, there was no credit exposure. The unrealized appreciation and
depreciation of marketable common stocks recognized in the Company's statement
of financial position were $814 million and $85 million, respectively, at
December 31, 1995.
Investment real estate includes properties directly owned by the Company and
investments in subsidiaries include properties owned jointly with venture
partners and operated by the partners. Joint ventures in which the Company has
an interest have mortgage loans with the Company of $2.2 billion at both
December 31, 1995 and December 31, 1994. The Company is committed to provide
additional mortgage financing for such joint ventures aggregating $304 million
at December 31, 1995.
3. Derivatives Held or Issued for Purposes Other Than Trading
The Company uses exchange-traded interest rate futures and forward contracts to
hedge against interest rate risks. The Company attempts to match the timing of
when interest rates are committed on insurance products and on new investments.
However, timing differences do occur and can expose the Company to fluctuating
interest rates. Interest rate futures and forward contracts are used to minimize
these risks. In these contracts, the Company is subject to the risk that the
counterparties will fail to perform and to the risks associated with changes in
the value of the underlying securities; however, such changes in value generally
are offset by opposite changes in the value of the hedged items. Futures
contracts are marked to market and settled daily, which minimizes the
counterparty risk. The notional amounts of futures and forward contracts ($303
million at December 31, 1995, and $80 million at December 31, 1994) represent
the extent of the Company's involvement but not the risk of loss.
The Company enters into interest rate swaps to minimize its exposure to
fluctuations in interest rates and to correct duration mismatches. The most
common use is to modify the duration of an asset or portfolio, a less common use
is to convert a floating rate asset into a fixed rate asset. The notional
principal amounts of the swaps outstanding at December 31, 1995 and 1994, were
$599 million and $586 million, respectively, and the credit exposure at December
31, 1995 and December 31, 1994 was $8 million. The Company's current credit
exposure on swaps is limited to the value of interest rate swaps that have
become favorable to the Company. The average unexpired terms of the swaps were
approximately three years at both December 31, 1995 and 1994, respectively. The
net amount payable or receivable from interest rate swaps is accrued as an
adjustment to interest income. The Company's interest rate swap agreements
include cross-default provisions when two or more swaps are transacted with a
given counterparty.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
3. Derivatives Held or Issued for Purposes Other Than Trading (continued)
The Company enters into currency exchange swap agreements to convert certain
foreign denominated fixed rate assets into dollar denominated fixed rate assets
and eliminate the exposure to future currency volatility on those securities. At
December 31, 1995, the Company had various foreign currency exchange agreements
with maturities ranging from 1995 to 2002, with an aggregate notional amount
involved of approximately $312 million and the credit exposure was $4 million.
The average unexpired term of the swaps was approximately five years at December
31, 1995.
4. Insurance, Annuity and Accident and Health Reserves
The carrying values and fair values of the Company's reserves and liabilities
for investment-type insurance contracts (which are only a portion of the
insurance reserves, annuity reserves, and other policy liabilities appearing in
the statement of financial position) at December 31, 1995 and 1994, are
summarized as follows (in millions):
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------------------------
Carrying Value Fair Carrying Value Fair
Value Value
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Insurance reserves $ 30 $ 33 $ 30 $ 30
Annuity reserves 20,989 21,524 19,714 19,168
Other policy liabilities 398 403 270 270
----------------------------------------------------------------------
Total $21,417 $21,960 $20,014 $19,468
======================================================================
</TABLE>
The fair values for the Company's reserves and liabilities under investment-type
contracts (insurance, annuity and other policy contracts that do not involve
significant mortality or morbidity risk) are estimated using discounted cash
flow analyses (based on current interest rates being offered for similar
contracts with maturities consistent with those remaining for the
investment-type contracts being valued) or surrender values.
The fair values for the Company's insurance contracts (insurance, annuity and
other policy contracts that do involve significant mortality or morbidity risk),
other than investment-type contracts, are not required to be disclosed. The
Company does consider, however, the various insurance and investment risks in
choosing investments for both insurance and investment-type contracts.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
4. Insurance, Annuity and Accident and Health Reserves (continued)
Activity in the liability for unpaid accident and health claims, which is
included with insurance reserves in the statement of financial position, is
summarized as follows (in millions):
Year ended December 31
1995 1994 1993
------------------------------------------
Balance at beginning of year $ 844 $ 723 $ 657
Incurred:
Current year 2,665 2,735 2,307
Prior years (24) (105) (37)
------------------------------------------
Total incurred 2,641 2,630 2,270
Payments:
Current year 2,196 2,065 1,814
Prior years 481 444 390
------------------------------------------
Total payments 2,677 2,509 2,204
------------------------------------------
Balance at end of year:
Current year 469 670 493
Prior years 339 174 230
------------------------------------------
Total balance at end of year $ 808 $ 844 $ 723
==========================================
5. Federal Income Taxes
The Company files a consolidated income tax return that includes all of its
qualifying subsidiaries, and has a policy of allocating income tax expenses and
benefits to companies in the group based upon pro rata contribution of taxable
income or operating losses. The Company is taxed at corporate rates on taxable
income based on existing tax laws. Due to the inherent differences between
income for financial reporting purposes and income for tax purposes, the
Company's provision for federal income taxes may not have the customary
relationship of taxes to income.
Deferred income taxes are generally not recognized for the tax effects of
temporary differences between income for financial reporting purposes and income
for tax purposes. In 1993, 1994 and 1995, however, the Company recognized a
deferred tax asset and operating benefit for the tax effect of unamortized
deferred acquisition costs required for tax purposes. This deferred tax asset
was non-admitted in accordance with statutory accounting practices. In 1995, the
Company also recognized a deferred tax liability and surplus charge for the tax
effect of unrealized gains for common stocks identified for sale in 1996.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
5. Federal Income Taxes (continued)
In December 1994, a U. S. Court of Appeals with jurisdiction over the Company
ruled that federal law did not permit mutual life insurance companies to use a
negative recomputed differential earnings rate to compute their equity tax
liability for the preceding year. Accordingly, the Company increased its
liability for federal income taxes attributable to its equity for years prior to
1994 and made a corresponding adjustment to surplus in the amount of $63
million.
6. Short-Term Borrowings
The Company issues commercial paper to meet its short-term financing needs.
There were no outstanding borrowings at December 31, 1995 or 1994. The Company
also maintains credit facilities with various banks for short-term borrowing
purposes.
7. Employee and Agent Benefits
The Company has defined benefit pension plans covering substantially all of its
employees and certain agents. The employees and agents are generally first
eligible for the pension plans when they reach age 21. The pension benefits are
based on the years of service and generally the employee's or agent's average
annual compensation during the last five years of employment. Partial benefit
accrual of pension benefits is recognized from first eligibility until
retirement based on attained service divided by potential service to age 65 with
a minimum of 35 years of potential service.
During 1995, the Company adopted Statement of Financial Standards (SFAS) No. 87,
"Employers' Accounting for Pensions," and accordingly changed its method of
accounting for the costs of defined benefit pension plans to an accrual method.
Prior to this change, the cost of pension benefits was recognized as
contributions were made to the pension trusts. The Company's policy is to fund
the cost of providing pension benefits in the years that the employees and
agents are providing service to the Company. The Company's funding policy is to
deposit the actuarial normal cost and any change in unfunded accrued liability
over a 30-year period as a percentage of compensation.
The pension plans' combined funded status, reconciled to amounts recognized in
the statements of financial position and statements of operations and surplus as
of and for the years ended December 31, 1995 and 1994, is as follows (in
millions):
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
December 31
1995 1994
------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $437 $324
==============================
Accumulated benefit obligation $457 $338
==============================
Plan assets at fair value, primarily affiliated mutual funds
and investment contracts of the Company $719 $581
Projected benefit obligation 661 462
------------------------------
Plan assets in excess of projected benefit obligation 58 119
Unrecognized net (gains) losses and funding different from that assumed
and from changes in assumptions 42 (23)
Unrecognized net transition asset as of January 1, 1994 (72) (83)
------------------------------
Prepaid pension asset (non-admitted) $ 28 $ 13
==============================
Net periodic pension income included the following components (in millions):
Year ended December 31
1995 1994
------------------------------
Service cost $22 $26
Interest cost on projected benefit obligation 39 37
Actual return on plan assets (144) 6
Net amortization and deferral 79 (72)
------------------------------
Total net periodic pension income $ (4) $ (3)
==============================
</TABLE>
During 1994 and 1993, $10 million and $8 million, respectively, was charged to
expense and contributed to the trusts previously established to provide for
future costs of pension benefits. During 1995, $12 million was contributed to
these pension trusts. In addition, to adjust the pension accounting to the new
method required by SFAS No. 87 and to make the change effective as of January 1,
1994, surplus as of January 1, 1995 has been increased by $13 million. According
to the requirements of statutory accounting practices, pension expense for 1994
has not been restated and the 1994 pension amounts shown above are for
comparative purposes only. The pension asset at January 1, 1995 ($13 million)
and December 31, 1995 ($28 million) was non-admitted as prescribed by statutory
accounting practices.
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
The weighted-average assumed discount rate used in determining the projected
benefit obligation was 7% and 8.5% at December 31, 1995 and 1994, respectively.
Some of the trusts holding the plan assets are subject to federal income taxes
at a 35% tax rate while others are not subject to federal income taxes. For both
1995 and 1994, the expected long-term rates of return on plan assets were
approximately 6% (after estimated income taxes) for those trusts subject to
federal income taxes and approximately 10% for those trusts not subject to
federal income taxes. The assumed rate of increase in future compensation levels
varies by age for both the qualified and non-qualified pension plans.
In addition, the Company has defined contribution plans that are generally
available to all employees and agents who are age 21 or older and have completed
one year of service. Eligible participants may contribute up to 15% of their
compensation or $9,240 annually to the plans. The Company matches the
participant's contribution with a 50% contribution up to a maximum contribution
of 2% of the participant's compensation. During both 1995 and 1994, the Company
contributed $7 million to the defined contribution plans. During 1993, such
contributions totaled $6 million.
The Company also provides certain health care, life insurance, and long-term
care benefits for retired employees. Substantially all employees are first
eligible for these postretirement benefits when they reach age 57 and have
completed ten years of service with the Company. Partial benefit accrual of
these health, life, and long-term care benefits is recognized from first
eligibility until retirement based on attained service divided by potential
service to age 65 with a minimum of 35 years of potential service. The Company's
policy is to fund the cost of providing retiree benefits in the years that the
employees are providing service to the Company. The Company's funding policy is
to deposit the actuarial normal cost and an accrued liability over a 30-year
period as a percentage of compensation.
The postretirement plans' combined funded status, reconciled to amounts
recognized in the statement of financial position and statement of operations
and surplus as of and for the years ended December 31, 1995 and 1994, is as
follows (in millions):
<PAGE>
<TABLE>
<CAPTION>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
December 31
1995 1994
<S> <C> <C>
-------------------------------
Plan assets at fair value, primarily affiliated mutual funds and
investment contracts of the Company $208 $155
Accumulated postretirement benefit obligation:
Retirees (83) (71)
Eligible employees (40) (31)
--------------------------------
Total accumulated postretirement benefit obligation (123) (102)
-------------------------------
Plan assets in excess of accumulated postretirement benefit obligation
85 53
Unrecognized net losses and funding different from that assumed and
from changes in assumptions 3 29
-------------------------------
Postretirement benefit asset (non-admitted) $ 88 $ 82
===============================
</TABLE>
<TABLE>
<CAPTION>
The net periodic postretirement benefit cost included the following components
(in millions):
Year ended
December 31
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Service cost $ 5 $ 4 $ 3
Interest cost on accumulated postretirement benefit cost 9 7 6
Expected return on plan assets (10) (10) (6)
Net amortization of gains and losses 1 - -
================================
Total net periodic postretirement benefit cost $ 5 $ 1 $ 3
================================
</TABLE>
The weighted-average assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7% and 8.5% at December 31, 1995 and 1994,
respectively. Some of the trusts holding the plan assets are subject to federal
income taxes at a 35% tax rate while others are not subject to federal income
taxes. For both 1995 and 1994, the expected long-term rates of return on plan
assets were approximately 6% (after estimated income taxes) for those trusts
subject to federal income taxes and approximately 9% for those trusts not
subject to federal income taxes. These rates of return on plan assets vary by
benefit type and employee group.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligations starts at 11.5% in 1995, declines to 9.5% in
2001, and then declines to an ultimate rate of 6.5% in 2036. If the health care
cost trend rate assumptions were increased by 1% in each year, the accumulated
postretirement benefits obligation for health plans as of December 31, 1995
would increase by 11.8% ($10 million). The effect of this 1% increase would also
increase the aggregate of the service cost and interest cost components of the
net periodic postretirement benefit cost of health plans for the year ended
December 31, 1995 by 13.5% ($1 million).
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
7. Employee and Agent Benefits (continued)
These statutory accounting provisions are similar to Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," issued by the FASB except that SFAS No. 106
includes ineligible employees in the accumulated postretirement benefit
obligation calculations. The accumulated postretirement benefit obligation for
ineligible employees was $77 million and $48 million at December 31, 1995 and
1994, respectively.
8. Surplus Notes
On March 10, 1994, the Company issued $300 million of surplus notes, including
$200 million due March 1, 2024 at a 7.875% annual interest rate and the
remaining $100 million due March 1, 2044 at an 8% annual interest rate. No
affiliates of the Company hold any portion of the surplus notes. The discount
and direct costs associated with issuing these surplus notes is being amortized
to expense over their respective terms using the interest method. For statutory
accounting purposes, these notes are considered a part of total surplus of the
Company. Each payment of interest and principal on the surplus notes may be made
only with the prior approval of the Commissioner of Insurance of the State of
Iowa (the Commissioner) and only to the extent that the Company has sufficient
surplus earnings to make such payments. For the years ended December 31, 1995
and 1994, interest of $24 million and $11 million, respectively, was approved by
the Commissioner, paid and charged to expense. Had the accrual of interest on
surplus notes not been subject to approval of the Commissioner, accrued interest
payable on surplus notes at both December 31, 1995 and 1994 would have been $8
million.
Subject to Commissioner approval, the surplus notes due March 1, 2024 may be
redeemed at the Company's election on or after March 1, 2004 in whole or in part
at a redemption price of approximately 103.6% of par. The approximate 3.6%
premium is scheduled to gradually diminish over the following ten years. These
surplus notes may then be redeemed on or after March 1, 2014, at a redemption
price of 100% of the principal amount plus interest accrued to the date of
redemption. Non-insurance companies individually held over 10% of these surplus
notes (approximately $50 million and $73 million at December 31, 1995 and 1994,
respectively).
In addition, subject to Commissioner approval, the surplus notes due March 1,
2044 may be redeemed at the Company's election on or after March 1, 2014, in
whole or in part at a redemption price of approximately 102.3% of par. The
approximate 2.3% premium is scheduled to gradually diminish over the following
ten years. These surplus notes may be redeemed on or after March 1, 2024, at a
redemption price of 100% of the principal amount plus interest accrued to the
date of redemption. Non-insurance companies individually held over 10% of these
surplus notes (approximately $43 million and $62 million at December 31, 1995
and 1994, respectively).
<PAGE>
Principal Mutual Life Insurance Company
Notes to Financial Statements (continued)
9. Other Commitments and Contingencies
The Company leases office space and furniture and equipment under various
operating leases. Rental expense for all operating leases totaled $48 million in
1995, $43 million in 1994 and $44 million in 1993. At December 31, 1995, future
minimum rental commitments under noncancelable operating leases for office space
and electronic data processing equipment totaled approximately $97 million.
The Company is a defendant in various legal actions arising in the normal course
of its investment and insurance operations. In the opinion of management, any
losses resulting from such actions would not have a material effect on the
financial statements.
The Company is also subject to insurance guarantee laws in the states in which
it writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. At December 31, 1995 and 1994,
approximately $18 million and $15 million, respectively, of surplus is
appropriated for possible guarantee fund assessments for which notices have not
been received.
In 1995, the Company sold its wholly-owned subsidiary, Principal National Life
Insurance Company (Principal National), at a gain of approximately $1 million.
At December 31, 1994, substantially all the assets ($513 million), liabilities
($470 million), and equity ($43 million) of Principal National were transferred
to and assumed by the Company. This resulted in increases in both other income
and additions to policyowner reserves of $470 million in 1994.
<PAGE>
Report of Independent Auditors
The Board of Directors
Principal Mutual Life Insurance Company
We have audited the accompanying statements of financial position of Principal
Mutual Life Insurance Company (the Company) as of December 31, 1995 and 1994,
and the related statements of operations and surplus and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Principal Mutual Life Insurance
Company at December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles and with reporting
practices prescribed or permitted by the Insurance Division of the Department of
Commerce of the State of Iowa.
Ernst & Young LLP
Des Moines, Iowa
January 31, 1996
<PAGE>
PART C
PENSION BUILDER VARIABLE CONTRACT
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement
(1) Part A:
Condensed Financial Information for each of the 10 years
ended December 31, 1995.
(2) Part B:
Principal Mutual Life Insurance Company Separate
Account B:
Statement of Net Assets, December 31, 1995.
Statement of Operations for the year ended
December 31, 1995.
Statements of Changes in Net Assets for the years
ended December 31, 1995 and 1994.
Notes to Financial Statements.
Report of Independent Auditors.
Principal Mutual Life Insurance Company:
Statements of Financial Position, December 31, 1995
and 1994.
Statements of Operations and Surplus for the years
ended December 31, 1995, 1994 and 1993.
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.
Notes to Financial Statements.
Report of Independent Auditors.
(b) Exhibits
(1) Board resolution of Registrant.
(3a) Distribution Agreement
(3b) Selling Agreement
(4a) Form of Variable Annuity Contract
(4b) Form of Variable Annuity Contract
(4c) Form of Variable Annuity Contract
(5) Form of Variable Annuity Application
(6a) Articles of Incorporation of Depositor
(6b) Bylaws of Depositor
(9) Opinion of Counsel
(10a) Consent of Ernst & Young LLP
(10b) Powers of Attorney
(13a) Total Return Calculation
(13b) Annualized Yield for Separate Account B
(27) Financial Data Schedule for Separate Account B
<PAGE>
Item 25. Officers and Directors of the Depositor
Principal Mutual Life Insurance Company is managed by a Board of
Directors which is elected by its policyowners. The directors and
executive officers of the Company, their positions with the Company,
including Board Committee memberships, and their principal business
address, are as follows:
DIRECTORS: Principal
Name, Positions and Offices Business Address
MARY VERMEER ANDRINGA Vermeer Manufacturing Company
Director Box 200
Member, Nominating Committee Pella, IA 50219-0200
RUTH M. DAVIS The Pymatuning Group, Inc.
Director Suite 570, 4900 Seminary Road
Member, Nominating Committee Alexandria, VA 22311
DAVID J. DRURY The Principal Financial Group
Director Des Moines, IA 50392
Chairman of the Board
Chief Executive Officer
Chair,Executive Committee
C. DANIEL GELATT, JR. NMT Corporation
Director Post Office Box 2287
Member, Executive and La Crosse, WI 54602-2287
Human Resources Committees
G. DAVID HURD The Principal Financial Group
Director Des Moines, IA 50392
Member, Executive and
Human Resources Committees
THEODORE M. HUTCHISON The Principal Financial Group
Director Des Moines, IA 50392
Vice Chairman
C. S. JOHNSON Pioneer Hi-Bred International, Inc.
Director 400 Locust
Member, Audit Committee Des Moines, IA 50309
WILLIAM T. KERR Meredith Corporation
Director 1716 Locust St.
Member, Nominating Committee Des Moines, IA 50309-3023
LEE LIU IES Industries Inc.
Director Post Office Box 351
Member, Executive and Cedar Rapids, IA 52406
Human Resources Committees
VICTOR. H. LOEWENSTEIN Egon Zehnder International
Director 55 East 59th Street
Member, Audit New York, NY 10022
Committee
JOHN R. PRICE Chemical Banking Corporation
Director 270 Park Avenue - 44th Floor
Chair, Audit Committee New York, NY 10017
BARBARA A. RICE Rice & Associates
Director 712 Germantown Pike
Member, Human Resources Lafayette, PA 19444-1604
Committee
JEAN-PIERRE C. ROSSO Case Corporation
Director 700 State Street
Member, Audit Committee Racine, WI 53404
DONALD M. STEWART The College Board
Director 45 Columbus Avenue
Chair, Nominating New York, NY 10023-6992
Committee
ELIZABETH E. TALLETT Transcell Technologies, Inc.
Director 2000 Cornwall Road
Member, Audit Committee Monmouth Junction, NJ 08852
DEAN D. THORNTON 1602- 34 Court West
Director Seattle, WA 98199
Chair, Human Resources
Committee
FRED W. WEITZ Essex Meadows, Inc.
Director 800 Second Avenue
Member, Executive and Des Moines, IA 50309
Nominating Committees
Executive Officers (Other than Directors):
JOHN E. ASCHENBRENNER Senior Vice President
RAY S. CRABTREE Executive Vice President
THOMAS J. GAARD Senior Vice President
MICHAEL H.GERSIE Senior Vice President
THOMAS J. GRAF Senior Vice President
J. BARRY GRISWELL Executive Vice President
RONALD E. KELLER Executive Vice President
GREGG R. NARBER Senior Vice President and
General Counsel
CHARLES E. ROHM Executive Vice President
Item 26. Persons Controlled by or Under Common Control with Depositor
Principal Mutual Life Insurance Company (incorporated as a mutual life
insurance company under the laws of Iowa);
Sponsored the organization of the following mutual funds, some of
which it controls by virtue of owning voting securities:
Principal Asset Allocation Fund, Inc. (a Maryland
Corporation) 100.0% of shares outstanding owned by Principal
Mutual Life Insurance Company and its separate accounts on
March 21, 1996.
Principal Aggressive Growth Fund, Inc. (a Maryland Corporation)
100.0% of shares outstanding owned by Principal Mutual Life
Insurance Company and its separate accounts on March 21, 1996.
Princor Balanced Fund, Inc. (a Maryland Corporation) 14.10% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal Balanced Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company and its separate accounts on March 21, 1996.
Princor Blue Chip Fund, Inc. (a Maryland Corporation) 12.07% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor Bond Fund, Inc. (a Maryland Corporation) 1.75% of shares
outstanding owned by Principal Mutual Life Insurance Company on
March 21, 1996.
Principal Bond Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company and its separate accounts on March 21, 1996.
Princor Capital Accumulation Fund, Inc. (a Maryland
Corporation) 43.93% of outstanding shares owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Principal Capital Accumulation Fund, Inc. (a Maryland
Corporation)100.0% of outstanding shares owned by Principal
Mutual Life Insurance Company and its Separate Accounts on
March 21, 1996.
Princor Cash Management Fund, Inc. (a Maryland Corporation) 1.28%
of outstanding shares owned by Principal Mutual Life Insurance
Company (including subsidiaries and affiliates) on March 21,
1996.
Princor Emerging Growth Fund, Inc. (a Maryland Corporation) .78%
of shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996
Principal Emerging Growth Fund, Inc. (a Maryland Corporation)
100.0% of shares outstanding owned by Principal Mutual Life
Insurance Company and its Separate Accounts on March 21, 1996.
Princor Government Securities Income Fund, Inc. (a Maryland
Corporation) 0.39% of shares outstanding owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Principal Government Securities Fund, Inc. (a Maryland
Corporation) 100.0% of shares outstanding owned by Principal
Mutual Life Insurance Company and its Separate Accounts on
March 21, 1996.
Princor Growth Fund, Inc. (a Maryland Corporation) 0.68% of
outstanding shares owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal Growth Fund, Inc. (a Maryland Corporation) 100.0% of
outstanding shares are owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Princor High Yield Fund, Inc. (a Maryland Corporation) 34.94% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal High Yield Fund, Inc. (a Maryland Corporation) 100.0%
of shares outstanding owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Princor Limited Term Bond Fund, Inc. (a Maryland Corporation)
98.02% of shares outstanding owned by Principal Mutual Life
Insurance Company on March 21, 1996.
Principal Money Market Fund, Inc. (a Maryland Corporation) 100.0%
of shares outstanding owned by Principal Mutual Life Insurance
Company and its Separate Accounts on March 21, 1996.
Principal Special Markets Fund, Inc. (a Maryland Corporation)
79.25% of the shares outstanding of the International Securities
Portfolio and 82.87% of the shares outstanding of the
Mortgage-Backed Securities Portfolio were owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Princor Tax-Exempt Bond Fund, Inc. (a Maryland Corporation) 0.60%
of shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor Tax-Exempt Cash Management Fund, Inc. (a Maryland
Corporation) 0.90% of shares outstanding owned by Principal
Mutual Life Insurance Company on March 21, 1996.
Princor Utilities Fund, Inc. (a Maryland Corporation) 1.35% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Princor World Fund, Inc. (a Maryland Corporation) 20.19% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Principal World Fund, Inc. (a Maryland Corporation) 100.0% of
shares outstanding owned by Principal Mutual Life Insurance
Company on March 21, 1996.
Subsidiaries organized and wholly-owned by Principal Mutual Life
Insurance Company:
Principal Life Insurance Company (an Iowa Corporation) A general
insurance and annuity company. It is not currently active.
Principal Holding Company (an Iowa Corporation) A holding company
wholly-owned by Principal Mutual Life Insurance Company.
PT Asuransi Jiwa Principal Egalita Indonesia (an Indonesia
Corporation)
Subsidiaries wholly-owned by Principal Holding Company:
a. Petula Associates, Ltd. (an Iowa Corporation) a real
estate development company.
b. Patrician Associates, Inc. (a California Corporation) a real
estate development company.
c. Principal Development Associates, Inc. (a California
Corporation) a real estate development company.
d. Princor Financial Services Corporation (an Iowa
Corporation) a registered broker-dealer.
e. Invista Capital Management, Inc. (an Iowa Corporation) a
registered investment adviser.
f. Principal Marketing Services, Inc. (a Delaware Corporation) a
corporation formed to serve as an interface between marketers
and manufacturers of financial services products.
g. The Principal Financial Group, Inc. (a Delaware corporation)
a general business corporation established in connection with
the new corporate identity. It is not currently active.
h. Delaware Charter Guarantee & Trust Company (a Delaware
Corporation) a nondepository trust company.
i. Principal Securities Holding Corporation (a Delaware
Corporation) a holding company.
j. Principal Health Care, Inc. (an Iowa Corporation) a developer
and administrator of managed care systems.
k. Principal Financial Advisors, Inc. (an Iowa Corporation) a
registered investment advisor.
l. Principal Asset Markets, Inc. (an Iowa Corporation) a
residential mortgage loan broker.
m. Principal Portfolio Services, Inc. (an Iowa Corporation) a
mortgage due diligence company.
n. Principal International, Inc. (an Iowa Corporation) a company
formed for the purpose of international business development.
o. Principal Spectrum Associates, Inc. (a California
Corporation) a real estate development company.
p. Principal Commercial Advisors, Inc. (an Iowa Corporation) a
company that purchases, manages and sells commercial real
estate assets.
q. Principal FC, Ltd. (an Iowa Corporation) a limited purpose
investment corporation.
r. Principal Residential Mortgage, Inc. (an Iowa Corporation) a
residential mortgage loan broker.
s. Equity FC, LTD. (an Iowa Corporation) engaged in investment
transactions including limited partnership and limited
liability companies.
Subsidiaries organized and wholly-owned by Princor Financial Services
Corporation:
a. Princor Management Corporation (an Iowa Corporation) a
registered investment advisor.
b. Principal Investors Corporation (a New Jersey Corporation) a
registered broker-dealer with the Securities Exchange
Commission. It is not currently active.
Subsidiary wholly owned by Principal Securities Holding Corporation:
Principal Financial Securities, Inc. (a Delaware Corporation) an
investment banking and securities brokerage firm.
Subsidiaries organized and wholly-owned by Principal Health Care,
Inc.:
a. America's Health Plan, Inc. (a Maryland Corporation) a
developer of discount provider networks.
b. PHC Merging Company (a Florida Corporation) it is not
currently active.
c. Principal Behavioral Health Care, Inc. (an Iowa Corporation)
a mental and nervous/substance abuse preferred provider
organization.
d. Principal Health Care of Illinois, Inc. (an Illinois
Corporation) a health maintenance organization.
e. Principal Health Care of Nebraska, Inc. (a Nebraska
Corporation) a health maintenance organization.
f. Principal Health Care of Delaware, Inc. (a Delaware
Corporation) a health maintenance organization.
g. Principal Health Care of Georgia, Inc. (a Georgia
Corporation) a health maintenance organization.
h. Principal Health Care of Kansas City, Inc. (a Missouri
Corporation) a health maintenance organization.
i. Principal Health Care of Louisiana, Inc. (a Louisiana
Corporation) a health maintenance organization.
j. Principal Health Care of Florida, Inc. (a Florida
Corporation) a health maintenance organization.
k. United Health Care Services of Iowa, Inc. (an Iowa
Corporation) a health maintenance organization.
l. Principal Health Care of Iowa, Inc. (an Iowa Corporation) a
health maintenance organization.
m. Principal Health Care of Indiana, Inc. (a Delaware
Corporation) a health maintenance organization.
n. Principal Health Care of Pennsylvania, Inc. (a Pennsylvania
Corporation) a health maintenance organization. It is not
currently active.
o. Principal Health Care of Tennessee, Inc. (a Tennessee
Corporation) a health maintenance organization.
p. Principal Health Care of Texas, Inc. (a Texas Corporation) a
health maintenance organization.
q. Principal Health Care of the Carolinas, Inc. (a North
Carolina Corporation) a health maintenance organization.
r. Principal Health Care, of South Carolina, Inc. (a South
Carolina Corporation) a health maintenance organization.
s. MetraHealth Care Plan, Inc. (a Missouri Corporation) a
health maintenance organization.
t. The Admar Group, Inc. (a Florida Corporation) a general
business corporation engaged in the business of managed
healthcare.
Subsidiary owned by Principal Health Care of Delaware, Inc.:
Principal Health Care of the Mid-Atlantic, Inc. (a Virginia
Corporation) a health maintenance organization.
Subsidiaries owned by Principal International, Inc.:
a. Grupo Financiero Principal, S.A. de Seguros de Vida (a
Spanish insurance company).
b. Principal Internacional, S.A. Compania de Seguros (a Mexico
Corporation).
c. Principal International Argentina, S.A. (an Argentina
Corporation).
d. Principal International Asia Limited (formerly known as
Goldchin Champ, Limited) (a Hong Kong Corporation).
e. Principal International de Chile, S.A.
Subsidiary owned by Grupo Financiero Principal, S.A. de Seguros de
Vida:
Grupo Financiero Principal S.A. de Agencia de Seguros (an
insurance agency). It is currently dormant.
Subsidiaries owned by Principal International Argentina, S.A.:
a. Ethika, S.A. Administradora de Fondos de Jubilaciones y
Pensiones (an Argentina Corporation).
b. Princor Compania de Seguros de Retiro, S.A. (an Argentina
Corporation).
c. Prinlife Compania de Seguros de Vida, S.A. (an Argentina
Corporation)
d. Jacaranda Administradora de Fondos de Jubilaciones y
Pensiones, S.A. (an Argentina Corporation)
Subsidiary owned by Principal International de Chile, S.A.:
BanRenta Compania de Seguros de Vida, S.A.
Subsidiaries owned by The Admar Group, Inc.
a. Admar Corporation (a California Corporation)
b. Admar Insurance Marketing, Inc. (a California Corporation)
c. Benefit Plan Administrators, Inc. (a Colorado corporation)
d. Image Financial & Insurance Services, Inc. (a California
Corporation)
e. SelectCare Management Co., Inc. (a California Corporation)
f. Wm. G. Hofgard & Co., Inc. (a Colorado corporation)
Item 27. Number of Contractowners - As of: March 31, 1996
(1) (2) (3)
Number of Number of
Title of Class Contractowners Plan Participants
-------------- -------------- -----------------
BFA Variable Annuity Contracts 13 312
Pension Builder Contracts 2,224 3,860
Personal Variable Contracts 89 2,667
Premier Variable Contracts 204 10,577
Flexible Variable Annuity Contract 11,253 11,253
Item 28. Indemnification
None
Item 29. Principal Underwriters
(a) Princor Financial Services Corporation, principal underwriter for
Registrant, acts as principal underwriter for Principal
Aggressive Growth Fund, Inc., Principal Asset Allocation Fund,
Inc., Principal Balanced Fund, Inc., Principal Bond Fund, Inc.,
Principal Capital Accumulation Fund, Inc., Principal Emerging
Growth Fund, Inc., Principal Government Securities Fund, Inc.,
Principal Growth Fund, Inc., Principal High Yield Fund, Inc.,
Principal Money Market Fund, Inc., Principal World Fund, Inc.,
Princor Balanced Fund, Inc., Princor Blue Chip Fund, Inc.,
Princor Bond Fund, Inc., Princor Capital Accumulation Fund, Inc.,
Princor Cash Management Fund, Inc., Princor Emerging Growth Fund,
Inc., Princor Government Securities Income Fund, Inc., Princor
Growth Fund, Inc., Princor High Yield Fund, Inc., Princor Limited
Term Bond Fund, Inc., Princor Tax-Exempt Bond Fund, Inc., Princor
Tax-Exempt Cash Management Fund, Inc., Princor Utilities Fund,
Inc., Princor World Fund, Inc., Principal Special Markets Fund,
Inc. and for variable annuity contracts participating in
Principal Mutual Life Insurance Company Separate Account B, a
registered unit investment trust for retirement plans adopted by
public school systems or certain tax-exempt organizations
pursuant to Section 403(b) of the Internal Revenue Code, Section
457 retirement plans, Section 401(a) retirement plans, certain
non-qualified deferred compensation plans and Individual
Retirement Annuity Plans adopted pursuant to Section 408 of the
Internal Revenue Code, and for variable life insurance contracts
issued by Principal Mutual Life Insurance Company Variable Life
Separate Account, a registered unit investment trust.
(b) (1) (2)
Positions
and offices
Name and principal with principal
business address underwriter
J. Barbara Alvord Marketing Officer
The Principal
Financial Group
Des Moines, IA 50392
Robert W. Baehr Marketing Services Officer
The Principal
Financial Group
Des Moines, IA 50392
Michael J. Beer Vice President and
The Principal Chief Operating Officer
Financial Group
Des Moines, IA 50392
Mary L. Bricker Assistant Corporate
The Principal Secretary
Financial Group
Des Moines, IA 50392
Ray S. Crabtree Director
The Principal
Financial Group
Des Moines, IA 50392
David J. Drury Director
The Principal
Financial Group
Des Moines, IA 50392
Arthur S. Filean Vice President
The Principal
Financial Group
Des Moines, IA 50392
Paul N. Germain Assistant Vice President-
The Principal Operations
Financial Group
Des Moines, IA 50392
Ernest H. Gillum Assistant Vice President-
The Principal Registered Products
Financial Group
Des Moines, IA 50392
Thomas J. Graf Director
The Principal
Financial Group
Des Moines, IA 50392
J. Barry Griswell Director
The Principal
Financial Group
Des Moines, IA 50392
Joyce N. Hoffman Vice President and
The Principal Corporate Secretary
Financial Group
Des Moines, IA 50392
Theodore M. Hutchison Director
The Principal
Financial Group
Des Moines, IA 50392
Stephan L. Jones Director and
The Principal President
Financial Group
Des Moines, IA 50392
Ronald E. Keller Director
The Principal
Financial Group
Des Moines, IA 50392
John R. Lepley Senior Vice
The Principal President
Financial Group Marketing and Distribution
Des Moines, IA 50392
Gregg R. Narber Director
The Principal
Financial Group
Des Moines, IA 50392
Richard H. Neil Director
The Principal
Financial Group
Des Moines, IA 50392
Layne A. Rasmussen Controller
The Principal
Financial Group
Des Moines, IA 50392
Charles E. Rohm Director
The Principal
Financial Group
Des Moines, IA 50392
Michael D. Roughton Counsel
The Principal
Financial Group
Des Moines, IA 50392
Jean B. Schustek Compliance Officer
The Principal
Financial Group
Des Moines, IA 50392
Roger C. Stroud Assistant Director
The Principal
Financial Group
Des Moines, IA 50392
Jerry G. Wisgerhof Vice President and
The Principal Treasurer
Financial Group
Des Moines, IA 50392
Peter D. Zornik Arkansas State Director
2624 North Fillmore
Little Rock, AR 72207
(c) (1) (2)
Net Underwriting
Name of Principal Discounts and
Underwriter Commissions
Princor Financial $5,326,848.77
Services Corporation
(3) (4) (5)
Compensation on Brokerage
Redemption Commissions Compensation
0 0 0
Item 30. Location of Accounts and Records
All accounts, books or other documents of the Registrant are located
at the offices of the Depositor, The Principal Financial Group, Des
Moines, Iowa 50392.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes that in restricting cash withdrawals from
Tax Sheltered Annuities to prohibit cash withdrawals before the
Participant attains age 59 1/2, separates from service, dies, or
becomes disabled or in the case of hardship, Registrant acts in
reliance of SEC No Action Letter addressed to American Counsel of Life
Insurance (available November 28, 1988). Registrant further undertakes
that:
1. Registrant has included appropriate disclosure regarding the
redemption restrictions imposed by Section 403(b)(11) in its
registration statement, including the prospectus, used in
connection with the offer of the contract;
2. Registrant will include appropriate disclosure regarding the
redemption restrictions imposed by Section 403(b)(11) in any
sales literature used in connection with the offer of the
contract;
3. Registrant will instruct sales representatives who solicit Plan
Participants to purchase the contract specifically to bring the
redemption restrictions imposed by Section 403(b)(11) to the
attention of the potential Plan Participants; and
4. Registrant will obtain from each Plan Participant who purchases a
Section 403(b) annuity contract, prior to or at the time of such
purchase, a signed statement acknowledging the Plan Participant's
understanding of (a) the restrictions on redemption imposed by
Section 403(b)(11), and (b) the investment alternatives available
under the employer's Section 403(b) arrangement, to which the
Plan Participant may elect to transfer his contract value.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Principal Mutual Life Insurance
Company Separate Account B, certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of the Registration Statement and
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned thereto duly authorized in the City of Des Moines and
State of Iowa, on the 11th day of April, 1996.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
(Registrant)
By: PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
(Depositor)
David J. Drury
By ______________________________________________
David J. Drury
Chairman and Chief Executive Officer
Attest:
Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
D. J. Drury Director, Chairman and April 11, 1996
Chief Executive Officer
D. C. Cunningham Vice President and April 11, 1996
Controller (Principal
Accounting Officer)
C. E. Rohm Executive Vice April 11, 1996
President (Principal
Financial Officer)
(M. V. Andringa)* Director April 11, 1996
M. V. Andringa
(R. M. Davis)* Director April 11, 1996
R. M. Davis
(C. D. Gelatt, Jr.)* Director April 11, 1996
C. D. Gelatt, Jr.
(G. D. Hurd)* Director April 11, 1996
G. D. Hurd
(T. M. Hutchison)* Director April 11, 1996
T. M. Hutchison
(C. S. Johnson)* Director April 11, 1996
C. S. Johnson
(W. T. Kerr)* Director April 11, 1996
W. T. Kerr
(L. Liu)* Director April 11, 1996
L. Liu
(V. H. Loewenstein)* Director April 11, 1996
V. H. Loewenstein
(J. R. Price)* Director April 11, 1996
J. R. Price
(B. A. Rice)* Director April 11, 1996
B. A. Rice
(J-P. C. Rosso)* Director April 11, 1996
J-P. C. Rosso
(D. M. Stewart)* Director April 11, 1996
D. M. Stewart
(E. E. Tallett)* Director April 11, 1996
E. E. Tallett
(D. D. Thornton)* Director April 11, 1996
D. D. Thornton
(F. W. Weitz)* Director April 11, 1996
F. W. Weitz
*By David J. Druy
David J. Drury
Chairman and Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein
BANKERS LIFE COMPANY
BOARD RESOLUTION
No. 11315
Passed 6-24-68
BE IT RESOLVED:
1. That the Chairman of the Board or the President shall designate the
appropriate officers to have the primary responsibility and authority within the
provisions of the Articles of Incorporation of the Bankers Life Company and as
permitted under the applicable law to prepare and issue group and/or individual
variable annuity contracts which would result in tax deferral under the Internal
Revenue Code of 1954, as amended, but which do not provide for participation in
the Separate Account established by the Company on the 8th day of August, 1964.
Such variable annuity contracts may provide for benefits whose dollar amount or
other measure of value may vary during the period subsequent to as well as the
period prior to the maturity dates of such contracts.
2. That the Chairman of the Board or the President shall designate the
same or other officers to have the primary responsibility and authority within
the provisions of the Articles of Incorporation of Bankers Life Company and as
permitted under the applicable law to establish one or more additional Separate
Accounts or funds, each of which shall meet the requirements of a "unit
investment trust" as defined by the Investment Company Act of 1940, as amended.
3. That the officers so designated are hereby authorized and directed
to prepare, execute and file with the Securities and Exchange Commission in
accordance with the provisions of the Securities Act of 1933, as amended, a
registration statement or statements, and such amendments thereto as may be
necessary or appropriate, relating to such variable annuity contracts as
described in this resolution.
4. That the officers so designated are hereby authorized if necessary
to prepare, execute and file with the Securities and Exchange Commission in
accordance with the provisions of the Investment Company Act of 1940, as
amended, a registration statement or statements, and such amendments thereto as
may be necessary or appropriate, relating to such unit investment trust or
trusts.
5. That the officers so designated are hereby authorized to take such
further action as may in their judgment be necessary or desirable to effect the
registration of such variable annuity contracts and of such unit investment
trust or trusts.
This is to certify that the above is a true copy of Board Resolution
No. 11315 as it appears on the minute book of the Corporation.
R. E. Cassell
------------------------------------------
R. E. Cassell
Senior Vice-President and Secretary
<PAGE>
EXECUTIVE COMMITTEE RESOLUTION
No. 2000
Passed January 12, 1970
RESOLVED, That in furtherance of resolution No. 11315 of the Board of
Directors enacted on the 24th day of June, 1968, a separate account to be known
as Separate Account B be and hereby is established for the purpose of issuing
variable annuity contracts entitled to special tax treatment under Sections 401
or 403(b) of the Internal Revenue Code 1954, as amended.
<PAGE>
EXECUTIVE COMMITTEE RESOLUTION
RESOLUTION NO. 2115
PASSED 4-12-71
"RESOLVED, That Separate Account B heretofore established by Executive
Committee Resolution No. 2000, passed January 12, 1970, be and is hereby amended
by deleting all reference to Section 401 of the Internal Revenue Code, and as
amended said resolution reads as follows:
'RESOLVED, That in furtherance of Resolution No. 11315 of the Board of
Directors enacted on the 24th day of June 1968, a separate account to
be known as Separate Account B be and hereby is established for the
purpose of issuing variable annuity contracts entitled to special tax
treatment under Section 403(b) of the Internal Revenue Code 1954, as
amended.' "
<PAGE>
Executive Committe Resolution 2927, dated May 17, 1982
On motion duly made and seconded, the following Resolution was unanimously
adopted:
WHEREAS, Board Resolution No. 11315, June 24, 1968, authorized the
establishment and operation of one or more separate accounts for the
purpose of issuing variable annuity contracts entitled to special tax
treatment under the Internal Revenue Code of 1954 as amended, and, pursuant
thereto the establishment of Separate Account B was authorized by Executive
Committee Resolution No. 2000, January 12, 1970, as amended by Executive
Committee Resolution No. 2115, April 12, 1971;
WHEREAS, the Plan of Operations for Separate Account B provides for
alternative funding for variable annuity contracts participating in
Separate Account B;
NOW, THEREFORE, BE IT RESOLVED, that there are hereby established, for the
purpose of providing alternative funding methods for variable annuity
contracts entitled to special tax treatment under the Internal Revenue Code
of 1954, as amended, two separate divisions within Separate Account B, a
Common Stock Division and a Money Market Division. All income and expenses
and all gains or losses, whether or not realized, experienced with respect
to assets for a series of contracts participating in a Division of Separate
Account B shall be credited to or charged against those assets, unaffected
by income and expenses or gains or losses experienced with respect to
assets for any other series of contracts participating in the same or any
other Division of Separate Account B, or constituting any other Separate
Account, or constituting the general account of the Company.
FURTHERMORE, the assets for a series of contracts participating in a
Division of Separate Account B shall not be charged by Bankers Life Company
with any liabilities arising from any other series of contracts issued by
the company participating in the same or from any other Division of
Separate Account B.
<PAGE>
Board Resolution #12434 (passed February 23-24, 1987)
WHEREAS, Board Resolution No. 11315, June 24, 1968, authorized the
establishment and operation of one or more separate accounts for the purpose of
issuing variable annuity contracts entitled to special tax treatment under the
Internal Revenue Code of 1954 as amended, and, pursuant thereto the
establishment of Separate Account B was authorized by Executive Committee
Resolution No. 2000, January 12, 1970, as amended by Executive Committee
Resolution No. 2115, April 12, 1971, and Executive Committee Resolution No.
2927, May 17, 1982;
WHEREAS, the Plan of Operations for Separate Account B provides for
alternative funding for variable annuity contracts participating in Separate
Account B;
NOW, THEREFORE, BE IT RESOLVED, that there are hereby established, for
the purpose of providing alternative funding methods for variable annuity
contracts entitled to special tax treatment under the Internal Revenue Code of
1954, as amended, three separate divisions within Separate Account B, a Common
Stock Division, a Money Market Division and a Government Securities Division.
All income and expenses and all gains or losses, whether or not realized,
experienced with respect to assets for a series of contracts participating in a
Division of Separate Account B shall be credited to or charged against those
assets, unaffected by income and expenses or gains or losses experienced with
respect to assets for any other series of contracts participating in the same or
any other Division of Separate Account B, or constituting any other Separate
Account, or constituting the general account of the Company.
FURTHERMORE, the assets for a series of contracts participating in a
Division of Separate Account B shall not be charged by Principal Mutual Life
Insurance Company with any liabilities arising from any other series of
contracts issued by the Company participating in the same or from any other
Division of Separate Account B.
<PAGE>
MEMORANDUM
November 24, 1993
TO: Dave Drury, Officers, S-6, X7-5921
FROM: Barry Griswell, Ind. Staff, G-13, X7-5749
RE: New Divisions for Separate Account B
In accordance with Principal Mutual Life Insurance Company Board Resolution No.
12503 passed February 22, 1988, I have created the following new division for
Separate Account B to reflect the funding options that will be utilized by the
variable annuity Principal Mutual will issue in the near future:
1. Utilities Division;
2. World Division;
3. Growth Division;
4. Blue Chip Division;
5. Emerging Growth Division;
6. Managed Division; and
7. Bond Division.
In addition, I have directed that the name of the Common Stock Division be
changed to the Capital Accumulation Division.
BARRY GRISWELL
__________________________________
Barry Griswell
BG/srr
dd1124.mem
<PAGE>
MEMORANDUM
July 24, 1994
TO Dave Drury, Officers, S-6, x75921
FROM Barry Griswell, Ind. Staff, G-13, x75749
RE New Divisions for Separate Account B
In accordance with Principal Mutual Life Insurance Company Board Resolution No.
12503 passed February 22, 1988, I have directed the following name changes for
the divisions of Separate Account B to relfect the funding options that will be
utilized by the variable anniuty Principal Mutual will issue in the near future:
Current Name New Name
------------ --------
Utilities Division Asset Allocation Division
Blue Chip Division Aggressive Growth Division
Managed Division Balanced Division
BARRY GRISWELL
- -------------------------------
Barry Griswell
<PAGE>
Board Resolution #12503 (passed February 22-23, 1988)
RESOLVED, that Board Resolution No. 12057, October 18-19, 1982, is amended
and superseded by the following resolution, and all references in other
resolutions to that resolution, or resolutions which it replaced, are amended to
refer to this superseding resolution:
BE IT RESOLVED, that either the Chief Executive Officer, or the President,
is authorized to designate officers who shall have the power and authority,
acting directly or through other officers and employees to whom they may
delegate the power and authority:
1. To prepare and issue or amend appropriate individual life policies,
annuity contracts, disability and double indemnity riders or contracts,
and settlement option contracts; to determine the appropriate plans of
insurance, contracts, riders, amendments and benefits to be offered; to
determine underwriting practices, including exclusions, restrictions,
amount limits and classification of risks; to determine premiums, fees
or charges, non-forfeiture values, and policy loan rates; to administer
benefit payments; and to make recommendations with respect to dividends
to be paid in connection with such policies or contracts.
2. To prepare and issue or amend appropriate individual health policies or
contracts; to determine the appropriate plans of insurance, contracts,
riders, amendments and benefits to be offered; to determine
underwriting practices, including exclusions, restrictions, amount
limits and classification of risks; to determine premium, fees or
charges and non-forfeiture values; to administer benefit payments; and
to make recommendations with respect to dividends to be paid in
connection with such policies or contracts.
3. To prepare and issue or amend appropriate group policies, contracts,
riders, amendments and other forms, including, but not limited to,
life plans, disability benefit plans, health plans, dental plans,
annuity plans and all other forms of plans, contracts or agreements
pertaining to or utilized in connection with pension, profit sharing
and other deferred compensation plans; to determine the plans and
benefits to be offered which may include coverage on dependents as well
as the participants in the plan; to determine the underwriting
practices, including the exclusions, restrictions, amount limits, and
classification of risks; to determine premiums, fees or charges and
values; to administer benefit payments; and to make recommendations
with respect to dividends to be paid in connection with such policies
or contracts.
4. To prepare, issue or amend appropriate individual or group contracts,
policies or annuities providing for a separate account or accounts and
to establish, maintain, amend and discontinue such account or accounts
as are deemed necessary or advisable.
5. To enter into reinsurance and coinsurance contracts and treaties; to
take such actions as are required to liberalize, restrict or otherwise
change benefits, values and underwriting practices with respect to any
class or classes of persons or policyholders; to cause the general
account or any account maintained by the Company to be segmented for
the purposes of crediting investment results separately to any class or
classes of policyholders; to enter into contracts or agreements wherein
the Company undertakes to provide services of any nature; and to
acquire or cause to be formed insurance companies or other
subsidiaries, the stock of which will be owned directly or indirectly
by the Company.
6. To do those other things deemed necessary or desirable to carry out the
business of Principal Mutual Life Insurance Company within the powers
of the Corporation.
BE IT FURTHER RESOLVED, that either the corporate secretary or the general
counsel is authorized to certify the powers of the corporation and the powers
and authority of the officers or employees.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT effective January 1, 1982 between Bankers Life
Company ("The Bankers Life"), a mutual life insurance company organized under
the laws of the State of Iowa, and BLC Equity Services Corporation ("BLESCO"), a
subsidiary of The Bankers Life organized under the laws of the State of Iowa.
This Distribution Agreement replaces the Distribution Agreement dated August 16,
1971, as amended.
W I T N E S S E T H
WHEREAS, The Bankers Life has established a separate account for variable
annuity contracts ("Contracts") designated Bankers Life Company Separate Account
B (the "Account"):
WHEREAS, BLESCO is registered with the Securities and Exchange Commission
as a broker-dealer under the Securities Exchange Act of 1934 ("1934 Act") and is
a member of the National Association of Securities Dealers, Inc.; and
WHEREAS, The Bankers Life desires to have certain variable annuity
contracts issued with respect to the Account sold and distributed by and through
BLESCO, and BLESCO is willing to sell and distribute such contracts under the
terms and conditions stated herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Bankers Life hereby designates BLESCO as the principal underwriter of
the Contracts issued with respect to the Account, and BLESCO agrees to use
its best efforts to sell and distribute the Contracts through its
registered representatives or through other broker-dealers registered under
the 1934 Act whose registered representatives are authorized by applicable
law to sell variable annuity contracts.
2. With the consent of the Bankers Life, BLESCO may enter into
agreements with other broker-dealers duly licensed under applicable Federal and
state laws for the sale and distribution of the Contracts and may pay such
compensation and perform such other duties as may be provided for in such
agreements.
3. All payments and any other monies payable upon the sale,
distribution, renewal or other transaction involving the Contracts shall be the
property of and be paid or remitted directly to The Bankers Life, which will
retain all such payments and monies for its own account except to the extent
such payments and monies are allocated to the Account.
4. The Bankers Life will pay to the registered representatives of BLESCO the
salaries or commissions to which such representatives are entitled as a
result of the sale, distribution, renewal or other transaction involving
the Contracts, and BLESCO shall not have or be deemed to have any interest
in such payments.
5. The Bankers Life will pay to BLESCO the following:
(a) An overwriting and operating expense fee of 14% of the sales charge
attributable to the sale and distribution of Contracts for which a
sales charge of 7% (or such lessor amount as may be offered by The
Bankers Life) of Contributions or Payments is applicable.
(b) An overwriting and operating expense fee of 1.00% of Contributions or
Payments received by The Bankers Life for Contracts on which there is
no sales charge applied at the time such Contributions or Payments are
received.
(c) Upon receipt of proper evidence of expenditures, will reimburse BLESCO
for compensation paid by BLESCO to other broker-dealers in accordance
with paragraph 2 hereof.
6. The Bankers Life is responsible, including the costs thereof, for contract
development, filing and compliance with state insurance laws and
regulations applicable to the Account and said Contracts. BLESCO is
responsible, including the costs thereof, for registration, filing and
compliance with federal and state securities laws and regulations
applicable to the Account and said Contracts. This includes not only the
preparation, printing and filing of the registration material, but also the
preparation, printing and filing of prospectuses, sales literature and
reports as required. In addition, BLESCO is responsible, including the
costs thereof, for the following:
(a) The supply of prospectuses and sales literature to be used in the sale
of said Contracts.
(b) General sales promotion activity, including television, radio and
newspaper advertising.
(c) Special training of both BLESCO field personnel and home office
personnel due to the variable benefits nature of the Contracts.
(d) Preparation and distribution of confirmations, reports and
correspondence to persons participating under such Contracts.
(e) Other sales and administrative services related to the Contracts as
required by the regulatory authorities or deemed desirable by BLESCO.
7. BLESCO will be responsible for supervising and controlling the conduct and
activities of its registered representatives with regard to the sale and
distribution of the Contracts.
8. BLESCO may request that some or all of the books and records relating to
the sale of the Contracts which are maintained by it pursuant to Rules
17a-3 and 17a-4 under the 1934 Act be prepared and maintained by The
Bankers Life. The Bankers Life agrees to maintain and preserve any such
books and records for BLESCO in conformity with the requirements of the
1934 Act, to the extent applicable to variable annuity operations, and
further agrees that for purposes of this Agreement such books and records
shall be deemed the property of BLESCO and shall be surrendered promptly
upon BLESCO's request. With respect to any books and records maintained or
preserved on behalf of BLESCO, The Bankers Life agrees to permit
examination of such books and records at any time or from time to time
during business hours by representatives or designees of the Securities and
Exchange Commission, and to promptly furnish to said Commission or its
designee true, correct, complete and current hard copy of any or all of any
part of such books and records.
9. This Agreement may at any time be terminated by either party hereto on 60
days written notice. BLESCO shall promptly notify the Securities and
Exchange Commission of any such termination.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage prepaid to the other party at such address as
such other party may designate for the receipt of such notices. Until
further notice to the other party, it is agreed that the address of The
Bankers Life and that of BLESCO for this purpose shall be 711 High Street,
Des Moines, Iowa 50307.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on April 28, 1982.
BANKERS LIFE COMPANY
Attest:
T.M. HUTCHISON By R.N. HOUSER
- ------------------------------- -------------------------------
Chairman and Chief Executive Officer
BLC EQUITY SERVICES CORPORATION
Attest:
WILLIAM P. KOVAC A.S. FILEAN
- ------------------------------- --------------------------------
President
BROKER-DEALER
MARKETING AND COMPENSATION AGREEMENT
FOR
PENSION BUILDER PLUS
AGREEMENT made this ______ day of ____________________, 19____, by and between
Princor Financial Services Corporation (hereinafter called Distributor),
__________________________________ (hereinafter called Broker) and Principal
Mutual Life Insurance Company (hereinafter called Issuer).
MARKETING
In consideration of the mutual agreements herein contained, the Parties hereto
agree as follows:
1. The Distributor hereby appoints the Broker to sell Pension Builder Plus
Variable Contracts and Associated Fixed Annuity Contracts (hereinafter
called Contracts) issued by the Issuer to provide annuity benefits
individuals and groups who adopt retirement plans qualified under Section
401, Section 403(b), and Section 408 of the Internal Revenue Code. This
Agreement is a selling agreement between broker-dealers. It does not
constitute any Party as the broker, agent or employee of any other Party.
Words and phrases in this Agreement given special meaning in the any
Contracts shall have that same special meaning in this Agreement unless
specifically defined otherwise herein.
2. With respect to Payments received under Contracts by the Distributor, the
Broker shall receive compensation at rates to be determined by the
Distributor and set forth in this Agreement.
3. The Broker hereby agrees to direct its best efforts to find purchasers for
Contracts issued by the Issuer. The Broker does not undertake hereby to
sell any specific number of Contracts issued by the Issuer.
4. The Distributor shall provide the Broker with a reasonable number of
current prospectuses and such other material as the Distributor determines
to be desirable for use in connection with the sale of Contracts or the
solicitation of applications for participation thereunder.
5. The Broker warrants that the Broker and any person associated with or
action for the Broker in the solicitation of applications for Contracts or
for participation thereunder shall be qualified pursuant to the
requirements of the National Association of Securities Dealers, Inc. And
appropriate federal and state agencies regulating securities, insurance,
any other aspect of the Contracts or the sale of them. The Broker shall be
responsible for seeing to such qualifications, and will indemnify and hold
the Distributor and the Issuer harmless for any failure to have all persons
engaged in solicitation properly licensed, registered, and appointed for
securities and insurance sales.
6. The Broker shall be responsible for supervising and controlling the conduct
and activities of its Registered Representatives with regard to the sale
and distribution of the Contracts and applications for participation
thereunder. The Broker agrees to indemnify and hold the Distributor and the
Issuer harmless for claims and actions of any sort which arise from the
conduct and activities of the persons involved in the sale and distribution
of Contracts.
7. The Broker shall act only in its own behalf in making agreements with
Registered Representatives or other persons in connection with the
solicitation or sales of Contracts.
8. The Broker agrees to maintain all books and records relating to the sale of
Contracts or interests therein required to be maintained by the Broker
pursuant to the Securities Exchange Act of 1934, in conformity with the
requirements of Rules 17a-3 and 17a-4 under such Act, or to the applicable
securities or insurance laws of any state.
9. The Broker shall transmit promptly and directly to the Distributor all
Contributions collected by or paid to the Broker. All Certificates are to
be delivered promptly, and any undelivered Certificates are to be returned
within the time allowed or on demand.
10. The Broker shall provide disclosure information required by Prohibited
Transaction Class Exemption 77-9.
COMPENSATION
With respect to Certificates under applicable Contracts issued by the Issuer and
distributed by the Distributor, it is agreed that subject to all provisions of
this Agreement, the Broker shall receive Compensation in the form of a dealer
concession as provided herein.
1. Certificate shall mean a Certificate (the application for which was
secured by a Registered Representative of the Broker) issued under the
Contracts during a period in which this Agreement has not been
terminated. Determination of Certificates applicable to this Agreement
shall be by the Issuer.
2. Transfer Contributions for an Eligible Certificate, as defined in a
Contract, shall mean those Contributions transferred to the Issuer from a
non-Issuer Plan as determined by the Issuer and excludes any assets
transferred within the Issuer.
3. First Year and Renewal Compensation
Percentage of Premium Received
In Each Policy Year
------------------------------------------------------------
Pension Builder Plus
Flexible Premium
Retirement Annuity
(Annual Participant or Case Premium)
First $ 50,000 ...................4.5%
Next $ 50,000 ...................3.5
Next $400,000 ...................2.5
Over $500,000 ...................2.0
Single Premium
Retirement Annuity, Roll-Over IRA, or Transfer Contributions
First $ 250,000 ...................4.5%
Next $ 250,000 ...................4.0
Next $ 500,000 ...................3.5
Over $1,000,000 ...................2.5
Note:
a. Policy Year means the Contribution year as defined int he
Contract.
b. For Flexible Premium Retirement Annuities, the compensation is
payable only on the premium in excess of withdrawals, during the
current annuity Contract Year and the three prior full Policy
Years.
c. If the source of the proceeds placed under an annuity benefit
option is a deferred annuity, the commission rate is graded
according to the Policy Year of the Contract in which
annuitization occurs:
Policy Years Commission
----------------------------------------------------------
1 - 4........................................... 0%
5 - 7........................................... 2.5
8 - 10.......................................... 3.5
11 and later ................................... 4.5
The total proceeds eligible for the annuitization commission will
not include certain premiums placed under the Contract during its
last full Policy Year and any partial year immediately prior to
annuitization. Premiums contributed during this period in excess
of the average accumulated value of the Contract prior to this
period will not be included. The average accumulated value is
accumulated value divided by the number of Policy Years. Both
premium and average accumulated value amounts will be adjusted to
a comparable basis to account for any partial year.
4. Service Fees of one tenth of one percent (.1%) of the accumulated value of
each Contract identified to the Broker will be paid to the Broker each year
on the anniversary date of that Contract. The anniversary date is the first
day of the Contribution Year. The Service Fee will be based on the
accumulated value of the Contract one day before that date. Service Fees
will be terminated by the Distributor and the Issuer if the Contractholder
or Certificateholder requests a change in the servicing broker-dealer, or
if the Distributor and the Issuer decide that a change would be in the best
interests of the Contractholder or Certificateholder.
5. The Distributor may, at any time, upon written notice to the Broker, change
any and all of the rates of Compensation set out herein.
6. If the Issuer, for any reason, refunds any Contributions, or any part
thereof, on any Certificate, any Compensation paid on the amount refunded
shall be repaid to the Issuer by the Broker promptly and on demand.
7. If Contracts or the Plan of any participating Employer thereunder are
amended resulting in increased or additional Contributions, the Distributor
will determine what Compensation, if any, shall be paid to the Broker
because of such amendment.
8. Any indebtedness of any kind due to the Distributor or Issuer from the
Broker may be offset against any amount due the Broker.
9. No assignment of the Compensation payable pursuant to this Agreement shall
be valid unless it is accepted in writing by the Issuer and Distributor.
10. Upon notice from a participating Employer or Contractholder that no
additional purchases are to be made through the Broker or a Registered
Representative of the Broker, no further Compensation under this Agreement
shall be due and payable to the Broker as to said participating Employer or
Contractholder. Such notice shall constitute a termination of this
Agreement as to such participating Employer or such Contractholder.
However, the Issuer or the Distributor reserves the right to change or stop
payment of any Compensation as a result of any failure of the Broker to
comply with federal or stat requirements, or with the terms of this
Agreement.
GENERAL
1. The Broker shall have no authority to incur any liability or debt against
the Distributor or the Issuer; accept risks or contracts of any kind; make,
alter, authorize or discharge any contract; extend the time of payment of
any Contributions; waive payments; fail to transmit any Contributions
collected promptly to the Distributor; use any advertising or sales
material which has not first been submitted to and approved by the
Distributor and the Issuer; no bind the Distributor or the Issuer in any
way.
2. Any modifications of this Agreement must be in writing and signed by an
authorized offer of the Distributor and the Issuer.
3. This Agreement may be terminated by either the Distributor, the Broker or
the Issuer upon written notice to the last known address of the other
parties.
4. This Agreement supersedes and replaces any and all prior agreements of the
Distributor or the Issuer with the Broker on the subject of Contracts or
other sale of them.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in triplicate on the date first above written.
____________________________________________ ("Broker")
By ___________________________________________________
PRINCOR FINANCIAL SERVICES CORPORATION
By ___________________________________________________
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By ___________________________________________________
GROUP ANNUITY CONTRACT
BANKERS LIFE COMPANY
711 HIGH STREET
DES MOINES, IA 50307
In consideration of the application for this contract made by
________________________________________________________________________________
(herein called the Contractholder)
and in consideration of payment of all Contributions provided for in this
contract, agrees to make payments to the person or persons entitled thereto
subject to the provisions of this contract.
This contract is delivered in __________________________________________________
Contributions are directed into Separate Account B and are not guaranteed as to
fixed dollar amount but will increase or decrease in dollar amount, depending on
the investment performance of Separate Account B.
This contract is issued and accepted subject to all the terms set forth in it.
This contact is executed by Bankers Life Company at its home office to take
effect as of the ___________________ day of _____________________, 19__, which
is the contract date.
T.M. Hutchison R.N. Houser
Vice President, Counsel President
and Corporate Secretary
__________________________
Registar
Date______________________
GROUP CONTRACT NO. GA
GROUP ANNUITY CONTRACT - PENSION BUILDER
With Pooled Separate Account
Variable Benefits
Participating
For TSA Plans
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----- Parties to this Contract
Section 2 ----- Other Defined Terms
ARTICLE II CONTRIBUTIONS
Section 1 ----- Contributions
Section 2 ----- Investment Direction
Section 3 ----- Cessation of Contributions
ARTICLE III BEFORE RETIREMENT VALUES AND ACCOUNTING
Section 1 ----- Separate Account B
Section 2 ----- Unit Value
Section 3 ----- Net Investment Factor
Section 4 ----- Investment Accounts
Section 5 ----- Administration Charge
Section 6 ----- Separate Payment of Certain Charges
Section 7 ----- Accounts and Forfeiture
ARTICLE IV ANNUITY BENEFITS
Section 1 ----- Annuity Benefits and Options
Section 2 ----- Amount of Monthly Annuity Income
Section 3 ----- Mortality and Expense Guarantees
ARTICLE V SUPPLEMENTARY BENEFITS
Section 1 ----- Benefits Payable at Death
Section 2 ----- Options for Benefits Payable at Death
Section 3 ----- Proof of Death
Section 4 ----- Cash Withdrawal Benefit
Section 5 ----- Contingent Deferred Sales Charge
ARTICLE VI TRANSFERS AND LIMITATIONS
Section 1 ----- Transfer to and from Associated Fixed Contract
Section 2 ----- Transfers between Divisions
Section 3 ----- Limitation on Payment or Transfer
8ection 4 ----- Limitation as to Participants
Section 5 ----- Transfer to Alternate Funding Agent
Tc;V-TS;8705
<PAGE>
ARTICLE VII GENERAL PROVISIONS
Section 1 ----- Certificates
Section 2 ----- Beneficiary
Section 3 ----- Dividends
Section 4 ----- Contract
Section 5 ----- Plan and Plan A mendments
Section 6 ----- Alteration of Contract
Section 7 ----- Amendments
Section 8 ----- Contributions
Section 9 ----- Misstatements
Section 10 ----- Information, Proofs and Deter mination of Facts
Section 11 ----- Modification in Mode of Payment of Annuity
Section 12 ----- Commutation of Payments
Section 13 ----- Facility of Payment
Section 14 ----- Pronouns
Section 15 ----- Assignment
Section 16 ----- Basis of Reserve
Section 17 ----- Substituted Securities
Tc(2);V-TS;8705
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--PARTIES TO THIS CONTRACT. This contract is between the Contractholder
and Principal Mutual Life Insurance Company.
Contractholder means the holder of this contract named on the face page.
Principal Mutual Life Insurance Company will be referred to in this contract as
we, us, and our.
SECTION 2--DEFINED TERMS.
Administration Charge means the charge described in Article III, Section 5.
Annuity Change Factor means the factor described in Article IV, Section 2.
Annuity Commencement Date means the date annuity income payments to a
Participant begin. A Participant's Annuity Commencement Date shall be the first
day of a month.
Annuity Reserve Account means the reserves held for annuities in course of
payment in a Division of Separate Account B for this Series of Contracts.
Associated Fixed Contract means Group Contract No. issued by us to the
Contractholder.
Code means the Internal Revenue Code of 1986 as amended and the regulations
thereunder. Reference to the Internal Revenue Code means such Code or the
corresponding provisions of any subsequent revenue code and any regulations
thereunder.
Contingent Deferred Sales Charge means the charge described in Article V,
Section 5.
Contract Date means the date this contract is effective as shown on the face
page.
Contribution Year means the twelve-month period coinciding with the Plan Year.
Contributions means contributions for a Participant under this contract as
described in Article II, Section 1.
Division means the part of Separate Account B which is invested in shares of a
single Mutual Fund.
Employer means
Investment Account means each account established for a Participant as described
in Article III, Section 4.
Investment Account Value means the value of an Investment Account for a Division
which on any date will be equal to the number of units then credited to such
account multiplied by the Unit Value of this Series of Contracts for that
Division for the Valuation Period in which such date occurs.
Mutual Fund means a registered investment company in which Separate Account B
invests.
Net Investment Factor means, for a Division, the factor described in Article
III, Section 3.
Normal Income Form means the form of annuity benefit which the Plan provides if
the Participant has not elected another form of benefit. If the Plan does not
specify a Normal Income Form, this form will be Option D with a minimum period
of 10 years for an unmarried Participant, and Option G, with the spouse as
contingent annuitant, for a married Participant.
Participant means a person who is a participant under the Plan and for whom an
InInvestment Account has been established under this contract.
Plan means
Plan Year means the accounting year of the Plan. If the Plan does not have an
accounting year, Plan Year means the twelve-month period we establish for it.
Series of Contracts means all group annuity contracts we issue with the form
number GP A 5925 and such other contracts designated by us as belonging to this
series.
Separate Account B means Principal Mutual Life Insurance Company Separate
Account B as described in Article III, Section 1.
Termination of Employment means a Participant's termination of employment with
the Employer.
Total and Permanent Disability means that a Participant is disabled, as the
result of sickness or injury, so as to be prevented from engaging in any
substantial gainful activity and such total disability has been continuous for a
period of six months. The Participant must submit due proof thereof which is
acceptable to us.
Trust means
Unit Value means the value of a unit credited to an Investment Account held
under this Series of Contracts for a Division as described in Article III,
Section 2.
Valuation Date means the date on which the net asset value of a Mutual Fund is
determined.
Valuation Period means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Date and the time as of
which such value is determined on the next following Valuation Date.
Written Notification means actual delivery to us at our home office in Des
Moines, Iowa of an appropriate writing from the person or persons specified by
the Plan, on a form supplied or approved by us.
ARTICLE II
CONTRIBUTIONS
SECTION 1--CONTRIBUTIONS. Contributions permitted by the Plan for a Participant
may be paid to us under this contract on any date on or after the Contract Date.
Such Contributions may be any of the following types:
(a) Contributions by the Employer behalf of a Participant pursuant to a salary
modification agreement.
(b) Any other Contributions by the Employer on behalf of a Participant.
(c) Other Contributions not covered by (a) or (b) above, if we agree to accept
such Contributions.
Contributions for a Participant under (a) or (b) above may not exceed the
following without our written consent:
(d) the exclusion allowance described in Code Section 403(b) and
(e) the limitations contained in Code Section 415.
On and after January 1, 1987, Contributions for a Participant under (a) above
may not exceed the following:
(f) the greater of $9,500 or the amount in Code Section 402(g)(1) increased by
any cost of living adjustment; but not less than
(g) the amount determined under the provisions of Code Section 402(g)(8), if
such provision is applicable to such Participant.
All Contributions are payable directly to us at our home office in Des Moines,
Iowa. Contributions will be accepted by us during our normal business hours
Monday through Friday. If received during other hours, Saturdays, and legal
holidays, they will be accepted the next following business day.
Contributions will be reduced by the amount of any premium taxes due on such
Contributions before being credited in accordance with Article III, Section 4.
SECTION 2--INVESTMENT DIRECTION. Each type of Contribution for a Participant may
be directed to any number of Investment Accounts available as described in
Article III, Section 4, as designated in Written Notification to us.
Contributions will be added to each Investment Account in the amount or
percentage specified in the Written Notification on file with us. Such direction
may be changed at any time by filing a new Written Notification.
SECTION 3--CESSATION OF CONTRIBUTIONS. For any Plan, cessation of Contributions
shall be effective as of any of the following dates:
(a) On the date we receive Written Notification that cessation of Contributions
is to occur.
(b) On the date Contributions would no longer be allowable under the Plan in
accordnace with Code Section 403(b).
(c) On the date no Investment Accounts subject to the Plan remain under this
contract.
Upon cessation of Contributions, no other Plan participants will become
Participants under the contract, and no further Plan Contributions will be
accepted by us.
All provisions of this contract will remain effective as to any Investment
Accounts which have not been paid or applied in full.
Once all Investment Accounts have been paid or applied in full, we will
have no further obligation in regard to such accounts.
ARTICLE III
BEFORE RETIREMENT VALUES AND ACCOUNTING
SECTION 1--SEPARATE ACCOUNT B. We have established and will maintain a
separate account called Principal Mutual Life Insurance Company Separate Account
B (Separate Account B). All amounts credited to Separate Account B will be used
to purchase shares, at net asset value, of such Mutual Fund or Mutual Funds as
directed by Written Notification. Any and all distributions made by a Mutual
Fund in respect of its shares held by Separate Account B will be reinvested in
additional shares of such Mutual Fund, at net asset value. Payments and
transfers forme Separate Account B may be effected by redeeming all or a part of
the shares of a Mutual Fund or Mutual Funds, at net asset value, equal in total
value to the amount to be paid or transferred. We expect to invest all the
amounts credited to Separate Account B in shares of the Mutual Funds available,
as directed by Written Notification. However, we reserve the right to change
investments as provided in Article VII, Section 17.
Amounts which will be credited to Separate Account B include amounts held
in connection with this contract and other contracts we designate as
participating in Separate Account B, and amounts which are credited to it by us
for the purpose of maintaining reserves for variable annuity benefits.
All income, gains and losses, whether or not realized, and expenses with
respect to the assets of Separate Account B shall be credited to or charged
against Separate Account B without regard to any other income, gains or losses
or expenses. The assets of Separate Account B shall not be charged with any
liabilities arising out of any other business conducted by us.
Any taxes or reserves for taxes we determine to be attributable to
Separate Account B will be charged against Separate Account B by us.
In addition, all income, gains and losses, whether or not realized, and
expenses with respect to a Division of Separate Account B for a Series of
Contracts shall be credited to or charged against such Division of Separate
Account B for that Series of Contracts without regard to income, gains or
losses, or expenses of any other Division of Separate Account B. The assets of a
Division of Separate Account B for a Series of Contracts shall not be charged
with any liabilities arising out of any other Division of Separate Account B.
We shall be the sole owner of all funds received under this contract.
SECTION 2--UNIT VALUE. The Unit Value for a Series of Contracts which
invests in a Division of Separate Account B is the basis of determining the
value of that portion of the interest of each person having an interest in
Separate Account B. The Unit Value for each Series of Contracts in each Division
is determined on each date on which the net asset value of its underlying Mutual
Fund is determined.
The Unit Value for a Series of Contracts which invests in a Division for a
Valuation Period is the value determined as of the end of such period. The Unit
Value for a Series of Contracts for each Division was fixed at $1.00 for the
Valuation Period in which the first amount of money was credited to that
Division of Separate Account B for that Series of Contracts. The Unit Value for
any later Valuation Period for a Division is equal to its Unit Value for the
immediately preceding Valuation Period multiplied by the Net Investment Factor
for such Division for such later Valuation Period.
SECTION 3--NET INVESTMENT FACTOR. The Net Investment Factor for a Division
for this Series of Contracts for any specified Valuation Period is equal to
(a) the quotient obtained by dividing (i) the net asset value of a
share of its Mutual Fund as of the end of such Valuation Period,
plus the per share amount of any dividend or other distribution
made by such Mutual Fund during such Valuation Period, (less an
adjustment for taxes, if any, referred to in Section 1 of this
Article) by (ii) the net asset value of a share of such Mutual
Fund as of the end of the immediately preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
rate for the number of days within such Valuation Period at an
annual rate of 1.4965%.
The amounts derived from applying the rate specified in subparagraph (b)
above and the amount of any taxes referred to in subparagraph (a) above will be
accrued daily and will from time to time be transferred from Separate Account B
at our discretion. The net asset value of a share of a Mutual Fund is determined
and reported by such Mutual Fund or its agent.
SECTION 4--INVESTMENT ACCOUNTS. An Investment Account for each type of
Contributions will be established for each Participant for each Division of
Separate Account B under this contract. We will maintain each of these
Investment Accounts for each Participant until the Investment Account Value is
either applied to effect variable annuity benefits for the Participant, or paid
to the Participant or his beneficiary or transferred in accordance with the
provisions of this contract.
Each Contribution of each type for a Participant shall be allocated to the
Division or Divisions of Separate Account B in accordance with the Written
Notification on file with us and shall result in a credit of units to the
appropriate Investment Account of the Participant. The number of units so
credited shall be determined by dividing the portion of the Contribution
allocated to a Division by the Unit Value for such Division for the Valuation
Period within which the Contribution was received by us.
Units shall remain credited to each Investment Account of a Participant
until cancelled for one of the following:
(a) Application to effect a variable annuity for the Participant.
(b) Payment of a single sum cash benefit to the Participant or his beneficiary.
(c) Transfer or adjustment of the value of such account, according to the terms
of this contract.
(d) Payment of the Contingent Deferred Sales Charge described in Article V,
Section 5.
(e) Payment of the Administration Charge described in Section 5 of this
Article.
SECTION 5--ADMINISTRATION CHARGE. An Administration Charge will be
deducted once each Contribution Year proportionately from the Investment
Accounts of each Participant and will be equal to the sum of (a) and (b):
(a) $25.
(b) An amount equal to a percentage of the total value of all
Investment Accounts of the Participant under this contract. This
percentage shall be equal to 1/2% of the first $50,000 in such
accounts divided by the total value in such accounts.
If accounts are established for a Participant under both this contract and
the Associated Fixed Contract, the charges determined above will be apportioned
among such Participant's accounts under both contracts based on the values of
such accounts thereunder.
If Contributions for a Participant are made under this contract as part of
a retirement plan sponsored by or program of the Employer of the Participant and
we receive all of that portion of such contributions under such plan or program
directed to annuity contracts for all employees participating in such plan or
program, then the percentage determined in (b) above will be based on the value
of the aggregate of all accounts of all such Participants of such Employer. The
$25 charge determined by (a) will be deducted from the accounts of each
Participant; the balance of the charge determined by (b) will be deducted pro
rata from the Investment Accounts of all such Participants based on their
proportionate value of the aggregate of such accounts.
The Administration Charge applicable to each Participant will be deducted
from his Investment Accounts on the earlier of (i) the date such account is paid
or applied in full or (ii) the last day of the Contribution Year. Such deduction
will be effected by cancelling a number of units in each Investment Account of
the Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Series of Contracts for the applicable
Division for the Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant.
SECTION 6--SEPARATE PAYMENT OF CERTAIN CHARGES. An Employer may, by written
agreement with us, agree to pay separately the Administration Charge set out in
Section 5 of this Article for Participants who are employees of such Employer.
We shall notify the Employer in writing of the amount of such charges when
due. Such charges shall be payable within 30 days after such notice at our home
office in Des Moines, Iowa. Failure of an Employer to pay these charges
separately shall result in deduction of such charges from the Investment
Accounts of such Participants as outlined in Section 5 of this Article.
An Employer may revoke his written agreement with us by Written
Notification. Such notice will be effective on the later of the date we receive
it or the date specified in such written notice.
SECTION 7--ACCOUNTS AND FORFEITURE. The Investment Accounts established for
a Participant to hold Contributions described in Article II, Section l (a) and
(c) are nonforfeitable. The vested portions of the Investment Accounts
established for a Participant to hold all other Contributions described in
Article II, Section I are nonforfeitable, also. A Participant's incidents of
ownership in his Investment Accounts are nontransferable.
ARTICLE IV
ANNUITY BENEFITS
SECTION 1--REQUIRED DISTRIBUTION DATES AND AMOUNTS. For that part of a
Participant's Accumulation Accounts which have accrued since December 31, 1986,
the Participant must have received all Accumulation Accounts under Article V,
Section 4 or must start receiving benefits under this Article IV or under
Article V, Section 5, no later than the latest of the following:
(a) The April 1 following the calendar year in which the Participant attains
age 70 1/2.
(b) The Participant's Termination of Employment, if the Participant has
attained age 70 1/2 on or before December 31, 1988 and is actively at work
on such date.
(c) The date specified in the Participant's Written Notification, if the
Participant has more than one tax sheltered annuity or custodial account
and gives us Written Notification that distribution is first to occur from
such other tax sheltered annuity or custodial account.
For that part of a Participant's Accumulation Accounts which accrued on or
before December 31, 1986, the Participant must start receiving benefits under
this Article IV or under Article V, Section 4 or Section 5, no later than the
later of the Participant's Termination of Employment or attainment of age 75.
Benefits may be payable under any of the options shown in Section 3 of
this Article as long as they conform to (d) and meet one of the tests in (e) and
(f):
(d) On the Participant's Annuity Commencement Date or annuity starting date,
the present value of the amount to be paid to the Participant while living
is greater than 50% of the present value of the total value to be paid to
the Participant and his designated beneficiary; provided, however, that if
the Participant's spouse is the joint or contingent annuitant, this
requirement is not applicable.
(e) No benefits are provided which extend beyond the life of the Participant or
the lives of the Participant and his designated beneficiary.
(f) No benefits are provided which extend beyond the life expectancy of the
Participant or the life expectancy of the Participant and his designated
beneficiary.
SECTION 2--ANNUITY BENEFITS. The Investment Account Value of each of a
Participant's Investment Accounts will be applied to provide annuity income for
him under any option of this Section, as long as the annuity income to be
provided conforms to Plan provisions and complies with the following:
(a) The amount available to provide an annuity income may be all or a portion
of the amount available under the Plan, as reported to us by the Employer.
The vested Investment Account Value of each Investment Account, determined
as of the end of the Valuation Period one month before the Participant's
Annuity Commencement Date, will be applied to effect a variable annuity for
him. Each such amount will be transferred on the date such value was
determined to the Annuity Reserve Account for the Division of Separate
Account B in which the Investment Account was maintained.
(b) We must receive Written Notification to provide annuity income for a
Participant before his Annuity Commencement Date can occur.
(c) If no Written Notification has been received by us before the date
specified in Section 1 (a) through (c), we will convert his Investment
Accounts to provide annuity income starting on such date. The form of
annuity will be the option elected by the Participant.
(d) If no optional form of income is elected before a Participant's Annuity
Commencement Date, the Normal Income Form will be provided.
(e) The amount applied for the Participant must be at least $1,750.
(f) The form of annuity and the person named as contingent or joint annuitant
(if any) cannot be changed after the Participant's Annuity Commencement
Date.
In lieu of any annuity benefits under this Article, a Participant may, if
not restricted by the Plan, elect a cash benefit in accordance with Article V,
Section 4.
Any of the options described below may be chosen as the form of income for
annuity benefits, provided it meets the requirements of Section 1 (d) through
(f) of this Article.
Option D--Life Annuity with Minimum Period. This provides monthly annuity
income to the Participant, starting on his Annuity Commencement Date, for
the minimum period elected and continuing for the lifetime of the
Participant. The minimum period may be 0, 5, 10, 15 or 20 years or the
period (called installment refund period) required for the sum of all
income payments to equal the amount applied, assuming all payments are in
the same amount as the initial payment. If this option is chosen, we must
have Written Notification of the length of the minimum period and the
beneficiary designated by the Participant.
Option E--Joint and Survivor Annuity with Minimum Period. This provides
monthly annuity payments starting on the Participant's Annuity
Commencement Date, for a minimum period of 10 years, and continuing for
the joint lifetimes of the Participant and the joint annuitant named in
the election, and continuing after the death of either payee, in the
amount that would have been payable to them jointly, for the lifetime of
the survivor. If both payees die before the end of the minimum period, the
remaining payments for the minimum period will be paid to the
Participant's beneficiary. If this option is chosen, we must have Written
Notification of the name and date of birth of the joint annuitant and the
beneficiary designated by the Participant.
Option F--Joint and Two-Thirds Survivor Life Annuity. This provides
monthly annuity payments, starting on the Participant's Annuity
Commencement Date, for the joint lifetimes of the Participant and the
joint annuitant named in the election. At the death of either payee,
two-thirds of the amount that would have been payable had both survived
will be continued to the survivor for his lifetime. If this option is
chosen, we must have Written Notification of the name and date of birth of
the joint annuitant.
Option G--Life Annuity with One-Half Survivorship. This provides monthly
annuity payments to the Participant, starting on his Annuity Commencement
Date and continuing for his lifetime. If the Participant dies on or after
his Annuity Commencement Date, one-half of the monthly annuity will be
continued to the contingent annuitant for the lifetime of the contingent
annuitant. If this option is chosen, we must have Written Notification of
the name and date of birth of the contingent annuitant.
Options other than those set out above may be made available by written
agreement between the Participant and us.
SECTION 3--AMOUNT OF MONTHLY ANNUITY INCOME. For each Investment Account
of a Participant, the initial amount of monthly annuity income provided by each
$1,000 applied under Section I of this Article, after reduction for any
applicable premium tax, shall be determined by us based on the option selected
and on the age of the Participant and his joint or contingent annuitant, if any,
on his Annuity Commencement Date. The initial monthly annuity income payment
will be determined on the basis of the annuity conversion rates applicable on
such date to such conversions under all contracts of this class issued by us.
However, the annuity conversion rates will not provide less initial monthly
annuity income than the conversion rates shown in Table 1. The amount of each
subsequent monthly annuity income payment shall be determined by multiplying the
payment for the preceding calendar month by the Annuity Change Factor for such
month for the Division of Separate Account B for this Series of Contracts in
which such Annuity Reserve Account is maintained.
Annuity Change Factor for any Division for a Series of Contracts for any
given calendar month is the quotient of (a) divided by (b) below:
(a) The number which results from dividing (i) the Unit Value for such
Division for the first Valuation Date in the calendar month
beginning one month before such given calendar month by (ii) the
Unit Value for such Division for the first Valuation Date in the
calendar month beginning two months before such given calendar
month.
(b) An amount equal to one plus the effective interest rate for the
number of days between the two Valuation Dates specified in
subparagraph (a) above at the interest rate assumed to determine
the initial payment of variable benefits to such Participant.
The amount of each monthly payment to a beneficiary (entitled to monthly
payments for the remainder of the minimum period after the death of the
Participant), to the survivor payee after the death of one payee under Option E
or F, or the contingent annuitant under Option G shall be the same as would have
been payable to the Participant or joint payees, if living, with monthly changes
based on the Annuity Change Factors applicable, except that any payment to the
survivor payee under Option F will be two-thirds of the payment that would have
been payable if both payees were living, and any payment to the contingent
annuitant under Option G will be one-half of the payment that would have been
made to the Participant, if living.
SECTION 4--MORALITY AND EXPENSE GUARANTEES. The mortality table and the
expense margins which are factors in determining the amounts of the periodic
payments of annuity benefits in course of payment are guaranteed. Variations in
the dollar amount of such payments are entirely dependent upon the investment
performance of the Division of Separate Account B for this Series of Contracts
in which the Annuity Reserve Account is maintained.
We will, at least once each year, make any transfer of funds from our
general account to the Annuity Reserve Account of each Division of Separate
Account B, or from the Annuity Reserve Account of each Division of such Separate
Account to our general account, so that the assets of the Annuity Reserve
Account of each Division of Separate Account B shall be equal to the total of
our liabilities for annuity income benefits payable from each Division of
Separate Account B, all as we determine. The effect of such transfer is to
adjust the Annuity Reserve Account of each Division of such Separate Account for
the difference between the actual mortality and expense experience since the
last such transfer and the mortality and expense assumptions used in the
conversion rates for annuity income payments from such Division.
ARTICLE V
SUPPLEMENTARY BENEFITS
SECTION 1--BENEFITS PAYABLE AT DEATH. If the death of a Participant occurs
prior to his Annuity Commencement Date, we will, upon receipt of due proof of
death, treat such Participant's Investment Account Values as provided by his
Written Notification. The Participant may choose one of the following methods:
(a) We will cancel all units in the Investment Accounts of the
Participant and transfer the value to the Associated Fixed
Contract. The amount transferred from each such account will be
equal to the number of units cancelled multiplied by the Unit
Value for its Division of Separate Account B for the Valuation
Period in which the cancellation is effective.
(b) We will pay the value of the Participant's Investment Accounts to
the beneficiary in a single sum. The value will be determined as
provided in (a) above and payment will be made within seven days
after we receive due proof of death.
SECTION 2--OPTIONS FOR BENEFITS PAYABLE AT DEATH. In lieu of treating the
Participant's Investment Account Values as shown in Section 1 of this Article,
the beneficiary may, by Written Notification, request the alternate method. Such
Written Notification must be given before the date the transfer or payment is to
be effective.
In lieu of these methods, the beneficiary may, by Written Notification,
choose to receive annuity income payments from all or a part of the Investment
Account Values, if the amount of monthly annuity income would be at least $20.
The form of annuity income must be Option D and the beneficiary must be a
natural person.
The beneficiary must give Written Notification for such annuity income
payments on or before the date payment or transfer under Section 1 of this
Article would be effective. Such income payments will begin within one month
after the beneficiary's Written Notification is received.
SECTION 3--PROOF OF DEATH. We will accept as proof of death a certified
copy of a death certificate, a certified copy of a decree of a court of
competent jurisdiction as to the finding of death, a written statement by a
medical doctor who attended the deceased during his last illness, or any other
proof that is satisfactory to us.
SECTION 4--CASH WITHDRAWAL BENEFIT. By Written Notification and if not
restricted by the Plan, we will pay to a Participant all or a portion of the
vested portion of his Investment Accounts under this contract, subject to the
following:
(a) The Participant's vested Investment Account Values will be determined at
the end of the Valuation Period in which we receive the request and the
vested portion will be paid to the Participant within seven days after the
request is received. We may require that any request be accompanied by the
certificate issued to the Participant under Article VII, Section 1.
(b) If an event occurs which requires the vesting provisions of the Plan to be
applied to the Participant's Investment Accounts, a partial withdrawal of
the non-vested portion of such accounts will occur. Such non-vested
Investment Account Values will be paid to the Employer, subject to any
charges described in (d) and (e) of this Section.
(c) Any payment shall be subject to the limitations contained in Article I. In
addition, no more than two partial payments shall be made in a twelve month
period without our express consent.
(d) The amount available will be subject to the Administration Charge contained
in Article III, Section 5.
(e) The amount available may be subject to the Contingent Deferred Sales
Charge, as described in Section 5 of this Article.
Any payment made under this Section will result in the cancellation of a
number of units in each Investment Account of the Participant from which payment
is made. The number of units cancelled from such account will be equal to the
amount paid from it divided by the Unit Value for its Division of Separate
Account B for the Valuation Period in which the cancellation is effective. Units
shall also be cancelled to cover any charges assessed under (d) and (e) above.
SECTION 5--CONTINGENT DEFERRED SALES CHARGE. Any payment on behalf of a
Participant under Section 4 of this Article or under Article VI, Section 5,
except on account of the Participant's Total and Permanent Disability, shall be
subject to a Contingent Deferred Sales Charge equal to a percentage of the
amount being paid or transferred. Such percentage will be determined according
to the following table:
Number of Contribution Years
a Participant has been Contingent Deferred Sales
covered under the contract Charge Percentage
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 .7
10 or more 0
The amount of any Contingent Deferred Sales Charge will be an application
from the Investment Account of a Participant at the end of the Valuation Period
in which the transfer or withdrawal is effective. Such application will be
effected by a cancellation of a number of units in such account. If the sum of
the amount to be paid out or transferred and the Contingent Deferred Sales
Charge would be greater than the Participant's Investment Account, we will apply
all of the Investment Account and the amount paid out or transferred will
reflect such charge.
For a Participant, the amount of Contingent Deferred Sales Charge deducted
will limited, however, so that the amount of any such charge shall never exceed
9% of the Contribution to which the charge relates. For this purpose, payments
under Section 4 of this Article or under Article VI, Section 5 will be related
to Contributions on a first in, first out basis.
ARTICLE VI
TRANSFERS AND LIMITATIONS
SECTION 1--TRANSFER TO AND FROM ASSOCIATED FIXED CONTRACT.
Subsection (a)--Transfer to Associated Fixed Contract. All or a portion of
the value of any of a Participant's Investment Accounts may be transferred to
the Associated Fixed Contract at any time at least one month before his Annuity
Commencement Date by Written Notification to us. Transfer will be effective as
of the end of the Valuation Period in which such Written Notification is
received and will be made with in seven days after such request is received. Any
amount transferred pursuant to this Subsection (a) will result in the
cancellation of units in such account or accounts of the Participant as of the
effective date of transfer. The number of units cancelled from an Investment
Account will be equal to the amount transferred from such account divided by the
appropriate Unit Value for the Division for this Series of Contracts for the
Valuation Period in which the transfer is effective. The amount transferred will
be credited to the Participant under the Associated Fixed Contract in accordance
with the provisions of such contract.
Transfer under this Subsection (a) is subject to any limitation in Section
3 of this Article. In addition, no more than two such transfers may be made in a
twelve month period without our express consent.
Subsection (b)--Transfer from Associated Fixed Contract. All or a portion
of the proceeds available to a Participant under the Associated Fixed Contract
may be transferred to one or more of his Investment Accounts under this contract
at any time at least one month before his Annuity Commencement Date by Written
Notification to us. The amount and date of any such transfer will be determined
in accordance with the provisions of the Associated Fixed Contract. Transferred
amounts will be treated as a Contribution for such Participant on the date of
transfer and credited in accordance with his investment direction, as described
in Article II, Section 3.
SECTION 2--TRANSFERS BETWEEN DIVISIONS. By Written Notification, all or a
portion of the value of one of a Participant's Investment Accounts may be
transferred to any other of his Investment Accounts for the same type of
Contribution at any time at least one month before his Annuity Commencement
Date, but no more than two transfers out of any one Investment Account may be
made in a twelve month period without our express consent. The transfer will be
effective as of the end of the Valuation Period in which such request is
received and will be made within seven days after such request is received. Any
amount transferred under this Section will result in the cancellation of units
in the Investment Account from which transfer occurs as of the effective date of
transfer. The number of units cancelled from such Investment Account will be
equal to the amount transferred from such account divided by the Unit Value of
such Division for a Series of Contracts for the Valuation Period in which the
transfer is effective. The transferred amount will be treated as a Contribution
for such Participant to the Investinent Account specified in the Written
Notification on the date of transfer.
Transfer under this Section is subject to any limitation in Section 3 of
this Article.
SECTION 3--LIMITATION ON PAYMENT OR TRANSFER. The date on which any amount
is to be paid or transferred under this contract may be deferred by us during
any period that the right to redeem Mutual Fund shares is suspended as permitted
under the provisions of the Investment Company Act of 1940 which may be in
effect from time to time. If any deferment of payment or transfer is effective,
and if said payment or transfer has not been cancelled by Written Notification
to us within the period of deferment, the amount to be paid or transferred shall
be determined as of the first Valuation Date following the expiration of the
permitted deferment, and the payment or transfer will be made within seven days
thereafter. We will notify the Employer and Participant in event of any
deferment under the provisions of this Section.
SECTION 4--LIMITATION AS TO PARTICIPANTS. If at any time Princor Financial
Services is not the investment manager of the Mutual Fund or Mutual Funds in
which Separate Account B is invested, we may give written notice to the
Contractholder that no further persons may become covered as Participants under
this contract.
SECTION 5--TRANSFER TO ALTERNATE FUNDING AGENT. By Written Notification to
us, the value of all of the Investment Accounts of the Participants for whom
Contributions have been made under this contract as a part of a retirement plan
sponsored by the Employer of such Participants which Plan provides for Employer
Contributions in addition to regular compensation may be transferred to an
Alternate Funding Agent. Subject to any limitations in this Article, the value
of such Investment Accounts will be determined as of the end of the Valuation
Period in which we receive such Written Notification and will be transferred
within seven days after such request is received.
Any amounts transferred under this Section will be subject to the charges
contained in Article V, Section 5. Any such transfer shall be an application of
the amounts transferred and shall be in lieu of any other benefits payable from
such accounts.
Alternate Funding Agent means an insurance company or custodian designated
by the Written Notification and authorized to receive any amount or amounts
transferred under this Section as to a Participant or Participants and to apply
such amount or amounts for the exclusive benefit of such Participant or
Participants under a plan which continues to meet the requirements of the Code,
without any obligation on our part as to such application.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. We will issue to each Employer for delivery to
each Participant an individual certificate setting forth a statement as to the
benefits to which such Participant is entitled and to whom such benefits are
payable. If benefits become payable to a Participant under one of the options of
Article IV, Section 1, we shall issue a superseding individual certificate
setting forth the amount, form and period of payment of the monthly annuity
benefits.
SECTION 2--BENEFICIARY. The beneficiary is the person or persons to whom
proceeds (other than any monthly annuity payable to a joint or contingent
annuitant under provisions of Article IV, Section 1) are payable upon the death
of the Participant, subject to the provisions of Section 13 of this Article. A
Participant shall name such beneficiary, or may change a named beneficiary, by
executing and filing a written designation to that effect with us, but such
designation will not be effective until we receive it. The designation, when
received, will be effective as of the date it was executed, but any payment made
by us prior to receipt of such designation shall fully discharge us to the
extent of such payment. We reserve the right to require the Participant's
certificate for endorsement of any change of beneficiary.
If annuity benefits become payable to any Participant under Option D and
if the death of the Participant occurs before he has received all of the
payments for the minimum period provided for under Option D, any remaining
payments for the balance of such period shall be paid when due to the
beneficiary or beneficiaries then surviving; provided, however, that each
beneficiary shall have the right to request in writing and receive the commuted
value of any such remaining payments due him in one sum.
If annuity benefits become payable to any Participant under Option E and
if the death of both the Participant and the joint annuitant occur before
payments have been made for the minimum period of ten years, any remaining
payments for the balance of such period shall be paid when due to the
beneficiary or beneficiaries then surviving; provided, however, that each
beneficiary shall have the right to request in writing and receive the commuted
value of any such remaining payments due him in one sum.
Unless otherwise specified by the Participant with our written consent,
(a) if a beneficiary dies before the Participant, monthly payments
which would have become payable to such beneficiary, if living,
will be payable when due to the beneficiary or beneficiaries
surviving the Participant in the order provided.
(b) if any beneficiary survives the Participant but dies before
receiving all of the monthly payments which would have become
payable to such beneficiary, if living, payments will be paid when
due to the surviving beneficiary or beneficiaries of such
Participant in the order provided.
(c) if the last survivor of all designated beneficiaries dies
following the death of the Participant (and the joint or
contingent annuitant, if any) and before all payments due the
beneficiary have been made, the remaining payments will be
commuted and the commuted value paid to the executor or
administrator of the estate of the last survivor.
If no designated beneficiary shall survive the Participant (and the joint
or contingent annuitant, if any), then any amounts which would have become
payable to a designated beneficiary shall be commuted and the commuted value
shall be paid to the executor or administrator of the estate of the Participant
(the executor or administrator of the estate of any joint or contingent
annuitant, if he survives the Participant).
SECTION 3--DIVIDENDS. The proportion of the divisible surplus, if any,
which we determine to accrue on this contract for each Participant shall be
ascertained annually by us and shall be apportioned by addition (prior to the
close of the calendar year in which the dividend is declared) to the Investment
Accounts of the Participants as a Contribution. NOTE: Due to the direct
crediting of investment results, it is not anticipated that any dividends will
ever be paid under this contract.
SECTION 4--CONTRACT. This contract and the application of the
Contractholder, a copy of which is attached to and made a part of this contract,
shall constitute the entire contract between the parties. Except to the extent
specified in this contract, we are not a party to nor bound by any trust or
plan.
SECTION 5--PLAN AND PLAN AMENDMENTS. The Employer agrees to furnish us with
a copy of the Plan in effect on the date this contract is effective for such
Employer and any subsequent amendments to it. No amendment to the Plan which
affects our duties and obligations will be effective under this contract if we
notify the Employer in writing that such change is unacceptable to us. We will
notify an Employer within 60 days after we receive an amendment if it is
unacceptable.
SECTION 6--ALTERATION OF CONTRACT. Only our corporate officers have
authority to alter this contract or to waive any of its provisions or
requirements.
SECTION 7--AMENDMENTS. We reserve the right to amend or change this
contract as follows:
(a) Any or all of the contract provisions may be changed at any time,
including retroactive changes, to the extent necessary to meet the
requirements of any law or regulation issued by any governmental
agency to which we are subject.
(b) We may, as of any date after the Contract Date, amend or change
(i) the basis for determining Investment Account Values, Net
Investment Factors, and Annuity Change Factors; (ii) Table 1; and
(iii) the provisions as to transfers contained in Article VI.
(c) The percentage stated in Article III, Section 3(b), may be changed
at any time at least one year after the Contract Date; provided,
however, that such rate will in no event exceed 2.00% and will not
be changed more frequently than once in any one-year period.
We will give written notice to the Contractholder of any change made in
accordance with subparagraph (a) above and to each Participant and Employer
affected by the change. In order for any amendment or change in accordance with
subparagraph (b) or (c) above to become effective, we must give written notice
to the Contractholder, each Participant, and each Employer whose Participants
are affected by the change not less than 60 days prior to the date the amendment
or change is to take effect.
This contract may also be amended or changed at any time as to any of its
provisions, including those in regard to coverage, benefits and participation
privileges, by written agreement between the Contractholder (or any other person
or persons designated by the 7--3,4,5,6,7;V-TS;8705
Contractholder) and us. Such amendment or change may be made without the consent
of any Participant, beneficiary or joint or contingent annuitant.
Any amendment or change in accordance with this Section shall be binding
and conclusive on each Participant, beneficiary or joint or contingent
annuitant, subject to the following limitations:
(i) No amendment or change shall apply to annuities which are in the
course of payment prior to the effective date of the amendment or
change except to the extent necessary in making changes pursuant
to subparagraph (a) above.
(ii) No change in Table I which would provide less initial monthly
annuity income will take effect for a current Participant.
SECTION 8--CONTRIBUTIONS. We reserve the right to limit or refuse further
Contributions under this contract. We will give to the Contractholder and each
Participant written notice at least 60 days before the date after which further
Contributions will be limited or refused by us.
SECTION 9--MISSTATEMENTS. If the age or any other relevant fact as to a
Participant or joint or contingent annuitant is found to have been misstated,
the amount of annuity payable by us will be that provided by the amount applied
to provide such annuity, determined as of the date established by the misstated
information and on the basis of the correct information. The value of any
overpayment by us resulting from any misstatements will be deducted from amounts
thereafter payable to the Participant, his joint or contingent annuitant or his
beneficiary. Any underpayment by us resulting from any misstatements will be
paid in full with the next payment due the Participant, his joint or contingent
annuitant or his beneficiary.
SECTION 10--INFORMATION, PROOFS AND DETERMINATION OF FACTS. We may
require evidence of a Participant's age and the age of his joint or contingent
annuitant, if any, on or prior to his Annuity Commencement Date and any other
records, data, proofs or additional information which, in our opinion, is
necessary for the administration of this contract.
SECTION 11--MODIFICATION IN MODE OF PAYMENT OF ANNUITY. If the monthly
amount of the annuity payable at Annuity Commencement Date to a Participant
under this contract would be less than $20, we may, at our option, pay in cash
the value of his Investment Account in full
settlement of all benefits otherwise payable.
SECTION 12--COMMUTATION OF PAYMENTS. If any monthly payments are to be
commuted, the commmuted value of such payments shall be determined by us using
the interest rate which was used as a basis for calculating the amount of the
monthly payment at the time the annuity payments began, assuming level monthly
payments.
SECTION 13--FACILITY OF PAYMENT. If any Participant, joint or contingent
annuitant or beneficiary is physically or mentally incapable of giving a valid
receipt for any payment due him and no legal representative has been appointed
for him, we may, at our option, make such payment to the person or persons as
have, in our opinion, assumed the care and principal support of such
Participant, joint or contingent annuitant or beneficiary, except that any
payment due a minor shall be paid at a rate not exceeding $100.00 per month.
However, in no event will any such payment exceed the maximum amount allowed
under applicable law of the state in which this contract is delivered. Any such
payment made by us shall fully discharge us to the extent of such payment.
SECTION 14--PRONOUNS. Masculine pronouns used in this contract include
both masculine and feminine gender unless the context indicates otherwise.
SECTION 15--ASSIGNMENT. The Investment Accounts of a Participant under
this contract and any benefits payable under this contract to any Participant,
beneficiary or joint or contingent annuitant are not assignable nor may they be
pledged as security for any loan. All such accounts and benefits shall be exempt
from claims of creditors to the maximum extent permitted by law.
SECTION 16--BASIS OF RESERVE. The reserve of any annuity income under this
contract shall be determined by us on the same interest and mortality
assumptions as were used to calculate the amount of each payment.
SECTION 17--SUBSTITUTED SECURITIES. If shares of the Mutual Funds should
not be available or if, in our judgment, investment in such shares is no longer
appropriate, we may substitute for such shares or apply Contributions received
after a date specified by us to the purchase of (i) shares of another registered
open-end investment company or (ii) securities or other property as we in our
discretion shall select. In the event of any investment pursuant to clause (ii)
above, we may make such changes as in our judgment are necessary or appropriate
in the frequency and methods of determination of Unit Values Net Investment
Factors, Annuity Change Factors, and Investment Account Values, including any
changes in the foregoing which will provide for the payment of an investment
advisory fee to us; provided, however, that any such changes shall be made only
after approval by the Insurance Department of the State of Iowa. We will give
written notice to each Participant of any substitution or change pursuant to
this Section.
Any substitution under this Section 17 is subject to the rules and
regulations of the Securities and Exchange Commission.
<PAGE>
Option D -- MONTHLY LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS -- AMOUNT OF INITIAL MONTHLY PAYMENT
AGE OF PAYEE MINIMUM PERIOD
- ------------ --------------------------------------------------------
5 10 15 20 INST
MALE FEMALE NONE YEARS YEARS YEARS YEARS REFUND
- ---- ------ ---- ----- ----- ----- ----- ------
30 36 2.82 2.82 2.82 2.81 2.81 2.79
31 37 2.84 2.84 2.84 2.84 2.83 2.82
32 38 2.87 2.87 2.87 2.86 2.86 2.84
33 39 2.90 2.89 2.89 2.89 2.88 2.87
34 40 2.92 2.92 2.92 2.92 2.91 2.89
35 41 2.95 2.95 2.95 2.95 2.94 2.92
36 42 2.98 2.98 2.98 2.98 2.97 2.95
37 43 3.02 3.02 3.01 3.01 3.00 2.98
38 44 3.05 3.05 3.05 3.04 3.03 3.01
39 45 3.09 3.09 3.08 3.08 3.07 3.04
40 46 3.12 3.12 3.12 3.11 3.10 3.07
41 47 3.16 3.16 3.16 3.15 3.14 3.11
42 48 3.20 3.20 3.20 3.19 3.17 3.14
43 49 3.25 3.25 3.24 3.23 3.21 3.18
44 50 3.29 3.29 3.28 3.27 3.25 3.22
45 51 3.34 3.34 3.33 3.31 3.29 3.26
46 52 3.39 3.38 3.38 3.36 3.34 3.30
47 53 3.44 3.44 3.43 3.41 3.38 3.34
48 54 3.49 3.49 3.48 3.46 3.43 3.39
49 55 3.55 3.54 3.53 3.51 3.48 3.43
50 56 3.61 3.60 3.59 3.56 3.52 3.48
51 57 3.67 3.66 3.65 3.62 3.58 3.53
52 58 3.73 3.73 3.71 3.68 3.63 3.59
53 59 3.80 3.79 3.77 3.74 3.68 3.64
54 60 3.87 3.86 3.84 3.80 3.74 3.70
55 61 3.95 3.94 3.91 3.87 3.80 3.76
56 62 4.02 4.02 3.99 3.94 3.86 3.82
57 63 4.11 4.10 4.07 4.01 3.92 3.89
58 64 4.20 4.19 4.15 4.09 3.98 3.96
59 65 4.29 4.28 4.24 4.17 4.05 4.03
60 66 4.39 4.38 4.33 4.25 4.11 4.10
61 78 4.50 4.48 4.43 4.33 4.18 4.18
62 68 4.61 4.59 4.53 4.42 4.25 4.27
63 69 4.73 4.71 4.64 4.51 4.32 4.35
64 70 4.86 4.84 4.75 4.60 4.38 4.44
65 71 5.00 4.97 4.87 4.70 4.45 4.54
66 72 5.14 5.11 5.00 4.80 4.52 4.64
67 73 5.30 5.26 5.13 4.90 4.58 4.74
68 74 5.46 5.42 5.26 5.00 4.65 4.86
69 75 5.64 5.59 5.40 5.10 4.71 4.97
70 76 5.83 5.76 5.55 5.21 4.77 5.09
71 77 6.03 5.95 5.70 5.31 4.83 5.22
72 78 6.24 6.14 5.86 5.41 4.88 5.35
73 79 6.46 6.35 6.02 5.51 4.93 5.49
74 80 6.70 6.57 6.18 5.61 4.98 5.64
75 81 6.95 6.80 6.35 5.71 5.02 5.79
76 82 7.22 7.04 6.52 5.80 5.06 5.95
77 83 7.51 7.30 6.70 5.89 5.09 6.12
78 84 7.82 7.57 6.87 5.98 5.13 6.30
79 85 8.15 7.85 7.05 6.06 5.15 6.49
80 86 8.51 8.15 7.23 6.13 5.18 6.68
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020, FEMALE SET BACK 6 YEARS IN
AGE, RATES FOR OTHER AGES WILL BE DETERMINED BY BANKERS LIFE COMPANY ON THE SAME
ACTUARIAL BASIS AS THE ABOVE RATES.
<PAGE>
<TABLE>
<CAPTION>
OPTION E - MONTHLY JOINT AND SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.29 3.31 3.32 3.34 3.36 3.37 3.39 3.40 3.41 3.43 3.44 3.45 3.46 3.48 3.49 3.50
51 57 3.32 3.34 3.35 3.37 3.39 3.41 3.42 3.44 3.45 3.47 3.48 3.49 3.51 3.52 3.53 3.54
52 58 3.34 3.36 3.38 3.40 3.42 3.44 3.46 3.47 3.49 3.51 3.52 3.54 3.55 3.57 3.58 3.59
53 59 3.37 3.39 3.41 3.43 3.45 3.47 3.49 3.51 3.53 3.55 3.57 3.58 3.60 3.62 3.63 3.65
54 60 3.40 3.42 3.44 3.47 3.49 3.51 3.53 3.55 3.57 3.59 3.61 3.63 3.65 3.66 3.68 3.70
55 61 3.42 3.45 3.47 3.50 3.52 3.54 3.57 3.59 3.61 3.63 3.65 3.67 3.69 3.71 3.73 3.75
56 62 3.45 3.48 3.50 3.53 3.55 3.58 3.60 3.63 3.65 3.68 3.70 3.72 3.74 3.77 3.79 3.81
57 63 3.47 3.50 3.53 3.56 3.59 3.61 3.64 3.67 3.69 3.72 3.74 3.77 3.79 3.82 3.84 3.86
58 64 3.50 3.53 3.56 3.59 3.62 3.65 3.68 3.71 3.73 3.76 3.79 3.82 3.84 3.87 3.90 3.92
59 65 3.52 3.55 3.59 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.87 3.90 3.93 3.95 3.98
60 66 3.54 3.58 3.61 3.65 3.68 3.72 3.75 3.78 3.82 3.85 3.88 3.92 3.95 3.98 4.01 4.04
61 67 3.57 3.60 3.64 3.68 3.71 3.75 3.79 3.82 3.86 3.90 3.93 3.97 4.00 4.04 4.07 4.10
62 68 3.59 3.63 3.67 3.71 3.75 3.78 3.82 3.86 3.90 3.94 3.98 4.02 4.06 4.10 4.13 4.17
63 69 3.61 3.65 3.69 3.73 3.78 3.82 3.86 3.90 3.95 3.99 4.03 4.07 4.11 4.16 4.20 4.23
64 70 3.63 3.68 3.72 3.76 3.81 3.85 3.90 3.94 3.99 4.03 4.08 4.13 4.17 4.22 4.26 4.30
65 71 3.65 3.70 3.74 3.79 3.84 3.88 3.93 3.98 4.03 4.08 4.13 4.18 4.23 4.28 4.32 4.37
66 72 3.67 3.72 3.77 3.82 3.87 3.92 3.97 4.02 4.07 4.13 4.18 4.23 4.28 4.34 4.39 4.44
67 73 3.69 3.74 3.79 3.84 3.90 3.95 4.00 4.06 4.11 4.17 4.23 4.28 4.34 4.40 4.45 4.51
68 74 3.71 3.77 3.82 3.87 3.93 3.98 4.04 4.10 4.16 4.22 4.28 4.34 4.40 4.46 4.52 4.58
69 75 3.73 3.79 3.84 3.90 3.95 4.01 4.07 4.13 4.20 4.26 4.32 4.39 4.45 4.52 4.58 4.65
70 76 3.75 3.81 3.86 3.92 3.98 4.04 4.10 4.17 4.23 4.30 4.37 4.44 4.51 4.58 4.65 4.71
71 77 3.77 3.82 3.88 3.94 4.00 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.56 4.63 4.71 4.78
72 78 3.78 3.84 3.90 3.96 4.03 4.09 4.16 4.23 4.31 4.38 4.45 4.53 4.61 4.69 4.77 4.85
73 79 3.80 3.86 3.92 3.98 4.05 4.12 4.19 4.26 4.34 4.41 4.49 4.58 4.66 4.74 4.83 4.91
74 80 3.81 3.87 3.94 4.00 4.07 4.14 4.21 4.29 4.37 4.45 4.53 4.62 4.70 4.79 4.88 4.97
75 81 3.82 3.89 3.95 4.02 4.09 4.16 4.24 4.32 4.40 4.48 4.57 4.66 4.75 4.84 4.94 5.03
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION F - MONTHLY JOINT AND TWO-THIRDS SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.62 3.65 3.68 3.71 3.74 3.77 3.80 3.84 3.87 3.90 3.94 3.97 4.01 4.05 4.08
51 57 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.88 3.91 3.95 3.98 4.02 4.06 4.09 4.13
52 58 3.66 3.69 3.72 3.75 3.78 3.81 3.85 3.88 3.92 3.95 3.99 4.03 4.06 4.10 4.14 4.18
53 59 3.69 3.72 3.75 3.78 3.82 3.85 3.89 3.92 3.96 4.00 4.03 4.07 4.11 4.15 4.19 4.23
54 60 3.72 3.75 3.79 3.82 3.86 3.89 3.93 3.96 4.00 4.04 4.08 4.12 4.16 4.20 4.24 4.28
55 61 3.75 3.79 3.82 3.86 3.89 3.93 3.97 4.01 4.04 4.08 4.13 4.17 4.21 4.25 4.29 4.34
56 62 3.79 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.17 4.22 4.26 4.30 4.35 4.39
57 63 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.18 4.22 4.27 4.31 4.36 4.41 4.45
58 64 3.86 3.90 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.27 4.32 4.37 4.41 4.46 4.51
59 65 3.89 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.28 4.32 4.37 4.42 4.47 4.52 4.57
60 66 3.93 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.64
61 67 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.49 4.54 4.59 4.65 4.71
62 68 4.01 4.05 4.09 4.14 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.54 4.60 4.66 4.72 4.77
63 69 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.66 4.72 4.78 4.85
64 70 4.08 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.67 4.73 4.79 4.86 4.92
65 71 4.13 4.17 4.22 4.27 4.32 4.38 4.43 4.49 4.55 4.61 4.67 4.73 4.80 4.86 4.93 5.00
66 72 4.17 4.22 4.27 4.32 4.37 4.43 4.49 4.54 4.61 4.67 4.73 4.80 4.87 4.93 5.00 5.07
67 73 4.21 4.26 4.31 4.37 4.42 4.48 4.54 4.60 4.66 4.73 4.80 4.87 4.94 5.01 5.08 5.15
68 74 4.25 4.30 4.36 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.01 5.08 5.16 5.24
69 75 4.29 4.35 4.41 4.46 4.52 4.59 4.65 4.72 4.78 4.86 4.93 5.00 5.08 5.16 5.24 5.32
70 76 4.34 4.39 4.45 4.51 4.57 4.64 4.71 4.77 4.85 4.92 5.00 5.07 5.15 5.24 5.32 5.40
71 77 4.38 4.44 4.50 4.56 4.62 4.69 4.76 4.83 4.91 4.98 5.06 5.14 5.23 5.31 5.40 5.49
72 78 4.42 4.48 4.55 4.61 4.68 4.74 4.82 4.89 4.97 5.05 5.13 5.21 5.30 5.39 5.48 5.57
73 79 4.47 4.53 4.59 4.66 4.73 4.80 4.87 4.95 5.03 5.11 5.20 5.28 5.37 5.47 5.56 5.66
74 80 4.51 4.57 4.64 4.71 4.78 4.85 4.93 5.01 5.09 5.17 5.26 5.35 5.45 5.55 5.65 5.75
75 81 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06 5.15 5.24 5.33 5.42 5.52 5.62 5.73 5.83
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION G - LIFE ANNUITY WITH 1/2 SURVIVORSHIP PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE PARTICIPANT - MALE
AGE OF 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
CONTINGENT _____________________________________________________________________________________________
ANNUITANT AGE OF PARTICIPANT - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.63 3.67 3.72 3.77 3.81 3.86 3.91 3.97 4.02 4.07 4.13 4.19 4.25 4.31 4.37
51 57 3.60 3.65 3.69 3.74 3.79 3.84 3.89 3.94 3.99 4.05 4.10 4.16 4.22 4.28 4.35 4.41
52 58 3.62 3.66 3.71 3.76 3.81 3.86 3.91 3.96 4.02 4.07 4.13 4.19 4.25 4.32 4.38 4.45
53 59 3.64 3.68 3.73 3.78 3.83 3.88 3.93 3.99 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49
54 60 3.65 3.70 3.75 3.80 3.85 3.90 3.96 4.01 4.07 4.13 4.19 4.25 4.32 4.39 4.46 4.52
55 61 3.67 3.71 3.76 3.82 3.87 3.92 3.98 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49 4.56
56 62 3.68 3.73 3.78 3.83 3.89 3.94 4.00 4.06 4.12 4.19 4.25 4.32 4.39 4.46 4.53 4.61
57 63 3.69 3.75 3.80 3.85 3.91 3.96 4.02 4.09 4.15 4.21 4.28 4.35 4.42 4.50 4.57 4.65
58 64 3.71 3.76 3.81 3.87 3.93 3.98 4.05 4.11 4.17 4.24 4.31 4.38 4.46 4.53 4.61 4.69
59 65 3.72 3.77 3.83 3.89 3.94 4.01 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.57 4.65 4.73
60 66 3.73 3.79 3.85 3.90 3.96 4.03 4.09 4.16 4.23 4.30 4.37 4.45 4.53 4.61 4.69 4.77
61 67 3.75 3.80 3.86 3.92 3.98 4.05 4.11 4.18 4.25 4.32 4.40 4.48 4.56 4.64 4.73 4.82
62 68 3.76 3.82 3.88 3.94 4.00 4.06 4.13 4.20 4.28 4.35 4.43 4.51 4.60 4.68 4.77 4.86
63 69 3.77 3.83 3.89 3.95 4.02 4.08 4.15 4.23 4.30 4.38 4.46 4.55 4.63 4.72 4.81 4.91
64 70 3.78 3.84 3.90 3.97 4.03 4.10 4.18 4.25 4.33 4.41 4.49 4.58 4.67 4.76 4.85 4.95
65 71 3.79 3.86 3.92 3.98 4.05 4.12 4.20 4.27 4.35 4.44 4.52 4.61 4.70 4.80 4.90 4.99
66 72 3.81 3.87 3.93 4.00 4.07 4.14 4.22 4.29 4.38 4.46 4.55 4.64 4.74 4.84 4.94 5.04
67 73 3.82 3.88 3.94 4.01 4.08 4.16 4.24 4.32 4.40 4.49 4.58 4.67 4.77 4.87 4.98 5.08
68 74 3.83 3.89 3.96 4.03 4.10 4.18 4.26 4.34 4.42 4.51 4.61 4.71 4.81 4.91 5.02 5.13
69 75 3.84 3.90 3.97 4.04 4.12 4.19 4.27 4.36 4.45 4.54 4.64 4.74 4.84 4.95 5.06 5.17
70 76 3.85 3.91 3.98 4.05 4.13 4.21 4.29 4.38 4.47 4.56 4.66 4.76 4.87 4.98 5.10 5.21
71 77 3.85 3.92 3.99 4.07 4.14 4.22 4.31 4.40 4.49 4.59 4.69 4.79 4.90 5.02 5.13 5.25
72 78 3.86 3.93 4.00 4.08 4.16 4.24 4.32 4.41 4.51 4.61 4.71 4.82 4.93 5.05 5.17 5.29
73 79 3.87 3.94 4.01 4.09 4.17 4.25 4.34 4.43 4.53 4.63 4.73 4.84 4.96 5.08 5.20 5.33
74 80 3.88 3.95 4.02 4.10 4.18 4.26 4.35 4.44 4.54 4.65 4.75 4.87 4.98 5.11 5.23 5.37
75 81 3.88 3.95 4.03 4.11 4.19 4.27 4.36 4.46 4.56 4.66 4.77 4.89 5.01 5.13 5.27 5.40
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
GROUP ANNUITY CONTRACT
BANKERS LIFE COMPANY
711 HIGH STREET
DES MOINES, IA 50307
In consideration of the application for this contract made by
________________________________________________________________________________
(herein called the Contractholder)
and in consideration of payment of all Contributions provided for in this
contract, agrees to make payments to the person or persons entitled thereto
subject to the provisions of this contract.
This contract is delivered in __________________________________________________
Contributions are directed into Separate Account B and are not guaranteed as to
fixed dollar amount but will increase or decrease in dollar amount, depending on
the investment performance of Separate Account B.
This contract is issued and accepted subject to all the terms set forth in it.
This contact is executed by Bankers Life Company at its home office to take
effect as of the ___________________ day of _____________________, 19__, which
is the contract date.
T.M. Hutchison R.N. Houser
Vice President, Counsel President
and Corporate Secretary
__________________________
Registar
Date______________________
GROUP CONTRACT NO. GA
GROUP ANNUITY CONTRACT - PENSION BUILDER
With Pooled Separate Account
Variable Benefits
Participating
For Individual Retirement Annuities
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----- Parties to this Contract
Section 2 ----- Other Defined Terms
ARTICLE II CONTRIBUTIONS
Section 1 ----- Contributions
Section 2 ----- Refund of Excess Contributions
Section 3 ----- Investment Direction
ARTICLE III BEFORE RETIREMENT VALUES AND ACCOUNTING
Section 1 ----- Separate Account B
Section 2 ----- Unit Value
Section 3 ----- Net Investment Factor
Section 4 ----- Investment Accounts
Section 5 ----- Administration Charge
Section 6 ----- Separate Payment of Certain Charges
ARTICLE IV ANNUITY BENEFITS
Section 1 ----- Annuity Benefits and Options
Section 2 ----- Amount of Monthly Annuity Income
Section 3 ----- Mortality and Expense Guarantees
ARTICLE V SUPPLEMENTARY BENEFITS
Section 1 ----- Benefits Payable at Death
Section 2 ----- Options for Benefits Payable at Death
Section 3 ----- Proof of Death
Section 4 ----- Cash Withdrawal Benefit
Section 5 ----- Contingent Deferred Sales Charge
ARTICLE VI TRANSFERS AND LIMITATIONS
Section 1 ----- Transfer to and from Associated Fixed Contract
Section 2 ----- Transfers between Divisions
Section 3 ----- Limitation on Payment or Transfer
Section 4 ----- Limitation as to Participants
Tc;V-IRA;8204
<PAGE>
ARTICLE VII GENERAL PROVISIONS
Section 1 ----- Certificates
Section 2 ----- Beneficiary
Section 3 ----- Dividends
Section 4 ----- Contract
Section 5 ----- Alteration of Contract
Section 6 ----- Amendments
Section 7 ----- Contributions
Section 8 ----- Misstatements
Section 9 ----- Information, Proofs and Determination of Facts
Section 10 ----- Modification in Mode of Payment of Annuity
Section 11 ----- Commutation of Payments
Section 12 ----- Facility of Payment
Section 13 ----- Pronouns
Section 14 ----- Assignment
Section 15 ----- Nonforfeiture
Section 16 ----- Basis of Reserve
Section 17 ----- Substituted Securities
Tc(2);V-IRA;8204
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--PARTIES TO THIS CONTRACT. This contract is between the Contractholder
and Principal Mutual Life Insurance Company.
Contractholder means the holder of this contract named on the face page.
Principal Mutual Life Insurance Company will be referred to in this contract as
we, us, and our.
SECTION 2--OTHER DEFINED TERMS.
Administration Charge means the charge described in Article III, Section 5.
Annuity Change Factor means the factor described in Article IV, Section 2.
Annuity Commencement Date means the date on which the Investment Accounts of a
Participant are applied under Article IV to provide annuity income for him. A
Participant's income starting date is subject to the following:
(a) A Participant's Annuity Commencement Date will not occur before the
earlier of (i) the first day of the month following our receipt of the
Participant's Written Notification for commencement of benefits, or
(ii) the April 1 following the calendar year in which the Participant
attains age 70 1/2.
(b) A Participant's Annuity Commencement Date or income starting date must
be no later than the April 1 following the end of the calendar year in
which the Participant attains age 70 1/2.
Annuity Reserve Account means the reserves held for annuities in course of
payment in a Division of Separate Account B for this Series of Contracts.
Associated Fixed Contract means Group Contract No. issued by us to the
Contractholder.
Code means the Internal Revenue Code of 1986 as amended and the regulations
thereunder. Reference to the Internal Revenue Code means such Code or the
corresponding provisions of any subsequent revenue code and any regulations
thereunder.
Compensation means the amount derived from personal services which is includable
in the gross income of the Participant for such Taxable Year.
Contingent Deferred Sales Charge means the charge described in Article V,
Section 5.
Contract Date means the date this contract is effective as shown on the face
page.
Contribution Year means the Taxable Year of a Participant. The first
Contribution Year of a Participant will run from the date we receive his first
Contribution under Article II, Section 1 to the end of that Taxable Year.
Contributions means contributions for a Participant under this contract as
described in Article II, Section 1.
Division means the part of Separate Account B which is invested in shares of a
single Mutual Fund.
Employer means, for a particular Participant, the person or entity which employs
that Participant. For an unemployed Participant for whom contributions are made
by a spouse, the term Employer means the person or entity which employs the
spouse.
Investment Account means each account established for a Participant as described
in Article III, Section 4.
Investment Account Value means the value of an Investment Account for a Division
which on any date will be equal to the number of units then credited to such
account multiplied by the Unit Value of this Series of Contracts for that
Division for the Valuation Period in which such date occurs.
Mutual Fund means a registered investment company in which Separate Account B
invests. Net Investment Factor means, for a Division, the factor described in
Article III, Section 3.
Participant-owner means the person for whom an Investment Account has been
established under this contract. In this contract a Participant-owner will be
referred to as a Participant.
Series of Contracts eans all group annuity contracts we issue with the form
number GP A 5921 and such other contracts designated by us as belonging to this
series.
Separate Account B means Principal Mutual Life Insurance Company's Separate
Account B as described in Article III, Section 1.
Taxable Year means the tax year of each Participant.
Total and Permanent Disability means that a Participant is disabled, as the
result of sickness or injury, so as to be prevented from engaging in any
substantial gainful activity, and such total disability has been continuous for
a period of at least six months. The Participant must submit due proof thereof
which is acceptable to us.
Trust means PRINCIPAL MUTUAL ANNUITY TRUST II FOR INDIVIDUAL RETIREMENT ANNUITY.
Unit Value means the value of a unit credited to an Investment Account held
under this Series of Contracts for a Division as described in Article III,
Section 2.
Valuation Date means the date on which the net asset value of a Mutual Fund is
determined.
Valuation Period means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Date and the time as of
which such value is determined on the next following Valuation Date.
Written Notification means actual delivery to us at our home office in Des
Moines, of an appropriate writing on a form supplied or approved by us.
ARTICLE II
CONTRIBUTIONS
SECTION 1--CONTRIBUTIONS. Contributions for a Participant may be paid to us
under this contract on any date on or after the Contract Date. No further
Contributions may be paid to us for a Participant after the first day of the
Taxable Year in which the Participant attains age 70 1/2 unless such further
Contributions are permitted by the Code.
For any Taxable Year, the Contributions for a Participant cannot exceed the
amounts permitted under Code Section 219 without regard to the deduction limits
of Code Section 219(g). In general, these amounts are:
(a) For a single Participant, Contributions are limited to the lesser of
(i) $2,000, or (ii) 100% of Compensation, reduced by (iii) any amounts
contributed for the same Taxable Year to any other individual
retirement account or annuity for such Participant.
(b) For a married Participant, total Contributions are limited to the
lesser of (i) $2,250 or (ii) 100% of Compensation reduced by (iii) any
amounts contributed for the same Taxable Year to any other individual
retirement account or annuity for such Participant or spouse.
The maximum Contribution for either the Participant or the Participant's spouse
is the lesser of (i) $2,000, or (ii) 100% of Compensation.
(c) For a divorced or separated Participant, Contributions are limited to
(a) above. For purposes of this section, Compensation includes
qualifying alimony and separate maintenance payments under Code Section
71.
(d) For a Participant who claims a tax deduction under Code Section 219 (a)
because of Contributions on his behalf pursuant to a simplified
employee pension plan described in Code Section 408(k), contributions
are limited to those permitted under such simplified employee pension
plan.
Contributions consisting of either of the following may be paid to us only
with our consent:
(e) Amounts previously accumulated under an individual retirement account
or annuity pursuant to Code Section 408.
(f) Amounts the Participant is entitled to roll over under Code Sections
402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), 408(d)(3), or 409(b)(c)(3).
All Contributions are payable directly to us at our home office in Des Moines,
Iowa. Contributions will be accepted by us during our normal business hours
Monday through Friday. If received during other hours, Saturdays, and legal
holidays, they will be accepted the next following business day.
Contributions under this contract and the accounts attributable thereto are for
the exclusive benefit of Participants and their beneficiaries. 2--1;V-IRA;8803
Contributions will be reduced by the amount of any premium taxes due on such
Contributions before being credited in accordance with Article III, Section 4.
SECTION 2--REFUND OF EXCESS CONTRIBUTIONS. If a Participant gives us Written
Notification that Contributions for him for a Taxable Year are in excess of
those per-mitted under Section 219 of the Code, the portion of each Investment
Account Value attributable to such excess Contributions will be refunded to him.
The Investment Account Values for such excess Contributions will be determined
as of the end of the Valuation Period in which the Written Notification was
received by us and refund will be made within seven days after such request is
received.
SECTION 3--INVESTMENT DIRECTION. Each Contribution for a Participant may be
directed to any number of Investment Accounts available as described in Article
III, Section 4, as designated in Written Notification to us. Contributions will
be added to each Investment Account in the amount or percentage specified in the
Written Noti-fication on file with us. Such direction may be changed at any time
by filing a new Written Notification.
ARTICLE III
BEFORE RETIREMENT VALUES AND ACCOUNTING
SECTION 1--SEPARATE ACCOUNT B. We have established and will maintain a separate
account called Principal Mutual Life Insurance Company Separate Account B
(Separate Account B). All amounts credited to Separate Account B will be used to
purchase shares, at net asset value, of such Mutual Fund or Mutual Funds as
directed by the Participant. Any and all distributions made by a Mutual Fund in
respect of its shares held by Separate Account B will be reinvested in
additional shares of such Mutual Fund, at net asset value. Payments and
transfers from Separate Account B may be effected by redeeming all or a part of
the shares of a Mutual Fund or Mutual Funds, at net asset value, equal in total
value to the amount to be paid or transferred. We expect to invest all the
amounts credited to Separate Account B in shares of the Mutual Funds avail-able,
as directed by the Participant. However, we reserve the right to change
invest-ments as provided in Article VII, Section 17.
Amounts which will be credited to Separate Account B include amounts held in
connection with this contract and other contracts we designate as participating
in Separate Account B, and amounts which are credited to it by us for the
purpose of maintaining reserves for variable annuity benefits.
All income, gains and losses, whether or not realized, and expenses with
respect to the assets of Separate Account B shall be credited to or charged
against Separate Account B without regard to any other income, gains or losses
or expenses. The assets of Separate Account B shall not be charged with any
liabilities arising out of any other business conducted by us.
Any taxes or reserves for taxes we determine to be attributable to Separate
Account B will be charged against Separate Account B by us.
In addition, all income, gains and losses, whether or not realized, and expenses
with respect to a Division of Separate Account B for a Series of Contracts shall
be credited to or charged against such Division of Separate Account B for that
Series of Contracts without regard to income, gains or losses, or expenses of
any other Division of Separate Account B. The assets of a Division of Separate
Account B for a Series of Contracts shall not be charged by us with any
liabilities arising out of any other Division of Separate Account B.
We shall be the sole owner of all funds received under this contract.
SECTION 2--UNIT VALUE. The Unit Value for a Series of Contracts which invests in
a Division of Separate Account B is the basis of determining the value of that
portion of the interest of each person having an interest in Separate Account B.
The Unit Value for each Division for each Series of Contracts is determined on
each date on which the net asset value of its underlying Mutual Fund is
determined.
The Unit Value for a Division for a Series of Contracts for a Valuation Period
is the value determined as of the end of such period. The Unit Value for this
Series of Contracts for each Division was fixed at $1.00 for the Valuation
Period in which the first amount of money was credited to that Division of
Separate Account B for that Series of Contracts. The Unit Value for any later
Valuation Period for a Division is equal to its Unit Value for the immediately
preceding Valuation Period multiplied by the Net Investment Factor for such
Division for a Series of Contracts for such later Valuation Period.
SECTION 3--NET INVESTMENT FACTOR. The Net Investment Factor for a Division for
this Series of Contracts for any specified Valuation Period is equal to
(a) the quotient obtained by dividing (i) the net asset value of a share
of its Mutual Fund as of the end of such Valuation Period, plus the
per share amount of any dividend or other distribution made by such
Mutual Fund during such Valuation Period, (less an adjustment for
taxes, if any, referred to in Section 1 of this Article) by (ii) the
net asset value of a share of such Mutual Fund as of the end of the
immediately preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
interest rate for the number of days within such Valuation Period at
an annual rate of 1.4965%.
The amounts derived from applying the rate specified in subparagraph (b) above
and the amount of any taxes referred to in subparagraph (a) above will be
accrued daily and will from time to time be transferred from Separate Account B
at our discretion.
The net asset value of a share of a Mutual Fund is determined and reported by
such Mutual Fund or its agent.
SECTION 4--INVESTMENT ACCOUNTS. An Investment Account will be established for
each Participant for each Division of Separate Account B under this contract. We
will maintain each of these Investment Accounts for each Participant until the
Investment Account Value is either applied to effect variable annuity benefits
for the Participant, or paid to the Participant or his beneficiary or
transferred in accordance with the provisions of this contract.
Each Contribution for a Participant shall be allocated to the Division or
Divisions of Separate Account B in accordance with the Participant's Written
Notification on file with us and shall result in a credit of units to the
appropriate Investment Account of the Participant. The number of units so
credited shall be determined by dividing the portion of the Contribution
allocated to a Division by the Unit Value for such Division for the Valuation
Period within which the Contribution was received by us.
Units shall remain credited to each Investment Account of a Participant until
cancelled for one of the following:
(a) Application to effect a variable annuity for the Participant.
(b) Payment of a single sum cash benefit to the Participant or his
beneficiary.
(c) Transfer or adjustment of the value of such account, according to the
terms of this contract.
(d) Payment of the Contingent Deferred Sales Charge described in Article
V, Section 5.
(e) Payment of the Administration Charge described in Section 5 of this
Article.
SECTION 5--ADMINISTRATION CHARGE. An Administration Charge will be deducted once
each Contribution Year proportionately from the Investment Accounts of each
Participant and will be equal to the sum of (a) and (b):
(a) $25.
(b) An amount equal to a percentage of the total value of all Investment
Accounts of the Participant under this contract. This percentage shall
be equal to 1/2% of the first $50,000 in such accounts divided by the
total value in such accounts.
If accounts are established for a Participant under both this contract and the
Associated Fixed Contract, the charges determined above will be apportioned
among such Participant's accounts under both contracts based on the values of
such accounts there- under.
If Contributions for a Participant are made under this contract as part of a
retirement plan sponsored by or program of the Employer of the Participant and
we receive all of that portion of such contributions under such plan or program
directed to annuity contracts for all employees participating in such plan or
program, then the percentage determined in (b) above will be based on the value
of the aggregate of all accounts of all such Participants of such Employer. The
$25 charge determined by (a) will be deducted from the accounts of each
Participant; the balance of the charge determined by (b) will be deducted pro
rata from the Investment Accounts of all such Participants based on their
proportionate value of the aggregate of such accounts.
The Administration Charge applicable to each Participant will be deducted from
his Investment Accounts on the earlier of (i) the date such account is paid or
applied in full or (ii) the last day of the Contribution Year. Such deduction
will be effected by cancelling a number of units in each Investment Account of
the Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Series of Contracts for the applicable
Division for the Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant.
SECTION 6--SEPARATE PAYMENT OF CERTAIN CHARGES. An Employer may, by written
agreement with us, agree to pay separately the Administration Charge set out in
Section 5 of this Article for Participants who are employees of such Employer.
We shall notify the Employer in writing of the amount of such charges when due.
Such charges shall be payable within 30 days after such notice at our home
office in Des Moines, Iowa. Failure of an Employer to pay these charges
separately shall result in deduction of such charges from the Investment
Accounts of such Participants as outlined in Section 5 of this Article.
An Employer may revoke his written agreement with us by Written Notification.
Such notice will be effective on the later of the date we receive it or the date
specified in such written notice.
ARTICLE IV
ANNUITY BENEFITS
SECTION 1--ANNUITY BENEFITS AND OPTIONS. On a Participant's Annuity Commencement
Date, the Investment Account Value of each of his Investment Accounts,
determined as of the end of the Valuation Period one month before his Annuity
Commencement Date, will be applied to effect a variable annuity for him. Each
such amount will be trans-ferred on the date the value was determined to the
Annuity Reserve Account for the Division of Separate Account B in which the
Investment Account was maintained. Each such annuity will be payable under any
one of the options described in this Section, as selected in the Participant's
Written Notification. If no election of an option is made prior to a
Participant's Annuity Commencement Date, payment will be made under either (i)
Option D with a minimum period of 10 years, for a Participant who does not have
a spouse on his Annuity Commencement Date, or (ii) Option G with his spouse as
contingent annuitant, for a Participant who does have a spouse on his Annuity
Commence-ment Date. In lieu of any annuity payments in accordance with this
Article, a Partici-pant may elect a cash benefit in accordance with Article V,
Section 4.
Any of the options described below may be chosen as the form of income for
annuity benefits, provided at least 50% of the amount applied is payable to the
Participant over the Participant's expected life or provided the Participant's
designated beneficiary is the Participant's spouse. In addition, the form of
income must meet either one of the following tests in accordance with the life
expectancy and joint and survivor life expectancy tables set forth in Section
1.72-9 of the Income Tax Regulations.
(a) No benefits are provided which extend beyond the life of the
Participant or the lives of the Participant and his designated
beneficiary.
(b) No benefits are provided which extend over a period longer than the
life ex- pectancy of the Participant or the life expectancy of the
Participant and his designated beneficiary.
Option D--Life Annuity with Minimum Period. This provides monthly annuity income
to the Participant, starting on his Annuity Commencement Date, for the minimum
period elected and continuing for the lifetime of the Participant. The minimum
period may be 0, 5, 10, 15 or 20 years or the period (called installment refund
period) required for the sum of all income payments to equal the amount applied,
assuming all payments are in the same amount as the initial payment. In choosing
this option, we must have Written Notification of the length of the minimum
period and the beneficiary designated by the Participant.
Option E--Joint and Survivor Annuity with Minimum Period. This provides monthly
annuity payments starting on the Participant's Annuity Commencement Date, for a
minimum period of 10 years, and continuing for the joint lifetimes of the
Participant and the joint annuitant named in the election, and continuing after
the death of either payee, in the amount that would have been payable to them
jointly, for the lifetime of the survivor. If both payees die before the end of
the minimum period, the remaining payments for the minimum period will be paid
to the Participant's beneficiary. In choosing this option, we must have Written
Notification of the name, date of birth, and sex of the joint annuitant and the
beneficiary designated by the Participant.
Option F--Joint and Two-Thirds Survivor Life Annuity. This provides monthly
annuity payments, starting on the Participant's Annuity Commencement Date, for
the joint lifetimes of the Participant and the joint annuitant named in the
election. At the death of either payee, two-thirds of the amount that would have
been payable had both survived will be continued to the survivor for his
lifetime. In choosing this option, we must have Written Notification of the
name, date of birth, and sex of the joint annuitant.
Option G--Life Annuity with One-Half Survivorship. This provides monthly annuity
payments to the Participant, starting on his Annuity Commencement Date and
continuing for his lifetime. If the Participant dies on or after his Annuity
Commencement Date, one-half of the monthly annuity will be continued to the
contingent annuitant for the lifetime of the contingent annuitant. In choosing
this option, we must have Written Notification of the name, date of birth, and
sex of the contingent annuitant.
Options other than those set out above may be made available by written
agreement between the Participant and us.
SECTION 2--AMOUNT OF MONTHLY ANNUITY INCOME. For each Investment Account of a
Par- ticipant, the initial amount of monthly annuity income provided by each
$1,000 applied under Section 1 of this Article, after reduction for any
applicable premium tax, shall be determined by us based on the option selected
and on the sex and age of the Participant and his joint or contingent annuitant,
if any, on his Annuity Commencement Date. The initial monthly income payment
will be determined on the basis of the annuity conversion rates applicable on
such date to such conversions under all contracts of this class issued by us.
However, the annuity conversion rates will not provide less initial monthly
annuity income than the conversion rates shown in Table 1. The amount of each
subsequent monthly annuity income payment shall be determined by multiplying the
payment for the preceding calendar month by the Annuity Change Factor for such
month for the Division of Separate Account B for this Series of Contracts in
which such Annuity Reserve Account is maintained.
Annuity Change Factor for any Division for a Series of Contracts for any given
calendar month is the quotient of (a) divided by (b) below:
(a) The number which results from dividing (i) the Unit Value for such
Division for the first Valuation Date in the calendar month beginning
one month before such given calendar month by (ii) the Unit Value for
such Division for the first Valuation Date in the calendar month
beginning two months before such given calendar month.
(b) An amount equal to one plus the effective interest rate for the number
of days between the two Valuation Dates specified in subparagraph (a)
above at the interest rate assumed to determine the initial payment of
variable benefits to such Participant.
The amount of each monthly payment to a beneficiary (entitled to monthly
payments the remainder of the minimum period after the death of the
Participant), to the survivor payee after the death of one payee under Option E
or F, or the contingent annuitant under Option G shall be the same as would have
been payable to the Participant or joint payees, if living, with monthly changes
based on the Annuity Change Factors applicable, except that any payment to the
survivor payee under Option F will be two-thirds of the payment that would have
been payable if both payees were living and any payment to the contingent
annuitant under Option G will be one-half of the payment that would have been
made to the Participant, if living.
SECTION 3--MORTALITY AND EXPENSE GUARANTEES. The mortality table and the expense
margins which are factors in determining the amounts of the periodic payments of
annuity benefits in course of payment are guaranteed. Variations in the dollar
amount of such payments are entirely dependent upon the investment performance
of the Division of Separate Account B for this Series of Contracts in which the
Annuity Reserve Account is maintained.
We will, at least once each year, make any transfer of funds from our general
account to the Annuity Reserve Account of each Division of Separate Account B,
or from the Annuity Reserve Account of each Division of such Separate Account to
our general account, so that the assets of the Annuity Reserve Account of each
Division of Separate Account B shall be equal to the total of our liabilities
for annuity income benefits payable from each Division of Separate Account B,
all as we determine. The effect of such transfer is to adjust the Annuity
Reserve Account of each Division of such Separate Account for the difference
between the actual mortality and expense experience since the last such transfer
and the mortality and expense assumptions used in the conversion rates for
annuity income payments from such Division.
ARTICLE V
SUPPLEMENTARY BENEFITS
SECTION 1--BENEFITS PAYABLE AT DEATH. If the death of a Participant occurs prior
to his Annuity Commencement Date, we will, upon receipt of due proof of death,
treat such Participant's Investment Account Values as provided in his Written
Notification. The Participant may choose one of the following methods:
(a) We will cancel all units in the Investment Accounts of the Participant
and transfer the value to the Associated Fixed Contract. The amount
transferred from each such account will be equal to the number of
units cancelled multiplied by the Unit Value for its Division of
Separate Account B for the Valuation Period in which the cancellation
is effective.
(b) We will establish Investment Accounts for the beneficiary of the
Participant to hold the Investment Account Values of the Participant.
The provisions of this Section are subject to the provisions of Section 2 of
this Article.
SECTION 2--OPTIONS FOR BENEFITS PAYABLE AT DEATH. In lieu of treating the
Participant's Investment Account Values as shown in Section 1 of this Article,
we may pay all or part of such Investment Account Values to the beneficiary in a
single sum. If (a) of Section 1 of this Article is the method chosen by the
Participant, the Written Notifi- cation from the beneficiary must be given
before the date such transfer is to be ef- fective. Such payment will be made
within seven days after we receive such Written Notification.
By Written Notification to us, a beneficiary may:
(a) Elect to have all or a portion of the amount available to him under
the Associated Fixed Contract transferred to this contract. This
amount transferred will establish Investment Accounts for such
beneficiary.
(b) Elect to have all or a portion of the amount available to him under
this contract (if (b) of Section 1 of this Article is in effect for
him) transferred to the Associated Fixed Contract.
If the beneficiary chooses to transfer all or a portion of the amount
available to him under this contract to the Associated Fixed Contract, we will
treat such beneficiary as if he were a Participant and the provisions of Article
VI, Section 1, Subsection (a) will apply.
If Investment Accounts are established for a beneficiary, the following will
apply:
(c) The value of the Investment Accounts established must be at least
$1,750 or we may, at our option, pay the beneficiary the value of such
accounts in lieu of all other benefits as to such accounts.
(d) Any annuity income payable will be in the form of a lifetime annuity
income which does not provide benefits beyond the life or life
expectancy of the beneficiary. The beneficiary must be a natural
person if a lifetime income is elected.
(e) The beneficiary must begin to receive annuity income payments in the
form of an immediate annuity immediately distributed, or must receive
a single sum payment not later than 12 months after the Participant's
death, unless the beneficiary is the Participant's spouse.
(f) The amount of monthly annuity income payments must be at least $20 for
a bene- ficiary to choose to receive annuity income payments. If the
Investment Accounts would provide less, we may, at our option pay the
beneficiary the value of such accounts in lieu of all other benefits
as to such accounts.
If Investment Accounts are established for a beneficiary, we will furnish the
beneficiary with a writing explaining the details.
SECTION 3--PROOF OF DEATH. We will accept as proof of death a certified copy of
a death certificate, a certified copy of a decree of a court of competent
jurisdiction as to the finding of death, a written statement by a medical doctor
who attended the deceased during his last illness, or any other proof that is
satisfactory to us.
SECTION 4--CASH WITHDRAWAL BENEFIT. By Written Notification from a Participant,
we may pay to him all or a portion of his Investment Accounts under this
contract, subject to the following:
(a) The Participant's Investment Account Values will be determined at the
end of the Valuation Period in which we receive the request and will
be paid to the Participant within seven days after the request is
received. We may require that any request be accompanied by the
certificate issued to the Participant under Article VII, Section 1.
(b) Any payment shall be subject to the limitations contained in Article
VI. In ad- dition, no more than two partial payments shall be made in
a twelve month period without our express consent.
(c) The amount available will be subject to the Administration Charge
contained in Article III, Section 5.
(d) The amount available may be subject to the Contingent Deferred Sales
Charge, as described in Section 5 of this Article.
Any payment made under this Section will result in the cancellation of a
number of units in each Investment Account of the Participant from which payment
is made. The number of units cancelled from such account will be equal to the
amount paid from it divided by the Unit Value for its Division of Separate
Account B for the Valuation Period in which the cancellation is effective. Units
shall also be cancelled to cover any charges assessed under (c) and (d) above.
SECTION 5--CONTINGENT DEFERRED SALES CHARGE. Any payment on behalf of a
Participant under Section 4 of this Article, except on account of the
Participant's Total and Permanent Disability, shall be subject to a Contingent
Deferred Sales Charge equal to a percentage of the amount being paid. Such
percentage will be determined according to the following table:
Number of Contribution Years
a Participant has been Contingent Deferred Sales
covered under the contract Charge Percentage
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 .7
10 or more 0
The amount of any Contingent Deferred Sales Charge will be an application from
the Investment Account of a Participant at the end of the Valuation Period in
which the withdrawal is effective. Such application will be effected by a
cancellation of a number of units in such account. If the sum of the amount to
be paid out and the Contingent Deferred Sales Charge would be greater than the
Participant's Investment Account, we will apply all of the Investment Account
and the amount paid out will reflect such charge.
For a Participant, the amount of Contingent Deferred Sales Charge deducted will
be limited, however, so that the amount of such charge shall never exceed 9% of
the Con- tribution to which the charge relates. For this purpose, any payments
under Section 4 of this Article or under Article VI, Section 5 will be related
to Contri-butions on a first in, first out basis.
ARTICLE VI
TRANSFERS AND LIMITATIONS
SECTION 1--TRANSFER TO AND FROM ASSOCIATED FIXED CONTRACT.
Subsection (a)--Transfer to Associated Fixed Contract. A Participant may
transfer all or a portion of the value of any of his Investment Accounts to the
Associated Fixed Contract at any time at least one month before his Annuity
Commencement Date by Written Notification to us. Transfer will be effective as
of the end of the Valuation Period in which such Written Notification is
received and will be made within seven days after such request is received. Any
amount transferred pursuant to this subsection (a) will result in the
cancellation of units in such account or accounts of the Participant as of the
effective date of transfer. The number of units cancelled from an Investment
Account will be equal to the amount transferred from such account divided by the
appropriate Unit Value for the Division for this Series of Contracts for the
Valuation Period in which the transfer is effective. The amount transferred will
be credited to the Participant under the Associated Fixed Contract in accordance
with the provisions of such contract.
Transfer under this subsection (a) is subject to any limitation in Section 3 of
this Article. In addition, no more than two such transfers may be made in a
twelve-month period without our express consent.
Subsection (b)--Transfer from Associated Fixed Contract. A Participant may
transfer all or a portion of the proceeds available to him under the Associated
Fixed Contract to one or more of his Investment Accounts under this contract at
any time at least one month before his Annuity Commencement Date by Written
Notification to us. The amount and date of any such transfer will be determined
in accordance with the provisions of the Associated Fixed Contract. Transferred
amounts will be treated as a Contribution for such Participant on the date of
transfer and credited in accordance with his investment direction, as described
in Article II, Section 3.
SECTION 2--TRANSFERS BETWEEN DIVISIONS. A Participant may transfer all or a
portion of the value of one of his Investment Accounts to any other of his
Investment Accounts at any time at least one month before his Annuity
Commencement Date, but no more than two transfers out of any one Investment
Account may be made in a twelve month period without our express consent. Such
transfer request shall be by Written Notification. The transfer will be
effective as of the end of the Valuation Period in which such request is
received and will be made within seven days after such request is received. Any
amount transferred under this Section will result in the cancellation of units
in the Investment Account from which transfer occurs as of the effective date of
transfer. The number of units cancelled from such Investment Account will be
equal to the amount transferred from such account divided by the Unit Value of
such Division for a Series of Contracts for the Valuation Period in which the
transfer is effective. The transferred amount will be treated as a Contribution
for such Participant to the Investment Account specified in his Written
Notification on the date of transfer.
Transfer under this Section is subject to any limitation in Section 3 of this
Article.
SECTION 3--LIMITATION ON PAYMENT OR TRANSFER. The date on which any amount is to
be paid or transferred under this contract may be deferred by us during any
period that the right to redeem Mutual Fund shares is suspended as permitted
under the provisions of the Investment Company Act of 1940 which may be in
effect from time to time. If any deferment of payment or transfer is effective,
and if said payment or transfer has not been cancelled by Written Notification
to us within the period of deferment, the amount to be paid or transferred shall
be determined as of the first Valuation Date following the expiration of the
permitted deferment, and the payment or transfer will be made within seven days
thereafter. We will notify the Participant in event of any deferment under the
provisions of this Section.
SECTION 4--LIMITATION AS TO PARTICIPANTS. If at any time Princor Financial
Services is not the investment manager of the Mutual Fund or Mutual Funds in
which Separate Account B is invested, we may give written notice to the
Contractholder that no further persons may become covered as Participants under
this contract.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. We will issue to each Participant an individual
certificate setting forth a statement as to the benefits to which such
Participant is entitled and to whom such benefits are payable. If benefits
become payable to a Participant under one of the options of Article IV, Section
1, we shall issue a superseding individual certificate setting forth the amount,
form and period of payment of the monthly annuity benefits. Any certificate
issued shall be nontransferable.
SECTION 2--BENEFICIARY. The beneficiary is the person or persons to whom
proceeds (other than any monthly annuity payable to a joint or contingent
annuitant under provisions of Article IV, Section 1) are payable upon the death
of the Participant, subject to the provisions of Section 12 of this Article. A
Participant shall name such bene- ficiary, or may change a named beneficiary, by
executing and filing a written designation to that effect with us, but such
designation will not be effective until we receive it. The designation, when
received, will be effective as of the date it was executed, but any payment made
by us prior to receipt of such designation shall fully discharge us to the
extent of such payment. We reserve the right to require the Participant's
certificate for endorsement of any change of beneficiary.
If annuity benefits become payable to any Participant under Option D and if the
death of the Participant occurs before he has received all of the payments for
the minimum period provided for under Option D, any remaining payments for the
balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
If annuity benefits become payable to any Participant under Option E and if the
death of both the Participant and the joint annuitant occur before payments have
been made for the minimum period of ten years, any remaining payments for the
balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
Unless otherwise specified by the Participant with our written consent,
(a) if any beneficiary dies before the Participant, any monthly payment
which would have become payable to such beneficiary, if living, will
be payable when due to the beneficiary or beneficiaries surviving the
Participant in the order provided.
(b) if any beneficiary survives the Participant but dies before receiving
all of the monthly payments which would have become payable to such
beneficiary, if living, payments will be paid when due to the
surviving beneficiary or beneficiaries of such Participant in the
order provided.
(c) if the last survivor of all designated beneficiaries dies following
the death of the Participant (and the joint or contingent annuitant,
if any) and before all payments due the beneficiary have been made,
the remaining payments will be com- muted and the commuted value paid
to the executor or administrator of the estate of the last survivor.
If no designated beneficiary shall survive the Participant (and the joint or
contingent annuitant, if any), then any amounts which would have become payable
to a designated beneficiary shall be commuted and the commuted value shall be
paid to the executor or administrator of the estate of the Participant (the
executor or administrator of the estate of any joint or contingent annuitant, if
he survives the Participant).
SECTION 3--DIVIDENDS. The proportion of the divisible surplus, if any, which we
determine to accrue on this contract for each Participant shall be ascertained
annually by us and shall be apportioned by addition (prior to the close of the
calendar year in which the dividend is declared) to the Investment Accounts of
the Participants as a Contribution. NOTE: Due to the direct crediting of
investment results, it is not anticipated that any dividends will ever be paid
under this contract. (Amounts attributable to excess Contributions are not
treated as dividends.)
SECTION 4--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached to and made a part of this contract, shall constitute
the entire contract between the parties. Except to the extent specified in this
contract, we are not a party to nor bound by any trust or plan.
SECTION 5--ALTERATION OF CONTRACT. Only our corporate officers have authority to
alter this contract or to waive any of its provisions or requirements.
SECTION 6--AMENDMENTS. We reserve the right to amend or change this contract as
follows:
(a) Any or all of the contract provisions may be changed at any time,
including retroactive changes, to the extent necessary to meet the
requirements of any law or regulation issued by any governmental
agency to which we are subject.
(b) We may, as of any date after the Contract Date, amend or change (i)
the basis for determining Investment Account Values, Net Investment
Factors, and Annuity Change Factors; (ii) Table 1; and (iii) the
provisions as to transfers contained in Article VI.
(c) The percentage stated in Article III, Section 3(b), may be changed at
any time at least one year after the Contract Date; provided, however,
that such rate will in no event exceed 2.00% and will not be changed
more frequently than once in any one-year period.
We will give written notice to the Contractholder of any change made in
accordance with subparagraph (a) above and to each Participant affected by the
change. In order for any amendment or change in accordance with subparagraph (b)
or (c) above to become effective, we must give written notice to the
Contractholder and each Participant affected by the change not less than 60 days
prior to the date the amendment or change is to take effect.
This contract may also be amended or changed at any time as to any of its
provisions, including those in regard to coverage, benefits and participation
privileges, by written agreement between the Contractholder (or any other person
or persons designated by the Contractholder) and us. Such amendment or change
may be made with-out the consent of any Participant, beneficiary or joint or
contingent annuitant. We will give written notice to each Participant affected
by any amendment or change under this paragraph.
Any amendment or change in accordance with this Section shall be binding and
conclusive on each Participant, beneficiary or joint or contingent annuitant,
subject to the following limitations:
(i) No amendment or change shall apply to annuities which were in the
course of pay- ment prior to the effective date of the amendment or
change except to the extent necessary in making changes pursuant to
subparagraph (a) above.
(ii) No change in Table 1 which would provide less initial monthly income
will take effect for a current Participant.
SECTION 7--CONTRIBUTIONS. We reserve the right to limit or refuse further
Contribu- tions under this contract. We will give to the Contractholder and each
Participant written notice at least 60 days before the date after which further
Contributions will be limited or refused by us.
SECTION 8--MISSTATEMENTS. If the age or sex of any Participant or joint or
contingent annuitant is found to have been misstated,
(a) the amount of annuity payable by us will be that provided by the
amount applied to provide such annuity, determined as of the date
established by the misstated information and on the basis of the
correct age and sex.
(b) the value of any overpayment by us resulting from any misstatements
will be deducted from amounts thereafter payable to the Participant,
his joint or contingent annuitant or his beneficiary.
(c) the value of any underpayment by us resulting from any misstatements
will be paid in full with the next payment due the Participant, his
joint or contingent annuitant or his beneficiary.
SECTION 9--INFORMATION, PROOFS AND DETERMINATION OF FACTS. We may require
evidence of a Participant's age and the age of his joint or contingent
annuitant, if any, on or prior to his Annuity Commencement Date and any other
records, data, proofs or additional information which, in our opinion, is
necessary for the administration of this contract.
SECTION 10--MODIFICATION IN MODE OF PAYMENT OF ANNUITY. If the monthly amount of
the annuity payable at Annuity Commencement Date to a Participant under this
contract would be less than $20, we may, at our option, pay in cash the value of
his Investment Accounts in full settlement of all benefits otherwise payable.
SECTION 11--COMMUTATION OF PAYMENTS. If any monthly payments are to be commuted,
the commuted value of such payments shall be determined by us using the interest
rate which was used as a basis for calculating the amount of the monthly payment
at the time the annuity payments began, assuming level monthly payments.
SECTION 12--FACILITY OF PAYMENT. If any Participant, joint or contingent
annuitant or beneficiary is physically or mentally incapable of giving a valid
receipt for any payment due him and no legal representative has been appointed
for him, we may, at our option, make such payment to the person or persons as
have, in our opinion, assumed the care and principal support of such
Participant, joint or contingent annuitant or beneficiary, except that any
payment due a minor shall be paid at a rate not exceeding $100.00 per month.
However, in no event will any such payment exceed the maximum amount allowed
under applicable law of the state in which this contract is delivered. Any such
payment made by us shall fully discharge us to the extent of such payment.
SECTION 13--PRONOUNS. Masculine pronouns used in this contract include both
masculine and feminine gender unless the context indicates otherwise.
SECTION 14--ASSIGNMENT. The Investment Accounts of a Participant under this
contract and any benefits payable under this contract to any Participant,
beneficiary or joint or contingent annuitant are not assignable nor may they be
pledged as security for any loan. All such accounts and benefits shall be exempt
from claims of creditors to the maximum extent permitted by law.
SECTION 15--NONFORFEITURE. The Investment Accounts of each Participant are owned
by the Participant and are nonforfeitable. Annuity income payments from an
annuity in course of payment are owned by the Participant and are
nonforfeitable.
SECTION 16--BASIS OF RESERVE. The reserve of any annuity income under this
contract shall be determined by us on the same interest and mortality
assumptions as were used to calculate the amount of each payment.
SECTION 17--SUBSTITUTED SECURITIES. If shares of the Mutual Funds should not be
available or if, in our judgment, investment in such shares is no longer
appropriate, we may substitute for such shares or apply Contributions received
after a date specified by us to the purchase of (i) shares of another registered
open-end investment company or (ii) securities or other property as we in our
discretion shall select. In the event of any investment pursuant to clause (ii)
above, we may make such changes as in our judgment are necessary or appropriate
in the frequency and methods of determination of Unit Values, Net Investment
Factors, Annuity Change Factors, and Investment Account Values, including any
changes in the foregoing which will provide for the payment of an investment
advisory fee to us; provided, however, that any such changes shall be made only
after approval by the Insurance Department of the State of Iowa. We will give
written notice to each Participant of any substitution or change pursuant to
this Section.
Any substitution under this Section 17 is subject to the rules and regulations
of the Securities and Exchange Commission.
<PAGE>
Option D -- MONTHLY LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS -- AMOUNT OF INITIAL MONTHLY PAYMENT
AGE OF PAYEE MINIMUM PERIOD
- ------------ --------------------------------------------------------
5 10 15 20 INST
MALE FEMALE NONE YEARS YEARS YEARS YEARS REFUND
- ---- ------ ---- ----- ----- ----- ----- ------
30 36 2.82 2.82 2.82 2.81 2.81 2.79
31 37 2.84 2.84 2.84 2.84 2.83 2.82
32 38 2.87 2.87 2.87 2.86 2.86 2.84
33 39 2.90 2.89 2.89 2.89 2.88 2.87
34 40 2.92 2.92 2.92 2.92 2.91 2.89
35 41 2.95 2.95 2.95 2.95 2.94 2.92
36 42 2.98 2.98 2.98 2.98 2.97 2.95
37 43 3.02 3.02 3.01 3.01 3.00 2.98
38 44 3.05 3.05 3.05 3.04 3.03 3.01
39 45 3.09 3.09 3.08 3.08 3.07 3.04
40 46 3.12 3.12 3.12 3.11 3.10 3.07
41 47 3.16 3.16 3.16 3.15 3.14 3.11
42 48 3.20 3.20 3.20 3.19 3.17 3.14
43 49 3.25 3.25 3.24 3.23 3.21 3.18
44 50 3.29 3.29 3.28 3.27 3.25 3.22
45 51 3.34 3.34 3.33 3.31 3.29 3.26
46 52 3.39 3.38 3.38 3.36 3.34 3.30
47 53 3.44 3.44 3.43 3.41 3.38 3.34
48 54 3.49 3.49 3.48 3.46 3.43 3.39
49 55 3.55 3.54 3.53 3.51 3.48 3.43
50 56 3.61 3.60 3.59 3.56 3.52 3.48
51 57 3.67 3.66 3.65 3.62 3.58 3.53
52 58 3.73 3.73 3.71 3.68 3.63 3.59
53 59 3.80 3.79 3.77 3.74 3.68 3.64
54 60 3.87 3.86 3.84 3.80 3.74 3.70
55 61 3.95 3.94 3.91 3.87 3.80 3.76
56 62 4.02 4.02 3.99 3.94 3.86 3.82
57 63 4.11 4.10 4.07 4.01 3.92 3.89
58 64 4.20 4.19 4.15 4.09 3.98 3.96
59 65 4.29 4.28 4.24 4.17 4.05 4.03
60 66 4.39 4.38 4.33 4.25 4.11 4.10
61 78 4.50 4.48 4.43 4.33 4.18 4.18
62 68 4.61 4.59 4.53 4.42 4.25 4.27
63 69 4.73 4.71 4.64 4.51 4.32 4.35
64 70 4.86 4.84 4.75 4.60 4.38 4.44
65 71 5.00 4.97 4.87 4.70 4.45 4.54
66 72 5.14 5.11 5.00 4.80 4.52 4.64
67 73 5.30 5.26 5.13 4.90 4.58 4.74
68 74 5.46 5.42 5.26 5.00 4.65 4.86
69 75 5.64 5.59 5.40 5.10 4.71 4.97
70 76 5.83 5.76 5.55 5.21 4.77 5.09
71 77 6.03 5.95 5.70 5.31 4.83 5.22
72 78 6.24 6.14 5.86 5.41 4.88 5.35
73 79 6.46 6.35 6.02 5.51 4.93 5.49
74 80 6.70 6.57 6.18 5.61 4.98 5.64
75 81 6.95 6.80 6.35 5.71 5.02 5.79
76 82 7.22 7.04 6.52 5.80 5.06 5.95
77 83 7.51 7.30 6.70 5.89 5.09 6.12
78 84 7.82 7.57 6.87 5.98 5.13 6.30
79 85 8.15 7.85 7.05 6.06 5.15 6.49
80 86 8.51 8.15 7.23 6.13 5.18 6.68
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020, FEMALE SET BACK 6 YEARS IN
AGE, RATES FOR OTHER AGES WILL BE DETERMINED BY BANKERS LIFE COMPANY ON THE SAME
ACTUARIAL BASIS AS THE ABOVE RATES.
<PAGE>
<TABLE>
<CAPTION>
OPTION E - MONTHLY JOINT AND SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.29 3.31 3.32 3.34 3.36 3.37 3.39 3.40 3.41 3.43 3.44 3.45 3.46 3.48 3.49 3.50
51 57 3.32 3.34 3.35 3.37 3.39 3.41 3.42 3.44 3.45 3.47 3.48 3.49 3.51 3.52 3.53 3.54
52 58 3.34 3.36 3.38 3.40 3.42 3.44 3.46 3.47 3.49 3.51 3.52 3.54 3.55 3.57 3.58 3.59
53 59 3.37 3.39 3.41 3.43 3.45 3.47 3.49 3.51 3.53 3.55 3.57 3.58 3.60 3.62 3.63 3.65
54 60 3.40 3.42 3.44 3.47 3.49 3.51 3.53 3.55 3.57 3.59 3.61 3.63 3.65 3.66 3.68 3.70
55 61 3.42 3.45 3.47 3.50 3.52 3.54 3.57 3.59 3.61 3.63 3.65 3.67 3.69 3.71 3.73 3.75
56 62 3.45 3.48 3.50 3.53 3.55 3.58 3.60 3.63 3.65 3.68 3.70 3.72 3.74 3.77 3.79 3.81
57 63 3.47 3.50 3.53 3.56 3.59 3.61 3.64 3.67 3.69 3.72 3.74 3.77 3.79 3.82 3.84 3.86
58 64 3.50 3.53 3.56 3.59 3.62 3.65 3.68 3.71 3.73 3.76 3.79 3.82 3.84 3.87 3.90 3.92
59 65 3.52 3.55 3.59 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.87 3.90 3.93 3.95 3.98
60 66 3.54 3.58 3.61 3.65 3.68 3.72 3.75 3.78 3.82 3.85 3.88 3.92 3.95 3.98 4.01 4.04
61 67 3.57 3.60 3.64 3.68 3.71 3.75 3.79 3.82 3.86 3.90 3.93 3.97 4.00 4.04 4.07 4.10
62 68 3.59 3.63 3.67 3.71 3.75 3.78 3.82 3.86 3.90 3.94 3.98 4.02 4.06 4.10 4.13 4.17
63 69 3.61 3.65 3.69 3.73 3.78 3.82 3.86 3.90 3.95 3.99 4.03 4.07 4.11 4.16 4.20 4.23
64 70 3.63 3.68 3.72 3.76 3.81 3.85 3.90 3.94 3.99 4.03 4.08 4.13 4.17 4.22 4.26 4.30
65 71 3.65 3.70 3.74 3.79 3.84 3.88 3.93 3.98 4.03 4.08 4.13 4.18 4.23 4.28 4.32 4.37
66 72 3.67 3.72 3.77 3.82 3.87 3.92 3.97 4.02 4.07 4.13 4.18 4.23 4.28 4.34 4.39 4.44
67 73 3.69 3.74 3.79 3.84 3.90 3.95 4.00 4.06 4.11 4.17 4.23 4.28 4.34 4.40 4.45 4.51
68 74 3.71 3.77 3.82 3.87 3.93 3.98 4.04 4.10 4.16 4.22 4.28 4.34 4.40 4.46 4.52 4.58
69 75 3.73 3.79 3.84 3.90 3.95 4.01 4.07 4.13 4.20 4.26 4.32 4.39 4.45 4.52 4.58 4.65
70 76 3.75 3.81 3.86 3.92 3.98 4.04 4.10 4.17 4.23 4.30 4.37 4.44 4.51 4.58 4.65 4.71
71 77 3.77 3.82 3.88 3.94 4.00 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.56 4.63 4.71 4.78
72 78 3.78 3.84 3.90 3.96 4.03 4.09 4.16 4.23 4.31 4.38 4.45 4.53 4.61 4.69 4.77 4.85
73 79 3.80 3.86 3.92 3.98 4.05 4.12 4.19 4.26 4.34 4.41 4.49 4.58 4.66 4.74 4.83 4.91
74 80 3.81 3.87 3.94 4.00 4.07 4.14 4.21 4.29 4.37 4.45 4.53 4.62 4.70 4.79 4.88 4.97
75 81 3.82 3.89 3.95 4.02 4.09 4.16 4.24 4.32 4.40 4.48 4.57 4.66 4.75 4.84 4.94 5.03
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION F - MONTHLY JOINT AND TWO-THIRDS SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.62 3.65 3.68 3.71 3.74 3.77 3.80 3.84 3.87 3.90 3.94 3.97 4.01 4.05 4.08
51 57 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.88 3.91 3.95 3.98 4.02 4.06 4.09 4.13
52 58 3.66 3.69 3.72 3.75 3.78 3.81 3.85 3.88 3.92 3.95 3.99 4.03 4.06 4.10 4.14 4.18
53 59 3.69 3.72 3.75 3.78 3.82 3.85 3.89 3.92 3.96 4.00 4.03 4.07 4.11 4.15 4.19 4.23
54 60 3.72 3.75 3.79 3.82 3.86 3.89 3.93 3.96 4.00 4.04 4.08 4.12 4.16 4.20 4.24 4.28
55 61 3.75 3.79 3.82 3.86 3.89 3.93 3.97 4.01 4.04 4.08 4.13 4.17 4.21 4.25 4.29 4.34
56 62 3.79 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.17 4.22 4.26 4.30 4.35 4.39
57 63 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.18 4.22 4.27 4.31 4.36 4.41 4.45
58 64 3.86 3.90 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.27 4.32 4.37 4.41 4.46 4.51
59 65 3.89 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.28 4.32 4.37 4.42 4.47 4.52 4.57
60 66 3.93 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.64
61 67 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.49 4.54 4.59 4.65 4.71
62 68 4.01 4.05 4.09 4.14 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.54 4.60 4.66 4.72 4.77
63 69 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.66 4.72 4.78 4.85
64 70 4.08 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.67 4.73 4.79 4.86 4.92
65 71 4.13 4.17 4.22 4.27 4.32 4.38 4.43 4.49 4.55 4.61 4.67 4.73 4.80 4.86 4.93 5.00
66 72 4.17 4.22 4.27 4.32 4.37 4.43 4.49 4.54 4.61 4.67 4.73 4.80 4.87 4.93 5.00 5.07
67 73 4.21 4.26 4.31 4.37 4.42 4.48 4.54 4.60 4.66 4.73 4.80 4.87 4.94 5.01 5.08 5.15
68 74 4.25 4.30 4.36 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.01 5.08 5.16 5.24
69 75 4.29 4.35 4.41 4.46 4.52 4.59 4.65 4.72 4.78 4.86 4.93 5.00 5.08 5.16 5.24 5.32
70 76 4.34 4.39 4.45 4.51 4.57 4.64 4.71 4.77 4.85 4.92 5.00 5.07 5.15 5.24 5.32 5.40
71 77 4.38 4.44 4.50 4.56 4.62 4.69 4.76 4.83 4.91 4.98 5.06 5.14 5.23 5.31 5.40 5.49
72 78 4.42 4.48 4.55 4.61 4.68 4.74 4.82 4.89 4.97 5.05 5.13 5.21 5.30 5.39 5.48 5.57
73 79 4.47 4.53 4.59 4.66 4.73 4.80 4.87 4.95 5.03 5.11 5.20 5.28 5.37 5.47 5.56 5.66
74 80 4.51 4.57 4.64 4.71 4.78 4.85 4.93 5.01 5.09 5.17 5.26 5.35 5.45 5.55 5.65 5.75
75 81 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06 5.15 5.24 5.33 5.42 5.52 5.62 5.73 5.83
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION G - LIFE ANNUITY WITH 1/2 SURVIVORSHIP PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE PARTICIPANT - MALE
AGE OF 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
CONTINGENT _____________________________________________________________________________________________
ANNUITANT AGE OF PARTICIPANT - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.63 3.67 3.72 3.77 3.81 3.86 3.91 3.97 4.02 4.07 4.13 4.19 4.25 4.31 4.37
51 57 3.60 3.65 3.69 3.74 3.79 3.84 3.89 3.94 3.99 4.05 4.10 4.16 4.22 4.28 4.35 4.41
52 58 3.62 3.66 3.71 3.76 3.81 3.86 3.91 3.96 4.02 4.07 4.13 4.19 4.25 4.32 4.38 4.45
53 59 3.64 3.68 3.73 3.78 3.83 3.88 3.93 3.99 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49
54 60 3.65 3.70 3.75 3.80 3.85 3.90 3.96 4.01 4.07 4.13 4.19 4.25 4.32 4.39 4.46 4.52
55 61 3.67 3.71 3.76 3.82 3.87 3.92 3.98 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49 4.56
56 62 3.68 3.73 3.78 3.83 3.89 3.94 4.00 4.06 4.12 4.19 4.25 4.32 4.39 4.46 4.53 4.61
57 63 3.69 3.75 3.80 3.85 3.91 3.96 4.02 4.09 4.15 4.21 4.28 4.35 4.42 4.50 4.57 4.65
58 64 3.71 3.76 3.81 3.87 3.93 3.98 4.05 4.11 4.17 4.24 4.31 4.38 4.46 4.53 4.61 4.69
59 65 3.72 3.77 3.83 3.89 3.94 4.01 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.57 4.65 4.73
60 66 3.73 3.79 3.85 3.90 3.96 4.03 4.09 4.16 4.23 4.30 4.37 4.45 4.53 4.61 4.69 4.77
61 67 3.75 3.80 3.86 3.92 3.98 4.05 4.11 4.18 4.25 4.32 4.40 4.48 4.56 4.64 4.73 4.82
62 68 3.76 3.82 3.88 3.94 4.00 4.06 4.13 4.20 4.28 4.35 4.43 4.51 4.60 4.68 4.77 4.86
63 69 3.77 3.83 3.89 3.95 4.02 4.08 4.15 4.23 4.30 4.38 4.46 4.55 4.63 4.72 4.81 4.91
64 70 3.78 3.84 3.90 3.97 4.03 4.10 4.18 4.25 4.33 4.41 4.49 4.58 4.67 4.76 4.85 4.95
65 71 3.79 3.86 3.92 3.98 4.05 4.12 4.20 4.27 4.35 4.44 4.52 4.61 4.70 4.80 4.90 4.99
66 72 3.81 3.87 3.93 4.00 4.07 4.14 4.22 4.29 4.38 4.46 4.55 4.64 4.74 4.84 4.94 5.04
67 73 3.82 3.88 3.94 4.01 4.08 4.16 4.24 4.32 4.40 4.49 4.58 4.67 4.77 4.87 4.98 5.08
68 74 3.83 3.89 3.96 4.03 4.10 4.18 4.26 4.34 4.42 4.51 4.61 4.71 4.81 4.91 5.02 5.13
69 75 3.84 3.90 3.97 4.04 4.12 4.19 4.27 4.36 4.45 4.54 4.64 4.74 4.84 4.95 5.06 5.17
70 76 3.85 3.91 3.98 4.05 4.13 4.21 4.29 4.38 4.47 4.56 4.66 4.76 4.87 4.98 5.10 5.21
71 77 3.85 3.92 3.99 4.07 4.14 4.22 4.31 4.40 4.49 4.59 4.69 4.79 4.90 5.02 5.13 5.25
72 78 3.86 3.93 4.00 4.08 4.16 4.24 4.32 4.41 4.51 4.61 4.71 4.82 4.93 5.05 5.17 5.29
73 79 3.87 3.94 4.01 4.09 4.17 4.25 4.34 4.43 4.53 4.63 4.73 4.84 4.96 5.08 5.20 5.33
74 80 3.88 3.95 4.02 4.10 4.18 4.26 4.35 4.44 4.54 4.65 4.75 4.87 4.98 5.11 5.23 5.37
75 81 3.88 3.95 4.03 4.11 4.19 4.27 4.36 4.46 4.56 4.66 4.77 4.89 5.01 5.13 5.27 5.40
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
GROUP ANNUITY CONTRACT
BANKERS LIFE COMPANY
711 HIGH STREET
DES MOINES, IA 50307
In consideration of the application for this contract made by
________________________________________________________________________________
(herein called the Contractholder)
and in consideration of payment of all Contributions provided for in this
contract, agrees to make payments to the person or persons entitled thereto
subject to the provisions of this contract.
This contract is delivered in __________________________________________________
Contributions are directed into Separate Account B and are not guaranteed as to
fixed dollar amount but will increase or decrease in dollar amount, depending on
the investment performance of Separate Account B.
This contract is issued and accepted subject to all the terms set forth in it.
This contact is executed by Bankers Life Company at its home office to take
effect as of the ___________________ day of _____________________, 19__, which
is the contract date.
T.M. Hutchison R.N. Houser
Vice President, Counsel President
and Corporate Secretary
__________________________
Registar
Date______________________
GROUP CONTRACT NO. GA
GROUP ANNUITY CONTRACT - PENSION BUILDER
With Pooled Separate Account
Variable Benefits
Participating
For Rollover IRAs
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----- Parties to this Contract
Section 2 ----- Other Defined Terms
ARTICLE II CONTRIBUTIONS
Section 1 ----- Contributions
Section 2 ----- Investment Direction
ARTICLE III BEFORE RETIREMENT VALUES AND ACCOUNTING
Section 1 ----- Separate Account B
Section 2 ----- Unit Value
Section 3 ----- Net Investment Factor
Section 4 ----- Investment Accounts
Section 5 ----- Administration Charge
ARTICLE IV ANNUITY BENEFITS
Section 1 ----- Annuity Benefits and Options
Section 2 ----- Amount of Monthly Annuity Income
Section 3 ----- Mortality and Expense Guarantees
ARTICLE V SUPPLEMENTARY BENEFITS
Section 1 ----- Benefits Payable at Death
Section 2 ----- Options for Benefits Payable at Death
Section 3 ----- Proof of Death
Section 4 ----- Cash Withdrawal Benefit
Section 5 ----- Contingent Deferred Sales Charge
ARTICLE VI TRANSFERS AND LIMITATIONS
Section 1 ----- Transfer to and from Associated Fixed Contract
Section 2 ----- Transfers between Divisions
Section 3 ----- Limitation on Payment or Transfer
Section 4 ----- Limitation as to Participants
ARTICLE VII GENERAL PROVISIONS
Section 1 ----- Certificates
Section 2 ----- Beneficiary
Section 3 ----- Dividends
Section 4 ----- Contract
Section 5 ----- Alteration of Contract
Section 6 ----- Amendments
Section 7 ----- Contributions
Section 8 ----- Misstatements
Section 9 ----- Information, Proofs and Determination of Facts Section 10
----- Modification in Mode of Payment of Annuity Section 11 -----
Commutation of Payments Section 12 ----- Facility of Payment Section 13
----- Pronouns Section 14 ----- Assignment Section 15 ----- Nonforfeiture
Section 16 ----- Basis of Reserve Section 17 ----- Substituted Securities
ARTICLE I
DEFINITIONS
SECTION 1--PARTIES TO THIS CONTRACT. This contract is between the Contractholder
and Principal Mutual Life Insurance Company.
Contractholder means the holder of this contract named on the face page.
Principal Mutual Life Insurance Company will be referred to in this contract as
we, us, and our.
SECTION 2--OTHER DEFINED TERMS.
Administration Charge means the charge described in Article II, Section 5.
Annuity Change Factor means the factor described in Article IV, Section 2.
Annuity Commencement Date means the date on which the Investment Accounts of a
Partici pant are applied under Article IV to provide annuity income for him. A
Participant's income starting date is subject to the following:
(a) A Participant's Annuity Commencement Date will not occur earlier than
our receipt of the Participant's Written Notification for commencement
of benefits.
(b) A Participant's Annuity Commencement Date or income starting date must
be no later than the April 1 following the end of the calendar year in
which the Participant attains age 70 1/2.
(c) If a Contribution is first accepted for a Participant after the date
described in (b), then such Participant's Annuity Commencement Date
shall be within 30 days after the date we accept the Contribution.
Annuity Reserve Account means the reserves held for annuities in course of
payment in a Division of Separate Account B for this Series of Contracts.
Associated Fixed Contract means Group Contract No. issued by us to the
Contractholder.
Code means the Internal Revenue Code of 1986 as amended and the regulations
thereunder. Reference to the Internal Revenue Code means such Code or the
corresponding provisions of any subsequent revenue code and any regulations
thereunder.
Contingent Deferred Sales Charge means the charge described in Article V,
Section 5.
Contract Date means the date this contract is effective as shown on the face
page.
Contribution Year means for a Participant, the twelve-month period
beginning on the date his first Contribution is received and each twelve-month
period thereafter.
Contributions means contributions for a Participant under this contract as
described in Article II, Section 1.
Division means the part of Separate Account B which is invested in shares of a
single Mutual Fund.
Investment Account means each account established for a Participant as described
in Article III, Section 4.
Investment Account Value means the value of an Investment Account for a Division
which on any date will be equal to the number of units then credited to such
account multiplied by the Unit Value of this Series of Contracts for that
Division for the Valuation Period in which such date occurs.
Mutual Fund means a registered investment company in which Separate Account B
invests.
Net Investment Factor means, for a Division, the factor described in Article
III, Section 3.
Participant-owner means the person for whom an Investment Account has been
established under this contract. In this contract a Participant-owner will be
referred to as a Participant.
Series of Contracts means all group annuity contracts we issue with the form
number GP A 5927 and such other contracts designated by us as belonging to this
series.
Separate Account B means Principal Mutual Life Insurance Company Separate
Account B as described in Article III, Section 1.
Taxable Year means the tax year of each Participant.
Total and Permanent Disability means that a Participant is disabled, as
the result of sickness or injury, so as to be prevented from engaging in any
substantial gainful activity, and such total disability has been continuous for
a period of at least six months. The Participant must submit due proof thereof
which is acceptable to us.
Trust means PRINCIPAL MUTUAL ANNUITY TRUST II FOR INDIVIDUAL RETIREMENT ANNUITY.
Unit Value means the value of a unit credited to an Investment Account held
under this Series of Contracts for a Division as described in Article III,
Section 2.
Valuation Date means the date on which the net asset value of a Mutual Fund is
determined.
Valuation Period means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Date and the time as of
which such value is determined on the next following Valuation Date.
Written Notification means actual delivery to us at our home office in Des
Moines, Iowa of an appropriate writing on a form supplied or approved by us.
ARTICLE II
CONTRIBUTIONS
SECTION 1--CONTRIBUTIONS. A Contribution for a person may be paid to us on any
date after the Contract Date, subject to the following:
(a) The person for whom the Contribution is made has made written
application to and has been accepted as a Participant by us.
(b) A Contribution may be equal to all or a part of the amount such
Participant is entitled to roll over under the following Sections of
the Code.
(i) 402(a)(5)
(ii) 402(a)(7)
(iii) 403(a)(4)
(iv) 403(b)(8)
(v) 408(d)(3)
(c) A Contribution may include amounts previously deductible from gross
income under Section 219 of the Code and amounts which would have been
deductible but for the operation of Section 219(g) of the Code, in
accordance with Section 408(d)(3) of the Code.
(d) We reserve the right to set minimum Contribution requirements for
Participants. All Contributions are payable directly to us at our home
office in Des Moines, Iowa. Contributions will be accepted by us
during our normal business hours Monday through Friday. If received
during other hours, Saturdays, and legal holidays, they will be
accepted the next following business day.
Contributions under this contract and the accounts attributable thereto
are for the exclusive benefit of Participants and their beneficiaries.
Contributions will be reduced by the amount of any premium taxes due on such
Contributions before being credited in accordance with Article III, Section 4.
SECTION 2--INVESTMENT DIRECTION. Each Contribution for a Participant may be
directed to any number of Investment Accounts available as described in Article
III, Section 4, as designated in Written Notification to us. Contributions will
be added to each Investment Account in the amount or percentage specified in the
Written Notification on file with us. Such direction may be changed at any time
by filing a new Written Notification.
ARTICLE III
BEFORE RETIREMENT VALUES AND ACCOUNTING
SECTION 1--SEPARATE ACCOUNT B. We have established and will maintain a separate
account called Principal Mutual Life Insurance Company Separate Account B
(Separate Account B). All amounts credited to Separate Account B will be used to
purchase shares, at net asset value, of such Mutual Fund or Mutual Funds as
directed by the Participant. Any and all distributions made by a Mutual Fund in
respect of its shares held by Separate Account B will be reinvested in
additional shares of such Mutual Fund, at net asset value. Payments and
transfers from Separate Account B may be effected by redeeming all or a part of
the shares of a Mutual Fund or Mutual Funds, at net asset value, equal in total
value to the amount to be paid or transferred. We expect to invest all the
amounts credited to Separate Account B in shares of the Mutual Funds available,
as directed by the Participant. However, we reserve the right to change
investments as provided in Article VII, Section 17.
Amounts which will be credited to Separate Account B include amounts held in
connection with this contract and other contracts we designate as participating
in Separate Account B, and amounts which are credited to it by us for the
purpose of maintaining reserves for variable annuity benefits.
All income, gains and losses, whether or not realized, and expenses with respect
to the assets of Separate Account B shall be credited to or charged against
Separate Account B without regard to any other income, gains or losses or
expenses. The assets of Separate Account B shall not be charged with any
liabilities arising out of any other business conducted by us.
Any taxes or reserves for taxes we determine to be attributable to Separate
Account B will be charged against Separate Account B by us.
In addition, all income, gains and losses, whether or not realized, and expenses
with respect to a Division of Separate Account B for a Series of Contracts shall
be credited to or charged against such Division of Separate Account B for that
Series of Contracts without regard to income, gains or losses, or expenses of
any other Division of Separate Account B. The assets of a Division of Separate
Account B for a Series of Contracts shall not be charged by us with any
liabilities arising out of any other Division of Separate Account B.
We shall be the sole owner of all funds received under this contract.
SECTION 2--UNIT VALUE. The Unit Value for a Series of Contracts which invests in
a Division of Separate Account B is the basis of determining the value of that
portion of the interest of each person having an interest in Separate Account B.
The Unit Value for each Series of Contracts in each Division is determined on
each date on which the net asset value of its underlying Mutual Fund is
determined.
The Unit Value for a Series of Contracts for a Division for a Valuation Period
is the value determined as of the end of such period. The Unit Value for a
Series of Contracts for each Division was fixed at $1.00 for the Valuation
Period in which the first amount of money was credited to that Division of
Separate Account B for that Series of Contracts. The Unit Value for any later
Valuation Period for a Division is equal to its Unit Value for the immediately
preceding Valuation Period multiplied by the Net Investment Factor for such
Division for such later Valuation Period.
SECTION 3--NET INVESTMENT FACTOR. The Net Investment Factor for a Division for
this Series of Contracts for any specified Valuation Period is equal to
(a) the quotient obtained by dividing (i) the net asset value of a share
of its Mutual Fund as of the end of such Valuation Period, plus the
per share amount of any dividend or other distribution made by such
Mutual Fund during such Valuation Period, (less an adjustment for
taxes, if any, referred to in Section 1 of this Article) by (ii) the
net asset value of a share of such Mutual Fund as of the end of the
immediately preceding Valuation Period,
reduced by
(b) a mortality and expense risks charge of a number equal to a simple
interest rate for the number of days within such Valuation Period at
an annual rate of 1.0001%.
The amounts derived from applying the rate specified in subparagraph (b) above
and the amount of any taxes referred to in subparagraph (a) above will be
accrued daily and will from time to time be transferred from Separate Account B
at our discretion.
The net asset value of a share of a Mutual Fund is determined and reported by
such Mutual Fund or its agent.
SECTION 4--INVESTMENT ACCOUNTS. An Investment Account will be established for
each Participant for each Division of Separate Account B under this contract. We
will maintain each of these Investment Accounts for each Participant until the
Investment Account Value is either applied to effect variable annuity benefits
for the Participant, or paid to the Participant or his beneficiary or
transferred in accordance with the provisions of this contract.
Each Contribution for a Participant shall be allocated to the Division or
Divisions of Separate Account B in accordance with the Participant's Written
Notification on file with us and shall result in a credit of units for the
appropriate Investment Account of the Participant. The number of units so
credited shall be determined by dividing the portion of the Contribution
allocated to a Division by the Unit Value for such Division for the Valuation
Period within which the Contribution was received by us.
Units shall remain credited to each Investment Account of a Participant until
cancelled for one of the following:
(a) Application to effect a variable annuity for the Participant.
(b) Payment of a single sum cash benefit to the Participant or his
beneficiary.
(c) Transfer or adjustment of the value of such account, according to the
terms of this contract.
(d) Payment of the Contingent Deferred Sales Charge described in Article
V, Section 5.
(e) Payment of the Administration Charge described in Section 5 of this
Article.
SECTION 5--ADMINISTRATION CHARGE. An Administration Charge will be deducted once
each Contribution Year proportionately from the Investment Accounts of each
Participant and will be equal to the sum of (a) and (b):
(a) $25.
(b) An amount equal to a percentage of the total value of all Investment
Accounts of the Participant under this contract. This percentage shall
be equal to 1/2% of the first $50,000 in such accounts divided by the
total value in such ac-counts.
If accounts are established for a Participant under both this contract and the
Associated Fixed Contract, the charges determined above will be apportioned
among such Participant's accounts under both contracts based on the values of
such accounts thereunder.
The Administration Charge applicable to each Participant will be deducted from
his Investment Accounts on the earlier of (i) the date such account is paid or
applied in full or (ii) the last day of the Contribution Year. Such deduction
will be effected by cancelling a number of units in each Investment Account of
the Participant equal to its proportionate share of the Administration Charge
divided by the Unit Value for the Series of Contracts for the applicable
Division for the Valuation Period in which the charge is made.
A pro rata Administration Charge will be made for any fractional part of a
Contribution Year of a Participant.
ARTICLE IV
ANNUITY BENEFITS
SECTION 1--ANNUITY BENEFITS AND OPTIONS. On a Participant's Annuity Commencement
Date, the Investment Account Value of each of his Investment Accounts,
determined as of the end of the Valuation Period one month before his Annuity
Commencement Date, will be applied to effect a variable annuity for him. Each
such amount will be transferred on the date such value was determined to the
Annuity Reserve Account for the Division of Separate Account B in which the
Investment Account was maintained. Each such annuity will be payable under any
one of the options described in this Section, as selected in the Participant's
Written Notification. If no election of an option is made prior to a
Participant's Annuity Commencement Date, payment will be made under either (i)
Option D with a minimum period of 10 years, for a Participant who does not have
a spouse on his Annuity Commencement Date, or (ii) Option G with his spouse as
contingent annuitant, for a Participant who does have a spouse on his Annuity
Commencement Date. In lieu of any annuity payments in accordance with this
Article, a Participant may elect a cash benefit in accordance with Article V,
Section 4.
Any of the options described below may be chosen as the form of income for
annuity benefits, provided at least 50% of the amount applied is payable to the
Participant over the Participant's expected life or provided the Participant's
designated beneficiary is the Participant's spouse. In addition, the form of
income must meet either one of the following tests in accordance with the life
expectancy and joint and survivor life expectancy tables set forth in Section
1.72-9 of the Income Tax Regulations:
(a) No benefits are provided which extend beyond the life of the
Participant or the lives of the Participant and his designated
beneficiary.
(b) No benefits are provided which extend over a period longer than the
life expectancy of the Participant or the life expectancy of the
Participant and his designated beneficiary.
Option D--Life Annuity with Minimum Period. This provides monthly annuity income
to the Participant, starting on his Annuity Commencement Date, for the minimum
period elected and continuing for the lifetime of the Participant. The minimum
period may be 0, 5, 10, 15 or 20 years or the period (called installment refund
period) required for the sum of all income payments to equal the amount applied,
assuming all payments are in the same amount as the initial payment. In choosing
this op-tion, we must have Written Notification of the length of the minimum
period and the beneficiary designated by the Participant.
Option E--Joint and Survivor Annuity with Minimum Period. This provides monthly
annuity payments starting on the Participant's Annuity Commencement Date, for a
minimum period of 10 years, and continuing for the joint lifetimes of the
Participant and the joint annuitant named in the election, and continuing after
the death of either payee, in the amount that would have been payable to them
jointly, for the lifetime of the survivor. If both payees die before the end of
the minimum period, the remaining payments for the minimum period will be paid
to the Participant's beneficiary. In choosing this option, we must have Written
Notification of the name, date of birth, and sex of the joint annuitant and the
beneficiary designated by the Participant.
Option F--Joint and Two-Thirds Survivor Life Annuity. This provides monthly
annuity payments, starting on the Participant's Annuity Commencement Date, for
the joint lifetimes of the Participant and the joint annuitant named in the
election. At the death of either payee, two-thirds of the amount that would have
been payable had both survived will be continued to the survivor for his
lifetime. In choosing this option, we must have Written Notification of the
name, date of birth, and sex of the joint annuitant.
Option G--Life Annuity with One-Half Survivorship. This provides monthly annuity
payments to the Participant, starting on his Annuity Commencement Date and
continuing for his lifetime. If the Participant dies on or after his Annuity
Commencement Date, one-half of the monthly annuity will be continued to the
contingent annuitant for the lifetime of the contingent annuitant. In choosing
this option, we must have Written Notification of the name, date of birth, and
sex of the contingent annuitant.
Options other than those set out above may be made available by written
agreement between the Participant and us.
SECTION 2--AMOUNT OF MONTHLY ANNUITY INCOME. For each Investment Account of a
Participant, the initial amount of monthly annuity income provided by each
$1,000 applied under Section 1 of this Article, after reduction for any
applicable premium tax, shall be determined by us based on the option selected
and on the sex and age of the Participant and his joint or contingent annuitant,
if any, on his Annuity Commencement Date. The initial monthly annuity income
payment will be determined on the basis of the annuity conversion rates
applicable on such date to such conversions under all contracts of this class
issued by us. However, the annuity conversion rates will not provide less
initial monthly annuity income than the conversion rates shown on Table 1. The
amount of each subsequent monthly annuity income payment shall be determined by
multiplying the payment for the preceding calendar month by the Annuity Change
Factor for such month for the Division of Separate Account B for this Series of
Contracts in which such Annuity Reserve Account is maintained.
Annuity Change Factor for any Division for a Series of Contracts for
any given calendar month is the quotient of (a) divided by (b) below:
(a) The number which results from dividing (i) the Unit Value for such
Division for the first Valuation Date in the calendar month beginning
one month before such given calendar month by (ii) the Unit Value for
such Division for the first Valuation Date in the calendar month
beginning two months before such given calendar month.
(b) An amount equal to one plus the effective interest rate for the number
of days between the two Valuation Dates specified in subparagraph (a)
above at the interest rate assumed to determine the initial payment of
variable benefits to such Participant.
The amount of each monthly payment to a beneficiary (entitled to monthly
payments for the remainder of the minimum period after the death of the
Participant), to the survivor payee after the death of one payee under Option E
or F, or the contingent annuitant under Option G shall be the same as would have
been payable to the Partici-pant or joint payees, if living, with monthly
changes based on the Annuity Change Factors applicable, except that any payment
to the survivor payee under Option F will be two-thirds of the payment that
would have been payable if both payees were living and any payment to the
contingent annuitant under Option G will be one-half of the payment that would
have been made to the Participant, if living.
SECTION 3--MORTALITY AND EXPENSE GUARANTEES. The mortality table and the expense
margins which are factors in determining the amounts of the periodic payments of
annuity benefits in course of payment are guaranteed. Variations in the dollar
amount of such payments are entirely dependent upon the investment performance
of the Division of Separate Account B for this Series of Contracts in which the
Annuity Reserve Account is maintained.
We will, at least once each year, make any transfer of funds from our general
account to the Annuity Reserve Account of each Division of Separate Account B,
or from the An- nuity Reserve Account of each Division of such Separate Account
to our general account, so that the assets of the Annuity Reserve Account of
each Division of Separate Account B shall be equal to the total of our
liabilities for annuity income benefits payable from each Division of Separate
Account B, all as we determine. The effect of such transfer is to adjust the
Annuity Reserve Account of each Division of such Separate Account for the
difference between the actual mortality and expense experience since the last
such transfer and the mortality and expense assumptions used in the conversion
rates for annuity income payments from such Division.
ARTICLE V
SUPPLEMENTARY BENEFITS
SECTION 1--BENEFITS PAYABLE AT DEATH. If the death of a Participant
occurs prior to his Annuity Commencement Date, we will, upon receipt of due
proof of death, treat such Participant's Investment Account Values as provided
in his Written Notification. The Participant may choose one of the following
methods:
(a) We will cancel all units in the Investment Accounts of the Participant
and transfer the value to the Associated Fixed Contract. The amount
transferred from each such account will be equal to the number of
units cancelled multiplied by the Unit Value for its Division of
Separate Account B for the Valuation Period in which the cancellation
is effective.
(b) We will establish Investment Accounts for the beneficiary of the
Participant to hold the Investment Account Values of the Participant.
The provisions of this Section are subject to the provisions of Section 2 of
this Article.
SECTION 2--OPTIONS FOR BENEFITS PAYABLE AT DEATH. In lieu of treating the
Participant's Investment Account Values as shown in Section 1 of this Article,
we may pay all or part of such Investment Account Values to the beneficiary in a
single sum. If (a) of Section 1 of this Article is the method chosen by the
Participant, the Written Notification from the beneficiary must be given before
the date such transfer is to be effective. Such payment will be made within
seven days after we receive such Written Notification.
By Written Notification to us, a beneficiary may:
(a) Elect to have all or a portion of the amount available to him under
the Associated Fixed Contract transferred to this contract. This
amount transferred will establish Investment Accounts for such
beneficiary.
(b) Elect to have all or a portion of the amount available to him under
this contract (if (b) of Section 1 of this Article is in effect for
him) transferred to the Associated Fixed Contract.
If the beneficiary chooses to transfer all or a portion of the amount available
to him under this contract to the Associated Fixed Contract, we will treat such
beneficiary as if he were a Participant and the provisions of Article VI,
Section 1, Subsection (a) will apply.
If Investment Accounts are established for a beneficiary, the following will
apply:
(c) The value of the Investment Accounts established must be at least
$1,750 or or we may, at our option, pay the beneficiary the value of
such accounts in lieu of all other benefits as to such accounts.
(d) Any annuity income payable will be in the form of a lifetime annuity
income which does not provide benefits beyond the life or life
expectancy of the beneficiary. The beneficiary must be a natural
person if a lifetime income is elected.
(e) The beneficiary must begin to receive annuity income payments in the
form of an immediate annuity immediately distributed, or must receive
a single sum payment not later than 12 months after the Participant's
death, unless the beneficiary is the Participant's spouse.
(f) The amount of monthly annuity income payments must be at least $20 for
a beneficiary to choose to receive annuity income payments. If the
Investment Accounts would provide less, we may, at our option pay the
beneficiary the value of such accounts in lieu of all other benefits
as to such accounts.
If Investment Accounts are established for a beneficiary, we will
furnish the beneficiary with a writing explaining the details.
SECTION 3--PROOF OF DEATH. We will accept as proof of death a certified copy of
a death certificate, a certified copy of a decree of a court of competent
jurisdiction as to the finding of death, a written statement by a medical doctor
who attended the deceased during his last illness, or any other proof that is
satisfactory to us.
SECTION 4--CASH WITHDRAWAL BENEFIT. By Written Notification, from a Participant,
we will pay to him all or a portion of his Investment Accounts under this
contract, subject to the following:
(a) The Participant's Investment Account Values will be determined at the
end of the Valuation Period in which we receive the request and will
be paid to the Participant within seven days after the request is
received. We may require that any request be accompanied by the
certificate issued to the Participant under Article VII, Section 1.
(b) Any payment shall be subject to the limitations contained in Article
VI. In addition, no more than two partial payments shall be made in a
twelve month period without our express consent.
(c) The amount available will be subject to the Administration Charge
contained in Article III, Section 5.
(d) The amount available may be subject to the Contingent Deferred Sales
Charge, as described in Section 5 of this Article.
Any payment made under this Section will result in the cancellation of a number
of units in each Investment Account of the Participant from which payment is
made. The number of units cancelled from such account will be equal to the
amount paid from it divided by the Unit Value for its Division of Separate
Account B for the Valuation Period in which the cancellation is effective. Units
shall also be cancelled to cover any charges assessed under (c) and (d) above.
SECTION 5--CONTINGENT DEFERRED SALES CHARGE. Any payment to a Participant under
Section 4 of this Article, except on account of the Participant's Total and
Permanent Disability, shall be subject to a Contingent Deferred Sales Charge
equal to a percentage of the amount being paid. Such percentage will be
determined according to the following table:
Number of Contribution Years
a Participant has been Contingent Deferred Sales
covered under the contract Charge Percentage
Less than 1 7.0%
1 but less than 2 6.3
2 but less than 3 5.6
3 but less than 4 4.9
4 but less than 5 4.2
5 but less than 6 3.5
6 but less than 7 2.8
7 but less than 8 2.1
8 but less than 9 1.4
9 but less than 10 .7
10 or more 0
The amount of any Contingent Deferred Sales Charge will be an application from
the Investment Account of a Participant at the end of the Valuation Period in
which the withdrawal is effective. Such application will be effected by a
cancellation of a number of units in such account. If the sum of the amount to
be paid out and the Contingent Deferred Sales Charge would be greater than the
Participant's Investment Account, we will apply all of the Investment Account
and the amount paid out will reflect such charge.
For a Participant, the amount of Contingent Deferred Sales Charge deducted will
be limited, however, so that the amount of such charge shall never exceed 9% of
the Contribution to which the charge relates. For this purpose, any payments
under Section 4 of this Article or under Article VI, Section 5 will be related
to Contributions on a first in, first out basis.
ARTICLE VI
TRANSFERS AND LIMITATIONS
SECTION 1--TRANSFER TO AND FROM ASSOCIATED FIXED CONTRACT.
Subsection (a)--Transfer to Associated Fixed Contract. A Participant may
transfer all or a portion of the value of any of his Investment Accounts to the
Associated Fixed Contract at any time at least one month before his Annuity
Commencement Date by Written Notification to us. Transfer will be effective as
of the end of the Valuation Period in which such Written Notification is
received and will be made within seven days after such request is received. Any
amount transferred pursuant to this subsection (a) will result in the
cancellation of units in such account or accounts of the Participant as of the
effective date of transfer. The number of units cancelled from an Investment
Account will be equal to the amount transferred from such account divided by the
appropriate Unit Value for the Division for this Series of Contracts for the
Valuation Period in which the transfer is effective. The amount transferred will
be credited to the Participant under the Associated Fixed Contract in accordance
with the provisions of such contract.
Transfer under this subsection (a) is subject to any limitation in Section 3 of
this Article. In addition, no more than two such transfers may be made in a
twelve-month period without our express consent.
Subsection (b)--Transfer from Associated Fixed Contract. A Participant may
transfer all or a portion of the proceeds available to him under the Associated
Fixed Contract to one or more of his Investment Accounts under this contract at
any time at least one month before his Annuity Commencement Date by Written
Notification to us. The amount and date of any such transfer will be determined
in accordance with the provisions of the Associated Fixed Contract. Transferred
amounts will be treated as a Contribution for such Participant on the date of
transfer and credited in accordance with his investment direction, as described
in Article II, Section 3.
SECTION 2--TRANSFERS BETWEEN DIVISIONS. A Participant may transfer all or a
portion of the value of one of his Investment Accounts to any other of his
Investment Accounts at any time at least one month before his Annuity
Commencement Date, but no more than two transfers out of any one Investment
Account may be made in a twelve month period without our express consent. Such
transfer request shall be by Written Notification. The transfer will be
effective as of the end of the Valuation Period in which such request is
received and will be made within seven days after such request is received. Any
amount transferred under this Section will result in the cancellation of units
in the Investment Account from which transfer occurs as of the effective date of
transfer. The number of units cancelled from such Investment Account will be
equal to the amount transferred from such account divided by the Unit Value of
such Division for a Series of Contracts for the Valuation Period in which the
transfer is effective. The transferred amount will be treated as a Contribution
for such Participant to the Investment Account specified in his Written
Notification on the date of transfer.
Transfer under this Section is subject to any limitation in Section 3 of this
Article.
SECTION 3--LIMITATION ON PAYMENT OR TRANSFER. The date on which any amount is to
be paid or transferred under this contract may be deferred by us during any
period that the right to redeem Mutual Fund shares is suspended as permitted
under the provisions of the Investment Company Act of 1940 which may be in
effect from time to time. If any deferment of payment or transfer is effective,
and if said payment or transfer has not been cancelled by Written Notification
to us within the period of deferment, the amount to be paid or transferred shall
be determined as of the first Valuation Date following the expiration of the
permitted deferment, and the payment or transfer will be made within seven days
thereafter. We will notify the Participant in event of any deferment under the
provisions of this Section.
SECTION 4--LIMITATION AS TO PARTICIPANTS. If at any time Princor Financial
Services is not the investment manager of the Mutual Fund or Mutual Funds in
which Separate Account B is invested, we may give written notice to the
Contractholder that no further persons may become covered as Participants under
this contract.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. We will issue to each Participant an individual
certificate setting forth a statement as to the benefits to which such
Participant is entitled and to whom such benefits are payable. If benefits
become payable to a Participant under one of the options of Article IV, Section
1, we shall issue a superseding individual certificate setting forth the amount,
form and period of payment of the monthly annuity benefits. Any certificate
issued shall be nontransferable.
SECTION 2--BENEFICIARY. The beneficiary is the person or persons to whom
proceeds (other than any monthly annuity payable to a joint or contingent
annuitant under provisions of Article IV, Section 1) are payable upon the death
of the Participant, subject to the provisions of Section 12 of this Article. A
Participant shall name such beneficiary, or may change a named beneficiary, by
executing and filing a written designation to that effect with us, but such
designation will not be effective until we receive it. The designation, when
received, will be effective as of the date it was executed, but any payment made
by us prior to receipt of such designation shall fully discharge us to the
extent of such payment. We reserve the right to require the Participant's
certificate for endorsement of any change of beneficiary.
If annuity benefits become payable to any Participant under Option D and if the
death of the Participant occurs before he has received all of the payments for
the minimum period provided for under Option D, any remaining payments for the
balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
If annuity benefits become payable to any Participant under Option E and if the
death of both the Participant and the joint annuitant occur before payments have
been made for the minimum period of ten years, any remaining payments for the
balance of such period shall be paid when due to the beneficiary or
beneficiaries then surviving; provided, however, that each beneficiary shall
have the right to request in writing and receive the commuted value of any such
remaining payments due him in one sum.
Unless otherwise specified by the Participant with our written consent,
(a) if any beneficiary dies before the Participant, any monthly payment
which would have become payable to such beneficiary, if living, will
be payable when due to the beneficiary or beneficiaries surviving the
Participant in the order provided.
(b) any beneficiary survives the Participant but dies before receiving all
of the monthly payments which would have become payable to such
beneficiary, if living, payments will be paid when due to the
surviving beneficiary or beneficiaries of such Participant in the
order provided.
(c) if the last survivor of all designated beneficiaries dies following
the death of the Participant (and the joint or contingent annuitant,
if any) and before all payments due the beneficiary have been made,
the remaining payments will be commuted and the commuted value paid to
the executor or administrator of the estate of the last survivor.
If no designated beneficiary shall survive the Participant (and the joint or
contingent annuitant, if any), then any amounts which would have become payable
to a designated beneficiary shall be commuted and the commuted value shall be
paid to the executor or administrator of the estate of the Participant (the
executor or administrator of the estate of any joint or contingent annuitant, if
he survives the Participant).
SECTION 3--DIVIDENDS. The proportion of the divisible surplus, if any, which we
determine to accrue on this contract for each Participant shall be ascertained
annually by us and shall be apportioned by addition (prior to the close of the
calendar year in which the dividend is declared) to the Investment Accounts of
the Participants as a Contribution. NOTE: Due to the direct crediting of
investment results, it is not anticipated that any dividends will ever be paid
under this contract. (Amounts attributable to excess Contributions are not
treated as dividends.)
SECTION 4--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached to and made a part of this contract, shall constitute
the entire contract between the parties. Except to the extent specified in this
contract, we are not a party to nor bound by any trust or plan.
SECTION 5--ALTERATION OF CONTRACT. Only our corporate officers have authority to
alter this contract or to waive any of its provisions or requirements.
SECTION 6--AMENDMENTS. We reserve the right to amend or change this contract as
follows:
(a) Any or all of the contract provisions may be changed at any time,
including retroactive changes, to the extent necessary to meet the
requirements of any law or regulation issued by any governmental
agency to which we are subject.
(b) We may, as of any date after the Contract Date, amend or change (i)
the basis for determining Investment Account Values, Net Investment
Factors, and Annuity Change Factors; (ii) Table 1; and (iii) the
provisions as to transfers contained in Article VI.
(c) The percentage stated in Article III, Section 3(b), may be changed at
any time at least one year after the Contract Date; provided, however,
that such rate will in no event exceed 2.00% and will not be changed
more frequently than once in any one-year period.
We will give written notice to the Contractholder and each Participant at least
60 days prior to the date after which further Contributions will be limited or
refused by us. We will give written notice to the Contractholder of any change
made in accordance with subparagraph (a) above and to each Participant affected
by the change. In order for any amendment or change in accordance with
subparagraph (b) or (c) above to become effective, we must give written notice
to the Contractholder and each Participant affected by the change not less than
60 days prior to the date the amendment or change is to take effect.
This contract may also be amended or changed at any time as to any of its
provisions, including those in regard to coverage, benefits and participation
privileges, by written agreement between the Contractholder (or any other person
or persons designated by the Contractholder) and us. Such amendment or change
may be made without the consent of any Participant, beneficiary or joint or
contingent annuitant. We will give written notice to each Participant affected
by any amendment or change under this paragraph.
Any amendment or change in accordance with this Section shall be binding and
conclusive on each Participant, beneficiary or joint or contingent annuitant,
subject to the following limitations:
(i) No amendment or change shall apply to annuities which are in the
course of payment prior to the effective date of the amendment or
change except to the extent necessary in making changes pursuant to
subparagraph (a) above.
(ii) No change in Table 1 which would provide less initial monthly annuity
income will take effect for a current Participant.
SECTION 7--CONTRIBUTIONS. We reserve the right to limit or refuse further
Contributions under this contract. We will give to the Contractholder and each
Participant written notice at least 60 days before the date after which further
Contributions will be limited or refused by us.
SECTION 8--MISSTATEMENTS. If the age or sex of any Participant or joint or
contingent annuitant is found to have been misstated,
(a) the amount of annuity payable by us will be that provided by the
amount applied to provide such annuity, determined as of the date
established by the misstated information and on the basis of the
correct age and sex.
(b) the value of any overpayment by us resulting from any misstatements
will be deducted from amounts thereafter payable to the Participant,
his joint or contingent annuitant or his beneficiary.
(c) the value of any underpayment by us resulting from any misstatements
will be paid in full with the next payment due the Participant, his
joint or contingent annuitant or his beneficiary.
SECTION 9--INFORMATION, PROOFS AND DETERMINATION OF FACTS. We may require
evidence of a Participant's age and the age of his joint or contingent
annuitant, if any, on or prior to his Annuity Commencement Date and any other
records, data, proofs or additional information which, in our opinion, is
necessary for the administration of this contract.
SECTION 10--MODIFICATION IN MODE OF PAYMENT OF ANNUITY. If the monthly amount of
the annuity payable at Annuity Commencement Date to a Participant under this
contract would be less than $20, we may, at our option, pay in cash the value of
his Investment Accounts in full settlement of all benefits otherwise payable.
SECTION 11--COMMUTATION OF PAYMENTS. If any monthly payments are to be commuted,
the commuted value of such payments shall be determined by us using the interest
rate which was used as a basis for calculating the amount of the monthly payment
at the time the annuity payments began, assuming level monthly payments.
SECTION 12--FACILITY OF PAYMENT. If any Participant, joint or contingent
annuitant or beneficiary is physically or mentally incapable of giving a valid
receipt for any payment due him and no legal representative has been appointed
for him, we may, at our option, make such payment to the person or persons as
have, in our opinion, assumed the care and principal support of such
Participant, joint or contingent annuitant or beneficiary, except that any
payment due a minor shall be paid at a rate not exceeding $100.00 per month.
However, in no event will any such payment exceed the maximum amount allowed
under applicable law of the state in which this contract is delivered. Any such
payment made by us shall fully discharge us to the extent of such payment.
SECTION 13--PRONOUNS. Masculine pronouns used in this contract include both
masculine and feminine gender unless the context indicates otherwise.
SECTION 14--ASSIGNMENT. The Investment Accounts of a Participant under this
contract and any benefits payable under this contract to any Participant,
beneficiary or joint or contingent annuitant are not assignable nor may they be
pledged as security for any loan. All such accounts and benefits shall be exempt
from claims of creditors to the maximum extent permitted by law.
SECTION 15--NONFORFEITURE. The Investment Accounts of each Participant are owned
by the Participant and are nonforfeitable. Annuity income payments from an
annuity in course of payment are owned by the Participant and are
nonforfeitable.
SECTION 16--BASIS OF RESERVE. The reserve of any annuity income under this
contract shall be determined by us on the same interest and mortality
assumptions as were used to calculate the amount of each payment.
SECTION 17--SUBSTITUTED SECURITIES. If shares of the Mutual Funds should not be
available or if, in our judgment, investment in such shares is no longer
appropriate, we may substitute for such shares or apply Contributions received
after a date specified by us to the purchase of (i) shares of another registered
open-end investment company or (ii) securities or other property as we in our
discretion shall select. In the event of any investment pursuant to clause (ii)
above, we may make such changes as in our judgment are necessary or appropriate
in the frequency and methods of determination of Unit Values, Net Investment
Factors, Annuity Change Factors, and Investment Account Values, including any
changes in the foregoing which will provide for the payment of an investment
advisory fee to us; provided, however, that any such changes shall be made only
after approval by the Insurance Department of the State of Iowa. We will give
written notice to each Participant of any substitution or change pursuant to
this Section.
Any substitution under this Section 17 is subject to the rules and regulations
of the Securities and Exchange Commission.
<PAGE>
Option D -- MONTHLY LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS -- AMOUNT OF INITIAL MONTHLY PAYMENT
AGE OF PAYEE MINIMUM PERIOD
- ------------ --------------------------------------------------------
5 10 15 20 INST
MALE FEMALE NONE YEARS YEARS YEARS YEARS REFUND
- ---- ------ ---- ----- ----- ----- ----- ------
30 36 2.82 2.82 2.82 2.81 2.81 2.79
31 37 2.84 2.84 2.84 2.84 2.83 2.82
32 38 2.87 2.87 2.87 2.86 2.86 2.84
33 39 2.90 2.89 2.89 2.89 2.88 2.87
34 40 2.92 2.92 2.92 2.92 2.91 2.89
35 41 2.95 2.95 2.95 2.95 2.94 2.92
36 42 2.98 2.98 2.98 2.98 2.97 2.95
37 43 3.02 3.02 3.01 3.01 3.00 2.98
38 44 3.05 3.05 3.05 3.04 3.03 3.01
39 45 3.09 3.09 3.08 3.08 3.07 3.04
40 46 3.12 3.12 3.12 3.11 3.10 3.07
41 47 3.16 3.16 3.16 3.15 3.14 3.11
42 48 3.20 3.20 3.20 3.19 3.17 3.14
43 49 3.25 3.25 3.24 3.23 3.21 3.18
44 50 3.29 3.29 3.28 3.27 3.25 3.22
45 51 3.34 3.34 3.33 3.31 3.29 3.26
46 52 3.39 3.38 3.38 3.36 3.34 3.30
47 53 3.44 3.44 3.43 3.41 3.38 3.34
48 54 3.49 3.49 3.48 3.46 3.43 3.39
49 55 3.55 3.54 3.53 3.51 3.48 3.43
50 56 3.61 3.60 3.59 3.56 3.52 3.48
51 57 3.67 3.66 3.65 3.62 3.58 3.53
52 58 3.73 3.73 3.71 3.68 3.63 3.59
53 59 3.80 3.79 3.77 3.74 3.68 3.64
54 60 3.87 3.86 3.84 3.80 3.74 3.70
55 61 3.95 3.94 3.91 3.87 3.80 3.76
56 62 4.02 4.02 3.99 3.94 3.86 3.82
57 63 4.11 4.10 4.07 4.01 3.92 3.89
58 64 4.20 4.19 4.15 4.09 3.98 3.96
59 65 4.29 4.28 4.24 4.17 4.05 4.03
60 66 4.39 4.38 4.33 4.25 4.11 4.10
61 78 4.50 4.48 4.43 4.33 4.18 4.18
62 68 4.61 4.59 4.53 4.42 4.25 4.27
63 69 4.73 4.71 4.64 4.51 4.32 4.35
64 70 4.86 4.84 4.75 4.60 4.38 4.44
65 71 5.00 4.97 4.87 4.70 4.45 4.54
66 72 5.14 5.11 5.00 4.80 4.52 4.64
67 73 5.30 5.26 5.13 4.90 4.58 4.74
68 74 5.46 5.42 5.26 5.00 4.65 4.86
69 75 5.64 5.59 5.40 5.10 4.71 4.97
70 76 5.83 5.76 5.55 5.21 4.77 5.09
71 77 6.03 5.95 5.70 5.31 4.83 5.22
72 78 6.24 6.14 5.86 5.41 4.88 5.35
73 79 6.46 6.35 6.02 5.51 4.93 5.49
74 80 6.70 6.57 6.18 5.61 4.98 5.64
75 81 6.95 6.80 6.35 5.71 5.02 5.79
76 82 7.22 7.04 6.52 5.80 5.06 5.95
77 83 7.51 7.30 6.70 5.89 5.09 6.12
78 84 7.82 7.57 6.87 5.98 5.13 6.30
79 85 8.15 7.85 7.05 6.06 5.15 6.49
80 86 8.51 8.15 7.23 6.13 5.18 6.68
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020, FEMALE SET BACK 6 YEARS IN
AGE, RATES FOR OTHER AGES WILL BE DETERMINED BY BANKERS LIFE COMPANY ON THE SAME
ACTUARIAL BASIS AS THE ABOVE RATES.
<PAGE>
<TABLE>
<CAPTION>
OPTION E - MONTHLY JOINT AND SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.29 3.31 3.32 3.34 3.36 3.37 3.39 3.40 3.41 3.43 3.44 3.45 3.46 3.48 3.49 3.50
51 57 3.32 3.34 3.35 3.37 3.39 3.41 3.42 3.44 3.45 3.47 3.48 3.49 3.51 3.52 3.53 3.54
52 58 3.34 3.36 3.38 3.40 3.42 3.44 3.46 3.47 3.49 3.51 3.52 3.54 3.55 3.57 3.58 3.59
53 59 3.37 3.39 3.41 3.43 3.45 3.47 3.49 3.51 3.53 3.55 3.57 3.58 3.60 3.62 3.63 3.65
54 60 3.40 3.42 3.44 3.47 3.49 3.51 3.53 3.55 3.57 3.59 3.61 3.63 3.65 3.66 3.68 3.70
55 61 3.42 3.45 3.47 3.50 3.52 3.54 3.57 3.59 3.61 3.63 3.65 3.67 3.69 3.71 3.73 3.75
56 62 3.45 3.48 3.50 3.53 3.55 3.58 3.60 3.63 3.65 3.68 3.70 3.72 3.74 3.77 3.79 3.81
57 63 3.47 3.50 3.53 3.56 3.59 3.61 3.64 3.67 3.69 3.72 3.74 3.77 3.79 3.82 3.84 3.86
58 64 3.50 3.53 3.56 3.59 3.62 3.65 3.68 3.71 3.73 3.76 3.79 3.82 3.84 3.87 3.90 3.92
59 65 3.52 3.55 3.59 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.87 3.90 3.93 3.95 3.98
60 66 3.54 3.58 3.61 3.65 3.68 3.72 3.75 3.78 3.82 3.85 3.88 3.92 3.95 3.98 4.01 4.04
61 67 3.57 3.60 3.64 3.68 3.71 3.75 3.79 3.82 3.86 3.90 3.93 3.97 4.00 4.04 4.07 4.10
62 68 3.59 3.63 3.67 3.71 3.75 3.78 3.82 3.86 3.90 3.94 3.98 4.02 4.06 4.10 4.13 4.17
63 69 3.61 3.65 3.69 3.73 3.78 3.82 3.86 3.90 3.95 3.99 4.03 4.07 4.11 4.16 4.20 4.23
64 70 3.63 3.68 3.72 3.76 3.81 3.85 3.90 3.94 3.99 4.03 4.08 4.13 4.17 4.22 4.26 4.30
65 71 3.65 3.70 3.74 3.79 3.84 3.88 3.93 3.98 4.03 4.08 4.13 4.18 4.23 4.28 4.32 4.37
66 72 3.67 3.72 3.77 3.82 3.87 3.92 3.97 4.02 4.07 4.13 4.18 4.23 4.28 4.34 4.39 4.44
67 73 3.69 3.74 3.79 3.84 3.90 3.95 4.00 4.06 4.11 4.17 4.23 4.28 4.34 4.40 4.45 4.51
68 74 3.71 3.77 3.82 3.87 3.93 3.98 4.04 4.10 4.16 4.22 4.28 4.34 4.40 4.46 4.52 4.58
69 75 3.73 3.79 3.84 3.90 3.95 4.01 4.07 4.13 4.20 4.26 4.32 4.39 4.45 4.52 4.58 4.65
70 76 3.75 3.81 3.86 3.92 3.98 4.04 4.10 4.17 4.23 4.30 4.37 4.44 4.51 4.58 4.65 4.71
71 77 3.77 3.82 3.88 3.94 4.00 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.56 4.63 4.71 4.78
72 78 3.78 3.84 3.90 3.96 4.03 4.09 4.16 4.23 4.31 4.38 4.45 4.53 4.61 4.69 4.77 4.85
73 79 3.80 3.86 3.92 3.98 4.05 4.12 4.19 4.26 4.34 4.41 4.49 4.58 4.66 4.74 4.83 4.91
74 80 3.81 3.87 3.94 4.00 4.07 4.14 4.21 4.29 4.37 4.45 4.53 4.62 4.70 4.79 4.88 4.97
75 81 3.82 3.89 3.95 4.02 4.09 4.16 4.24 4.32 4.40 4.48 4.57 4.66 4.75 4.84 4.94 5.03
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION F - MONTHLY JOINT AND TWO-THIRDS SURVIVOR LIFE ANNUITY PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE OF 1ST PAYEE - MALE
AGE 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
__________________________________________________________________________________________________________
2ND PAYEE AGE OF 1ST PAYEE - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.62 3.65 3.68 3.71 3.74 3.77 3.80 3.84 3.87 3.90 3.94 3.97 4.01 4.05 4.08
51 57 3.62 3.65 3.68 3.71 3.75 3.78 3.81 3.84 3.88 3.91 3.95 3.98 4.02 4.06 4.09 4.13
52 58 3.66 3.69 3.72 3.75 3.78 3.81 3.85 3.88 3.92 3.95 3.99 4.03 4.06 4.10 4.14 4.18
53 59 3.69 3.72 3.75 3.78 3.82 3.85 3.89 3.92 3.96 4.00 4.03 4.07 4.11 4.15 4.19 4.23
54 60 3.72 3.75 3.79 3.82 3.86 3.89 3.93 3.96 4.00 4.04 4.08 4.12 4.16 4.20 4.24 4.28
55 61 3.75 3.79 3.82 3.86 3.89 3.93 3.97 4.01 4.04 4.08 4.13 4.17 4.21 4.25 4.29 4.34
56 62 3.79 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.17 4.22 4.26 4.30 4.35 4.39
57 63 3.82 3.86 3.90 3.93 3.97 4.01 4.05 4.09 4.13 4.18 4.22 4.27 4.31 4.36 4.41 4.45
58 64 3.86 3.90 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.27 4.32 4.37 4.41 4.46 4.51
59 65 3.89 3.93 3.97 4.01 4.05 4.10 4.14 4.18 4.23 4.28 4.32 4.37 4.42 4.47 4.52 4.57
60 66 3.93 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.48 4.53 4.59 4.64
61 67 3.97 4.01 4.05 4.10 4.14 4.19 4.23 4.28 4.33 4.38 4.43 4.49 4.54 4.59 4.65 4.71
62 68 4.01 4.05 4.09 4.14 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.54 4.60 4.66 4.72 4.77
63 69 4.04 4.09 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.66 4.72 4.78 4.85
64 70 4.08 4.13 4.18 4.23 4.28 4.33 4.38 4.44 4.49 4.55 4.61 4.67 4.73 4.79 4.86 4.92
65 71 4.13 4.17 4.22 4.27 4.32 4.38 4.43 4.49 4.55 4.61 4.67 4.73 4.80 4.86 4.93 5.00
66 72 4.17 4.22 4.27 4.32 4.37 4.43 4.49 4.54 4.61 4.67 4.73 4.80 4.87 4.93 5.00 5.07
67 73 4.21 4.26 4.31 4.37 4.42 4.48 4.54 4.60 4.66 4.73 4.80 4.87 4.94 5.01 5.08 5.15
68 74 4.25 4.30 4.36 4.41 4.47 4.53 4.59 4.66 4.72 4.79 4.86 4.93 5.01 5.08 5.16 5.24
69 75 4.29 4.35 4.41 4.46 4.52 4.59 4.65 4.72 4.78 4.86 4.93 5.00 5.08 5.16 5.24 5.32
70 76 4.34 4.39 4.45 4.51 4.57 4.64 4.71 4.77 4.85 4.92 5.00 5.07 5.15 5.24 5.32 5.40
71 77 4.38 4.44 4.50 4.56 4.62 4.69 4.76 4.83 4.91 4.98 5.06 5.14 5.23 5.31 5.40 5.49
72 78 4.42 4.48 4.55 4.61 4.68 4.74 4.82 4.89 4.97 5.05 5.13 5.21 5.30 5.39 5.48 5.57
73 79 4.47 4.53 4.59 4.66 4.73 4.80 4.87 4.95 5.03 5.11 5.20 5.28 5.37 5.47 5.56 5.66
74 80 4.51 4.57 4.64 4.71 4.78 4.85 4.93 5.01 5.09 5.17 5.26 5.35 5.45 5.55 5.65 5.75
75 81 4.55 4.62 4.68 4.75 4.83 4.90 4.98 5.06 5.15 5.24 5.33 5.42 5.52 5.62 5.73 5.83
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
<PAGE>
<TABLE>
<CAPTION>
OPTION G - LIFE ANNUITY WITH 1/2 SURVIVORSHIP PER $1,000 APPLIED
VARIABLE BENEFITS - AMOUNT OF INITIAL MONTHLY PAYMENT
__________________________________________________________________________________________________________
AGE PARTICIPANT - MALE
AGE OF 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
CONTINGENT _____________________________________________________________________________________________
ANNUITANT AGE OF PARTICIPANT - FEMALE
MALE FEMALE 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 3.59 3.63 3.67 3.72 3.77 3.81 3.86 3.91 3.97 4.02 4.07 4.13 4.19 4.25 4.31 4.37
51 57 3.60 3.65 3.69 3.74 3.79 3.84 3.89 3.94 3.99 4.05 4.10 4.16 4.22 4.28 4.35 4.41
52 58 3.62 3.66 3.71 3.76 3.81 3.86 3.91 3.96 4.02 4.07 4.13 4.19 4.25 4.32 4.38 4.45
53 59 3.64 3.68 3.73 3.78 3.83 3.88 3.93 3.99 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49
54 60 3.65 3.70 3.75 3.80 3.85 3.90 3.96 4.01 4.07 4.13 4.19 4.25 4.32 4.39 4.46 4.52
55 61 3.67 3.71 3.76 3.82 3.87 3.92 3.98 4.04 4.10 4.16 4.22 4.29 4.35 4.42 4.49 4.56
56 62 3.68 3.73 3.78 3.83 3.89 3.94 4.00 4.06 4.12 4.19 4.25 4.32 4.39 4.46 4.53 4.61
57 63 3.69 3.75 3.80 3.85 3.91 3.96 4.02 4.09 4.15 4.21 4.28 4.35 4.42 4.50 4.57 4.65
58 64 3.71 3.76 3.81 3.87 3.93 3.98 4.05 4.11 4.17 4.24 4.31 4.38 4.46 4.53 4.61 4.69
59 65 3.72 3.77 3.83 3.89 3.94 4.01 4.07 4.13 4.20 4.27 4.34 4.41 4.49 4.57 4.65 4.73
60 66 3.73 3.79 3.85 3.90 3.96 4.03 4.09 4.16 4.23 4.30 4.37 4.45 4.53 4.61 4.69 4.77
61 67 3.75 3.80 3.86 3.92 3.98 4.05 4.11 4.18 4.25 4.32 4.40 4.48 4.56 4.64 4.73 4.82
62 68 3.76 3.82 3.88 3.94 4.00 4.06 4.13 4.20 4.28 4.35 4.43 4.51 4.60 4.68 4.77 4.86
63 69 3.77 3.83 3.89 3.95 4.02 4.08 4.15 4.23 4.30 4.38 4.46 4.55 4.63 4.72 4.81 4.91
64 70 3.78 3.84 3.90 3.97 4.03 4.10 4.18 4.25 4.33 4.41 4.49 4.58 4.67 4.76 4.85 4.95
65 71 3.79 3.86 3.92 3.98 4.05 4.12 4.20 4.27 4.35 4.44 4.52 4.61 4.70 4.80 4.90 4.99
66 72 3.81 3.87 3.93 4.00 4.07 4.14 4.22 4.29 4.38 4.46 4.55 4.64 4.74 4.84 4.94 5.04
67 73 3.82 3.88 3.94 4.01 4.08 4.16 4.24 4.32 4.40 4.49 4.58 4.67 4.77 4.87 4.98 5.08
68 74 3.83 3.89 3.96 4.03 4.10 4.18 4.26 4.34 4.42 4.51 4.61 4.71 4.81 4.91 5.02 5.13
69 75 3.84 3.90 3.97 4.04 4.12 4.19 4.27 4.36 4.45 4.54 4.64 4.74 4.84 4.95 5.06 5.17
70 76 3.85 3.91 3.98 4.05 4.13 4.21 4.29 4.38 4.47 4.56 4.66 4.76 4.87 4.98 5.10 5.21
71 77 3.85 3.92 3.99 4.07 4.14 4.22 4.31 4.40 4.49 4.59 4.69 4.79 4.90 5.02 5.13 5.25
72 78 3.86 3.93 4.00 4.08 4.16 4.24 4.32 4.41 4.51 4.61 4.71 4.82 4.93 5.05 5.17 5.29
73 79 3.87 3.94 4.01 4.09 4.17 4.25 4.34 4.43 4.53 4.63 4.73 4.84 4.96 5.08 5.20 5.33
74 80 3.88 3.95 4.02 4.10 4.18 4.26 4.35 4.44 4.54 4.65 4.75 4.87 4.98 5.11 5.23 5.37
75 81 3.88 3.95 4.03 4.11 4.19 4.27 4.36 4.46 4.56 4.66 4.77 4.89 5.01 5.13 5.27 5.40
__________________________________________________________________________________________________________
</TABLE>
THE ABOVE RATES HAVE BEEN COMPUTED ON THE BASIS OF (1) AN INTEREST RATE OF 2.5%
PER ANNUM AND (2) MORTALITY ACCORDING TO THE 1983 TABLE A FOR INDIVIDUAL ANNUITY
VALUATION PROJECTED WITH SCALE G TO THE YEAR 2020. FEMALE SET BACK 6 YEARS IN
AGE. RATES FOR OTHER COMBINATION OF AGES WILL BE DETERMINED BY US ON THE SAME
BASIS AS THE ABOVE RATES.
GP20505
SUBSCRIPTION TO TRUST AND APPLICATION
FOR CERTIFICATES UNDER CONTRACTS
No. VA ___________ (the Variable Contract) and No. GA ____________ (the
Associated Contract)
I subscribe as a Participant to the Bankers Life Annuity Trust II for Individual
Retirement Annuity in its present form, or as hereafter amended for the purpsoe
of becoming eligible to submit the following Application under a Group Annuity
Contract Issued by Bankers Life Company to the Trustee of the Bankers Life
Annuity Trust II for Individual Retirement Annuity.
________________________________________________________________________________
1. Name of Participant ________________________________________________________
(PRINT FULL NAME)
__ Male __ Female __ Married __ Single
2. Residence Address __________________________________________________________
Street or R.F.D. City or Town State Zip Code
3. Born: Month _________ Day ______ Year _______
Place of Birth ___________________________________
(Give City or Town and State)
4. Social Security Number ________________________________
5. Employer ___________________________________________________________________
Address_____________________________________________________________________
Street or R.F.D. City or Town State Zip Code
6. This Application is intended for the tax year ending Demcember 31, 19_____.
7. a. Is this Application intended to be part of a Spouse IRA Program?
__ Yes __ No
If yes, is Participant listed Item 1. the Employed Spouse?
__ Yes __ No
b. Are both Spouse IRAs intended to be with Bankers Life Company?
__ Yes __ No
8. Is this Application intended to be part of a Simplified Employee Pension
Plan (SEP)? __ Yes __ No
9. Expected first Year Contribution and Billing Mode:
________________________________________________________________________________
Billing Mode
________________________________________________________________________________
CONTRIBUTIONS Amount $ Annual Semi quarterly monthly PD *PAC
annual
________________________________________________________________________________
Employer Contribution $
________________________________________________________________________________
Employee
Contribution $
________________________________________________________________________________
Lump Sum
Distribution From
Previous Regular IRA Plan
________________________________________________________________________________
Complete for Fixed/Variable
Account Allocation %
Check One General Common Short
Asset Stock Term
________________________________________________
Employer Contribution 33 1/3% 33 1/3% 33 1/3%
% % %
Employee 33 1/3% 33 1/3% 33 1/3%
Contribution % % %
Lump Sum 33 1/3% 33 1/3% 33 1/3%
Distribution From % % %
Previous Regular IRA Plan
________________________________________________________________________________
*PAC draws will be made for total contributions under this plan.
**Minimum $5,000 required unless future contributions scheduled under 9 also.
10. Print full name and relationship of Beneficiary to Participant:
________________________________________________________________________________
UNLESS OTHERWISE PROVIDED HEREIN, IF TWO OR MORE BENEFICIARIES ARE NAMED, THE
PROCEEDS SHALL BE PAID IN EQUAL SHARE TO THE NAMED BENEFICIARIES SURVIVING THE
PARTICIPANT. THE RIGHT TO MAKE FUTURE CHANGES IS RESERVED BY THE PARTICIPANT.
11. Amount of contribution accompanying this Application:
Employer Contribution $____________ Employee Contribution $_______________
Lump Sum Distribution $____________
12. The Duration Period for Contributions is presently five Contribution Years
for each Account. Bankers Life Company reserves the right to change this
Duration Period for future Contribution Year Accounts and applicable Rollforward
Amounts at any time.
________________________________________________________________________________
It is my understanding that the Contract provides that my annuity values are
nontransferable in order to qualify under Section 408 of the Internal Revenue
Code.
I represent that these statements and answers are true, complete and correctly
recorded. I agree that these statements and answers together with this
declaration shall form the basis for the acceptance of my Application under the
Contract. I also agree that Bankers Life Company shall incur no liability until
an issued Certificate is delivered to me and the first Contribution is paid
during my lifetime. I agree to give written notification to Bankers Life Company
if I change my tax year.
THE UNDERSIGNED HEREBY ACKNOWLEDGE THAT A BANKERS LIFE COMPANY DISCLOSURE
STATEMENT WAS RECEIVED BY THE PARTICIPANT PRIOR TO THE EXECUTION OF THIS
APPLICATION.
Dated at ________________________________________________________ this _____
City or Town, State
day of __________________________, 19______
________________________________________________________________________________
Agent - Please sign and Print
________________________________________________________________________________
Signature of Participant
________________________________________________________________________________
<PAGE>
SUBSCRIPTION TO TRUST AND APPLICATION FOR CERTIFICATES
UNDER GROUP ANNUITY CONTRACTS NO. VA __________ AND NO. GA ___________
I subscribe as a Participant to the Bankers Life Annuity Trust II for Individual
Retirement Annuity in its present form, or as hereafter amended, for the purpose
of becoming eligible to submit the following Application under Group Annuity
Contracts issued by Bankers Life Company to the Trustee of the Bankers Life
Annuity Trust II for Individual Retirement Annuity.
________________________________________________________________________________
__ Male __ Married
1. Name of Participant ______________________________ __ Female __ Single
(PRINT FULL NAME)
2. Residence Address __________________________________________________________
Street or R.F.D. City or Town State Zip Code
3. Born: Month ___________ Day ____ Year _____
4. Place of birth _____________________________________________________________
(City or Town and State)
5. Social Security Number _________________________________
6. Lump sum of $___________________(minimum $5,000) originating as a
distribution from a qualified (non-IRA) retirement plan.
Contributions are to be divided between accounts as follows: (CHECK ONE)
__ a. Equity Account 33 1/3% General Asset Account 33 1/3%
Short Term Account 33 1/3%
__ b. Equity Account ______% General Asset Account ______%
Short Term Account ______%
8. Full name of Beneficiary:
________________________________________________________________
________________________________________________________________
9. Relationship: ____________________
____________________
UNLESS OTHERWISE INDICATED, IF TWO OR MORE BENEFICIARIES ARE NAMED, THE PROCEEDS
SHALL BE PAID IN EQUAL SHARES TO THE NAMED BENEFICIARIES SURVIVING THE
PARTICIPANT. THE RIGHT TO MAKE FUTURE CHANGES IS RESERVED.
10. Amount of Contribution accompanying this Application $_____________________
________________________________________________________________________________
I understand that the Contract provides that my annuity values are made
nontransferable in order to qualify under Section 408 of the Internal Revenue
Code.
I represent that these statements and answers are true, complete and correctly
recorded. I agree that these statements and answers together with this
declaration shall form the basis for the acceptance of my Application under the
Contracts. I also agree that Bankers Life Company shall incur no liability until
an issued Certificate is delivered to me and the first contribution is paid
during my lifetime. I agree to give written notification to Bankers Life Company
if I change my tax year to other than the calendar year.
I ACKNOWLEDGE THAT A BANKERS LIFE COMPANY DISCLOSURE STATEMENT AND APPROPRIATE
PROSPECTUSES FOR THE SEPARATE ACCOUNT B VARIABLE ANNUITY CONTRACT AND MUTUAL
FUNDS WERE RECEIVED BY ME PRIOR TO THE EXECUTION OF THIS APPLICAITON.
Dated at __________________________________________________ this ___________
(City or Town and State)
day of _________________________________, 19________
________________________________________________________________________________
Representative-Prease sign and print
________________________________________________________________________________
Signature of Participant
________________________________________________________________________________
<PAGE>
BLC EQUITY SERVICES CORPORATION
NEW ACCOUNT APPLICATION
In connection with my Application for an annuity to be funded by a Bankers Life
COmpany Separate Account B Variable Annuity Contract and its related mutual
funds, in accordance with the current prospectuses of such Contract and funds
which I have received, I am making this Application for a New Account with BLC
Equity Services Corporation.
Name (print in full) ___________________________________________________________
CONFIDENTIAL PERSONAL DATA - (Regulatory authorities require a review be made to
determine that this investment does not appear unsuitable for your financial
circumstances)
1. Face amount of life insurance owned
Applicant $____________ Spouse $____________ Dependants $____________
2. Value of home $____________ Mortgage balance $____________
3. Current balance checking and savings accounts $____________
4. Current market value of other investments $____________
5. Applicant's estimated net earnings: Current year $____________
Average three prior years $____________
6. Annual family income from all sources
__Under $7,500 __$7,500 - $14,999 __$15,000 - $24,999 __$25,000 and over
7. Occupation _________________________________________________________________
8. __Single __Married __Widowed __Divorced
9. Number of dependents: Children ________ Relatives ________ Other ________
If you do not wish to provide some parts of this information, we assume you have
carefully considered the investment objectives of this coverage, have decided it
is suitable for your financial situation, and understand a variable annuity
should be considered a long-term invstment. __ I decline to furnish the
information left blank.
_________________________________________________
(Signature of Applicant)
_________________________________________________
(Date of Application)
_________________________________________________
(Signature of Registered Representative)
ACCEPTED BY BLC EQUITY SERVICES CORPORATION
By ______________________________________________
Date ____________________________________________
________________________________________________________________________________
<PAGE>
BANKERS LIFE COMPANY
DES MOINES, IOWA
FOR CERTIFICATES UNDER CONTRACTS
No. VA ______________ (the Variable Contract) and
No. GA ______________ (the Associated Contract)
Issued to United Central Bank Trustee of BLCO Trust for TSA, Contractholder,
unless Another Contractholder is designated here
_______________________________________________________________________________
__ Male __ Married
1. Name of Participant _____________________________ __ Female __ Signle
(PRINT FULL NAME)
2. Residence Address __________________________________________________________
Street or R.F.D. City or Town State Zip Code
3. Born: Month ___________ Day ____ Year _____
Place of birth _____________________________________________________________
(City or Town and State)
4. Social Security Number _________________________________
5. Expected first year contributions: Payment Allocation were made.
________________________________________________________________________________
Allocation %
________________________________________________________________________________
Check Equity General Short
Contributions One Account Term
________________________________________________________________________________
Employee 33 1/3% 33 1/3% 33 1/3%
Salary Reduction % % %
________________________________________________________________________________
Deductible 33 1/3% 33 1/3% 33 1/3%
Voluntary Contributions % % %
________________________________________________________________________________
Employer 33 1/3% 33 1/3% 33 1/3%
Contributions % % %
________________________________________________________________________________
Mode of Payment
________________________________________________________________________________
Semi Payroll
Annual Annual Quarterly Monthly PAC Deduction
________________________________________________________________________________
Contributions
________________________________________________________________________________
Employee
Salary Reduction
________________________________________________________________________________
Deductible
Voluntary Contributions
________________________________________________________________________________
Employer
Contributions
________________________________________________________________________________
*Note: Please check one of the Percentage Allocations Above.
6. Print full name and relationship of Beneficiary to Participant:
________________________________________________________________________________
Unless otherwise indicated, if two or more Beneficiaries are named, the proceeds
shall be paid in equal shares to the named Beneficiaries surviving the
Participant. The right to make future changes is reserved.
________________________________________________________________________________
It is my understanding that the Contract provides that my annuity values are
nontransferable in order to qualify under Section 403(b) of the Internal Revenue
Code.
I represent that these statements and answers are true, complete, and correctly
recorded. I agree that these statements and answers together with this
declaration shall form the basis for the acceptance of my Application under the
Contract. I also agree that Bankers Life Company shall incur no liability until
an issued Certificate is delivered to me and the first contribution is paid
during my lifetime.
Amount of Contribution accompanying this Application $_____________________
I have received a copy of the Variable Contract Prospectus and the appropriate
Prospectus for its underlying Mutual Funds.
Dated at _________________________________________ this ______ day of
_________________________, 19________.
____________________________________________
Signature of Participant
Applicant
other
then
Participant _______________________________________________________
Employer
____________________________________________________________________
____________________
<PAGE>
BLC EQUITY SERVICES CORPORATION
NEW ACCOUNT APPLICATION
In connection with my Application for an annuity to be funded by Bankers Life
Company Separate Accounts in accordance with the appropriate Prospectuses for
the Mutual Funds which I have received, I am making this Application for a New
Account with BLC Equity Services Corporation.
Name (print in full) __________________________________________________________
CONFIDENTIAL PERSONAL DATA - (Regulatory authorities require a review be made
to determine that this investment does not appear unsuitable for your financial
circumstances)
1. Face amount of life insurance owned
Applicant $____________ Spouse $____________ Dependants $_____________
2. Value of home $____________ Mortgage balance $____________
3. Current balance checking and savings accounts $____________
4. Current market value of other investments $_____________
5. Applicant's estimated net earnings: Current year $____________
Average three prior years $____________
6. Annual family income from all sources
__Under $7,500 __$7,500 - $14,999 __$15,000 - $24,999 __$25,000 and over
7. Occupation _________________________________________________________________
8. __Single __Married __Widowed __Divorced
9. Number of dependents: Children ________ Relatives ________ Other ________
If you do not wish to provide some parts of this information, we assume you have
carefully considered the investment objectives of this coverage, have decided it
is suitable for your financial situation, and understand a variable annuity
should be considered a long-term invstment. __ I decline to furnish the
information left blank.
_________________________________________________
(Signature of Applicant)
_________________________________________________
(Date of Application)
_________________________________________________
(Signature of Registered Representative)
ACCEPTED BY BLC EQUITY SERVICES CORPORATION
By ______________________________________________
Date ____________________________________________
ARTICLES OF INCORPORATION
Principal Mutual Life Insurance Company
711 High Street DES MOINES, IOWA 50392
AMENDED AND SUBSTITUTED ARTICLES OF INCORPORATION
AS AMENDED
Effective July 1, 1991
ARTICLE I.
The name of the corporation shall be Principal Mutual Life Insurance Company, by
which name (or by the names Bankers Life Company and Princor Mutual Life
Insurance Company which it may use in its discretion and where permitted
continue to use or adopt) it shall do business and shall have and retain all its
property, rights and privileges.
ARTICLE II.
The corporation shall be located and have its principal place of business in the
city of Des Moines, Polk County, lowa. The principal office of the corporation
is the registered office, and the President is the registered agent of the
company.
ARTICLE III.
The purpose of this corporation are and it shall have full power to engage in,
pursue, maintain and transact a general life, health and accident insurance and
annuity business, and to insure other risks, perform other services and engage
in other businesses allowed by law. It may issue participating or
nonparticipating contracts. It shall further have the power to enter into
contracts with respect to proceeds of such insurance, to accept and reinsure
risks, to enter into coinsurance agreements, to issue and perform policies and
contracts of all types, including but not limited to individual and group, to
act as trustee or advisor in any capacity, and to offer all services, including
those of a financial accounting or data processing nature, to all persons,
partnerships, corporations and other business organizations, directly or
indirectly incidental to its business. It shall have all the rights, powers and
privileges granted or permitted by the Constitution and laws of the state of
Iowa governing the conduct of insurance companies and by Titles XIX and XX of
the Code of Iowa 1966 and all acts amendatory thereof or additional thereto.
The corporation shall be empowered: To sue and be sued, complain and defend, in
its corporate or assumed name, to have a corporate seal which may be altered at
pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced; to purchase, take,
receive, lease, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with, real or tangible or intangible personal property, or any interest
therein, wherever situated; to sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and assets; to
lend money to, and otherwise assist its employees, agents, officers and
directors unless prohibited by law; to purchase, take, receive, subscribe for,
or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with, shares,
options, warrants or other interests in, or obligations of, other domestic or
foreign corporations, associations, partnerships or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality
thereof unless prohibited by law; to make contracts and guaranties and incur
liabilities; to lend and borrow money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as security for
the payment of funds so loaned or invested; to acquire or organize subsidiaries;
to conduct its business, carry on its operations, and have offices and exercise
the powers granted in any state, territory, district, or possession of the
United States, or in any foreign country; to make donations for the public
welfare, and for religious, charitable, scientific or educational purposes; to
pay pensions and establish pension plans, pension trusts, profit-sharing plans
and other incentive, insurance and welfare plans for any or all of its
directors, officers, agents and employees; to enter into general partnerships,
limited partnerships, whether the corporation be a limited or general partner,
joint ventures, syndicates, pools, associations and other arrangements for
carrying on any or all of the purposes for which the corporation is organized,
jointly or in common with others; to indemnify officers, directors, employees
and agents, as allowed by law, subject to such limitations as may be established
by the Board of Directors; and to have and exercise all powers necessary or
convenient to effect any or all of the purposes for which the corporation is
organized.
ARTICLE IV.
The corporation shall have perpetual existence and succession.
ARTICLE V.
The private property of the members, directors and other officers and managers
of this corporation shall in no case be liable for the corporate debts, but
shall be exempt therefrom.
ARTICLE Vl.
The corporate powers of the corporation shall be exercised by the Board of
Directors, and by such officers and agents as the Board may authorize, elect or
appoint. The Board of Directors shall consist of not less than nine (9) nor more
than twenty-one (21) directors, the number to be determined from time to time by
a majority of the entire Board of Directors. The directors shall be divided into
three classes, as nearly equal numerically as possible, determined by terms
expiring in successive years. Each director shall serve a term of approximately
three years except as otherwise provided or where it is necessary to fix a
shorter term in order to preserve classification. No decrease in the number of
directors shall shorten the term of any incumbent director. Each director shall
serve until a successor is elected and shall be eligible for re-election. The
Board of Directors shall have the power to fill any vacancy in their number. The
term of office of each director shall begin at the annual meeting at which such
director is elected by the members or at the time elected by the Board of
Directors. The term of office of each director shall not extend beyond the
annual meeting next following the date such director attains age 70, or such
younger age as may be established for all directors by the Board of Directors,
except that the terms of directors holding office prior to the annual meeting in
1984 may extend to the annual meeting next following the date such director
attains age 72 and except that for officer-directors, other than one who is or
has been Chief Executive Officer, the term as a director shall not extend beyond
the annual meeting next following the date such director retires as an active
officer of this corporation. Directors need not be members.
The Board of Directors shall have the power to adopt such By-Laws and rules and
regulations for the transaction of the business of the corporation not
inconsistent with these Amended and Substituted Articles or the laws of the
state of Iowa, and to amend or repeal such By-Laws, rules and regulations. The
By-Laws shall provide procedures for the nomination and election of directors.
The Board of Directors may fix reasonable compensation of the directors for
their services. The Board of Directors shall elect from their number at the
first board meeting after the annual meeting of the corporation a President, and
shall authorize, elect or appoint at such first meeting or at any meeting
thereafter such other officers, agents or committees as in their judgment may be
necessary or advisable.
A director of this corporation shall not be personally liable to the corporation
or its members for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for a breach of the director's duty of loyalty to the
corporation or its members, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, or (iii)
for a transaction from which the director derives an improper personal benefit.
The liability of directors shall be deemed further limited or eliminated to the
fullest extent permitted by changes in the law governing this corporation and
approved by a majority of the entire Board of Directors. Any repeal or
modification of the provisions of this paragraph shall not adversely affect the
duty, liability, rights or protection of a director existing at the time of such
repeal or modification.
ARTICLE Vll.
The annual meeting of this corporation shall be held at the Home Office in Des
Moines, lowa, on the third Monday in May of each year for the election of a
director or directors and the transaction of any other business properly coming
before the annual meeting.
Special meetings of the corporation may be called by the directors at any time
and shall be so called upon the written request of five per cent (5%) of the
members, which request shall specify the matters proposed to be acted upon.
Notice of the time and place of each annual and each special meeting shall be
published at least one time in a newspaper of general circulation in the city
where the meeting is to be held not less than 30 nor more than 90 days prior to
the date of the meeting. No person shall be elected a director by the members at
any meeting except an annual meeting and then only if duly nominated in
accordance with the requirements of the By-Laws and named in the notice of the
annual meeting as a nominee for the class of director to be so elected. Each
notice of a meeting shall state the purpose of the meeting. These Amended and
Substituted Articles may be amended at any meeting only if the notice of the
meeting describes or sets out the proposed amendment.
At every annual or special meeting each member shall be entitled to one vote, to
be cast by ballot signed by such member and mailed or personally delivered by
such member to the Home Office. The Secretary of the corporation will, during
any 60 consecutive regular business days immediately preceding the date of the
annual or any special meeting, give or mail to each member making a request
therefor a ballot, and shall if the Board of Directors so direct mail a ballot
to each member. No ballot received in any manner after the adjournment of any
such meeting, or which in not signed by a member, shall be counted upon matters
acted upon at the meeting. There will be no cumulative voting by proxy,
ARTICLE VIII.
This corporation shall have no capital stock, but shall be purely mutual as a
legal reserve company.
ARTICLE IX.
Except as otherwise provided in this Article, each person who, and each entity
which, is regarded as present owner under the provisions of an original contract
of insurance or annuity issued by this corporation, or, absent determination by
such provisions, under the By-Laws or rules of the corporation, shall be a
member of this corporation and entitled to the privileges of such member as
defined herein, in the By-Laws or in the contract of insurance or annuity, but
so long only as the said original contract of insurance or annuity has not
matured or been surrendered and remains in force. The membership privileges of
those issued an original contract of insurance or annuity on or before April 8,
1980, but not the owner on that date, shall be preserved.
ARTICLE X.
These Articles of Incorporation may be amended at any annual meeting, or any
special meeting called for that purpose, upon notice given as required by
Article VII, upon a majority vote in favor of the amendment cast by the members
voting at such meeting by ballot or in person. The amendment shall be binding
upon all members of the corporation. Any amendment will not affect contracts of
the members nor terminate rights, powers, privileges, and franchises of the
corporation existing as of the time of amendment.
BY-LAWS
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 HIGH STREET DES MOINES, IOWA 50392
Adopted and Effective April 8, 1969
As Amended through August 15, 1994
ARTICLE I
MEETINGS OF THE COMPANY, ELECTION OF
DIRECTORS AT ANNUAL MEETING
SECTION 1. Meetings of the Company. The annual meeting of the Company shall be
held in accordance with the provisions of the Articles at the hour of 9:00
o'clock A.M.., Des Moines time. Any special meeting of the Company shall be held
at the time and place specified in the notice of such special meeting. The
Chairman of the Board or the acting Chairman of the Board shall preside at
meetings of the Company. The Secretary of the Corporation shall act as the
Secretary of the meeting. If either person is unable to act in the designated
capacity, the members present shall elect a member to serve as chairman pro tem
or secretary pro tem.
SECTION 2. Notices and Ballots. The Secretary of the Corporation shall cause
notice of each meeting to be published and shall mail or make ballots available
to members as required by the Articles and shall if so directed by the Board
mail a ballot to each member. No name of a candidate for election to the Board
shall be included in the ballot unless the candidate has been nominated as
provided in these By-Laws.
SECTION 3. Election of Directors and Voting on Propositions; Failure of
Election. At each annual meeting the ballots cast for candidates for election to
the Board, and at each annual meeting or special meeting the ballots cast
concerning any proposition, shall be referred to the Board for canvass at the
first meeting of the Board following such meeting of the Company. In the event a
candidate for election to the Board, who is included in a class for which the
number of candidates nominated for election is greater than the number to be
elected, dies or withdraws before election, then there shall be no election of
Directors in that class and the vacancy or vacancies created may be filled by
the Board, to serve until the next following annual meeting of the Company, when
a new election shall be held for the unexpired term of such vacancy or
vacancies.
The candidate or candidates receiving the highest number of votes in each class
shall be declared elected Director or Directors, and any proposition or any
other matter submitted shall be declared carried or lost in accordance with the
majority of votes cast for or against it. No person other than a candidate may
be elected a Director.
ARTICLE II
NOMINATION OF DIRECTORS AND
ELECTION BY BOARD
SECTION 1. Nomination by Board. The Board shall each year nominate candidates
for election as Directors to succeed those whose terms are expiring.
SECTION 2. Nomination by Members. Members of the Company may nominate candidates
for election as Directors to succeed those whose terms are expiring, upon
delivery to the Secretary of the Corporation a certificate or certificates of
nomination signed by members residing in at least five states and numbering in
each such state not less than 1/25 of 1% of the total membership of the entire
Company as of a date one hundred eighty days prior to the date of the annual
meeting and including the address and policy or contract number of each member
so signing.
SECTION 3. Qualification of Candidates. To qualify as a candidate, whether
nominated by the Board or by members, written certificate or certificates of
nomination shall be filed with the Secretary of the Corporation not more than
one hundred eighty days nor less than ninety days before the date of the annual
meeting of the Company and shall be accompanied by a written statement of the
nominee of his willingness to serve.
SECTION 4. Assignment to Class. Each nomination of a candidate shall be to a
class to which one or more Directors are to be elected at the next annual
meeting of the Company. If any nomination made by the members of the Company
fails to assign the candidate to any class, the Board shall make such
assignment.
SECTION 5. Filling Vacancies. Any vacancy upon the Board (except vacancies
resulting from failure of election as provided in Article I, Section 3), whether
resulting from death or resignation of a Director, increase in number of
Directors, or for any other reason, may be filled by the Board at any regular or
special meeting, and each such newly elected Director shall be assigned by the
Board to a class.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Number of Directors. The Board shall consist of thirteen Directors or
such larger or smaller number, within the limits specified by the Articles, as a
majority of the entire Board may determine at any regular or special meeting of
the Board.
SECTION 2. Meetings. Regular meetings of the Board shall be held without notice
once in each calendar quarter on such date and at such hour and place as may be
fixed by the Board, except that the meeting in the second quarter shall be held
in the Home Office of the Company in Des Moines on the date of the annual
meeting. The date, hour and place of any regular meeting other than the meeting
in the second quarter may be changed by the Chairman of the Board, if any, or
the President, by written notice to all Directors at least thirty days before
the regular meeting date, provided that the date to which any meeting is changed
shall not be more than fifteen days earlier or later than the date fixed by the
Board. Special meetings of the Board may be called at any time upon five days'
written notice given by the Chairman of the Board, if any, the President or any
two Directors. In the alternative, upon oral or written notice received prior to
the time of the meeting by at least two-thirds of the Directors, the Chairman of
the Board, or acting Chairman of the Board, may call a special meeting of the
Board to be held through communications equipment which permits all participants
to communicate with each other, with such participation constituting attendance
at such meeting. Any Director may waive call or notice required to be given
either before or after the time stated therein. Any meeting may be continued to
the succeeding day if the Board does not complete the business coming before it
on the meeting date.
At all meetings of the Board, regular or special, a majority of its number shall
constitute a quorum for the transaction of business. If at any meeting less than
a quorum is present, the meeting may be adjourned from time to time to a
subsequent date, at which date the meeting may be held without notice if a
quorum is then present.
SECTION 3. Officers of the Board; Duties. The Board shall elect from its number
a Chairman of the Board to serve at the pleasure of the Board. The Chairman of
the Board shall, if present, preside at each meeting of the Board and shall have
such powers and shall perform such duties as may be assigned to him by these
By-Laws or by or pursuant to authorization of the Board or, if the Chairman of
the Board is not the chief executive officer of the Company, by the chief
executive officer.
The Board may at any meeting of the Board elect a Secretary of the Board and
such other officers, assistants and committees of the Board as the Board may
deem necessary to serve during the pleasure of the Board, each of whom shall
have and perform such duties as may be assigned to him by the Board or by the
Chairman of the Board. The Secretary of the Board shall keep a record of all
proceedings of the Board.
The Board shall by resolution establish a procedure to provide for an acting
Chairman of the Board in the event the current Chairman of the Board is unable
to serve or act in that capacity.
SECTION 4. Compensation of Directors. Directors who are not officers of the
Company shall be entitled to an annual retainer and an additional amount for
attendance at each regular or special meeting of the Board or meetings of
committees of the Company, plus expense of attending such meetings, if any, as
may be fixed by the Board.
ARTICLE IV
OFFICERS OF THE COMPANY
SECTION 1. President. The Board shall, at the first meeting of the Board
following the annual meeting of the Company, or at any meeting thereafter to
fill a vacancy in the office, elect from its number a President of the Company
to serve for one year or until his successor is elected.
SECTION 2. Chief Executive Officer. The Board shall empower either the Chairman
of the Board, if one is elected, or the President to serve as the chief
executive officer of the Company.
SECTION 3. Other Officers Elected by Board. At any meeting of the Board it may
elect such officers of the Company, in addition to a President, as the Board may
deem necessary, to serve at the pleasure of the Board.
SECTION 4. Other Officers. The Board may authorize the Company to elect or
appoint other officers, each of whom shall serve at the pleasure of the Company.
SECTION 5. Duties of Officers. The chief executive officer shall supervise the
carrying out of policies adopted or approved by the Board, shall exercise a
general supervision and superintendence over all the business and affairs of the
Company, and shall possess such other powers and perform such other duties as
may be incident to his function.
The President, if not the chief executive officer, shall have such powers and
perform such duties as may be assigned to him by these By-Laws or by or pursuant
to authorization of the Board or by the chief executive officer.
Other officers elected by the Board shall have such powers and perform such
duties as may be assigned to them by or pursuant to authorization of the Board
or by the chief executive officer.
Officers elected or appointed by the Company shall have such powers and perform
such duties as may be assigned to them by the Company.
SECTION 6. Compensation of Officers. The compensation of all officers elected by
the Board shall be fixed by the Board. The compensation of officers elected or
appointed by the Company shall be fixed as provided by resolution of the Board
of Directors.
ARTICLE V
COMMITTEES
SECTION 1. Executive Committee. An Executive Committee is hereby created
composed of five Directors and shall include the Chairman of the Board and the
chief executive officer if other than the Chairman of the Board. Members of the
Executive Committee shall be appointed by and serve at the pleasure of the
Board. If the Board has elected a Chairman of the Board he shall, if present,
preside at each meeting of the Executive Committee. In the absence or vacancy in
the office of the Chairman of the Board, the chief executive officer shall
preside. If the Chairman of the Board is also the chief executive officer, any
other member of the Executive Committee, as determined by the members of the
Executive Committee present, shall preside at a meeting of the Committee in the
absence of the Chairman of the Board. The Secretary of the Board shall act as
secretary of the Executive Committee and shall keep a record of all proceedings.
A majority of the members of the Executive Committee shall constitute a quorum.
SECTION 2. Powers of Executive Committee. The Executive Committee shall have and
may exercise the powers of the Board in the management and affairs of the
Company except when the Board is in session and except the power to make, alter
or repeal By-Laws or to nominate candidates for election to, fill vacancies in
or change the number of members of the Board. Actions of the Executive
Committee, except when the rights or acts of third parties would be adversely
affected, shall be subject to the approval of the Board, which approval shall be
implied unless contrary action is taken by the Board.
SECTION 3. Other Committees. Other committees composed of members or directors,
officers, agents, or employees of the Company or of any subsidiary or affiliate
of the Company may be appointed and their respective functions, terms and duties
prescribed from time to time by the Board of Directors, by the chief executive
officer subject to the approval of the Board, or by the chief executive officer.
ARTICLE VI
EXECUTION AND SIGNING OF INSTRUMENTS
AND CHECKS: FACSIMILE SIGNATURES
SECTION 1. Execution of Instruments. Instruments affecting or relating to real
estate or the investment of funds of the Company may be executed as authorized
by resolution of the Board or as may be authorized by such officers of the
Company as the Board designates.
SECTION 2. Disposition of Funds. The funds of the Company shall be paid out,
transferred or otherwise disposed of only in such manner and under such controls
as may be authorized by resolution of the Board or as may be authorized by such
officers of the Company as the Board designates.
SECTION 3. Survival of Validity of Instrument Bearing Facsimile signature. If
any officer whose facsimile signature has been placed upon any form of
instrument shall have ceased to be such officer before an instrument in such
form is issued, such instrument may be issued with the same effect as if he had
been such officer at the time of its issue.
ARTICLE VII
INDEMNITY
The Board shall have the power to indemnify, or authorize the officers of the
Company to indemnify, directly and through insurance coverage, each person now
or hereafter a Director, officer, employee or other representative of the
Company, and that person's heirs and legal representatives, against all damages,
awards, costs and expenses, including counsel fees, reasonably incurred or
imposed in connection with or resulting from any action, suit or proceeding, or
the settlement thereof prior to final adjudication, to which such person is or
may be made a party by reason of being or having been a Director, officer,
employee or other representative of the Company or by reason of service at the
request of the Company in any capacity with another entity or organization. Such
rights or indemnification shall be in addition to any rights to which any
Director, officer, employee or other representative of the Company, former,
present or future, may otherwise be entitled as a matter of law and subject to
such limitations permitted by law as may be established by the Board.
ARTICLE VIII
AMENDMENT OF BY-LAWS
These By-Laws may be amended, altered or repealed by the Board at any regular or
special meeting of the Board, provided written notice expressing in substance
the proposed change shall have been given to each Director at least five days
prior to the date of such regular or special meeting to each Director who does
not waive notice. Notice may be waived by any Director by filing a written
waiver of notice with the Secretary of Board before, on or after the meeting
date.
ARTICLE IX
MEANINGS OF WORDS AND TERMS
When used in these By-Laws, the following words and terms shall have the meaning
assigned to them in this Article.
Company - Principal Mutual Life Insurance Company (which also may be
known as Bankers Life Company and Princor Mutual Life
Insurance Company)
Board - Board of Directors of the Company
By-Laws - these By-Laws of the Board, as from time to time amended
Articles - Articles of Incorporation of the Company, as from time to
time amended
member - a member of the Company, as defined in the Articles
Director - a person duly elected to the Board of the Company
class - that group of Directors whose terms expire on the date of the
same annual meeting of the Company.
candidate- a person duly nominated for election to the Board pursuant to the
provisions of the Articles and By-Laws
March 24, 1983
Board of Directors
Bankers Life Company
711 High Street
Des Moines, Iowa 50307
RE: Separate Account B
Gentlemen:
The establishment of Separate Account B by the Board of Directors of Bankers
Life Company as a separate account for assets applicable to variable annuity
contracts, pursuant to the then existing provisions of the Code of Iowa
applicable to the establishment of separate accounts by Iowa domiciled life
insurance companies, was supervised by the office of General Counsel of the
Company. I have supervised the preparation of a Registration Statement on Form
S-6 to be filed by Bankers Life Company with the Securities and Exchange
Commission under the Securities Act of 1933 with respect to the "Pension
Builder" series of group variable annuity contracts.
It is my opinion that:
1. Separate Account B is a separate account of the Company duly created and
validly existing pursuant to Iowa law, currently consisting of two distinct
Divisions.
2. The "Pension Builder" series of group variable annuity contracts, when
issued in accordance with the Prospectuses contained in the Amendment to
the Registration Statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company enforceable in
accordance with their terms.
3. All income and expenses and all gains and losses, whether or not realized,
experienced with respect to assets for this series of contracts
participating in a Division of Separate Account B, shall be credited to or
charged against those assets, unaffected by income and expenses or gains
and losses experienced with respect to assets for any other series of
contracts participating in the same or any other Division of Separate
Account B, or constituting any other Separate Account, or constituting the
general account of the Company.
4. The assets for a series of contracts participating in a Division of
Separate Account B shall not be charged with any liabilities arising from
any other series of contracts issued by the Company participating in the
same or from any other Division of Separate Account B.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I consent to the filing of this opinion as an exhibit to the Amendment to the
Registration Statement and to the use of my name under the caption "Legal
Opinions" in the Prospectuses contained therein.
Very truly yours,
HERMAN T. BAILEY
Herman T. Bailey
Senior Vice President and General Counsel
HTB/mvd
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Independent
Auditors" in Part A and Part B, and to the use of our reports dated February 7,
1996 (with respect to Principal Mutual Life Insurance Company Separate Account
B) and January 31, 1996 (with respect to Principal Mutual Life Insurance
Company), in Post-Effective Amendment No. 16 to the Registration Statement (Form
N-4 No. 2-78001) and related Prospectus of Principal Mutual Life Insurance
Company Separate Account B Pension Builder - Group Variable Annuity Contracts.
ERNST & YOUNG LLP
Des Moines, Iowa
April 11, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
M. Vermeer Andringa
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
R. M. Davis
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
D. J. Drury
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
C. D. Gelatt, Jr.
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
G. D. Hurd
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
T. M. Hutchison
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
C. S. Johnson
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
W. T. Kerr
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
L. Liu
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
V. H. Loewenstein
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
J. R. Price, Jr.
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
B. A. Rice
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
J-P. C. Rosso
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
D. M. Stewart
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
E. E. Tallett
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
D. D. Thornton
_____________________________________________
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Principal
Mutual Life Insurance Company, an Iowa corporation (the "Company"), hereby
constitutes and appoints D. J. Drury, G. D. Hurd, T. M. Hutchison and F. W.
Weitz, and each of them (with full power to each of them to act alone), the
undersigned's true and lawful attorney-in-fact and agent, with full power of
substitution to each, for and on behalf and in the name, place and stead of the
undersigned, to execute and file any of the documents referred to below relating
to registration under the Securities Act of 1933 with respect to flexible
premium variable life insurance contracts, with premiums received in connection
with such contracts held in the Principal Mutual Life Insurance Company Separate
Account B on Form N-4 or other forms under the Securities Act of 1933, and any
and all amendments thereto and reports thereunder with all exhibits and all
instruments necessary or appropriate in connection therewith, each of said
attorneys-in-fact and agents and his or their substitutes being empowered to act
with or without the others or other, and to have full power and authority to do
or cause to be done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect thereto to be
done in and about the premises in order to effectuate the same, as fully to all
intents and purposes as the undersigned might or could do in person; hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director has hereunto set his hand this 11th
day of April, 1996.
F. W. Weitz
_____________________________________________
SCHEDULE FOR COMPUTING TOTAL RETURN
IRA/TSA CAPITAL ACCUMULATION DIVISION
The hypothetical average annual total return quotations for 1, 5 and 10 years
ending on December 31, 1995 are computed by finding the average annual
compounded rates of return over the 1, 5 and 10 years that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1, 5
and 10 years ending December 31, 1995 are calculated as
follows:
1 YEAR
1000(1 + T)1 = 1,202.50
Solve for T
T = 20.25%
5 YEARS
1000 (1 + T)5 = 1,882.73
Solve for T
T = 13.49%
10 YEARS
1000 (1 + T)10 = 2,624.56
Solve for T
T = 10.13%
<PAGE>
SCHEDULE FOR COMPUTING TOTAL RETURN
ROLLOVER CAPITAL ACCUMULATION DIVISION
The hypothetical average annual total return quotations for 1, 5 and 10 years
ending on December 31, 1995 are computed by finding the average annual
compounded rates of return over the 1, 5 and 10 years that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1, 5
and 10 years ending December 31, 1995 are calculated as
follows:
1 YEAR
1000(1 + T)1 = 1,208.50
Solve for T
T = 20.85%
5 YEARS
1000 (1 + T)5 = 1,930.49
Solve for T
T = 14.06%
10 YEARS
1000 (1 + T)10 = 2,758.62
Solve for T
T = 10.68%
<PAGE>
SCHEDULE FOR COMPUTING TOTAL RETURN
IRA/TSA GOVERNMENT SECURITIES DIVISION
The hypothetical average annual total return quotations for 1 and 5 years ending
on December 31, 1995 and from April 14, 1987 (inception of the Division) to
December 31, 1995 are computed by finding the average annual compounded rates of
return over the 1 and 5 years and period that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1 and 5
years ending December 31, 1995 and period April 14, 1987 to
December 31, 1995 are calculated as follows:
1 YEAR
1000(1 + T)1 = 1,085.20
Solve for T
T = 8.52%
5 YEARS
1000(1 + T)5 = 1,355.99
Solve for T
T = 6.28%
Period of April 14, 1987 -
December 31, 1995
1000(1 + T)3183/365 = 1,854.63
Solve for T
T = 7.34%
<PAGE>
SCHEDULE FOR COMPUTING TOTAL RETURN
ROLLOVER GOVERNMENT SECURITIES DIVISION
The hypothetical average annual total return quotations for 1 and 5 years ending
on December 31, 1995 and from April 14, 1987 (inception of the Division) to
December 31, 1995 are computed by finding the average annual compounded rates of
return over the 1 and 5 years and period that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional
portion thereof).
The above calculation includes all recurring fees that are
charged to all contractowner accounts and a contingent
deferred sales charge subtracted form the ending value.
The Division's average annual total returns for the 1 and 5
years ending December 31, 1995 and period April 14, 1987 to
December 31, 1995 are calculated as follows:
1 YEAR
1000(1 + T)1 = 1,090.60
Solve for T
T = 9.06%
5 YEARS
1000(1 + T)5 = 1,389.49
Solve for T
T = 6.80%
Period of April 14, 1987 -
December 31, 1995
1000(1 + T)3183/365 = 1,937.60
Solve for T
T = 7.88%
SCHEDULE FOR COMPUTING ANNUALIZED ANNUALIZED YIELD
FOR SEPARATE ACCOUNT B IRA/TSA
MONEY MARKET DIVISION
The yield quotation based on the seven day period of 12/22/95 through
12/29/95 is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the sub-account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from contractowner
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and multiplying
the base period return by (365/7) according to the following formula:
a - b - c 365
EFFECTIVE YIELD = (-------------) x -----------
b 7
Where:
a = ending unit value
b = beginning unit value
c = expense factor for 7-day period
Separate Account B IRA/TSA's Annualized Yield is as follows:
ANNUALIZED YIELD =
1.7641630 - 1.7628807 - 0.0000791393 365
(((-------------------------------------------) x ------- = 3.558734094
1.7628807 7
ANNUALIZED YIELD = 3.56%
<PAGE>
SCHEDULE FOR COMPUTING EFFECTIVE EFFECTIVE YIELD
FOR SEPARATE ACCOUNT B IRA/TSA
MONEY MARKET DIVISION
The effective yield quotation based on the seven day period of 12/22/95
through 12/29/95 is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the sub-account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from result, according
to the following formula:
a - b - c
EFFECTIVE YIELD = (----------------------+1) ^ 365/7 -1
b
Where:
a = ending unit value
b = beginning unit value
c = expense factor for 7-day period
Separate Account B IRA/TSA's Effective Yield is as follows:
EFFECTIVE YIELD =
1.7641630 - 1.7628807 - 0.0000791393
(((-------------------------------------------) + 1) ^ 365/7) - 1 = 3.621557103
1.7628807
EFFECTIVE YIELD = 3.62%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 92,908,561
<INVESTMENTS-AT-VALUE> 103,657,763
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103,657,763
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,728,696
<SHARES-COMMON-PRIOR> 3,828,089
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 103,657,763
<DIVIDEND-INCOME> 2,051,110
<INTEREST-INCOME> 0
<OTHER-INCOME> 8,040,992
<EXPENSES-NET> (1,289,091)
<NET-INVESTMENT-INCOME> 8,803,011
<REALIZED-GAINS-CURRENT> 1,908,275
<APPREC-INCREASE-CURRENT> 12,768,964
<NET-CHANGE-FROM-OPS> 23,480,250
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (9,552,898)
<NUMBER-OF-SHARES-SOLD> 15,312,144
<NUMBER-OF-SHARES-REDEEMED> 22,405,151
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,927,352
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,289,091
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 44,523,062
<INVESTMENTS-AT-VALUE> 45,442,936
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45,442,936
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 4,307,388
<SHARES-COMMON-PRIOR> 3,227,473
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 45,442,936
<DIVIDEND-INCOME> 2,482,944
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (461,030)
<NET-INVESTMENT-INCOME> 2,021,914
<REALIZED-GAINS-CURRENT> (303,527)
<APPREC-INCREASE-CURRENT> 3,801,338
<NET-CHANGE-FROM-OPS> 5,519,725
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 9,649,513
<NUMBER-OF-SHARES-SOLD> 7,019,134
<NUMBER-OF-SHARES-REDEEMED> 9,078,409
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,169,238
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461,030
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 22,309,488
<INVESTMENTS-AT-VALUE> 22,309,488
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,309,488
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 22,309,488
<SHARES-COMMON-PRIOR> 17,109,486
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 22,309,488
<DIVIDEND-INCOME> 879,065
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (222,461)
<NET-INVESTMENT-INCOME> 656,604
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 656,604
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 4,543,398
<NUMBER-OF-SHARES-SOLD> 30,712,096
<NUMBER-OF-SHARES-REDEEMED> 30,932,151
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,200,002
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 222,461
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
