Registration No. _________
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. _____ _____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. ___ _____
(Check appropriate box or boxes)
Principal Life Insurance Company Separate Account B
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
Principal 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)
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of the Registration Statement
Title of Securities Being Registered: Principal Freedom Variable Annuity
Contract
<PAGE>
PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
PRINCIPAL FREEDOM(sm) VARIABLE ANNUITY CONTRACT
Registration Statement on Form N-4
Cross Reference Sheet
Form N-4 Item Caption in Prospectus
Part A
1. Cover Page Principal Freedom(sm) Variable
Annuity Contract
2. Definitions Glossary
3. Synopsis Summary of Expense Information
Summary
4. Condensed Financial Performance Calculation,
Information Independent Auditors,
Financial Statements
5. General Description of Summary, The Company, The
Registrant Separate Account, Fixed
Account, Voting Rights
6. Deductions Summary, Charges and
Deductions, Mortality and
Expense Risks Charge,
Transaction Fee, Premium Taxes,
Fixed Account Surrender Charge
and Transfer Fee,
Administrative Charge, Special
Provisions for Group or
Sponsored Arrangements,
Distribution of the
Contract
7. General Description of Summary, Investment Limita-
Variable Annuity Contract tions, Separate Account Invest-
ment Options, Transfers,
Surrenders, Charges and
Deductions, Standard Death
Benefit, Benefit Option Pay-
ments, Free-Look Provision, The
Separate Account, The Contract,
To Buy a Contract, The
Accumulation Period, The
Retirement Period, General
Provisions, Rights Reserved By
The Company, Customer Inquiries
8. Annuity Period The Accumulation Period, The
Retirement Period
9. Death Benefit Standard Death Benefit, The
Accumulation Period, The
Retirement Period, Mortality
and Expense Risks Charge, Fixed
Account Surrender Charge and
Transfer Fee, Delay of Payments
Non-Qualified Contracts,
Required Distributions for Non-
Qualified Contracts, IRA & SEP
10. Purchase and Contract Value Summary, Free-Look Provision,
The Contract, To Buy a
Contract, The Accumulation
Period, The Retirement Period,
Delay of Payments, Distribution
of the Contract
11. Redemptions Summary, Benefit Option
Payments, The Accumulation
Period, Charges and Deductions,
Transaction Fee, Fixed Account
Surrender Charge and Transfer
Fee, Delay of Payments,
Contract Termination
12. Taxes Summary, Benefit Options,
Federal Tax Matters,
Non-Qualified Contracts,
Required Distributions for
Non-Qualified Contracts, IRA
and SEP, Withholding, Mutual
Fund Diversification
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional
Information Information
Part B Statement of Additional
Information
Caption**
15. Cover Page Principal Freedom(sm)
Variable Annuity Contract
16. Table of Contents Table of Contents
17. General Information and General Information and
History History
18. Services Independent Auditors**,
Independent Auditors
19. Purchase of Securities Summary**, To Buy a Contract**
Being Offered Distribution of the Contract**
20. Underwriters Summary**, Distribution of the
Contract**
21. Calculation of Performance Calculation of Yield and
Data Total Return
22. Annuity Payments Benefit Options Payments**,
Delay of Payments**
23. Financial Statements Financial Statements
** Prospectus caption given where appropriate.
<PAGE>
Principal Freedom(sm) Variable Annuity
Issued by Principal Life Insurance Company (the "Company")
This Prospectus is dated ____________.
The individual deferred annuity contract ("Contract") described in this
Prospectus is funded with the Principal Life Insurance Company Separate Account
B ("Separate Account") and a fixed annuity account ("Fixed Account"). The assets
of the divisions of the Separate Account are invested in a corresponding Account
of the Principal Variable Contracts Fund, Inc., the American Century Variable
Portfolios, Inc. - VP Income & Growth and the Templeton Variable Products Series
Fund - Templeton Stock Fund Class 2. The Fixed Account is a part of the General
Account of the Company.
This prospectus provides information about the Contract and the Separate Account
that you ought to know before investing. It should be read and retained for
future reference. Additional information about the Contract is included in the
Statement of Additional Information ("SAI"), dated ________ which has been filed
with the Securities and Exchange Commission (the "Commission"). The SAI is a
part of this prospectus. The table of contents of the SAI is on page __ of this
prospectus. You may obtain a free copy of the SAI by writing or telephoning:
Principal Freedom(sm) Variable Annuity
Principal Financial Group
P. O. Box _______
Des Moines, Iowa _____________
Telephone: 1-800-_____________
An investment in the Contract is not a deposit in any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
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 attached to the current prospectuses for the
Principal Variable Contracts Fund, Inc. (the "Fund"), the American Century
Variable Portfolios, Inc. VP Income & Growth and the Templeton Variable Products
Series Fund - Templeton Stock Fund Class 2.
TABLE OF CONTENTS
GLOSSARY
SUMMARY OF EXPENSE INFORMATION
SUMMARY
Investment Limitations
Separate Account Investment Options
Transfers
Surrenders
Charges and Deductions
Standard Death Benefit
Benefit Option Payments
Free-look Provision
THE PRINCIPAL FREEDOMSM VARIABLE ANNUITY
THE COMPANY
THE SEPARATE ACCOUNT
THE FUNDS
THE CONTRACT
To Buy a Contract
The Accumulation Period
The Retirement Period
CHARGES AND DEDUCTIONS
Morality and Expense Risks Charge
Transaction Fee
Premium Taxes
Fixed Account Surrender Charge and Transfer Fee
Administration Charge
Special Provisions for Group or Sponsored Arrangements
FIXED ACCOUNT
General Description
Fixed Account Value
Fixed Account Transfers, Total and Partial Surrenders
GENERAL PROVISIONS
The Contract
Delay of Payments
Misstatement of Age or Sex
Assignment
Change of Owner
Beneficiary
Contract Termination
RIGHTS RESERVED BY THE COMPANY
DISTRIBUTION OF THE CONTRACT
PERFORMANCE CALCULATION
VOTING RIGHTS
FEDERAL TAX MATTERS
Non-Qualified Contracts
Required Distributions for Non-Qualified Contracts
IRA and SEP
Withholding
Mutual Fund Diversification
STATE REGULATION
LEGAL OPINIONS
LEGAL PROCEEDINGS
REGISTRATION STATEMENT
OTHER VARIABLE ANNUITY CONTRACTS
INDEPENDENT AUDITORS
FINANCIAL STATEMENTS
CUSTOMER INQUIRIES
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Contract offered by this prospectus may not be available in all states. This
prospectus is not an offer to sell, or solicitation of an offer to buy, the
Contract in states in which the offer or solicitation may not be lawfully made.
No person is authorized to give any information or to make any representation in
connection with this Contract other than those contained in this prospectus.
GLOSSARY
account - series or portfolio of a mutual fund in which a Separate Account
division invests.
accumulated value - an amount equal to the Fixed Account value plus the Separate
Account value.
annuitant - the person, including any joint annuitant, on whose life the benefit
option payment is based. This person may or may not be the owner.
annuity payment date - the date the owner's accumulated value is applied, under
a benefit option, to make income payments.
contract date - the date that the Contract is issued and which is used to
determine contract years.
contract year - the one-year period beginning on the contract date and ending
one day before the Contract anniversary and any subsequent one year period
beginning on a Contract anniversary.
division - a part of the Separate Account which invests in shares of an account
of a mutual fund.
Fixed Account - an account which earns guaranteed interest.
joint annuitant - additional annuitant. Joint annuitants must be husband and
wife and must be named as owner and joint owner. Any reference to the
annuitant's death means the death of the last surviving annuitant.
joint owner - an owner who has an undivided interest with the right of
survivorship in this Contract with another owner. Joint owners must be husband
and wife and must be named as annuitant and joint annuitant. Any reference to
the owner's death means the death of the last surviving owner.
mutual fund - a registered open-end investment company in which a division
invests.
owner - the person, including joint owner, who owns all the rights and
privileges of this contract.
purchase payments - the gross amount contributed to the contract. Fixed Account
purchase payments include transfers into the Fixed Account from any Separate
Account division.
unit - the accounting measure used to calculate the value of the Separate
Account value prior to annuity payment date.
unit value - a measure used to determine the value of an investment in a
division.
valuation date - the date as of which the net asset value of a mutual fund is
determined.
valuation period - the period of time between determination of asset value on
one valuation date and the next valuation date.
SUMMARY OF EXPENSE INFORMATION
The purpose of these tables is to assist you in understanding the various costs
and expenses of the Contract. This information includes expenses of the Contract
as well as the Accounts but does not include any premium taxes that may apply.
For a more complete description of the Contract expenses, see CHARGES AND
DEDUCTIONS.
Contract owner Transaction Expenses:
o There is no sales charge imposed on purchases.
o Deferred sales charge:
o No deferred sales charge applies to surrenders from the Separate
Account.
o The deferred sales charge (as a percentage of amounts surrendered from
the Fixed Account) is as follows:
number of completed contract years surrender charge applied
since each Fixed Account purchase* to Fixed Account surrenders
was made beyond Free Transaction Amount
0 (year of purchase payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and later 0
* Includes amounts transferred to Fixed Account from Separate Account divisions.
Each Fixed Account purchase payment begins in year 0 for purposes of calculating
the percentage applied to that payment.
o Transfer fees may apply to transfers from the Fixed Account to any
division of the Separate Account (See Table of Fixed Account Surrender
Charges and Transfer Fees).
o Transaction fee - a $30 fee is charged on:
o each unscheduled transfer after the 12th unscheduled transfer, and
o each unscheduled partial surrender after the 12th unscheduled partial
surrender in a contract year.
o There is no annual contract fee.
o Separate Account annual expenses (as a percentage of average account
value)
o mortality and expense risks charge 0.85%
o other Separate Account expenses 0
o total Separate Account annual expenses 0.85%
<TABLE>
<CAPTION>
o Annual expense of Accounts (as a percentage of average net assets) as of December 31, 1998.
Management Other Total Account
Account Fees Expenses Annual Expenses
------- ---- -------- ---------------
<S> <C> <C> <C>
American Century VP Income & Growth
Blue Chip
Bond
Capital Value
International
LargeCap Growth
MidCap
MidCap Growth
MidCap Value
Money Market
Stock Index 500
SmallCap
SmallCap Growth
Templeton VP Stock
*Estimated
</TABLE>
o Example
The purpose of the following example is to assist you in understanding the
various costs and expenses that a contract owner bears directly or indirectly.
It reflects expenses of the Separate Account as well as the expenses of the
Account in which the Separate Account invests, both as of the calendar year
ended December 31, 1998. In certain circumstances, state premium taxes also
apply.
The example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets. There is no surrender charge imposed on total or partial
surrenders from divisions of the Separate Account.
<TABLE>
<CAPTION>
Division 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
American Century VP Income & Growth
Blue Chip n/a n/a
Bond
Capital Value
International
LargeCap Growth n/a n/a
MidCap
MidCap Growth
MidCap Value n/a n/a
Money Market
Stock Index 500 n/a n/a
SmallCap
SmallCap Growth
Templeton VP Stock
</TABLE>
SUMMARY
This prospectus describes a flexible variable annuity offered by the Company.
The Contract is designed to provide individuals with retirement benefits,
including plans and trusts that do not qualify for special tax treatment under
the Internal Revenue Code of 1986, as amended (the "Code") and for purchase by
persons participating in individual retirement annuity plans that meet the
requirements of Section 408 of the Code.
This is a brief summary of the Contract's features. More detailed information
follows later in this prospectus.
Investment Limitations
o Initial purchase payment must be $10,000 or more.
o Each subsequent investment must be $50 or more.
o The total purchase payments made during the life of the Contract may
not be greater than $2 million.
Separate Account Investment Options (see THE FUNDS):
Division invests in:
American Century VP Growth American Century Variable Portfolios, Inc.
& Income VP Income & Growth
Principal Variable Contracts Fund, Inc.
Blue Chip Blue Chip Account
Bond Bond Account
Capital Value Capital Value Account
International International Account
LargeCap Growth LargeCap Growth Account
MidCap MidCap Account
MidCap Growth MidCap Growth Account
MidCap Value MidCap Value Account
Money Market Money Market Account
Stock Index 500 Stock Index 500 Account
SmallCap SmallCap Account
SmallCap Growth SmallCap Growth Account
Templeton VP Stock Templeton Variable Products Series Fund -
Templeton Stock Fund Class 2.
Transfers (see Separate Account Transfers for additional restrictions)
o During the accumulation period:
o from the Separate Account divisions:
o dollar amount or percentage of transfer must be specified; and
o transfer may occur on scheduled or unscheduled basis (a $30
fee is imposed on each unscheduled transfer after the 12th
unscheduled transfer in a contract year).
o from the Fixed Account:
o percentage or dollar amount of transfer must be specified; and
o amounts available for transfer without payment of transfer
fee are limited (see Fixed Account Transfers, Total and
Partial Surrenders).
o During the annuity period transfers are not permitted.
Surrenders (total or partial) (see Separate Account Surrender and Fixed Account
Transfers, Total and Partial Surrenders)
o During the accumulation period:
o a dollar amount must be specified;
o withdrawals before age 59 1/2 may involve an income tax
penalty;
o full surrender permitted prior to the annuity payment date;
and
o partial surrender permitted prior to annuity payment date
(a $30 fee is imposed on each unscheduled partial surrender
after the 12th unscheduled partial surrender in a contract
year).
o During the annuity period surrenders are not permitted.
Charges and Deductions
o No sales charge on purchase payment at the time of investment.
o A contingent deferred surrender charge is imposed on certain total or
partial surrenders from the Fixed Account.
o A transfer fee applies to certain transfers from the Fixed Account to
divisions of the Separate Account.
o A mortality and expense risks daily charge equal to 0.85% per year
applies to amounts in the Separate Account. The Company reserves the
right increase this charge but guarantees that it will not exceed 1.25%
per year.
o Daily Separate Account administration charge is currently zero but the
Company reserves the right to assess a charge not to exceed 0.15%
annually.
o Certain states and local governments impose a premium tax. The Company
reserves the right to deduct the amount of the tax from purchase
payments or accumulated values.
Standard Death Benefit
o During the accumulation period:
o death benefit is the greater of:
o accumulated value, or
o purchase payments minus partial surrenders, surrender
charges and transfer fees.
o You may choose to have death benefit payments made under a benefit
option.
o During the annuity period:
o your named beneficiary receives only the continuing payments
provided by the benefit option selected.
Optional annual Enhanced Death Benefit rider is available.
Benefit Option Payments
o You may choose from several fixed payment benefit options which start
on your selected annuity payment date.
o Payments are made to the annuitant (or beneficiary depending on benefit
option selected).
Free-look Provision
o You may surrender the Contract during the free-look period which is
generally 10 days but may be longer in certain states.
o We return either all purchase payments made or the accumulated value,
whichever is required by applicable state law.
THE PRINCIPAL FREEDOM(sm) VARIABLE ANNUITY
The Principal Freedom(sm) Variable Annuity is significantly different from a
fixed annuity. As the owner of a variable annuity, you assume the risk of
investment gain or loss (as to amounts in the Separate Account
divisions) rather than the insurance company. The amount of the annuity payment
under a variable annuity is not guaranteed. Payments vary with the investment
performance of the portfolio securities of the underlying Account.
Based on your investment objectives, you direct the allocation of purchase
payments and accumulated values. There can be no assurance that your investment
objectives will be achieved.
THE COMPANY
The Company is a stock life insurance company with its home office at: Principal
Financial Group, Des Moines, Iowa _____. It is authorized to transact life and
annuity business in all of the United States and the District of Columbia. The
Company is a wholly owned subsidiary of a mutual insurance holding company named
"Principal Mutual Holding Company."
In 1879, the Company was incorporated under Iowa law as a mutual life insurance
company named Bankers Life Association. It changed its name to Bankers Life
Company in 1911 and then to Principal Mutual Life Insurance Company in 1986. The
name change to Principal Life Insurance Company and reorganization into a mutual
holding company structure took place in 1998.
THE SEPARATE ACCOUNT
The Separate Account was established under Iowa law on January 12, 1970. It was
registered as a unit investment trust with the Commission on July 17, 1970. This
registration does not involve Commission supervision of the investments or
investment policies of the Separate Account.
The income, gains, and losses, whether or not realized, of the Separate Account
are credited to or charged against the Separate Account without regard to other
income, gains, or losses of the Company. Obligations arising from the Contract,
including the promise to make benefit option payments, are general corporate
obligations of the Company. However, the Contract provides that the portion of
the Separate Account's assets equal to the reserves and other liabilities under
the Contract are not charged with any liabilities arising out of any other
business of the Company.
There currently are fourteen divisions in the Separate Account available to you.
The assets of each division invest in a corresponding Account of a mutual fund.
New Accounts may be added and made available. Accounts may also be eliminated
from the Separate Account.
THE FUNDS
The Funds are mutual funds registered under the Investment Company Act of 1940
as open-end diversified management investment companies. The Funds provide the
investment vehicle for the Separate Account. A full description of the Funds,
their investment objectives, policies and restrictions, charges and expenses and
other operational information is contained in the attached prospectuses (which
should be read carefully before investing) and the Statements of Additional
Information. Additional copies of these documents are available from a sales
representative or our home office.
The following is a brief summary of the investment objectives of each division:
<TABLE>
<CAPTION>
Division Division Invests in Investment Advisor
<S> <C> <C>
American Century Variable
Portfolios, Inc.
American Century VP VP Income & Growth American Century
Income & Growth Investment Management, Inc.
Principal Variable Contracts Fund,
Inc.
Blue Chip Blue Chip Account Invista Capital Management, Inc.
through a sub-advisory agreement
Bond Bond Account Principal Management Corporation
Capital Value Capital Value Account Invista Capital Management, Inc.
through a sub-advisory agreement
International International Account Invista Capital Management, Inc.
through a sub-advisory agreement
LargeCap Growth LargeCap Growth Account Janus Capital Corporation
through a sub-advisory agreement
MidCap MidCap Account InVista Capital Management, Inc.
through a sub-advisory agreement
MidCap Growth MidCap Growth Account Dreyfus Corporation
through a sub-advisory agreement
MidCap Value MidCap Value Account Neuberger & Berman Management, Inc.
through a sub-advisory agreement
Money Market Money Market Account Principal Management Corporation
Stock Index 500 Stock Index 500 Account Invista Capital Management, Inc.
through a sub-advisory agreement
SmallCap SmallCap Account Invista Capital Management, Inc.
through a sub-advisory agreement
SmallCap Growth SmallCap Growth Account Berger Associates
through a sub-advisory agreement
Templeton Variable Products Series
Fund
Templeton VP Stock Templeton Stock Fund Class 2 Templeton Investment Counsel, Inc.
</TABLE>
<TABLE>
<CAPTION>
Division Investment Objective
<S> <C>
American Century VP Seeks dividend growth, current income and capital appreciation. The Account
Income & Growth will seek to achieve its investment objective by investing in common stocks.
Blue Chip Seeks to achieve growth of capital and growth of income by investing primarily
in common stocks of well capitalized, established companies.
Bond To provide as high a level of income as is consistent with preservation of
capital and prudent investment risk.
Capital Value To provide long-term capital appreciation and secondarily growth of investment
income. The Account seeks to achieve its investment objectives through the
purchase primarily of common stocks, but the Account may invest in other
securities.
International Seeks long-term growth of capital by investing in a portfolio of equity
securities domiciled in any of the nations of the world.
LargeCap Growth Seeks long-term growth of capital by investing primarily in equity securities
of growth companies with market capitalization of greater than $10 billion.
MidCap To achieve capital appreciation by investing primarily in securities of
emerging and other growth-oriented companies.
Division Investment Objective
MidCap Growth Seeks long-term growth of capital by investing primarily in growth stocks of
companies with market capitalizations in the $1 billion to $10 billion range.
MidCap Value Seeks long-term growth of capital by investing primarily in equity securities
of companies with value characteristics and market capitalizations in the $1
billion to $10 billion range.
Money Market seeks as high a level of current income available from short-term securities
as is considered consistent with preservation of principal and maintenance of
liquidity by investing all of its assets in a portfolio of money market
instruments.
Stock Index 500 Seeks long-term growth of capital. The Account attempts to mirror the
investment results of the Standard & Poors Stock Index.
SmallCap Seeks long-term growth of capital. The Account attempts to achieve its
objective by investing primarily in equity securities of small growth
companies with market capitalization of less than $1 billion.
SmallCap Growth Seeks long-term growth of capital by investing primarily in equity securities
of small growth companies with market capitalization of less than $1 billion.
Templeton VP Stock Capital growth through investing primarily in common and preferred stock
issued by companies, large and small, in various nations throughout the world.
</TABLE>
Principal Management Corporation (the "Manager") has executed agreements with
various sub-advisors. Under those sub-advisory agreements, the sub-advisor
agrees to assume the obligations of the Manager to provide investment advisory
services for a specific Account. For these services, each sub-advisor is paid a
fee by the Manager.
Account: Blue Chip, Capital Value, International, MidCap, Stock Index
500 and SmallCap Sub-Advisor: Invista Capital Management, Inc.
Invista is a subsidiary of Principal Life Insurance Company which
makes it an affiliate of the Manager. Invista has managed investments
for institutional investors, including Principal Life, since 1985. As
of December 31, 1998, it managed assets of approximately $_______
billion. Invista's address is 1800 Hub Tower, 699 Walnut, Des Moines,
Iowa 50309.
Account: LargeCap Growth
Sub-Advisor: Janus Capital Corporation
Account: MidCap Growth
Sub-Advisor: The Dreyfus Corporation, located at 200 Park Avenue, New
York, NY 10166, was formed in 1947. The Dreyfus Corporation is a
wholly-owned subsidiary of Mellon Bank, N.A. which is a wholly-owned
subsidiary of Mellon Bank Corporation. As of ________ the Dreyfus
Corporation managed or administered approximately $___ billion in
assets for approximately _____ million investor accounts nationwide.
Account: MidCap Value
Sub-Advisor: Neuberger & Berman Management, Inc.
Account: SmallCap Growth Sub-Advisor: Berger Associates. Berger's
address is 210 University Boulevard, Suite 900, Denver, CO 80206. It
serves as investment advisor, sub-advisor, administrator or sub-
administrator to mutual funds and institutional investors. Kansas City
Southern Industries, Inc. ("KCSI") owns approximately 87% of Berger.
KCSI is a publicly traded holding company with principal operations in
rail transportation, through its subsidiary the Kansas City Southern
Railway Company, and financial asset management businesses.
The Company purchases and sells Fund shares for the Separate Account at their
net asset value without any sales or redemption charge. Shares of the Funds
represent interests in the Accounts available for investment by the Separate
Account. Each Account corresponds to one of the divisions of the Separate
Account. The assets of each Account are separate from the others. An Account's
performance has no effect on the investment performance of any other Account.
THE CONTRACT
The descriptions that follow are based on provisions of the Contract offered by
this prospectus. You should refer to the actual Contract and the terms and
limitations of any tax qualified plan which is to be funded by the Contract. Tax
qualified plans are subject to several requirements and limitations which may
affect the terms of any particular Contract or the advisability of taking
certain action permitted by the Contract.
To Buy a Contract
If you want to buy a Contract, you must submit an application and make an
initial purchase payment. If the application is complete and the Contract
applied for is suitable, the Contract is issued. If the completed application is
received in proper order, the initial purchase payment is credited within two
valuation days after the later of receipt of the application or receipt of the
initial purchase payment at the Company's home office. If the initial purchase
payment is not credited within five valuation days, it is refunded unless we
have received your permission to retain the purchase payment until we receive
the information necessary to issue the Contract.
1. Purchase payments
The initial purchase payment must be at least $10,000. Subsequent payments must
be at least $50. The total of all purchase payments may not be greater than
$2,000,000 without our prior approval.
The Company reserves the right to:
o increase the minimum amount for each purchase payment to not more than
$1,000, and
o terminate a Contract and distribute the accumulated value if no
premiums are paid during two consecutive calendar years and the
accumulated value (or total purchase payments less partial surrenders
and applicable surrender charges and transfer fees) is less than
$5,000.
The Company will first notify you of its intent to exercise this right and give
you 60 days to increase the accumulated value to at least $5,000.
2. Allocation of purchase payments and free-look period
Your purchase payments are allocated to the divisions of the Separate Account or
to the Fixed Account according to your instructions. The percentage allocation
for future purchase payments may be changed, without charge, at any time by
sending a written request to or telephoning the Company. The allocation changes
are effective at the end of the valuation period in which your new instructions
are received. You may not allocate your investment to the Fixed Account if it
causes the value of the Fixed Account to be more than $1,000,000 (without our
prior approval).
You may surrender the Contract for any reason during the free-look period. Some
states require us to return the initial purchase payment. If your Contract is
issued in one of those states, your initial purchase payments are allocated to
the Money Market Division for 15 days (20 days for contracts issued in Idaho)
after the contract date. After the 15-day period (20 days in Idaho), the initial
purchase payment is reallocated according to your allocation instructions. The
states in which purchase payments are returned are:
Colorado Kentucky North Carolina
Connecticut* Louisiana Oklahoma
Georgia Maryland Rhode Island
Hawaii Michigan South Carolina
Idaho Missouri Utah
Indiana Nebraska Washington
*Purchase payments are refunded if the Contract is canceled prior to its
delivery, otherwise accumulated value is refunded.
If your Contract is issued in a state not listed above and if you surrender the
Contract during the free-look period, you will receive the accumulated value.
Under state law, you have the right to surrender the Contract for any reason
during the free-look period. The free-look period is 10 days after the Contract
is delivered to you in all states, unless your Contract is issued in:
a. California and you are age 60 and over (your free-look period is 30
days);
b. Colorado (15 day free-look period); or
c. Idaho and North Dakota (20 day free-look period).
You may surrender the Contract by returning it, and a written request to
surrender the Contract, to the Company's home office or to the sales
representative who sold it to you before the close of business on the last day
of the free-look period. If you send the surrender request (properly addressed
and postage prepaid) to the Company, the date of the postmark is used to
determine if the free-look period has expired.
If the purchase of this Contract is a replacement for another annuity contract
or a life insurance policy, different free-look periods may apply. The Company
reserves the right to keep the initial purchase payment in the Money Market
division longer than 15 days as allowed by a particular state's replacement
requirements.
The Accumulation Period
1. The value of your Contract
The value of your Contract is the total of the Separate Account value plus any
Fixed Account value. The Fixed Account value is described in the section titled
FIXED ACCOUNT.
There is no guaranteed minimum Separate Account value. Its value reflects the
investment experience of the divisions of the Separate Accounts that you choose.
It also reflects your purchase payments, partial surrenders and the Contract
expenses deducted from the Separate Account. At the end of any valuation period,
your Contract's value in a division is:
o the number of units you have in a division multiplied by
o the value of a unit in the division.
The number of units is the total of units purchased by allocations to the
division from:
o your initial purchase payment;
o subsequent investments; and
o transfers from another division or the Fixed Account.
minus units sold:
o for partial surrenders from the division;
o as part of a transfer to another division or the
Fixed Account; and
o to pay Contract charges and fees.
Unit values are calculated each valuation date. To calculate the unit value of a
division, the unit value from the previous valuation date is multiplied by the
divisions' net investment factor for the current valuation period. The number of
units does not change due to a change in unit value.
The net investment factor measures the performance of each division. The net
investment factor for a valuation period is calculated as follows:
[{share price of the underlying mutual fund account at the end of the
valuation period
plus
per share amount of the dividend (or other distribution) made by the
mutual fund account during the valuation period}
divided by
share price of the underlying mutual fund account at the end of the
previous valuation period]
subtract
{an administration charge (if any) plus the mortality and expense risks
charge}
The administration charge (if any) and the mortality and expense risks charge
are calculated by dividing the annual amount of the charge by 365 and
multiplying by the number of days in the valuation period.
2. Allocation of purchase payments
On your application for the Contract, you direct your purchase payments to be
allocated to divisions of the Separate Account, the Fixed Account or both.
Percentages must be in whole numbers and total 100%. Subsequent investments are
made using the same allocation percentages unless you change the allocations.
Changes to the allocation percentages may be made without charge. A change is
effective on the next valuation period after we receive your new instructions.
You can change the allocations by mailing your instructions to us or calling us
at _____________.
3. Separate Account Division Transfers
You may request an unscheduled transfer or set up a periodic transfer by sending
us a written request or calling us if telephone services apply
(1-800-_________). You must specify the dollar amount or percentage to transfer
from each Separate Account division. In states where allowed, we reserve the
right to reject transfer instructions from someone providing them for multiple
Contracts for which he or she is not the owner.
You may not make a transfer to the Fixed Account if:
o a transfer has been made from the Fixed Account to a division
within six months, or
o after the transfer, the Fixed Account value would be more than
$1,000,000 (without our prior approval).
Unscheduled
o You may make unscheduled Separate Account division transfers from a
division to another division or to the Fixed Account.
o The transfer is made, and values determined, as of the end of the
valuation period in which we receive your request.
o The transfer amount must be equal or greater than the lesser of $50 or
the value of your account(s) in the Separate Account divisions.
o A $30 fee is imposed on each unscheduled transfer after the 12th
unscheduled transfer in a contract year (for fee purposes, all
transfers based on a single instruction are considered to be a single
transfer).
Scheduled
o You may elect to have automatic transfers made on a periodic basis.
o You select the transfer date (other than the 29th, 30th or 31st) and
the transfer period.
o automatic portfolio rebalancing (annually, semi-annually or
quarterly)
o dollar cost averaging (annually, semi-annually, quarterly or
monthly)
o If the selected date is not a valuation date, the transfer is completed
on the next valuation date.
o Transfers continue until your interest in the division is exhausted or
we receive notice to stop them.
o We reserve the right to limit the number of Separate Account divisions
from which simultaneous transfers are made. In no event will it ever be
less than two.
4. Separate Account Surrenders
Surrenders from the Separate Account are generally paid within seven days of the
effective date of the request for surrender (or earlier if required by law).
However, certain delays in payment are permitted (see GENERAL PROVISIONS - Delay
of Payment). Surrenders before age 59 1/2 may involve an income tax penalty (see
FEDERAL TAX MATTERS). You must send us a written request for any surrender.
You may specify surrender allocations percentages with each partial surrender
request. If you don't provide us with specific percentages, we will use your
purchase payment allocation percentages for the partial surrender.
Total
o You may surrender the Contract on or before the annuity payment date.
o You receive the cash surrender value at the end of the valuation period
during which we receive your surrender request.
o The cash surrender value is the total of the values of your accounts in
the Separate Account divisions plus any amount you have in the Fixed
Account minus any applicable surrender charge or transaction fee.
o The written consent of all collateral assignees and irrevocable
beneficiaries must be obtained prior to surrender.
o We reserve the right to require you to return the Contract to us prior
to making any payment though this does not affect the amount of the
cash surrender value.
Unscheduled partial
o Prior to the annuity payment date, you may surrender a part of the
Fixed Account and/or Separate Account value by sending us a written
request.
o You must specify the dollar amount of the surrender which must be $50
or more.
o The surrender is effective at the end of the valuation period during
which we receive your written request for surrender.
o The surrender is deducted from your Fixed Account value and/or your
account in any Separate Account division according to the surrender
allocation percentages you specify.
o If surrender allocation percentages are not specified, we use your
purchase payment allocation percentages.
o We surrender units from the Separate Account divisions and/or Fixed
Account to equal the dollar amount of the surrender request plus any
applicable Fixed Account surrender charge.
o The accumulated value after the unscheduled partial surrender must be
equal or greater than $5,000 (we reserve the right to change the
minimum remaining accumulated value but it will not be greater than
$10,000).
o A $30 fee is imposed on each unscheduled partial surrender after the
12th unscheduled partial surrender in a contract year. Surrenders from
multiple divisions made at the same time are considered to be one
surrender for purposes of calculating this fee.
Scheduled partial
o You may elect partial surrenders on a periodic basis by sending us
written notice.
o Your accumulated value must be at least $5,000 when the surrenders
begin.
o Surrenders are made from any of the Separate Account divisions and/or
the Fixed Account.
o You may specify monthly, quarterly, semi-annually or annually and pick
a surrender date (other than the 29th, 30th or 31st).
o If the selected date is not a valuation date, the transfer is completed
on the next valuation date.
o The surrender is deducted from your Fixed Account value and/or your
account in any Separate Account division according to the surrender
allocation percentages you specify.
o If surrender allocation percentages are not specified, we use your
purchase payment allocation percentages.
o We surrender units from the Separate Account divisions and/or Fixed
Account to equal the dollar amount of the surrender request plus any
applicable surrender charge.
o The surrenders continue until the accumulated value is exhausted or we
receive written notice to stop them.
5. Death Benefit
Before the annuity payment date, you may give us written instructions for
payment under a benefit option. If we do not receive your instructions, the
death benefit is paid according to instructions from the beneficiary. No
surrender charge applies when a death benefit is paid.
The beneficiary is the person or persons you name in the application to receive
benefits upon your death. If the owner is not a natural person, death benefits
are paid to the beneficiary upon the death of the annuitant.
Unless you have named an irrevocable beneficiary, you may change your
beneficiary by providing us with written notice. If a beneficiary dies before
you, on your death we will make equal payments to the surviving beneficiaries
unless you had provided us with other written instructions. If none of your
beneficiaries survives you, we will pay the death benefit to your estate in a
lump sum.
The death benefit is usually paid within seven days of our receiving all
documents (including proof of death) that we require to process the claim and
the beneficiary's written instructions. Some states require this payment to be
made in less than seven days. Under certain circumstances, this payment may be
delayed (See GENERAL PROVISIONS - Delay of Payments). We pay interest (at least
3% or as required by state law) on the death benefit from the date we receive
all required documents until payment is made or until the death benefit is
applied under a benefit option.
Standard Death Benefit
The amount of the death benefit is the greater of:
o your accumulated value on the date we receive all required documents,or
o the total of purchase payments minus any partial surrenders, fees and
charges as of the date we receive all required documents and notice
(including proof)of death.
If you die before the annuitant and your beneficiary is your spouse, we will
continue the Contract with your spouse as the new owner. Alternatively, within
60 days of your death, your spouse may elect to:
o apply the death benefit under a benefit option, or
o receive the death benefit as a single payment.
If the annuitant dies before you and is not a joint owner, you may name a new
annuitant. If a new annuitant is not named within 60 days of our receiving
notice (including proof) of the annuitant's death, you will become the
annuitant. If the owner of the contract is not a natural person, the annuitant's
death is treated as the death of the owner.
If your beneficiary is a natural person but not your spouse, the death benefit
may be paid as:
o fixed income for a period of years that is not greater than the life
expectancy of the beneficiary;
o life income with no minimum guaranteed
period or a minimum guaranteed period that is not
greater than the life expectancy of the beneficiary;
o lump sum, or
o an individual arrangement approved by us.
NOTE: If your beneficiary is not a natural person, the death benefit
must be paid out within five years of your death.
If you die before the annuitant and before the annuity payment
date, there may be additional requirements imposed by the
Code. (See FEDERAL TAX MATTERS)
The Retirement Period
1. Annuity payment date
You may specify an annuity payment date in your application. If the annuitant is
living and the Contract is in force on that date, we will notify you to begin
taking payments under the Contract. You may not select an annuity payment date
which is on or after the Annuitant's 85th birthday or 10 years after the
contract date.
Depending on the type of retirement arrangement made when a Contract is issued,
payments that are made too early or too late may be subject to penalty taxes.
(See FEDERAL TAX MATTERS) You should consider this carefully when you select or
change the annuity payment date.
You may change the annuity payment date with our prior approval. The request
must be in writing and approved before we issue a supplementary Contract which
provides a benefit option. The new annuity payment date must be any contract
anniversary on or before the maximum annuity payment date.
2. Benefit Options
You may elect to have benefit option payments made on a monthly, quarterly,
semiannual or annual basis. There is no right to make any total or partial
surrender after benefit option payments start.
The amount of the benefit option payment depends on:
o amount of accumulated value;
o benefit option selected; and
o age of annuitant (unless fixed income option is selected).
Benefit option payments generally are higher for male annuitants than for female
annuitants with an otherwise identical contract. This is because statistically
females have longer life expectancies than males. In certain states, this
difference may not be taken into consideration in fixing the payment amount.
Additionally, contracts with no gender distinctions are made available for
certain employer-sponsored plans because under most such plans, such contract
provisions are prohibited by law.
You may select a benefit option or change a previous selection by written
request. We must receive the request on or before the annuity payment date.
Payments under the benefit options are made as of the first day of each payment
period beginning with the annuity payment date. The available benefit options
are:
o Fixed Income. Payments of a fixed amount or payments for a fixed
period of at least five years but not more than 30 years. Payments
stop after all guaranteed payments are made.
o Life Income. Payments are made as of the first day of each payment
period during the annuitant's life, starting with the annuity payment
date. No payments are made after the annuitant dies. It is possible
that you would only receive one payment under this option if the
annuitant dies before the second payment is due. If you die after the
payments begin and before the end of the minimum guaranteed period (if
applicable), the remaining payments are made to the beneficiary named
under your benefit option.
o Joint and Survivor Life Income. Payments are made during the life of
the annuitant and joint annuitant, continuing until the death of the
survivor. This option includes a minimum guaranteed period of 10 years.
If both persons die before the end of the minimum guaranteed period,
the remaining payments are made to the beneficiary under your benefit
option.
o Joint and two-thirds Survivor Life Income. Payments continue as long as
either the annuitant or the joint annuitant is alive. If either the
annuitant or joint annuitant dies, payments continue to the survivor at
two-thirds the original amount. Payments stop when both the annuitant
and joint annuitant have died. It is possible that only one payment is
made under this option if both annuitants die before the second payment
is due.
o Other benefit options may be available with our approval.
In order to avoid tax penalties, payments from at least one of your qualified
contracts must start no later than April 1 following the calendar year in which
you turn age 70 1/2. The required minimum payment is a distribution in equal (or
substantially equal) amounts over your life or over the joint lives of you and
your designated beneficiary. In addition, payments must be made at least once a
year. Tax penalties may also apply at your death on certain excess
accumulations. You should consider potential tax penalties with your tax advisor
when selecting a benefit option or taking other distributions from the Contract.
CHARGES AND DEDUCTIONS
A mortality and expense risks charge and in some circumstances a transaction fee
and state premium taxes are deducted under the Contract. A surrender charge (on
surrenders) and a transfer fee (on transfers to divisions of the Separate
Account) may also be deducted from certain withdrawals from the Fixed Account
made before the annuity payment date. We reserve the right to assess a daily
Separate Account administration charge. There are also deductions from and
expenses paid out of the assets of the Accounts which are described in the
Funds' prospectuses.
Mortality and Expense Risks Charge
We assess each division of the Separate Account with a daily charge for
mortality and expense risks. The annual rate of the charge is 0.85% of the
average daily net assets of the Separate Account. We reserve the right increase
this charge but guarantee that it will not exceed 1.25% per year. This charge is
assessed only prior to the annuity payment date. This charge is assessed daily
when the value of an accumulation unit is calculated.
We have a mortality risk in that we guarantee payment of a death benefit in a
single sum or under a benefit option. No surrender charge is imposed on a death
benefit payment which gives us an additional mortality risk.
The expense risk that we assume is that the actual expenses incurred in issuing
and administering the Contract exceed the Contract limits on administrative
charges.
If the mortality and expense risks charge is not enough to cover the costs, we
bear the loss. If the amount of mortality and expense risks charge deducted is
more than our costs, the excess is profit to the Company. We expect a profit
from the mortality and expense risks charge.
Transaction Fee
A transaction fee of $30 applies to each unscheduled partial surrender after the
twelfth unscheduled partial surrender in a contract year. A $30 transaction fee
is also charged to each unscheduled transfer from a division after the twelfth
such transfer in a contract year. The transaction fee is deducted from the Fixed
Account and/or your interest in a Separate Account division from which the
amount is surrendered or transferred, on a pro rata basis.
Premium Taxes
We reserve the right to deduct an amount to cover any premium taxes imposed by
states or other jurisdictions. Any deduction is made from either a purchase
payment when we receive it, or the accumulated value when you request a
surrender (total or partial) or it is applied under a benefit option.
Fixed Account Surrender Charge and Transfer Fee
No sales charge is collected or deducted when purchase payments are applied
under the Contract to provide a benefit option. A surrender charge is assessed
on certain total or partial surrenders from the Fixed Account. The amounts we
receive from the surrender charge are used to cover some of the expenses of the
sale of the Contract (commissions and other promotional or distribution
expenses). If the surrender charge collected is not enough to cover the actual
costs of distribution, the costs are paid from the Company's General Account
assets which will include profit, if any, from the mortality and expense risks
charge.
The surrender charge for any total or partial surrender is a percentage of the
Fixed Account purchase payments withdrawn or surrendered which were received by
us during the seven contract years prior to the withdrawal or surrender. The
applicable percentage which is applied to the sum of the Fixed Account purchase
payments (which includes amounts transferred to the Fixed Account from any of
the Separate Account divisions) paid during each contract year is determined by
the following table.
The Fixed Account transfer fee is assessed on certain transfers from the Fixed
Account to the Separate Account.
<TABLE>
<CAPTION>
Table of Fixed Account Surrender Charges and Transfer Fees
number of completed contract years surrender charge and transfer fee applied
since each Fixed Account purchase* to Fixed Account surrenders and transfers
was made beyond Free Transaction Amount
<S> <C> <C>
0 (year of purchase payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and later 0
</TABLE>
* Includes amounts transferred to Fixed Account from Separate Account divisions.
Each Fixed Account purchase payment begins in year 0 for purposes of
calculating the percentage applied to that payment.
We assume that surrenders and transfers are made in the following order:
o first from Fixed Account purchase payments we received more than seven
completed contract years prior to the surrender (or transfer);
o then from the Fixed Account free transaction amount (first from the
Fixed Account's earnings, then from the oldest Fixed Account purchase
payments(first-in, first-out))described below; and
o then from Fixed Account purchase payments we received within the seven
completed contract years before the surrender (or transfer) on a
first-in, first-out basis.
Where permitted by state law, we reserve the right to reduce
o the surrender charge fee for any amounts surrendered from this
Contract, and/or
o transfer fees on amounts transferred from the Fixed Account to the
Separate Account.
These reductions would apply to Contracts that are attributable to a
conversion from other products issued by the Company and its subsidiaries and
as otherwise permitted by the Investment Company Act of 1940(as amended).
Waiver of Fixed Account Surrender Charge Rider
The Fixed Account Surrender Charge will not apply to:
o amounts applied under a benefit option; or
o payment of death benefit; or
o amounts distributed to satisfy the minimum distribution requirement of
Section 401(a)9 of the Code (applies to qualified Contracts only) ; or
o after the seventh contract year, amounts transferred from the Contract
to a Single Premium Immediate Annuity issued by us, or
o any amount transferred from a Contract used to fund another annuity
contract issued by us to the contract owner's spouse when the
distribution is made under a divorce decree, or
o withdrawals made after the first Contract anniversary (if permitted by
state law) if the owner or annuitant has a critical need.
Waiver of the charge is available for critical need if the following conditions
are met:
o owner or annuitant has a critical need;
o the owner or annuitant to whom the critical need applies is the
original owner or annuitant; and
o the critical need did not exist before the contract date.
For the purposes of this section, the following definitions apply:
o critical need - owner's or annuitant's confinement to a health care
facility, terminal illness diagnosis or total and permanent
disability. If the critical need is confinement to a health care
facility, the confinement must continue for at least 60 consecutive
days after the contract date and the withdrawal must occur within
90 days of the confinement's end.
o heath care facility - a licensed hospital or inpatient nursing facility
providing daily medical treatment and keeping daily medical records for
each patient (not primarily providing just residency or retirement
care). This does not include a facility primarily providing drug or
alcohol treatment, or a facility owned or operated by the owner,
annuitant or a member of their immediate families.
o terminal illness - sickness or injury that results in the owner's or
annuitant's life expectancy being 12 months or less from the date
notice to receive a distribution from the Contract is received by the
Company.
o total and permanent disability - a disability that occurs after the
contract date and that qualifies the owner or annuitant to receive
social security disability payments. In New York and West Virginia,
different definitions of total and permanent disability apply. Contact
us at 1-800-_________ for additional information.
This rider is not available in New Jersey or Pennsylvania. In New York, the
rider only applies if the original owner or original annuitant suffers a total
and permanent disability.
Administration Charge
We reserve the right to assess each division of the Separate Account with a
daily charge at the annual rate of 0.15% of the average daily net assets of the
division. This charge would only be imposed before the annuity payment date.
This charge would be assessed to help cover administrative expenses.
Administrative expenses include the cost of issuing the Contract, clerical,
recordkeeping and bookkeeping services, keeping the required financial and
accounting records, communicating with Contract owners and making regulatory
filings.
Special Provisions for Group or Sponsored Arrangements
Where permitted by state law, Contracts may be purchased under group or
sponsored arrangements as well as on an individual basis.
o group arrangement - program under which a trustee, employer or similar
entity purchases
Contracts covering a group of individuals on a group basis.
o sponsored arrangement - program under which an employer permits group
solicitation of its employees or an association permits group
solicitation of its members for the purchase of Contracts on an
individual basis.
The charges and deductions described above may be reduced for Contracts issued
in connection with group or sponsored arrangements. The rules in effect at the
time the application is approved will determine if reductions apply. Reductions
may include Contracts without, or with reduced, Fixed Account surrender charges
or transfer fees.
Availability of the reduction and the size of the reduction (if any) is based
factors such as:
o size of group;
o expected number of participants; and
o anticipated purchase payments from the group.
Reductions reflect the reduced sales efforts and administrative costs resulting
from these arrangements.
We may modify the criteria for and the amount of the reduction in the future.
Modifications will not unfairly discriminate against any person, including
affected Contract owners and other contract owners with contracts funded by the
Separate Account.
FIXED ACCOUNT
You may allocate purchase payments and transfer amounts from the Separate
Account to the Fixed Account. Assets in the Fixed Account are held in the
General Account of the Company. Because of exemptive and exclusionary
provisions, interests in the Fixed Account are not registered under the
Securities Act of 1933 and the General Account is not registered as an
investment company under the Investment Company Act of 1940. The Fixed Account
is not subject to these Acts. The staff of the Commission does not review the
prospectus disclosures relating to the Fixed Account. However, these disclosures
are subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in the
prospectus.
This prospectus is intended to serve as a disclosure document only for the
Contract as it relates to the Separate Account. It only contains selected
information regarding the Fixed Account. More information concerning the Fixed
Account is available from our home office or from a sales representative.
General Description
Our obligations with respect to the Fixed Account are supported by the Company's
General Account. The General Account is the assets of the Company other than
those allocated to any of the Company's Separate Accounts. Subject to applicable
law, the Company has sole discretion over the assets in the General Account.
The Company guarantees that purchase payments allocated to the Fixed Account
earn interest at a guaranteed interest rate. In no event will the guaranteed
interest rate be less than 3% compounded annually.
Each purchase payment allocated or amount transferred to the Fixed Account earns
interest at the guaranteed rate in effect on the date it is received or
transferred. This rate applies to each purchase payment or amount transferred
through the end of the contract year.
Each contract anniversary, we declare a renewal interest rate that is guaranteed
and applies to the Fixed Account value in existence at that time. This rate
applies until the end of the contract year. Interest is earned daily and
compounded annually at the end of each contract year. Once credited, the
interest is guaranteed and becomes part of the accumulated value in the Fixed
Account from which deductions for fees and charges may be made.
Fixed Account Value
Your Contract's Fixed Account value on any valuation date is the sum of:
o purchase payments allocated to the Fixed Account;
o plus any transfers to the Fixed Account from the Separate Account;
o plus interest credited to the Fixed Account;
o minus any surrenders, surrender charges, or transaction fees allocated
to the Fixed Account;
o minus any transfers (and transfer fees) to the Separate Account.
Fixed Account Transfers, Total and Partial Surrenders
Transfers and surrenders from your investment in the Fixed Account are subject
to certain limitations. In addition, surrenders and transfers from the Fixed
Account may be subject to a charge or fee (see Table of Fixed Account Surrender
Charges and Transfer Fees).
You may transfer amounts from the Fixed Account to the Separate Account
divisions before the annuity payment date and as provided below. Transfer occurs
within one business day of our receiving your instructions. You may transfer
amounts by making either a scheduled or unscheduled Fixed Account transfer. You
may not make both a scheduled and unscheduled Fixed Account transfer in the same
contract year.
Fixed Account Free Transaction Amount
Each contract year, a certain portion of your Fixed Account value may be:
o withdrawn free of the surrender charge, or
o transferred to the Separate Account free of the transfer fee.
The surrender charge and transfer fee do no apply to Fixed Account surrenders or
transfers (or a combination of surrenders and transfers) which do not exceed the
greater of:
o your Fixed Account's earnings (Fixed Account value minus
unsurrendered/non-transferred Fixed Account purchase payments still
subject to a surrender charge or transfer fee)*, or
o 10% of your total Fixed Account value recalculated as of the later of
the contract date or last contract anniversary, or
o any amount to satisfy the minimum distribution amount requirement of
the Code.
In addition, 10% of Fixed Account purchase payments during the current Contract
year may be surrendered without a surrender charge or transferred without a
transfer fee.
Unscheduled Fixed Account Transfer You may make an unscheduled transfer from
the Fixed Account each contract year as follows:
o Transfer occurs within one business day of our receiving your
instructions.
o You must specify the dollar amount or percentage to be transferred.
o Amounts in excess of the Fixed Account Free Transaction Amount may be
subject to a transfer fee.
o You may transfer up to 100% of your Fixed Account value (without
incurring the transfer fee) within 30 days after a contract anniversary
if:
o your Fixed Account value is less than $1,000, or
o the renewal interest rate for your Fixed Account value for the
current contract year is more than one percentage point lower
than the weighted average of your Fixed Account interest
rates for the preceding contract year.
o If you do not meet one of the preceding conditions, transfers
from the Fixed Account may be subject to a surrender charge.
See Table of Fixed Account Surrender Charges and Transfer
Fees.
Scheduled Fixed Account Transfer (Dollar Cost Averaging) You may make scheduled
transfers on a periodic basis from the Fixed Account as follows:
o Transfers occur on a date you specify (other than the 29th, 30th or
31st of any month).
o If the selected date is not a valuation date, the transfer is
completed on the next valuation date.
o The minimum transfer amount is $50.
o Transfers continue until your value in the Fixed Account is exhausted
or we receive your notice to stop them.
o If you stop the transfers, you may not start them again without our
prior approval.
GENERAL PROVISIONS
The Contract
The entire Contract is made up of: applications, amendments, riders and
endorsements attached to the Contract; current data page; copies of any
supplemental applications, amendments, endorsements and revised Contract pages
or data pages which are mailed to you. Only our corporate officers can agree to
change or waive any provisions of a Contract. Any change or waiver must be in
writing and signed by an officer of the Company.
Delay of Payments
Surrenders are generally made within seven days after we receive your
instruction for a surrender in a form acceptable to us. This period may be
shorter where required by law. However, payment of any amount upon total or
partial surrender, death or the transfer to or from a division of the Separate
Account may be deferred during any period when the right to sell Fund shares is
suspended as permitted under provisions of the Investment Company Act of 1940
(as amended).
The right to sell shares may be suspended during any period when:
o trading on the New York Stock Exchange is restricted as determined by
the Commission or when the Exchange is closed for other than weekends
and holidays, or
o an emergency exists, as determined by the Commission, as a result of
which:
o disposal by a Fund of securities owned by it is not reasonably
practicable;
o it is not reasonably practicable for a Fund to fairly
determine the value of its net assets; or
o the Commission permits suspension for the protection of
security holders.
If payments are delayed and your surrender is not canceled by your written
instruction, the amount to be surrendered will be determined the first valuation
date following the expiration of the permitted delay. The surrender will be made
within seven days thereafter.
In addition, payments on surrenders attributable to a purchase payment made by
check may be delayed up to 15 days. This permits payment to be collected on
the check. We may also defer payment of surrender proceeds payable out of
the Fixed Account for a period of up to six months.
Misstatement of Age or Sex
If the age or, where applicable, gender of the annuitant has been misstated, we
adjust the income payable under your Contract to reflect the amount that would
have been payable at the correct age and gender. If we make any overpayment
because of incorrect information about age or gender, or any error or
miscalculation, we deduct the overpayment from the next payment or payments due.
Underpayments are added to the next payment.
Assignment
You may assign your non-qualified Contract. We assume no responsibility for the
validity of any assignment. An assignment or pledge of a Contract may have
adverse tax consequences.
An assignment must be made in writing and filed with us at our home office. Your
rights, as well as those of the annuitant and beneficiary, are subject to any
assignment on file with us. Any amounts paid to an assignee are treated as a
partial surrender and is paid in a single lump sum.
Change of Owner
You may change your ownership designation at any time (this does not apply to
IRAs or IRA rollovers). Your request must be in writing and approved by us.
After approval, the change is effective as of the date you signed the request
for change. We reserve the right to require that you send us the Contract so
that we can record the change.
Beneficiary
Before the annuity payment date, you have the right to name a beneficiary. This
may be done as part of the application process or by sending us a written
request. Unless you have named an irrevocable beneficiary, you may change your
beneficiary designation by sending us a written request.
Contract Termination
We reserve the right to terminate the Contract and make a single sum payment
(without imposing any charges) to you if your accumulated value at the end of
the accumulation period is less than $5,000. Before the Contract is terminated,
we will send you a notice to increase the accumulated value to $5,000 within 60
days.
RIGHTS RESERVED BY THE COMPANY
We reserve the right to make certain changes if, in our judgement, they best
serve the interests of you and the annuitant or are appropriate in carrying out
the purpose of the Contract. Any changes will be made only to the extent and in
the manner permitted by applicable laws. Also, when required by law, we will
obtain your approval of the changes and approval from any appropriate regulatory
authority. Approvals may not be required in all cases. Examples of the changes
the Company may make include:
o transfer assets in any division to another division or to the Fixed
Account;
o add, combine or eliminate divisions in the Separate Account; or
o substitute the shares of an Account for the Account shares in any
division:
o if shares of an Account are no longer available for
investment; or
o if in our judgement, investment in an Account becomes
inappropriate considering the purposes of the Separate
Account.
DISTRIBUTION OF THE CONTRACT
The individuals who sell the Contract are authorized to sell life and other
forms of personal insurance and variable annuities. Though it is sold primarily
by insurance agents who are employees of the Company, the Contract may also be
offered by insurance agents or brokers who are not our employees but who are
appointed by us to sell variable annuities. Our employees who sell the Contract
are also registered representatives of Princor Financial Services Corporation,
Principal Financial Group, Des Moines, Iowa 50392-0200. Princor is a broker-
dealer registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. When the Contract is sold by
our employees, as the principal underwriter, Princor is paid 1.35% of purchase
payments by the Company for the distribution of the Contract. Princor is also
the principal underwriter for various registered investment companies organized
by the Company. Princor is an indirectly wholly-owned subsidiary of the Comapny.
In addition to being sold by our employees, the Contract may be offered through
other registerd representatives of Princor and registered repesentatives of
other selected broker-dealers. Such broker-dealers are either registered under
the Securities Exchanges Act of 1934 or are exempt from such registration. When
the Contract is sold by other than our employees, as the principal underwriter,
Princor is paid 1.50% of purchase payments by the Company for the distribution
of the Contract.
PERFORMANCE CALCULATION
The Separate Account may publish advertisements containing information
(including graphs, charts, tables and examples) about the performance of one or
more of its divisions. The Contract was not offered prior to ___________, 1999.
However, shares of Accounts in which the Bond, Capital Value, International,
MidCap, MidCap Growth, Money Market, SmallCap and SmallCap Growth divisions of
the Separate Account invest were offered prior to that date. The Separate
Account may publish advertisements containing information about the hypothetical
performance of one or more of its divisions for this Contract as if the Contract
had been issued on or after the date the Account in which the division invests
was first offered. The hypothetical performance from the date of the inception
of the Account in which the division invests is calculated by reducing the
actual performance of the underlying Account by the fees and charges of this
Contract as if it had been in existence.
The American Century VP Income & Growth, Blue Chip, LargeCap Growth, MidCap
Value, Stock Index 500, and Templeton VP Stock divisions of the Separate
Account were not offered until __________, 1999. Performance data for these
divisions are calculated utilizing standardized performance formulas and
shows performance since the inception date of the division.
The yield and total return figures described below vary depending upon market
conditions, composition of the underlying Account's portfolios and operating
expenses. These factors and possible differences in the methods used in
calculating yield and total return should be considered when comparing the
Separate Account performance figures to performance figures published for other
investment vehicles. The Separate Account may also quote rankings, yields or
returns as published by independent statistical services or publishers and
information regarding performance of certain market indices. Any performance
data quoted for the Separate Account represents only historical performance and
is not intended to indicate future performance. For further information on how
the Separate Account calculates yield and total return figures, see the SAI.
From time to time the Separate Account advertises its Money Market division's
"yield" and "effective yield" for these Contracts. 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 7-day period (which period is 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" is slightly
higher than the "yield" because of the compounding effect of the assumed
reinvestment.
In addition, the Separate Account advertises the "yield" for other divisions for
the Contract. The "yield" of a division is determined by annualizing the net
investment income per unit for a specific, historical 30-day period and dividing
the result by the ending maximum offering price of the unit for the same period.
The Separate Account also advertises 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.
VOTING RIGHTS
The Company votes Account shares of the Principal Variable Contracts Fund, Inc.
held in the Separate Account at meetings of shareholders of those Accounts. It
follows your voting instructions if you have an investment in the corresponding
division of the Separate Account.
The number of Account shares in which you have a voting interest is determined
by the Company as of a date not more than 90 days before the meeting of the
shareholders of the Account. Your voting instructions are solicited by written
communication at least ten days prior to the meeting. The number of Account
shares held in Separate Account B attributable to your interest in each division
is determined by dividing the value of your interest in that division by the net
asset value of one share of the underlying Account. Account shares for which
owners are entitled to give voting instructions, but for which none are
received, and shares of the Account owned by the Company are voted in the same
proportion as the total shares for which voting instructions have been received.
Proxy materials are provided to you along with an appropriate form that may be
used to give voting instructions to the Company.
If the Company determines pursuant to applicable law that Account shares held in
Separate Account B need not be voted pursuant to instructions received from
Owners, then the Company may vote Account shares held in Separate Account B in
its own right.
FEDERAL TAX MATTERS
The following description is a general summary of the tax rules, primarily
related to federal income taxes, which in our opinion are currently in effect.
These rules are based on laws, regulations and interpretations which are subject
to change at any time. This summary is not comprehensive and is not intended as
tax advice. Federal estate and gift tax considerations, as well as state and
local taxes, may also be material. You should consult a qualified tax adviser
about the tax implications of taking action under a Contract or related
retirement plan.
Non-Qualified Contracts
Section 72 of the Code governs the taxation of annuities in general.
o Purchase payments made under non-qualified Contracts are not excludible
or deductible from your gross income or any other person's gross
income.
o An increase in the accumulated value of a non-qualified Contract
resulting from the investment performance of the Separate Account or
interest credit to the Fixed Account is generally not taxable until
paid out as surrender proceeds, death benefit proceeds, or otherwise.
o Generally, owners who are not natural persons are immediately taxed on
any increase in the accumulated value.
The following discussion applies generally to Contracts owned by natural
persons.
o Surrenders or partial surrenders are taxed as ordinary income to the
extent of the accumulated income or gain under the Contract.
o The value of the Contract pledged or assigned is taxed as ordinary
income to the same extent as a partial withdrawal.
o Benefit option payments:
o The investment in the Contract is generally the total of the
purchase payments made.
o The portion of the benefit option payment that represents the
amount by which the
accumulated value exceeds the investment in the Contract is
taxed as ordinary income. The remainder of each benefit option
payment is not taxed.
o After the investment in the Contract is paid out, the full
amount of any benefit option payment is taxable.
For purposes of determining the amount of taxable income resulting from
distributions, all Contracts and other annuity contracts issued by us or our
affiliates to the same owner within the same calendar year are treated as if
they are a single contract.
A transfer of ownership of a Contract, or designation of an annuitant or other
payee who is not also the owner, may result in a certain income or gift tax
consequences to the owner. If you are contemplating any transfer or assignment
of a Contract, you should contact a competent tax advisor with respect to the
potential tax effects of such transactions.
Required Distributions for Non-Qualified Contracts
In order for a non-qualified Contract to be treated as an annuity contract for
federal income tax purposes, the Code requires:
o If the person receiving payments dies on or after the annuity payment
date but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of the interest is distributed at
least as rapidly as under the method of distribution being used as
of the date of that person's death.
o If you die prior to the annuity payment date, the entire interest in
the Contract will be distributed:
o within five years after the date of your death, or
o as annuity payments which begin within one year of your death
and which are made over the life of your designated
beneficiary or over a period not extending beyond the life
expectancy of that beneficiary.
o If you take a distribution from the Contract before you are 59 1/2, you
may incur an income tax penalty.
If your designated beneficiary is your surviving spouse, the Contract may be
continued with your spouse deemed to be the new owner for purposes of the Code.
Where the owner or other person receiving payments is not a natural person, the
required distributions provided for in the Code apply upon the death of the
primary annuitant.
Generally, unless the beneficiary elects otherwise, the above requirements are
satisfied prior to the annuity payment date by paying the death benefit in a
single sum, subject to proof of your death. The beneficiary may elect by written
request to receive a benefit option instead of a lump sum payment. However, if
the election is not made within 60 days of the date the single sum death benefit
otherwise becomes payable, the IRS may disregard the election for tax purposes
and tax the beneficiary as if a single sum payment had been made.
IRA and SEP
The Contract may be used to fund IRAs and SEPs. The tax rules applicable to
owners, annuitants and other payees vary according to the type of plan and the
terms and conditions of the plan itself. In general, purchase payments made
under a retirement program recognized under the Code are excluded from the
participant's gross income for tax purposes prior to the annuity payment date.
The portion, if any, of any purchase payment made that is not excluded from
their gross income is their investment in the Contract. Aggregate deferrals
under all plans at the employee's option may be subject to limitations.
The tax implications of these plans are further discussed in the SAI under the
heading Taxation Under Certain Retirement Plans. Check with your tax advisor for
the rules which apply to your specific situation.
With respect to IRAs or IRA rollovers, there is a 10% penalty under the Code on
the taxable portion of a "premature distribution." Generally, an amount is a
"premature distribution" unless the distribution is:
o made on or after you reach age 59 1/2,
o made to a beneficiary on or after your death,
o made upon your disability,
o part of a series of substantially equal periodic payments for the life
or life expectancy of you or you and the beneficiary,
o made to pay medical expenses,
o for certain unemployment expenses,
o for first home purchases (up to $10,000), or
o for higher education expenses.
Rollover IRAs. If you receive a lump-sum distribution from a pension or profit
sharing plan, to maintain the tax deferred status of the money it may be rolled
into a "Rollover Individual Retirement Account." You have 60 days from receipt
of the money to complete this transaction. If you choose not to reinvest or go
beyond the 60 day limit and are under age 59 1/2, you will incur a 10% IRS
penalty as well as income tax expenses.
Withholding
Benefit option payments and other amounts received under the Contract are
subject to income tax withholding unless the recipient elects not to have taxes
withheld. The amounts withheld vary among recipients depending on the tax status
of the individual and the type of payments from which taxes are withheld.
Notwithstanding the recipient's election, withholding may be required on
payments delivered outside the United States. Moreover, special "backup
withholding" rules may require us to disregard the recipient's election if the
recipient fails to supply us with a "TIN" or taxpayer identification number
(social security number for individuals), or if the Internal Revenue Service
notifies us that the TIN provided by the recipient is incorrect.
Mutual Fund Diversification
The United States Treasury Department has adopted regulations under Section
817(h) of the Code which establishes standards of diversification for the
investments underlying the Contracts. Under this Code Section, Separate Account
investments must be adequately diversified in order for the increase in the
value of non-qualified Contracts to receive tax-deferred treatment. In order to
be adequately diversified, the portfolio of each underlying Account must, as of
the end of each calendar quarter or within 30 days thereafter, have no more than
55% of its assets invested in any one investment, 70% in any two investments,
80% in any three investments and 90% in any four investments. Failure of an
Account to meet the diversification requirements could result in tax liability
to non-qualified Contract holders.
The investment opportunities of the Accounts could conceivably be limited by
adhering to the above diversification requirements. This would affect all
owners, including owners of Contracts for whom diversification is not a
requirement for tax-deferred treatment.
STATE REGULATION
The Company is subject to the laws of the State of Iowa governing insurance
companies and to regulation by the Insurance Department of the State of Iowa. An
annual statement in a prescribed form must be filed by March 1 in each year
covering our operations for the preceding year and our financial condition on
December 31 of the prior year. Our books and assets are subject to examination
by the Commissioner of Insurance of the State of Iowa or her representatives at
all times. A full examination of our operations is conducted periodically by the
National Association of Insurance Commissioners. Iowa law and regulations also
prescribe permissible investments, but this does not involve supervision of the
investment management or policy of the Company.
In addition, we are subject to the insurance laws and regulations of other
states and jurisdictions where we are licensed to operate. Generally, the
insurance departments of these states and jurisdictions apply the laws of the
state of domicile in determining the field of permissible investments.
LEGAL OPINIONS
Legal matters applicable to the issue and sale of the Contracts, including our
right 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 SAI (Part B of the
Registration Statement) and Part C of the Registration Statement which the
Company has filed with the Commission. The SAI is a part of this Prospectus. You
may request a free copy of the SAI by writing or telephoning Princor. You may
obtain a copy of Part C of the Registration Statement from the Commission,
Washington, D.C. by paying the prescribed fees.
OTHER VARIABLE ANNUITY CONTRACTS
The Company currently offers other variable annuity contracts that participate
in Separate Account B. In the future, we may designate additional group or
individual variable annuity contracts as participating in Separate Account B.
INDEPENDENT AUDITORS
The financial statements of Principal Life Insurance Company Separate Account B
and the consolidated financial statements of the Principal Financial Group(R)
(comprised of Principal Life Insurance Company and its subsidiaries) are
included in the SAI. Those statements have been audited by Ernst & Young LLP,
independent auditors, for the periods indicated in their reports which also
appear in the SAI.
FINANCIAL STATEMENTS
The consolidated financial statements of The Principal Financial Group(R)
(comprised of the Company and its subsidiaries) which are included in the SAI
should be considered only as it relates to our ability to meet our obligations
under the Contract. They do not relate to investment performance of the assets
held in the Separate Account.
CUSTOMER INQUIRIES
Your questions should be directed to: Principal Freedom(sm)Variable Annuity,
Principal Financial Group, P.O. Box ________, Des Moines, Iowa _____ -_______,
1-800- ________________.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Independent Auditors ........................................
Calculation of Yield and Total Return .......................
Taxation Under Certain Retirement Plans........................
Principal Life Insurance Company Separate Account B
Report of Independent Auditors ...........................
Financial Statements......................................
Principal Financial Group(R)
Report of Independent Auditors ...........................
Financial Statements......................................
To obtain a free copy of the SAI write or telephone:
Principal Freedom(sm)Variable Annuity
The Principal Financial Group
P.O. Box _____
Des Moines, Iowa 50306-____
Telephone: 1-800-________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PRINCIPAL FREEDOM(sm)VARIABLE ANNUITY CONTRACT
dated ____________________
The Statement of Additional Information provides information about the Principal
Freedom Variable Annuity sponsored by Principal Life Insurance Company.
This Statement of Additional Information is not a prospectus but does provide
information that supplements the Contract's Prospectus dated ___________, 1999.
It should be read with that Prospectus which is available without charge. To
request a copy of the Prospectus, please contact us at:
Principal Freedom(sm) Variable Annuity
Principal Financial Group
P.O. Box ____________
Des Moines, Iowa ________
Telephone: ______________
TABLE OF CONTENTS
General Information and History
Independent Auditors ........................................................
Calculation of Yield and Total Return........................................
Taxation Under Certain Retirement Plans......................................
Principal Life Insurance Company Separate Account B
Report of Independent Auditors.......................................
Financial Statements.................................................
Principal Financial Group(R)
Report of Independent Auditors.......................................
Financial Statements.................................................
GENERAL INFORMATION AND HISTORY
Principal Life Insurance Company is the issuer of the Contract. In 1879, it was
incorporated under the laws of the State of Iowa as a mutual life insurance
company named Bankers Life Association. It changed its name to Bankers Life
Company in 1911 and then to Principal Mutual Life Insurance Company in 1986. The
name change to Principal Life Insurance Company and reorganization into a mutual
holding company structure was effective July 1, 1998.
INDEPENDENT AUDITORS
Ernst & Young LLP, 801 Grand, Des Moines, Iowa, serves as independent auditors
for Principal Life Insurance Company Separate Account B and the Principal
Financial Group. The firm performs audit and accounting services for Separate
Account B and the Principal Financial Group.
CALCULATION OF YIELD AND TOTAL RETURN
The Separate Account may publish advertisements containing information
(including graphs, charts, tables and examples) about the performance of one or
more of its divisions.
The Contract was not offered prior to ________________, 1999. Each division of
the Separate Account which are available for investment through the Contract
invests in an Account of the Principal Variable Contracts Fund, Inc., the
American Century Variable Portfolios, Inc. - VP Income & Growth or the Templeton
Variable Products Series Fund - Templeton Stock Fund Class 2.
Certain of the Accounts of the Principal Variable Contracts Fund, Inc.
correspond to open-end investment companies ("mutual funds") which, effective
January 1, 1998, were reorganized into the Accounts of the Principal Variable
Contracts Fund, Inc. as follows:
Account Name Old Mutual Fund Name
------------ --------------------
Bond Account Principal Bond Fund, Inc.
Capital Value Account Principal Capital Accumulation Fund, Inc.
MidCap Account Principal Emerging Growth Fund, Inc.
Money Market Account Principal Money Market Fund, Inc.
International Account Principal World Fund, Inc.
These Accounts (under their former names), the MidCap Growth Account, SmallCap
Growth Account as well as the American Century Variable Portfolios, Inc. - VP
Income & Growth, and the Templeton Variable Products Series Fund - Templeton
Stock Fund Class 2 were offered prior to the date the Contract was available.
The Separate Account may publish advertisements containing information about the
hypothetical performance of one or more of its divisions for this Contract as if
the contract had been issued on or after the date the Account in which such
division invests was first offered. The hypothetical performance from the date
of the inception of the Account is derived by reducing the actual performance of
the underlying Account by the fees and charges of the Contract as if it had been
in existence. The yield and total return figures described below vary depending
upon market conditions, the composition of the underlying Account's portfolios
and operating expenses. These factors and possible differences in the methods
used in calculating yield and total return should be considered when comparing
the Separate Account performance figures to performance figures published for
other investment vehicles. The Separate Account may also quote rankings, yields
or returns published by independent statistical services or publishers and
information regarding performance of certain market indices. Any performance
data quoted for the Separate Account represents historical performance and is
not intended to indicate future performance.
From time to time the Account advertises its Money Market division's "yield" and
"effective yield" for the Contract. 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 under the contract in
the division over a seven-day period (the 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" is slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. Neither yield quotation reflects a sales
load deducted from purchase payments which, if included, would reduce the
"yield" and "effective yield."
In addition, the Separate Account advertises the "yield" for certain other
divisions for the Contract. The "yield" of a division is determined by
annualizing the net investment income per unit for a specific, historical 30-day
period and dividing the result by the ending maximum offering price of the unit
for the same period. This yield quotation does not reflect a contingent deferred
sales charge which, if included, would reduce the "yield." No contingent
deferred sales charge is assessed on investments in the divisions of the
Separate Account of the Contract.
The Separate Account also advertises 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.
Following are the hypothetical average annual total returns for the period
ending December 31, 1998 assuming the contract had been offered as of the
effective dates of the underlying Accounts in which the Divisions invest:
Division One Year Five Year Ten Year
- ------------------------------ -------- --------- --------
American Century Variable Portfolios, Inc. -
VP Income & Growth
Principal Variable Contracts Fund, Inc.
Bond
Capital Value
International
MidCap
MidCap Growth
Money Market
SmallCap
SmallCap Growth
Templeton Variable Products Series Fund
Templeton Stock Fund Class 2.
(1) Period from June 1, 1994 through December 31, 1998.
(2) Period from May 2, 1994 through December 31, 1998.
TAXATION UNDER CERTAIN RETIREMENT PLANS
INDIVIDUAL RETIREMENT ANNUITIES
Purchase Payments. Individuals may make contributions for individual retirement
annuity ("IRA") Contracts. Deductible contributions for any year may be made up
to the lesser of $2,000 or 100% of compensation for individuals who (1) are not
active participants in another retirement plan, (2) are unmarried and have
adjusted gross income of $40,000 or less, or (3) are married and have adjusted
gross income of $60,000 or less. Such individuals may establish an IRA for a
spouse who makes no contribution to an IRA for the tax year. The annual purchase
payments for both spouses' Contracts cannot exceed the lesser of $4,000 or 100%
of the working spouse's earned income, and no more than $2,000 may be
contributed to either spouse's IRA for any year. Individuals who are active
participants in other retirement plans and whose adjusted gross income (with
certain special adjustments) exceeds the cut-off point ($40,000 for unmarried,
$60,000 for married persons filing jointly, and $0 for married persons filing a
separate return) by less than $10,000 are entitled to make deductible IRA
contributions in proportionately reduced amounts. For example, a married
individual who is an active participant in another retirement plan and files a
separate tax return is entitled to a partial IRA deduction if the individual's
adjusted gross income is less than $10,000, and no IRA deduction if his or her
adjusted gross income is equal to or greater than $10,000. Individuals whose
spouse is an active participant in other retirement plans and whose combined
adjusted gross income exceeds the cutoff point of $150,000 by less than $10,000
are entitled to make deductible IRA contributions in proportionately reduced
amounts.
An individual may make non-deductible IRA contributions to the extent of the
excess of (1) the lesser of $2,000 ($4,000 in the case of a spousal IRA) or 100%
of compensation over (2) the IRA deductible contributions made with respect to
the individual.
An individual may not make any contribution to his/her own IRA for the year in
which he/she reaches age 70 1/2 or for any year thereafter.
Taxation of Distributions. Distributions from IRA Contracts are taxed as
ordinary income to the recipient, although special rules exist for the tax-free
return of non-deductible contributions. In addition, taxable distributions
received under an IRA Contract prior to age 59 1/2 are subject to a 10% penalty
tax in addition to regular income tax. Certain distributions are exempted from
this penalty tax, including distributions following the owner's death or
disability if the distribution is paid as part of a series of substantially
equal periodic payments made for the life (or life expectancy) of the Owner or
the joint lives (or joint life expectancies) of Owner and the Owner's designated
Beneficiary; distributions to pay medical expenses; distributions for certain
unemployment expenses; distributions for first home purchases (up to $10,000)
and distributions for higher education expenses.
Required Distributions. Generally, distributions from IRA Contracts must
commence not later than April 1 of the calendar year following the calendar year
in which the employee attains age 70 1/2, and such distributions must be made
over a period that does not exceed the life expectancy of the employee (or the
employee and Beneficiary). A penalty tax of 50% would be imposed on any amount
by which the minimum required distribution in any year exceeded the amount
actually distributed in that year. In addition, in the event that the employee
dies before his or her entire interest in the Contract has been distributed, the
employee's entire interest must be distributed in accordance with rules similar
to those applicable upon the death of the Contract Owner in the case of a
non-qualified contract, as described in the Prospectus.
Tax-Free Rollovers. The Code permits the taxable portion of funds to be
transferred in a tax-free rollover from a qualified employer pension,
profit-sharing, annuity, bond purchase or tax-deferred annuity plan to an IRA
Contract if certain conditions are met, and if the rollover of assets is
completed within 60 days after the distribution from the qualified plan is
received. A direct rollover of funds may avoid a 20% federal tax withholding
generally applicable to qualified plans or tax-deferred annuity plan
distributions. In addition, not more frequently than once every twelve months,
amounts may be rolled over tax-free from one IRA to another, subject to the
60-day limitation and other requirements. The once-per-year limitation on
rollovers does not apply to direct transfers of funds between IRA custodians or
trustees.
SIMPLIFIED EMPLOYEE PENSION PLANS AND SALARY REDUCTION SIMPLIFIED EMPLOYEE
PENSION PLANS
Purchase Payments. Under Section 408(k) of the Code, employers may establish a
type of IRA plan referred to as a simplified employee pension plan (SEP).
Employer contributions to a SEP cannot exceed the lesser of $24,000 or 15% or
the employee's earned income. Employees of certain small employers may have
contributions made to the salary reduction simplified employee pension plan
("SAR/SEP") on their behalf on a salary reduction basis. These salary reduction
contributions may not exceed $______ in 1999, which is indexed for inflation.
Employees of tax-exempt organizations and state and local government agencies
are not eligible for SAR/SEPs. SAR/SEPs may not be established after December
31, 1996.
Taxation of Distributions. Generally, distribution payments from SEPs and
SAR/SEPs are subject to the same distribution rules described above for IRAs.
Required Distributions. SEPs and SAR/SEPs are subject to the same minimum
required distribution rules described above for IRAs.
Tax-Free Rollovers. Generally, rollovers and direct transfers may be made to and
from SEPs and SAR/SEPs in the same manner as described above for IRAs, subject
to the same conditions and limitations.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA)
Purchase Payments. Under Section 408(p) of the Code, employers may establish a
type of IRA plan known as a Simple IRA. Employees may have contributions made to
the SIMPLE IRA on a salary reduction basis. These salary reduction contributions
may not exceed $_____ in 1999, which is indexed for inflation. Total salary
reduction contributions are limited to $10,000 per year for any employee who
makes salary reduction contributions to more than one plan. Employers are
required to contribute to the SIMPLE IRA, which contributions may not exceed the
lesser of: (1) The amount of salary deferred by the employee, (2) 3% of the
employee's compensation, or (3) $6,000, if the employer contributes on a
matching basis; or the lesser of: (1) 2% of the employee's compensation, or (2)
$3,200, if the employer makes non-elective contributions. An employer may not
make contributions to both a SIMPLE IRA and another retirement plan for the same
calendar year.
Taxation of Distributions. Generally, distribution payments from SIMPLE IRAs are
subject to the same distribution rules described above for IRAs, except that
distributions made within two years of the date of an employee's first
participation in a SIMPLE IRA of an employer are subject to a 25% penalty tax
instead of the 10% penalty tax discussed previously.
Required Distributions. SIMPLE IRAs are subject to the same minimum required
distribution rules described above for IRAs.
Tax-Free Rollovers. Direct transfers may be made among SIMPLE IRAs in the same
manner as described above for IRAs, subject to the same conditions and
limitations. Rollovers from SIMPLE IRAs are permitted after two years have
elapsed from the date of an employee's first participation in a SIMPLE IRA of
the employer. Rollovers to SIMPLE IRAs from other plans are not permitted.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in the Registration Statement
(1) Part A:
None
(2) Part B:
None
(b) Exhibits
(1) Board Resolution of Registrant
(3) Distribution Agreement
(4a) Form of Variable Annuity Contract
(4b) Form of Variable Annuity Contract
(5) Form of Variable Annuity Application
(6a) Articles of Incorporation of the Depositor
(6b) Bylaws of Depositor
(9) Opinion of Counsel
(10b) Powers of Attorney*
(13a) Total Return Calculation*
(13b) Annualized Yield for Separate Account B*
* To be filed by amendment
<PAGE>
Item 25. Officers and Directors of the Depositor
Principal 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 2004 Kramer Street
Member, Executive Committee La Crosse, WI 54603
Chair, Human Resources
Committee
J. BARRY GRISWELL The Principal Financial Group
Director and Des Moines, IA 50392
President
G. DAVID HURD The Principal Financial Group
Director Des Moines, IA 50392
Member, Executive and
Nominating Committees
CHARLES S. JOHNSON Pioneer Hi-Bred International, Inc.
Director 400 Locust, Ste. 700 Capital Square
Member, Audit Committee Des Moines, IA 50309
WILLIAM T. KERR Meredith Corporation
Director 1716 Locust St.
Member, Executive Committee Des Moines, IA 50309-3023
and Chair, Nominating
Committee
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 350 Park Avenue - 8th Floor
Member, Audit New York, NY 10022
Committee
RONALD D. PEARSON Hy-Vee, Inc.
Director 5820 Westown Parkway
Member, Human Resources West Des Moines, IA 50266
Committee
JOHN R. PRICE The Chase Manhattan Corporation
Director 270 Park Avenue - 44th Floor
Member, Nominating Committee New York, NY 10017
DONALD M. STEWART The College Board
Director 45 Columbus Avenue
Member, Human Resources New York, NY 10023-6992
Committee
ELIZABETH E. TALLETT Dioscor, Inc.
Director 48 Federal Twist Road
Chair, Audit Committee Stockton, NJ 08559
DEAN D. THORNTON 1602- 34 Court West
Director Seattle, WA 98199
Member, Audit Committee
FRED W. WEITZ Essex Meadows, Inc.
Director 800 Second Avenue, Suite 150
Member, Human Resources Des Moines, IA 50309
Committee
Executive Officers (Other than Directors):
JOHN E. ASCHENBRENNER Senior Vice President
PAUL S. BOGNANNO Senior Vice President
DENNIS P. FRANCIS Senior Vice President
THOMAS J. GAARD Senior Vice President
MICHAEL H.GERSIE Senior Vice President
THOMAS J. GRAF Senior Vice President
RONALD E. KELLER Executive Vice President
GREGG R. NARBER Senior Vice President and
General Counsel
MARY A. O'KEEFE Senior Vice President
RICHARD L. PREY Senior Vice President
CARL C. WILLIAMS Senior Vice President and Chief
Information Officer
Item 26. Persons Controlled by or Under Common Control with Depositor
Principal Life Insurance Company (an Iowa corporation)
a life group, pension and individual insurance company.
Sponsored the organization of the following mutual funds,
some of which it controls by virtue of owning voting
securities:
Principal Balanced Fund, Inc.(a Maryland Corporation) 0.71% of
shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September
9, 1998.
Principal Blue Chip Fund, Inc.(a Maryland Corporation) 0.95% of
shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998.
Principal Bond Fund, Inc.(a Maryland Corporation) 1.20% of shares
outstanding owned by Principal Life Insurance Company
(including subsidiaries and affiliates) on September 9, 1998.
Principal Capital Value Fund, Inc. (a Maryland Corporation)
24.21% of outstanding shares owned by Principal Life
Insurance Company (including subsidiaries and affiliates) on
September 9, 1998.
Principal Cash Management Fund, Inc. (a Maryland Corporation)
7.53% of outstanding shares owned by Principal Life
Insurance Company (including subsidiaries and affiliates) on
September 9, 1998.
Principal Government Securities Income Fund, Inc. (a Maryland
Corporation) 0.39% of shares outstanding owned by Principal
Life Insurance Company (including subsidiaries and
affiliates) on September 9, 1998.
Principal Growth Fund, Inc. (a Maryland Corporation) 0.44% of
outstanding shares owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998.
Principal High Yield Fund, Inc. (a Maryland Corporation) 10.43%
of shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998.
Principal International Emerging Markets Fund, Inc. (a Maryland
Corporation) 52.14% of shares outstanding owned by Principal
Life Insurance Company (including subsidiaries and
affiliates) on September 9, 1998.
Principal International Fund, Inc. (a Maryland Corporation)
22.63% of shares outstanding owned by Principal Life
Insurance Company (including subsidiaries and affiliates) on
September 9, 1998.
Principal International SmallCap Fund, Inc. (a Maryland
Corporation) 47.36% of shares outstanding owned by Principal
Life Insurance Company (including subsidiaries and
affiliates) on September 9, 1998.
Principal Limited Term Bond Fund, Inc. (a Maryland Corporation)
38.80% of shares outstanding owned by Principal Life
Insurance Company(including subsidiaries and affiliates) on
September 9, 1998.
Principal MidCap Fund, Inc. (a Maryland Corporation) 0.60% of
shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998
Principal Real Estate Fund, Inc. (a Maryland Corporation) 77.76%
of shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998
Principal SmallCap Fund, Inc.(a Maryland Corporation) 33.36% of
shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998
Principal Special Markets Fund, Inc. (a Maryland Corporation)
83.04% of shares outstanding of the International Emerging
Markets Portfolio, 42.97% of the shares outstanding of the
International Securities Portfolio, 98.66% of shares outstanding
of the International SmallCap Portfolio and 100% of the shares
outstanding of the Mortgage-Backed Securities Portfolio were
owned by Principal Life Insurance Company (including
subsidiaries and affiliates) on September 9, 1998
Principal Tax-Exempt Bond Fund, Inc. (a Maryland Corporation)
0.54% of shares outstanding owned by Principal Life
Insurance Company (including subsidiaries and affiliates) on
September 9, 1998.
Principal Tax-Exempt Cash Management Fund, Inc. (a Maryland
Corporation) 3.80% of shares outstanding owned by Principal
Life Insurance Company (including subsidiaries and
affiliates) on September 9, 1998.
Principal Utilities Fund, Inc. (a Maryland Corporation) 1.58% of
shares outstanding owned by Principal Life Insurance
Company (including subsidiaries and affiliates) on September 9,
1998.
Principal Variable Contracts Fund, Inc. (a Maryland Corporation)
100% of shares outstanding of the following Accounts owned by
Principal Life Insurance Company and its Separate Accounts
on September 9, 1998: Aggressive Growth, Asset Allocation,
Balanced, Bond, Capital Value, Government Securities, Growth,
High Yield, International, International SmallCap, MicroCap,
MidCap, MidCap Growth, Money Market, Real Estate, SmallCap,
SmallCap Growth, SmallCap Value and Utilities .
Subsidiaries organized and wholly-owned by Principal Life
Insurance Company:
a. Principal Holding Company (an Iowa Corporation) A holding
company wholly-owned by Principal Life Insurance
Company.
b. 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. The Admar Group, Inc. (a Florida Corporation) a national
managed care service organization that developes and manages
preferred provider organizations.
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.
t. Principal Bank (a Federal Corporation) a Federally chartered
direct delivery savings bank.
u. HealthRisk Resource Group, Inc. (an Iowa Corporation) a
management services organization.
v. Principal Commercial Funding, LLC (a Delaware
Corporation) a correspondent lender and sevice provider for
loans.
w. Dental-Net, Inc. (an Arizona Corporation) holding company
of Employers Dental Services; a managed dental care services
organization. HMO and dental group practice.
Subsidiaries organized and wholly-owned by Princor Financial Services
Corporation:
a. Principal 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 Delaware Charter Guarantee & Trust Company:
a. Trust Consultants, Inc. (a California Corporation) a
Consulting and Administration of Employee Benefit Plans.
Subsidiaries owned by The Admar Group, Inc.:
a. Admar Corporation (a California Corporation) a managed care
services organization.
b. Admar Insurance Marketing, Inc. (a California Corporation) a
managed care services organization.
c. Benefit Plan Administrators, Inc. (a Colorado Corporation) a
managed care services organization.
d. SelectCare Management Co., Inc. (a California Corporation) a
managed care services organization.
e. Image Financial & Insurance Services, Inc. (a California
Corporation) a managed care services organization.
f. WM. G. Hofgard & Co., Inc. (a California Corporation) a
managed care services organization.
Subsidiary owned by Petula Associates, Ltd.
a. Magnus Properties, Inc. (an Iowa Corporation) which owns
real estate.
Subsidiary owned by Principal Residential Mortgage, Inc.:
a. Reliastar Mortgage Corporation (an Iowa corporation) a
brokerage and servicer of residential mortgage loans
b. Principal JMC, Inc. (an Iowa Corporation) a brokerage
company that originates and sells loans; enters into the
business of organization and sale of real estate mortgages.
Subsidiaries owned by Delta-Net, Inc.
a. Employers Dental Services, Inc. (an Arizona corporation)
a prepaid dental plan organization.
Subsidiaries owned by Principal International, Inc.:
a. Principal Insurance Company (Hong Kong) Limited (a Hong Kong
Corporation) group life and group pension products.
b. Principal International Argentina, S.A. (an Argentina
services corporation).
c. Principal International Asia Limited (a Hong Kong
Corporation) a corporation operating as a regional
headquarters for Asia.
d. Principal International de Chile, S.A. (a Chile
Corporation) a holding company.
e. Principal International Espana, S.A. de Seguros de Vida (a
Spain Corporation) a life insurance company (individual
group), annuities and pension.
f. Principal Mexico Compania de Seguros, S.A. de C.V. (a Mexico
Corporation) a life insurance company (individual and
group), personal accidents.
g. Afore Confia-Principal, S.a. de C.V. (a Mexico Corporation),
pension.
h. Zao Principal International (a Russia Corporation) inactive.
i. Principal Trust Company (Asia) Limited (an Asia trust
company).
j. Principal Asset Management Company (Asia) Ltd. (Hong Kong)
a corporation which manages pension funds.
k. Afore Atlantico Promex, S.A. DE C.V. (a Mexico corporation)
a Mexico Pension Co.
Subsidiaries owned by Principal International Argentina, S.A.:
a. Ethika Administradora de Fondos de Jubilaciones y Pensions
S.A. (an Argentina company) a pension company.
b. Principal Compania de Seguros de Retiro, S.A. (an Argentina
Corporation) an individual annuity/employee benefit company.
c. Principal Life Compania de Seguros, S.A. (an Argentina
Corporation) a life insurance company.
Subsidiary owned by Principal International de Chile, S.A.:
a. BanRenta Compania de Seguros de Vida, S.A. (a Chile
Corporation) group life and supplemental health, individual
annuities.
Subsidiary owned by Principal International Espana, S.A. de Seguros de
Vida:
a. Princor International Espana Sociedad Anonima de Agencia de
Seguros (a Spain Corporation) an insurance agency.
Subsidiary owned by Afore Confia-Principal, S.A. de C.V.:
a. Siefore Confia-Principal, S.A. de C.V. (a Mexico
Corporation) an investment fund company.
Item 27. Number of Contractowners - As of: September 9, 1998
(1) (2) (3)
Number of Plan Number of
Title of Class Participants Contractowners
-------------- -------------- --------------
BFA Variable Annuity Contracts 95 10
Pension Builder Contracts 1,192 1,340
Personal Variable Contracts 4,388 137
Premier Variable Contracts 17,789 270
Flexible Variable Annuity Contract 30,021 30,021
Principal Freedom Variable Annuity Contract 0 0
Item 28. Indemnification
None
Item 29. Principal Underwriters
(a) Princor Financial Services Corporation, principal underwriter for
Registrant, acts as principal underwriter for, Principal Balanced Fund, Inc.,
Principal Blue Chip Fund, Inc., Principal Bond Fund, Inc., Principal Capital
Value Fund, Inc., Principal Cash Management Fund, Inc., Principal Government
Securities Income Fund, Inc., Principal Growth Fund, Inc., Principal High Yield
Fund, Inc., Principal International Emerging Markets Fund, Inc., Principal
International Fund, Inc., Principal International SmallCap Fund, Inc., Principal
Limited Term Bond Fund, Inc., Principal MidCap Fund, Inc., Principal Real Estate
Fund, Inc., Principal SmallCap Fund, Inc., Principal Special Markets Fund, Inc.,
Principal Tax-Exempt Bond Fund, Inc., Principal Tax-Exempt Cash Management Fund,
Inc., Principal Utilities Fund, Inc., Principal Variable Contracts Fund, Inc.
and for variable annuity contracts participating in Principal 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 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
John E. Aschenbrenner Director
The Principal
Financial Group
Des Moines, IA 50392
Robert W. Baehr Marketing Services
The Principal Officer
Financial Group
Des Moines, IA 50392
Craig L. Bassett Treasurer
The Principal
Financial Group
Des Moines, IA 50392
Michael J. Beer Senior 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
Lynn A. Brones Vice President -
The Principal Investment Network
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 Vice President -
The Principal Mutual Fund Operations
Financial Group
Des Moines, IA 50392
Ernest H. Gillum Assistant Vice President -
The Principal Registered Products
Financial Group
Des Moines, IA 50392
William C. Gordon Insurance License Officer
The Principal
Financial Group
Des Moines, IA 50392
Thomas J. Graf Director
The Principal
Financial Group
Des Moines, IA 50392
J. Barry Griswell Director and
The Principal Chairman of the
Financial Group Board
Des Moines, IA 50392
Joyce N. Hoffman Vice President and
The Principal Corporate Secretary
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
Ellen Z. Lamale Director
The Principal
Financial Group
Des Moines, IA 50392
John R. Lepley Senior Vice
The Principal President - Marketing
Financial Group and Distribution
Des Moines, IA 50392
Gregg R. Narber Director
The Principal
Financial Group
Des Moines, IA 50392
Mark M. Oswald Compliance Officer
The Principal
Financial Group
Des Moines, IA 50392
Kelly A. Paul Systems/Technology -
The Principal Officer
Financial Group
Des Moines, IA 50392
Richard L. Prey Director
The Principal
Financial Group
Des Moines, IA 50392
Layne A. Rasmussen Controller -
The Principal Mutual Funds
Financial Group
Des Moines, IA 50392
Martin R. Richardson Operations Officer -
The Principal Broker/Dealer Services
Financial Group
Des Moines, IA 50392
Elizabeth R. Ring Controller
The Principal
Financial Group
Des Moines, IA 50392
Michael D. Roughton Counsel
The Principal
Financial Group
Des Moines, IA 50392
Jean B. Schustek Product Compliance Officer -
The Principal Registered Products
Financial Group
Des Moines, IA 50392
Kyle R. Selberg Vice President-Marketing
The Principal
Financial Group
Des Moines, IA 50392
Susan R. Sorensen Marketing Officer
The Principal
Financial Group
Des Moines, IA 50392
Roger C. Stroud Assistant Director -
The Principal Marketing
Financial Group
Des Moines, IA 50392
(c) (1) (2)
Net Underwriting
Name of Principal Discounts and
Underwriter Commissions
Princor Financial $11,491,356.06
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 to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that
the audited financial statements in the registration statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the prospectus that the applicant can remove
to send for a Statement of Additional Information.
The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
REPRESENTATION PURSUANT TO SECTION 26 OF THE INVESTMENT COMPANY ACT OF 1940
Principal Life Insurance Company represents the fees and charges deducted under
the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Principal Life Insurance
Company Separate Account B, has duly caused this 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 14th day of September, 1998
PRINCIPAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
(Registrant)
By: PRINCIPAL LIFE INSURANCE COMPANY
(Depositor)
/s/ David J. Drury
By ______________________________________________
David J. Drury
Chairman and Chief Executive Officer
Attest:
/s/ Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Vice President and
Corporate Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
Signature Title Date
/s/ D. J. Drury Chairman and September 14, 1998
- -------------------- Chief Executive Officer
D. J. Drury
/s/ D. C. Cunningham Vice President and September 14, 1998
- -------------------- Controller (Principal
D. C. Cunningham Accounting Officer)
/s/ M. H. Gersie Senior Vice President September 14, 1998
- -------------------- (Principal Financial
M. H. Gersie Officer)
(M. V. Andringa)* Director September 14, 1998
- --------------------
M. V. Andringa
(R. M. Davis)* Director September 14, 1998
- --------------------
R. M. Davis
(C. D. Gelatt, Jr.)* Director September 14, 1998
- --------------------
C. D. Gelatt, Jr.
(J. B. Griswell)* Director September 14, 1998
- --------------------
J. B. Griswell
(G. D. Hurd)* Director September 14, 1998
- --------------------
G. D. Hurd
(C. S. Johnson)* Director September 14, 1998
- --------------------
C. S. Johnson
(W. T. Kerr)* Director September 14, 1998
- --------------------
W. T. Kerr
(L. Liu)* Director September 14, 1998
- --------------------
L. Liu
(V. H. Loewenstein)* Director September 14, 1998
- --------------------
V. H. Loewenstein
(R. D. Pearson)* Director September 14, 1998
- --------------------
R. D. Pearson
(J. R. Price)* Director September 14, 1998
- --------------------
J. R. Price, Jr.
(D. M. Stewart)* Director September 14, 1998
- --------------------
D. M. Stewart
(E. E. Tallett)* Director September 14, 1998
- --------------------
E. E. Tallett
(D. D. Thornton)* Director September 14, 1998
- --------------------
D. D. Thornton
(F. W. Weitz)* Director September 14, 1998
- --------------------
F. W. Weitz
*By /s/ David J. Drury
------------------------------------
David J. Drury
Chairman and Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein
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.
/s/ 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.
/s/ J. Barry Griswell
__________________________________
Barry Griswell
BG/srr
dd1124.mem
<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.
<PAGE>
Memorandum
DATE: January 20, 1998
TO: Dave Drury, Officers, S-6, X7-5921
FROM: John Aschenbrenner, Ind. Staff, G-12, X7-5927
RE: New Divisions for Separate Account B
CC: Steve Jones, Barry Griswell
Eight new divisions are being added to Principal Flexible Variable Annuity
effective May 1, 1998. In accordance with Principal Mutual life Insurance
Company Board Resolution No. 12503 passed February 22, 1988, I have created the
following divisions for the Variable Life Separate Account to reflect the
funding options that will be utilized by individual variable annuity contracts
issued by Principal Mutual:
1. International SmallCap Division--will invest in shares of the
International SmallCap Account of the Principal Variable Contracts
Fund, Inc. The Account is to be sub-advised by Invista Capital
Management;
2. MicroCap Division--will invest in shares of the MicroCap Account of
the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Goldman Sachs Asset Management;
3. MidCap Growth Division--will invest in shares of the MidCap Growth
Account of the Principal Variable Contracts Fund, Inc. The Account is
to be sub-advised by Dreyfus Corporation;
4. Real Estate Division--will invest in shares of the Real Estate Account
of the Principal Variable Contracts Fund, Inc. The Account is to be
managed by Principal Management Corporation;
5. SmallCap Division--will invest in shares of the SmallCap Account of
the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Invista Capital Management;
6. SmallCap Growth Division--will invest in shares of the SmallCap Growth
Account of the Principal Variable Contracts Fund, Inc. The Account is
to be sub-advised by Berger Associates;
7. SmallCap Value Division--will invest in shares of the SmallCap Value
Account of the Principal Variable Contracts Fund, Inc. The Account is
to be sub-advised by JP Morgan Asset Management;
8. Utilities Division--will invest in shares of the Utilities Account of
the Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Invista Capital Management.
In addition, I have directed that the name of the Capital Accumulation Division
be changed to the Capital Value Division; that the name of the World Division be
changed to the International Division; and that the name of the Emerging Growth
Division be changed to the MidCap Division.
/S/ John Aschenbrenner
John Aschenbrenner
Memorandum
DATE: September 14, 1998
TO: Dave Drury
FROM: John Aschenbrenner, Ind. Staff, G-12, x75927
RE: New Divisions for Separate Account B
CC: Steve Jones, Barry Griswell, Joyce Hoffman
Six new divisions are being added for the Principal Freedom Variable Annuity
effective May 1, 1999. In accordance with Principal Life Insurance Company Board
Resolution No. 12503, passed February 22, 1988, I have created the following
divisions for Separate Account B to reflect the funding options that will be
utilized by individual annuity contracts issued by Principal Life:
1. Blue Chip Division--will invest in shares of the Blue Chip
Account of Principal Variable Contracts Fund, Inc. The
Account is to be sub-advised by Invista Capital Management;
2. LargeCap Growth Division--will invest in shares of the LargeCap
Growth Account of Principal Variable Contracts Fund, Inc. The
Account is to be sub-advised by Janus Capital Corporation;
3. MidCap Value Division--will invest in shares of the MidCap Account
of Principal Variable Contracts Fund, Inc. The Account is to be
sub-advised by Neuberger & Berman Management, Inc.;
4. Stock Index 500 Division--will invest in shares of the Stock Index
500 Account of Principal Variable Contracts Fund, Inc. The Account
is to be sub-advised by Invista Capital Management;
5. American Century VP Income & Growth Division-- will invest in
shares of the American Century Variable Portfolios, Inc. - VP
Income & Growth;
6. Templeton VP Stock Division-- will invest in shares of the
Templeton Variable products Series Fund - Templeton Stock
Fund Class 2.
/s/ John Aschenbrenner
-----------------------------------------
John Aschenbrenner
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made this _____day
of_______________,19__, between Principal Life Insurance Company ("Principal"),
a life insurance company organized under the laws of the State of Iowa, and
Princor Financial Services Corporation ("Princor"), an affiliate of Principal
organized under the laws of the State of Iowa.
WITNESSETH
WHEREAS, Principal has established Separate Account B ("Separate
Account") and registered such Separate Account as an investment company under
the Investment Company Act of 1940 to fund variable annuity contracts issued by
Principal Life Insurance Company;
WHEREAS, Princor is registered with the Securities and Exchange
Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc.; and
WHEREAS, Principal desires to issue certain Principal Freedomsm
Variable Annuity contracts ("Contracts") with respect to the Separate Account
which will be sold and distributed by and through Princor, and Princor is
willing to sell and distribute such Contracts under the terms and conditions
stated herein;
NOW, THEREFORE, the parties agree as follows:
1. Principal hereby appoints Princor as the principal underwriter of
the Contracts issued with respect to the Separate Account, and Princor agrees to
use its best efforts to sell and distribute the Contracts through its registered
representatives or through other broker-dealers registered under the Securities
and Exchange Act of 1934 whose registered representatives are authorized by
applicable law to sell variable annuity contracts.
2. All payments and 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 Principal , who shall retain all such
payments and monies for its own account except to the extent such payments and
monies are allocated to the Separate Account. Princor shall not be deemed to
have any interest in such payments
3. For the administrative convenience of the parties, Principal shall
(a) pay to the registered representatives of Princor the commissions
earned on the sale, distribution, renewal or other transaction
involving the Contracts as determined in the attached Commission
Schedule, and provide Princor with accurate records of all such
commissions paid on its behalf;
(b) pay to broker-dealers with whom Princor has entered into a Selling
Agreement for the distribution of the Contracts any applicable
dealer allowance or other compensation as provided in such Selling
Agreement, and provide Princor with accurate records of all such
payments paid on its behalf.
4. Principal shall pay to Princor an amount equal to the expenses
incurred by Princor in the performance of this Agreement. Princor shall provide
a statement of expenses to Principal at least semi-annually in a form and manner
agreed to by the parties.
5. Princor shall be solely responsible for the supervision and control
of the conduct and activities of its registered representatives with regard to
the sale and distribution of the Contracts.
6. Principal shall assume the responsibility, including the costs
thereof, for all administrative and legal functions pertaining to the Contracts
not otherwise specifically assumed by Princor in this agreement, including but
not limited to the following: filing of any contracts with a state securities
commission as required by applicable state securities (Blue Sky) laws; the
preparation, printing and filing of prospectuses; the development, filing, and
compliance with federal and state securities laws and regulations of the
Separate Account; contract development; SEC registration; filing and compliance
with state insurance laws and regulations; underwriting; contract issue and
contractowner service functions; developing sales and promotional material; and
training agents.
7. Principal will prepare and maintain all the books and records in
connection with the offer and sales of variable annuity contracts which are
required to be maintained and preserved in accordance with applicable securities
law; and all such books and records are to be maintained and held by Principal
on behalf of and as agent for the broker-dealer whose property they are and
shall remain; and all such books and records will be made available for
inspection by the Securities and Exchange Commission at all times.
8. Principal shall send to each contractowner or such other person as
appropriate a confirmation as required by law or regulation of any transaction
made with respect to the Contracts which shall reflect the true facts of the
transaction and show that confirmation of the transaction is being sent on
behalf of the broker-dealer acting in the capacity of agent for the insurance
company.
9. Princor and Principal may enter into agreements with other
broker-dealers duly licensed under applicable federal and state laws and with
their affiliated general agencies, if any, for the sale and distribution of the
Contracts. The commission payable to registered representatives on the sale of
Contracts thereunder may not exceed the amount shown on the attached Commission
Schedule.
10. This agreement may be terminated by either party upon 60 days prior
written notice. Princor shall promptly notify the Securities and Exchange
Commission of any such termination.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the day and year written above.
PRINCIPAL LIFE INSURANCE COMPANY
By: /S/_____________________________________
PRINCOR FINANCIAL SERVICES CORPORATION
By: /S/_____________________________________
SF SAMPLE
468
2
SF 468 SAMPLE
This contract is a legal contract between You, as the Owner, and Us, Principal
Life Insurance Company. Your contract is issued based on the information You
provided and the initial Purchase Payment shown on the initial Data Page.
We will pay You the benefits of this contract in accordance with its provisions.
10-DAY EXAMINATION OFFER. WE WANT YOU TO BE SATISFIED WITH THIS CONTRACT. IF YOU
ARE NOT SATISFIED, YOU MAY RETURN YOUR CONTRACT TO EITHER THE AGENT OR OUR HOME
OFFICE WITHIN TEN DAYS OF ITS RECEIPT AND YOUR CONTRACT WILL BE CONSIDERED VOID
FROM ITS INCEPTION. WE WILL REFUND YOUR PURCHASE PAYMENT IN STATES WHERE
REQUIRED. IN STATES WHERE PERMITTED, WE WILL REFUND THE TOTAL ACCUMULATED VALUE,
WHICH MAY BE MORE OR LESS THAN YOUR PURCHASE PAYMENT. PLEASE READ YOUR CONTRACT
CAREFULLY SO YOU MAY BETTER USE ITS MANY BENEFITS.
If You have questions about this contract, please contact Your Principal Life
representative or call Our home office at 1-800-247-9988.
THIS IS A FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on
Annuitization Date, or death benefit if Owner dies before Annuitization Date.
Benefits based on the performance of the Separate Account are Variable and not
guaranteed as to dollar amount. This policy is non-participating.
/s/ David J. Drury
Chairman and Chief Executive Officer
/s/ Joyce N. Hoffman
Vice President and Corporate Secretary
Owner:
Annuitant:
Contract Number:
TABLE OF CONTENTS
SUBJECT PAGE
CONTRACT DEFINITIONS............................................. 4
BUYING AND KEEPING THIS CONTRACT IN FORCE........................ 5
PURCHASE PAYMENTS.............................................. 5
PURCHASE PAYMENT LIMITS........................................ 5
PURCHASE PAYMENT ALLOCATIONS................................... 5
PREMIUM TAXES.................................................. 6
CONTRACT VALUES...................................................6
ACCUMULATED VALUE...............................................6
FIXED ACCOUNT VALUE.............................................6
SEPARATE ACCOUNT VALUE..........................................6
FIXED ACCOUNT.....................................................7
GUARANTEED INTEREST RATES...................................... 7
INTEREST CREDITING METHOD...................................... 7
FIXED ACCOUNT FREE TRANSACTION AMOUNT...........................7
SEPARATE ACCOUNT..................................................7
SEPARATE ACCOUNT ASSETS.........................................7
SEPARATE ACCOUNT DIVISIONS..................................... 8
UNITS AND UNIT VALUE........................................... 8
NET INVESTMENT FACTOR.......................................... 8
TRANSFERS AND FEES............................................... 9
TRANSFERS ALLOWED.............................................. 9
TRANSFERS FROM FIXED ACCOUNT................................... 9
TRANSFERS FROM SEPARATE ACCOUNT DIVISIONS..................... 10
TRANSACTION FEE................................................11
CONTRACT BENEFITS................................................11
SURRENDER......................................................11
STANDARD DEATH BENEFIT.........................................13
ANNUITIZATION INCOME...........................................14
TERMINATION..................................................... 14
BENEFIT OPTIONS..................................................14
CONDITIONS.....................................................15
GENERAL INFORMATION..............................................15
THE CONTRACT...................................................15
ALTERATIONS....................................................15
INCONTESTABILITY...............................................16
AGE............................................................16
OWNERSHIP......................................................16
CHANGE OF OWNER................................................16
CHANGE OF ANNUITY PAYMENT DATE.................................16
ASSIGNMENT.....................................................16
STATEMENTS OF VALUE............................................16
A copy of the application and any riders follow the last page of this contract.
3-5
SF 468 SAMPLE
ABCDEFG
DATA PAGE
Principal Freedomsm Variable Annuity
CONTRACT DATA
Contract Number: Sample
Owner: John Doe
Joint Owner: Jane Doe
Annuitants Name and Age: John Doe, 35
Joint Annuitants Name and Age: Jane Doe, 35
Contract Date: July 1, 2000
<TABLE>
<CAPTION>
<S> <C>
The initial Purchase Payment You paid is: $10,000.00
The Minimum Transaction Amount is: $50.00
The Minimum Surrender Value is: $5,000.00
Current Daily Separate Account Administration Charge: .000000000 (0.00% annually)
(Guaranteed not to exceed .15% annually)
Current Daily Mortality and Expense Risks Charge: .000023287 (0.85% annually)
(Guaranteed not to exceed 1.25% annually)
The Minimum Contract Value is: $5,000.00
</TABLE>
FIXED ACCOUNT DATA
The initial Purchase Payment interest rate for the 5.15%
first Contract Year is:
The Transaction Fee is: $30.00
The Maximum Lifetime Purchase Payment Limit is: $2,000,000.00
The Maximum Lifetime Fixed Account Value is: $1,000,000.00
The Annual Maximum Free Transaction Percentage is: 10%
The Minimum Interest Rate Variance is: 1%
The Minimum Transfer Waiting Period (for transfers to 6 months
the Fixed Account) is:
Initial Purchase Payment
Allocations
Fixed Account 0%
Separate Account Divisions:
American Century VP Income & Growth 10%
Blue Chip 10%
Bond 10%
Capital Value 10%
International 10%
LargeCap Growth 10%
MidCap 10%
MidCap Growth 10%
MidCap Value 10%
Money Market 10%
Stock Index 500 00%
SmallCap 00%
SmallCap Growth 00%
Templeton VP Stock 00%
----------------------
100%
<TABLE>
<CAPTION>
TABLE OF FIXED ACCOUNT SURRENDER CHARGES
NUMBER OF COMPLETED CONTRACT YEARS SINCE FIXED ACCOUNT SURRENDER CHARGE APPLIED TO FIXED ACCOUNT PURCHASE
PURCHASE PAYMENT WAS MADE PAYMENTS BEYOND FREE TRANSACTION AMOUNT
<S> <C>
0 (Year of Purchase Payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Later 0%
</TABLE>
Each Fixed Account Purchase Payment begins in Year 0 for purposes of calculating
the appropriate percentage to be applied to that payment. Purchase Payments
include amounts transferred to the Fixed Account from the Separate Account
Divisions.
TABLE OF FIXED ACCOUNT TRANSFER FEES
<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTRACT YEARS SINCE EACH FIXED TRANSFER FEE APPLIED TO FIXED ACCOUNT TRANSFERS BEYOND
ACCOUNT PURCHASE PAYMENT WAS MADE FREE TRANSACTION AMOUNT
<S> <C>
0 (Year of Purchase Payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Later 0%
</TABLE>
Each Fixed Account Purchase Payment begins in Year 0 for purposes of calculating
the appropriate percentage to be applied to that payment. Purchase Payments
include amounts transferred to the Fixed Account from the Separate Account
Divisions.
21
SF 468 SAMPLE
CONTRACT DEFINITIONS
Defined terms and phrases are capitalized throughout the contract. Please read
them carefully as they will help You understand the provisions.
ACCUMULATED VALUE -- the value described in the Accumulated Value provision of
this contract.
ANNUITANT -- the person, including any Joint Annuitant, on whose life the
benefit payments are based. This person may or may not be the Owner.
ANNUITY PAYMENT DATE -- the date We notify You that Your Accumulated Value may
be applied under a Benefit Option to make annuitization income payments.
BENEFIT OPTION -- the options described in the Benefit Options section of this
contract.
CONTRACT DATE -- the day this contract was issued by Us and shown on the current
Data Page.
CONTRACT YEARS AND ANNIVERSARIES -- The length of time Your contract has been in
force, derived from the Contract Date. For example, if the Contract Date is June
5, 1998, the first Contract Year ends on June 4, 1999, and the first Contract
Anniversary falls on June 5, 1999.
DIVISION -- a part of the Separate Account to which Purchase Payments may be
allocated or amounts transferred.
FIXED ACCOUNT -- an account which is part of our general account to which
Purchase Payments may be allocated or amounts transferred, which earns
guaranteed interest.
FIXED ACCOUNT SURRENDER CHARGE -- the charge described in the Fixed Account
Surrender Charge sub-provision of this contract.
FIXED ACCOUNT VALUE -- the amount described in the Fixed Account Value provision
of this contract.
JOINT ANNUITANT -- an additional Annuitant. The Joint Annuitants must be
husband and wife, and must be named as Owner and Joint Owner.
JOINT OWNER -- means an Owner who has an undivided interest with the right of
survivorship in this contract with another Owner. The Joint Owners must be
husband and wife, and must be named as Annuitant and Joint Annuitant. In this
contract, any reference to the Owner's death means the death of the last
surviving Owner.
MUTUAL FUND -- a registered open-end investment company or series thereof in
which a Division invests.
NET INVESTMENT FACTOR -- the investment performance measure described in the Net
Investment Factor provision of the contract.
NOTICE -- any form of communication providing the information We need, either in
writing or another manner that We approve in advance and receive in Our home
office.
OWNER -- the person, including any Joint Owner, who owns all rights and
privileges of this contract. If the Owner is not a natural person, the Owner
must be an entity with its own taxpayer identification number.
PURCHASE PAYMENT -- any amount You pay Us under this contract as consideration
for the benefits it provides, reduced by the amount We deduct to pay required
premium taxes. For purposes of the Fixed Account, Purchase Payments shall
include any amounts transferred into the Fixed Account from the Separate Account
Divisions.
SEPARATE ACCOUNT -- Principal Life Insurance Company Separate Account B, a
registered unit investment trust with Divisions and segregated assets to which
Purchase Payments may be allocated under this contract and others We issue.
SEPARATE ACCOUNT VALUE -- the amount described in the Separate Account Value
provision of this contract.
TRANSACTION FEE -- the fee described in the Transaction Fee provision of this
contract.
UNIT -- the accounting measure used to calculate the Separate Account Value.
VALUATION DATE -- the date the net asset value of a Mutual Fund is determined.
VALUATION PERIOD -- the period between when the net asset value of a Mutual Fund
is determined on one Valuation Date and when such value is determined on the
next following Valuation Date.
WE, OUR, US -- Principal Life Insurance Company.
YOU, YOUR -- the Owner of this contract.
BUYING AND KEEPING THIS CONTRACT IN FORCE
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Contract Date and is shown on the
initial Data Page. Subsequent Purchase Payments must be sent to the home office
address We provide to You either with Your annual report or in another manner.
You may make Purchase Payments at any time and in any amount while the contract
is in force and before You choose a Benefit Option, subject to the provisions
below.
PURCHASE PAYMENT LIMITS
The total Purchase Payments You make during the lifetime of this contract may
not exceed the Maximum Lifetime Purchase Payment Limit as shown on the current
Data Page, except with Our prior approval.
Each Purchase Payment must equal or exceed the Minimum Transaction Amount shown
on the current Data Page. We reserve the right to change this amount but it will
never exceed $1,000.
PURCHASE PAYMENT ALLOCATIONS
You may allocate Purchase Payments as additions to the Fixed Account and/or any
of the Separate Account Divisions shown on the current Data Page. However,
allocations to the Fixed Account are not allowed if the Fixed Account Value
immediately after the allocation exceeds the Maximum Lifetime Fixed Account
Value as shown on the current Data Page except with Our prior approval. Also, We
reserve the right to allocate the initial Purchase Payment entirely to the Money
Market Division for the first 15 days after the Contract Date. If the purchase
of this annuity falls within the definition of a replacement under state law, We
reserve the right to allocate the initial Purchase Payment (or any Purchase
Payment that may qualify as a replacement) to the Money Market Division beyond
15 days as may be necessary.
Allocations to the Fixed Account and/or each of the Separate Account Divisions
may be made as a percentage of each Purchase Payment. Percentages may be either
zero or any whole number and must total 100%. You may specify these allocations
with each Purchase Payment by providing Us Notice. Otherwise, We will allocate
each Purchase Payment in the same way You allocated the initial Purchase Payment
(as shown in the initial Data Page) unless You change this default allocation.
You may change this default allocation by providing Us Notice.
PREMIUM TAXES
We reserve the right to deduct amounts to cover any premium taxes required by
state or local law, where applicable. Any such deduction will be made from
either a Purchase Payment when received, or the Accumulated Value when
surrendered (in whole or part) or applied under a Benefit Option.
CONTRACT VALUES
The values and benefits are equal to or greater than those required by any
applicable law.
ACCUMULATED VALUE
Your contract values are calculated based on Your Accumulated Value. Your
Accumulated Value at any time is equal to Your Fixed Account Value plus Your
Separate Account Value.
FIXED ACCOUNT VALUE
Your Fixed Account Value at any time is equal to:
1. Purchase Payments You allocate to the Fixed Account; plus
2. Any transfers to the Fixed Account from Your interest in a Separate Account
Division; plus
3. Interest credited; minus
4. Any transfers from the Fixed Account to Your interest in a Separate Account
Division; minus
5. Any amounts from the Fixed Account that You received due to partial
surrenders; minus
6. Any Surrender Charges deducted from the Fixed Account due to partial
surrenders; minus
7. Any Transaction Fees deducted from the Fixed Account.
SEPARATE ACCOUNT VALUE
Your Separate Account Value at any time is equal to the sum of the values of
Your interests in all of the Separate Account Divisions. The value of Your
interest in each Separate Account Division at any time is equal to the total
number of Units multiplied by the Unit value of the Separate Account Division at
the time of valuation. The total number of Units is equal to:
1. The number of Units credited due to Purchase Payments You allocate to Your
interest in the Separate Account Division; plus
2. The number of Units credited due to any transfers from the Fixed Account or
Your interest in another Separate Account Division; minus
3. The number of Units canceled due to any transfers to the Fixed Account or
Your interest in another Separate Account Division; minus
4. The number of Units canceled due to any partial surrenders You made from Your
interest in the Separate Account Division; minus
5. The number of Units canceled due to any Transaction Fees deducted from Your
interest in the Separate Account Division.
FIXED ACCOUNT
GUARANTEED INTEREST RATES
Your Fixed Account Value will earn interest at a guaranteed interest rate. In no
event will the guaranteed interest rate be less than 3% compounded annually.
INTEREST CREDITING METHOD
Each Purchase Payment allocated or amount transferred to the Fixed Account earns
interest at the guaranteed rate in effect on the date it is received or
transferred. This rate applies to each Purchase Payment or amount transferred
until the end of the Contract Year. The interest rate applicable during the
first Contract Year to any initial Purchase Payment allocated to the Fixed
Account is shown on the initial Data Page.
Each Anniversary We will declare a renewal interest rate that is guaranteed and
applies to the Fixed Account Value in existence at that time. This rate applies
until the end of the Contract Year.
Interest is earned daily and will be compounded annually at the end of each
Contract Year.
FIXED ACCOUNT FREE TRANSACTION AMOUNT
You will not incur a Surrender Charge or Transfer Fee, as applicable, in any
Contract Year, for amounts surrendered or unscheduled transfers from the Fixed
Account which do not exceed the greater of:
A. The Fixed Account's earnings (Fixed Account Value minus
unsurrendered/non-Transferred Purchase Payments still subject to a Surrender
Charge or Transfer fee);
B. The Annual Maximum Free Transaction Percentage (shown on Your current Data
Page) of Your Fixed Account Value as of the later of the Contract Date or the
last Anniversary; or
C. Any amounts required to satisfy the minimum distribution amount requirement
of the Internal Revenue Code (for Qualified contracts only).
Surrenders, transfers, and any combination of surrenders and transfers will be
aggregated into one sum for purposes of calculating the Fixed Account Free
Transaction Amount in a particular Contract Year. The Fixed Account Free
Transaction Amount will increase by the Maximum Free Transaction Percentage
multiplied by any Purchase Payments made to the Fixed Account during the current
Contract Year.
SEPARATE ACCOUNT
SEPARATE ACCOUNT ASSETS
Our Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940 (as
amended). Assets We put into Our Separate Account to support this contract are
not part of Our general account. Income, gains and losses of Our Separate
Account, whether or not realized, are credited to or charged against Our
Separate Account assets, without regard to Our other income, gains or losses.
The assets of the Separate Account will be available to cover the liabilities of
Our general account only to the extent that the assets of the Separate Account
exceed the liabilities of the Separate Account arising under the contracts
supported by the Separate Account.
SEPARATE ACCOUNT DIVISIONS
Our Separate Account is comprised of the Divisions shown on the current Data
Page. Each Division invests in a series of a Mutual Fund with a different
investment objective. Income, gains and losses, whether or not realized, from
each Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or Our other income, gains
or losses.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a series
of a Mutual Fund are no longer available for investment, or in Our judgment
investment in a series of a Mutual Fund becomes inappropriate considering the
purposes of the Separate Account, We may eliminate the shares of a series of a
Mutual Fund and substitute shares of another. Substitution may be made with
respect to both existing investments and the investment of future Purchase
Payments. However, no such changes will be made without notifying You and
getting any required approval from the appropriate state and/or federal
regulatory authorities.
UNITS AND UNIT VALUE
Purchase Payments allocated or amounts transferred to a Separate Account
Division are credited as Units dividing the amount allocated or transferred by
the division's Unit value for the Valuation Period during which the amount is
allocated or transferred. Units are canceled when amounts are surrendered or
transferred from a Division.
The Unit value for each Division was arbitrarily set at $10 as of the date the
Division first purchased Mutual Fund shares. Thereafter, the Unit value on any
Valuation date is calculated by multiplying the Unit value on the previous
Valuation Date by that Division's Net Investment factor for the current
Valuation Period. The number of Units will not change due to a subsequent change
in Unit value. The Unit value for any Valuation Period is the Unit value
determined as of the end of the Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor measures the performance of each Division and is used
to determine changes in Unit value from one Valuation Period to the next. The
Net Investment Factor for a Valuation Period is equal to:
1. The quotient obtained by dividing:
a. The net asset value of a share of the Division's underlying series
of a Mutual Fund shown on the current Data Page 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, by
b. The net asset value of a share of such series of a Mutual Fund as of
the end of the immediately preceding Valuation Period;
minus
2. An administration fee equal to the number of days within such Valuation
Period times the Daily Separate Account Administration Charge shown on the
current Data Page. We reserve the right to change the Daily Separate Account
Administration Charge but it will never exceed 0.15% annually;
minus
3. A mortality and expense risks charge equal to the number of days within such
Valuation Period times the Daily Mortality and Expense Risks Charge shown on the
current Data Page.
We reserve the right to adjust the above formula to provide for any taxes
attributable to the operations of this contract or the Separate Account. The
Daily Separate Account Administration Charge and Daily Mortality and Expense
Risks Charge will be accrued daily and will be deducted from the Separate
Account at Our discretion.
TRANSFERS AND FEES
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Separate Account
Divisions prior to the Annuity Payment Date and as provided below. To request a
transfer, You must provide Us Notice. Transfers to the Fixed Account are
considered Purchase Payments for purposes of calculating any applicable
Surrender Charges and/or Transfer Fees. We reserve the right not to accept
transfer instructions from someone providing them for multiple contracts for
which he or she is not the Owner(s).
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to a Separate Account Division
by making either a scheduled or unscheduled Fixed Account transfer, provided
that either unscheduled Fixed Account transfers or scheduled Fixed Account
transfers (not both) may occur during the same Contract year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS--You may make an unscheduled transfer from
the Fixed Account each Contract Year, as follows:
1. The transfer will occur within one business day of the date We receive Your
Notice;
2. You must specify the dollar amount or percentage to be transferred;
3. Amounts in excess of the Fixed Account Free Transaction Amount (as described
in the Fixed Account Free Transaction Amount sub-provision) may be subject to a
Transfer Fee;
4. However, You may transfer up to 100% of Your Fixed Account Value (without
incurring a Transfer Fee) within 30 days after the first and following
Anniversaries if:
a. Your Fixed Account Value is less than $1,000; or
b. The difference between the renewal interest rate declared for Your
Fixed Account Value for the current Contract Year and the weighted
average interest rate earned on Your Fixed Account Value is more than
the Minimum Interest Rate Variance shown on Your current Data Page (in
that event, We will notify You).
SCHEDULED FIXED ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make scheduled
transfers on a periodic basis from the Fixed Account, as follows:
1. The transfer will occur on a date You specify in Your Notice (other than the
29th, 30th or 31st of any month);
2. The transfers will continue until Your Fixed Account Value is exhausted or We
receive Notice to stop them;
3. If You stop the transfers, You may not start them again without Our prior
approval; and
4. To initiate transfers, the amount transferred must equal or exceed the
Minimum Transaction Amount shown on the current Data Pages.
FIXED ACCOUNT TRANSFER FEE--A Transfer Fee, as determined below, may be deducted
from Your Fixed Account Value if You request a transfer from the Fixed Account
which is greater than the amounts provided in the Fixed Account Free Transaction
Amount provision, or is not otherwise exempt from Transfer Fees as provided
elsewhere in this contract. No Transfer Fees will apply to any amounts in the
Separate Account Divisions.
The amount of the Transfer Fee applicable to amounts in Your Fixed Account is
calculated as a percentage of the Fixed Account Purchase Payments transferred.
The Table of Fixed Account Transfer Fees shown on the current Data Page
indicates the appropriate percentage, if any, to be applied to the sum of the
Fixed Account Purchase Payments. This percentage is based on the number of
completed Contract Years between the Contract Year of the Fixed Account Purchase
Payment and the Contract Year of transfer. The Transfer Fee is equal to the
total of the sums determined for each Contract Year shown in the Table during
which Fixed Account Purchase Payments were made, considering the Fixed Account
Free Transaction Amount provision.
For purposes of calculating any Fixed Account Transfer Fee, amounts are
considered as transferred in the following order:
1. Fixed Account Purchase Payments made in Contract Years that are no longer
subject to a Surrender Charge;
2. Amounts described in the Fixed Account Free Transaction Amount provision,
first from the Fixed Account's earnings, then from the oldest Fixed Account
Purchase Payments (first-in, first-out); and
3. Fixed Account Purchase Payments made in Contract Years that are still subject
to a Surrender Charge, first-in, first-out.
We reserve the right to reduce Surrender Charges for any amounts transferred
from this contract that are attributable to a conversion from other products
issued by Principal Life Insurance Company and its subsidiaries and as otherwise
permitted by the Investment Company Act of 1940 (as amended).
TRANSFERS FROM SEPARATE ACCOUNT DIVISIONS
You may transfer amounts from a Separate Account Division to either the Fixed
Account or another Separate Account Division by making either a scheduled or
unscheduled Separate Account transfer subject to the following conditions:
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at least the
Minimum Transfer Waiting Period shown on the current Data Page; and
2. Your Fixed Account Value immediately after the transfer does not exceed the
Maximum Lifetime Fixed Account Value except with Our prior approval.
UNSCHEDULED SEPARATE ACCOUNT DIVISION TRANSFERS--You may make unscheduled
transfers from a Separate Account Division as follows:
1. The transfer will occur within one business day of the date We receive Your
Notice; and
2. You must specify the dollar amount or percentage to transfer from each
Separate Account Division, and the resulting total amount must equal or exceed
the lesser of the value of Your interest in the Separate Account Divisions or
the Minimum Transaction Amount shown on the current Data Page.
SCHEDULED SEPARATE ACCOUNT DIVISION TRANSFERS-(Dollar Cost Averaging/Automatic
Portfolio Rebalancing)-You may make scheduled transfers from a Separate Account
Division, as follows:
1. The transfers will occur on a date You specify in Your Notice (other than the
29th, 30th or 31st of any month);
2. You must specify how often the transfers will occur (annually, semi-annually,
quarterly for automatic portfolio rebalancing; annually, semi-annually,
quarterly or monthly for dollar cost averaging);
3. You must specify the dollar amount or percentage to transfer from each
Separate Account Division, and the resulting total amount must equal or exceed
the lesser of the value of Your interest in the Separate Account Divisions or
the Minimum Transaction Amount shown on the current Data Page.
4. The transfers will continue until Your interest in the Division is exhausted
or We receive Notice to stop them; and
5. We reserve the right to limit the number of Separate Account Divisions from
which transfers will be made at the same time. In no event will it ever be less
than two.
TRANSACTION FEE
The Transaction Fee is shown on the current Data Page. It will be
deducted for each unscheduled Separate Account Division transfer after the
twelfth such transfer in each Contract Year, and for each unscheduled partial
surrender after the twelfth such surrender in each Contract Year.
The Transaction Fee will be deducted on a pro-rata basis from Your Fixed Account
Value and/or the value of Your interest in a Separate Account Division from
which the amount is surrendered or transferred.
CONTRACT BENEFITS
You may surrender this contract, receive retirement income payments or a death
benefit will be paid as provided below.
We will pay any Separate Account Division surrender within seven days after We
receive Notice. We will pay any death benefit within seven days after We receive
Notice (including proof) of the Owner's death and all documentation We require
to process the claim. However, We reserve the right to delay payment of the
Fixed Account Value for up to six months after You provide Us Notice of a
surrender. Also, We reserve the right to require that You send Us this contract
so We can record any changes.
SURRENDER
You may surrender this contract on or before the Annuity Payment Date. You may
make a full or partial surrender of this contract and receive all or a portion
of its Accumulated Value minus any applicable Fixed Account Surrender Charges,
or Transaction Fees.
To request a surrender, You must provide Us Notice. For a partial surrender, You
must specify the dollar amount to surrender. The amount will be deducted from
Your Fixed Account Value and/or Your interest in any Separate Account Division
according to surrender allocation percentages You provide Us. Percentages may be
either zero or any whole number and must total 100%.
You may specify surrender allocation percentages with each surrender request by
providing Us Notice. Otherwise, We will use the Purchase Payment allocation
percentages You provide. You may change Purchase Payment allocation percentages
at any time by providing Us Notice.
UNSCHEDULED PARTIAL SURRENDERS--You may make unscheduled partial surrenders, as
follows:
1. Each unscheduled partial surrender must equal or exceed the Minimum
Transaction Amount shown on the current Data Page; and
2. The Accumulated Value after an unscheduled partial surrender must equal or
exceed the Minimum Surrender Value shown on the current Data Page. We reserve
the right to change this amount but it will never exceed $10,000.
SCHEDULED PARTIAL SURRENDERS--You may make scheduled partial surrenders, as
follows:
1. The surrender will occur on a date You specify in Your Notice (other than the
29th, 30th, or 31st of any month);
2. You must specify how often scheduled partial surrenders will occur (annually,
semi-annually, quarterly or monthly);
3. Your Accumulated Value must equal or exceed the Minimum Surrender Value shown
on the current Data Page; and
4. The surrenders will continue until the Accumulated Value is exhausted or We
receive Notice to stop them.
FIXED ACCOUNT SURRENDER CHARGE--A Surrender Charge, as determined below, may be
deducted from Your Fixed Account Value if You request a full or partial
surrender on or prior to the Annuity Payment Date. No Surrender Charges will
apply to any amounts in the Separate Account Divisions.
The amount of the Surrender Charge applicable to amounts in Your Fixed Account
is calculated as a percentage of the Fixed Account Purchase Payments
surrendered. The Table of Fixed Account Surrender Charges shown on the current
Data Page indicates the appropriate percentage, if any, to be applied to the sum
of the Fixed Account Purchase Payments. This percentage is based on the number
of completed Contract years between the Contract Year of the Fixed Account
Purchase Payment and the Contract Year of surrender. The Surrender Charge is
equal to the total of the sums determined for each Contract Year shown in the
Table during which Fixed Account Purchase Payments were made, considering the
Fixed Account Free Transaction Amount sub-provision.
For purposes of calculating any Fixed Account Surrender Charge, amounts are
considered as surrendered in the following order:
1. Fixed Account Purchase Payments made in Contract Years that are no longer
subject to a Surrender Charge;
2. Amounts described in the Fixed Account Free Transaction Amount sub-provision,
first from the Fixed Account's earnings, then from the oldest Fixed Account
Purchase Payments (first-in, first-out); and
3. Fixed Account Purchase Payments made in Contract Years that are still subject
to a Surrender Charge, first-in, first-out.
We reserve the right to reduce Surrender Charges for any amounts surrendered
from this contract that are attributable to a conversion from other products
issued by Principal Life Insurance Company and its subsidiaries and as otherwise
permitted by the Investment Company Act of 1940 (as amended).
STANDARD DEATH BENEFIT
If You die prior to the Annuity Payment Date, We will pay a death benefit.
No death benefit is payable under this provision after the Annuity Payment
Date. No Surrender Charge applies when We pay a death benefit.
The amount of the standard death benefit equals the greater of:
1. Your Accumulated Value on the date We receive Notice (including proof) of
death and all documentation We require to process the claim; or
2. The total Purchase Payments minus any partial surrenders, fees and charges
as of the date We receive Notice (including proof) of death and all
documentation We require to process the claim.
If benefit instructions are in effect, the death benefit will be paid according
to these instructions.
If the Annuitant dies before You and is not a Joint Owner, You may name a new
Annuitant. If the new Annuitant is not named within 60 days after the date We
receive Notice (including proof) of the Annuitant's death, You will become the
Annuitant. If the Owner is not a natural person, the death of the Annuitant will
be treated as the death of the Owner.
If You die before the Annuitant and Your beneficiary is Your spouse, We will
continue the contract with Your surviving spouse as the new Owner or Your
surviving spouse may choose to:
1. Apply the death benefit under a Benefit Option; or
2. Receive the death benefit as a single payment.
Any choice in 1 or 2 above must be made within 60 days after Your death.
If Your beneficiary is a natural person, but not Your surviving spouse, the
death benefit may be paid as:
1. Fixed income for a period of years that does not exceed the life expectancy
of the beneficiary;
2. Life income with no minimum guaranteed period or a minimum guaranteed period
that does not exceed the life expectancy of the beneficiary; or
3. An individual arrangement approved by Us.
If Your beneficiary is not a natural person, the death benefit must be paid out
within five years of Your death.
We will pay interest on the death benefit from the date We receive Notice
(including proof) of death and all required documentation to process the claim
until date of payment or until the death benefit is applied under a Benefit
Option.
We will pay interest at a rate equal to or greater than 3%.
Life expectancy is based on the appropriate life expectancy tables published by
the United State Treasury Department, as amended.
BENEFIT INSTRUCTIONS-- Before the Annuity Payment Date, You may file benefit
instructions for the payment of the death benefit under a Benefit Option. Such
benefit instructions, or a change of benefit instructions, must be in a written
Notice. A change of beneficiary will revoke any prior benefit instructions.
BENEFICIARY--The beneficiary is the person or persons You name in the
application to receive benefits payable upon Your death, or if the Owner is not
a natural person, upon the Annuitant's death. You may change Your beneficiary
designation at any time, unless You have named an irrevocable beneficiary. Any
change in beneficiary must be made in writing in a manner acceptable to Us.
If any beneficiary dies before You, upon Your death We will make an equal
distribution of that beneficiary's portion of the death benefit to Your
surviving beneficiaries unless We have approved other written instructions from
You. If none of Your beneficiaries survives You, We will pay the death benefit
to Your estate in one sum.
ANNUITIZATION INCOME
On the Annuity Payment Date, We will notify You that Your Accumulated Value may
be applied under a Benefit Option and, if elected, will make annuitization
income payments to You if the Annuitant is living and the contract is in force
on that date. No Surrender Charge will be deducted from Your Fixed Account Value
when Your Accumulated Value is applied under a Benefit Option.
If You do not choose a different Benefit Option, We will apply Your Accumulated
Value under a life income with a ten year guarantee, or under the joint and 100%
survivor life income with a ten year guarantee with Joint Annuitants, to
determine the annuitization income benefit.
TERMINATION
This contract will continue until one of the following events occurs:
1. Your Accumulated Value is applied under a Benefit Option;
2. You surrender Your contract in full; or
3. Your death occurs (unless Your spouse elects to continue the contract
pursuant to the Death Benefit provision), or, if the Owner is not a natural
person, the Annuitant's death occurs.
We reserve the right to terminate this contract by paying You the Accumulated
Value, in one sum, if Your Accumulated Value is less than the Minimum Contract
Value shown on Your current Data Page.
We will notify You and give You 60 days to increase the Accumulated Value to the
Minimum Contract Value shown on Your current Data Page before We exercise this
right.
BENEFIT OPTIONS
On the Annuity Payment Date, You may choose to use one of the following Benefit
Options, or any other Benefit Option We make available. The tables shown
illustrate guaranteed minimum benefits. The benefits You receive may be greater.
Option A. SPECIAL BENEFIT ARRANGEMENT--You may arrange an individually designed
Benefit Option with Our approval. Any arrangement that will not qualify this
contract as an annuity under the United States Internal Revenue Code , as
amended, will not be permitted.
Option C. FIXED INCOME-- We will pay an income of a fixed amount or an income
for a fixed period of at least 5 years but not exceeding 30 years. If You die
after annuity payments begin, the remaining payments will be paid to the
beneficiary named under Your Benefit Option.
Option D. LIFE INCOME--We will pay an income during a person's lifetime. A
minimum guaranteed period may be used. If You die after annuity payments begin
and before the end of the minimum guaranteed period (if applicable), the
remaining payments will be paid to the beneficiary named under Your Benefit
Option.
Option E. JOINT AND SURVIVOR LIFE INCOME--We will pay an income during the
lifetime of two persons, and continuing until the death of the survivor. This
option includes a minimum guaranteed period of 10 years. If both persons die
before the end of the minimum guaranteed period, the remaining payments will
be paid to the beneficiary named under Your Benefit Option.
Option F. JOINT AND TWO-THIRDS SURVIVOR LIFE INCOME--We will pay an income
during the lifetime of two persons, and two-thirds of the original amount during
the remaining lifetime of the survivor. If one of the persons dies after annuity
payments begin, We will continue to pay two-thirds of the original amount to the
survivor until that person's death.
CONDITIONS
When a Benefit Option is chosen, the following conditions will apply:
1. This contract must be exchanged for a supplementary contract providing the
Benefit Option You choose;
2. No changes may be made as to the Benefit Option once the supplementary
contract is issued;
3. Until proceeds are applied under a Benefit Option, any death benefit will be
held In a new account at an interest rate determined by Us which will not be
less than 3% a year;
4. We reserve the right to pay the Accumulated Value in a single sum if it does
not exceed $5,000, or if the amount to be applied for under a Benefit Option
would result in periodic payments that do not exceed other minimum requirements
that are in effect at that time for Annuitants in the same class;
5. Benefit Options are restricted if the recipient of benefits is not a natural
person;
6. One of the natural persons on whose life payment under Options D, E, and F
are based must be the Annuitant or a beneficiary. The size of payments depends
on the age of the person or persons on whose life payments are based, determined
as of the date this contract is exchanged for a supplementary contract. We
reserve the right to require evidence of age and continuing survival; and
7. At the time payments begin, any benefits will be at least that which would be
provided by any single premium immediate annuity contract then being offered by
Us for the same class of Annuitants.
GENERAL INFORMATION
THE CONTRACT
This contract, any attached application, or amendments to it, any attached
riders or endorsements, and the current Data Pages make up the entire contract.
Any statements made in an application will be considered representations and not
warranties.
ALTERATIONS
This contract may be altered by mutual agreement unless otherwise provided. Only
Our corporate officers may agree to modify or waive anything in or approve
amendments to Your contract. Any alterations must be in writing and signed by
one of Our corporate officers. No one else, including the agent, may change this
contract or waive any provisions.
INCONTESTABILITY
This contract will be incontestable after it has been in force for two years
from the Contract Date. The time limit in this Incontestability provision does
not apply to fraud.
AGE
If the Annuitant's age is not correctly shown on the current Data Page, We will
adjust the monthly income payable under Your contract. The age shown should be
the Annuitant's age on the Contract Date. Any adjustment will be based on the
amount of monthly income that would have been purchased at the correct age.
OWNERSHIP
The Owners and Joint Owners are named on the current Data Page. Ownership may be
changed as provided below. As Owner or Joint Owners, You may exercise every
right and privilege provided by this contract. These rights include the right to
receive income payments or to name a payee to receive these payments. The
exercise of Your rights is subject to the rights of any irrevocable beneficiary.
If Joint Owners are named, both must consent to any exercise of these rights.
CHANGE OF OWNER
You may change Your ownership designation at any time. Your request must be in
writing in a manner acceptable to Us. No change is effective without Our prior
approval. Once approved, the change is effective as of the date You signed the
request. We reserve the right to require that You send Us this contract so We
can record the change.
CHANGE OF ANNUITY PAYMENT DATE
You may change the Annuity Payment Date any time before a supplementary contract
which provides a Benefit Option is issued. Your request must be in writing and
have Our approval.
ASSIGNMENT
You may assign Your contract as collateral for a loan. The assignment must be in
writing and filed in Our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the Owner,
but the rights of any beneficiaries, whenever named, become subordinate to those
of the assignee. Any amount paid an assignee will be treated as a partial or
full surrender, as applicable, and will be paid in one sum.
STATEMENTS OF VALUE
We will mail You statements of Your current Accumulated Value at least once each
year until Your contract is applied under a Benefit Option or surrendered in
full. These will include current statements of the number of Units credited to a
Separate Account Division and the dollar value of a Unit. We will mail the
statements to Your last post office address known to Us.
ENDORSEMENTS
SF 468 SAMPLE
FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on Annuity Payment
Date, or death benefit if Owner dies before Annuity Payment Date. Benefits based
on the performance of the Separate Account are variable and not guaranteed as to
dollar amount. NON-PARTICIPATING.
SF 469 2 SAMPLE
WAIVER OF SURRENDER CHARGE RIDER
This rider is part of Your contract. All definitions, provisions, and exceptions
of the contract apply to this rider unless changed by this rider. The effective
date is the same as the Contract Date unless another date is shown on page 3 of
Your contract.
DEFINITIONS
CRITICAL NEED means being either confined to a Health Care Facility, diagnosed
with a Terminal Illness, or Totally and Permanently Disabled.
HEALTH CARE FACILITY means a licensed hospital or inpatient nursing facility
providing daily medical treatment and keeping daily medical records for each
patient (not primarily providing just residency or retirement care). This does
not include a facility that primarily provides drug or alcohol treatment, or a
facility owned or operated by the Owner or Annuitant or a member of their
immediate families.
TERMINAL ILLNESS means a sickness or injury that results in the Owner's or
Annuitant's life expectancy being 12 months or less from the date You provide Us
notice to receive benefits under this rider.
TOTALLY AND PERMANENTLY DISABLED means the Owner or Annuitant qualifies to
receive Social Security disability benefits.
BENEFITS AND CONDITIONS
We will waive the Surrender Charge and any administrative or transaction fee
that would apply to a full surrender or any partial surrender that would
otherwise incur a Surrender Charge, subject to the following conditions:
1. After the effective date of this rider, the original Owner (if a natural
person) must have a Critical Need; and on the effective date of this rider,
the original Owner must not have had a Critical Need; or
After the effective date of this rider, the original Annuitant must have a
Critical Need; and on the effective date of this rider, the original
Annuitant must not have had a Critical Need.
2. To exercise this rider based on Health Care Facility confinement, the
confinement must continue for at least 60 consecutive days after the
effective date of this rider.
3. There is a one year waiting period before You can exercise this rider. You
must provide Us notice, and proof which is acceptable to Us that the
conditions of this rider have been met, after one year following the
effective date of this rider. In addition, for Health Care Facility
confinement, this must be provided within 90 days after the confinement
ends.
4. You cannot pay any additional premiums or purchase payments that Your
contract would otherwise allow after You exercise this rider.
IJKLMNOP
ABCDEF
TERMINATION
This rider ends on the first of the following events:
1. You terminate the contract to which this rider is attached; or
2. You cancel this rider. We reserve the right to require that You send Us Your
contract so We can record the cancellation.
SF 470 3 SAMPLE
IRA RIDER
This rider is a part of Your contract. The contract to which it is attached is
modified, as specified below, in order to qualify as an Individual Retirement
Annuity (IRA) under the terms of the Internal Revenue Code as amended (the
Code). The rider's effective date is the same as the Contract Date unless
another date is shown on page 3 of Your contract.
We reserve the right to amend this rider to comply with future changes in the
Code. We will send You a copy of any such amendment.
The following statements shall apply:
1. At all times, the Annuitant (You) must be one individual and the only
Owner of the contract. Ownership of the contract is nontransferable.
The Annuitant's rights under the contract are nonforfeitable and for
the exclusive benefit of the Annuitant and his or her beneficiaries.
2. Benefits under the contract may not be sold, assigned, or pledged as
collateral for a loan, or as security for the performance of an
obligation, or for any other purpose; except that the contract may be
transferred to the Annuitant's former spouse under a divorce decree or
written instrument incident to such divorce. In the event of such a
transfer, the transferee will for all purposes be treated as the
Annuitant under the contract.
3. Except in the case of a rollover contribution (as permitted by Code
sections 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), or a contribution
made in accordance with the terms of a Simplified Employee Pension
(SEP), as described in Code section 408(k), no contributions will be
accepted unless they are in cash, and the total of such contributions
shall not exceed $2,000 for any taxable year (or such other amount
specified in Code section 408).
4. Any dividend or other refund of premiums or purchase payments (other
than those attributable to excess contributions) will be applied,
before the close of the calendar year following the year of the refund,
toward the payment of future premiums or the purchase of additional
benefits.
5. The Accumulated Value of the contract must be distributed, or begin to
be distributed, no later than April 1st following the calendar year in
which You attain age 70 1/2 (required beginning date) over (a) your
life, or the lives of You and Your designated beneficiary, or (b) a
period not extending beyond Your life expectancy, or the joint and last
survivor life expectancy of You and Your designated beneficiary.
Payments must be made in periodic payments at intervals of no longer
than one year. In addition, payments must be either nonincreasing or
they may increase only as provided in Q&A F-3 of section 1.401(a)(9)-1
of the Proposed Income Tax Regulations. All distributions will be made
in accordance with the requirements of Code section 401(a)(9) including
the incidental death benefit requirements of Code section 401(a)(9)(G),
and the regulations thereunder, including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the Proposed
Income Tax Regulations.
HIJKLMNOPABCDEF
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. Unless
You notify Us in writing by the time distributions are required to
begin, life expectancies will be recalculated annually. Such election
will be irrevocable by You and will apply to all subsequent years. The
life expectancy of a non-spouse beneficiary
may not be recalculated. Instead, life expectancy will be calculated
using the attained age of such beneficiary during the calendar year in
which the individual attains age 70 1/2, and the payments for
subsequent years will be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the
calendar year life expectancy was first calculated.
You may choose to receive payments through scheduled partial
surrenders, or a Benefit Option described in Your contract. Any amount
distributed as a result of the minimum distribution requirements of the
Income Tax Regulations will not be subject to a Surrender Charge.
6. If You die on or after the distribution of your Accumulated Value has
begun, but before the entire Accumulated Value has been distributed,
the remaining balance will continue to be distributed at least as
rapidly as under the method of distribution in effect at time of Your
death.
7. If You die before the distribution of your Accumulated Value has begun,
Your entire Accumulated Value will be distributed by December 31 of the
calendar year in which the fifth anniversary of Your death occurs,
except to the extent that an election is made to receive distributions
in accordance with a. or b. below:
a. If You have named a designated beneficiary, the Accumulated
Value may be distributed to Your designated beneficiary
provided that 1) payments begin on or before December 31 of
the calendar year immediately following the calendar year in
which You died and 2) payments are made over the life or a
period certain not greater than the life expectancy of the
designated beneficiary.
b. If Your designated beneficiary is your surviving spouse, the
date distributions are required to begin in accordance with a.
above shall not be earlier than the later of 1) December 31 of
the calendar year immediately following the calendar year in
which You died, or 2) December 31 of the calendar year in
which You would have attained age 70 1/2.
c. If Your designated beneficiary is Your surviving spouse, Your
spouse may treat the contract as his or her own IRA. This
election will be deemed to have been made if Your spouse makes
a regular contribution to the contract, makes a rollover to or
from the contract, or fails to elect any of the above.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. For
purposes of distributions beginning after Your death, unless Your
surviving spouse elects otherwise (notifying Us in writing) by the time
distributions are required to begin, life expectancies will be
recalculated annually. Such election will be irrevocable by Your
surviving spouse and will apply to all subsequent years. In the case of
any other designated beneficiary, life expectancies will be calculated
using the attained age of such beneficiary during the calendar year in
which distributions are required to begin pursuant to this section, and
payments for any subsequent calendar year will be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
8. Distributions under statements 6 and 7 are considered to have begun if
distributions are made on account of the individual reaching his or her
required beginning date or, if prior to the required beginning date,
distributions irrevocably commence to an individual over a period
permitted and in an annuity form acceptable under section 1.401(a)(9)
of the Income Tax Regulations.
9. On the Annuity Payment Date we will will notify You that Your
Accumulated Value may be applied under a Benefit Option and, if
elected, will apply your Accumulated Value under a Benefit Option and
make annuitization income payments to You if the Annuitant is living
and the contract is in force on that date.
If You do not choose a different Benefit Option, We will apply Your
Accumulated Value under Benefit Option D (Life Income with a 10 year
guarantee) to determine the annuitization income benefit. No Surrender
Charge will be deducted from your Accumulated Value when it is applied
under a Benefit Option.
10. We will mail You a statement of Your current Accumulated Value once
each year until Your contract is applied under a Benefit Option or
surrendered in full. We will mail the statement to Your last post
office address known to Us.
SF 471 SAMPLE
CHANGE OF ANNUITANT RIDER
This rider is part of Your contract. It is issued in consideration of the
application. No premiums are charged for this rider. Its issue date is the same
as the Contract Date unless another date is shown on page 3 of Your contract.
EXCHANGE PRIVILEGE
This contract may be exchanged to a new one with another person as the new
Annuitant, if You are the original Owner. If the original Owner is a natural
person, the person named as the new Annuitant must also be made the new Owner.
The exchange privilege can be used only once if the original Owner is a natural
person.
LIMITATIONS AND CONDITIONS
These limitations and conditions apply:
1. The new contract must be the same plan as this contract.
2. The date of exchange is the date We approve the application for exchange.
3. The date of issue of the new contract is the later of:
a. This contract's issue date; or
b. This contract's Anniversary following the new Annuitant's date of
birth.
4. The Accumulated Value under this contract will become the Accumulated Value
under the new contract.
5. The new contract is subject to any assignments of this contract.
TERMINATION
This rider ends on the first of:
1. The Contract Anniversary following the Annuitant's 70th birthday;
2. This contract's Annuity Payment Date; or
3. Termination of this contract.
IJKLMNOP ABCDEF
SF SAMPLE
467
2
SF 467 SAMPLE
This contract is a legal contract between You, as the Owner, and Us, Principal
Life Insurance Company. Your contract is issued based on the information You
provided and the initial Purchase Payment shown on the initial Data Page.
We will pay the benefits of this contract in accordance with its provisions.
10-DAY EXAMINATION OFFER. WE WANT YOU TO BE SATISFIED WITH THIS CONTRACT. IF YOU
ARE NOT SATISFIED, YOU MAY RETURN YOUR CONTRACT TO EITHER THE AGENT OR OUR HOME
OFFICE WITHIN TEN DAYS OF ITS RECEIPT AND YOUR CONTRACT WILL BE CONSIDERED VOID
FROM ITS INCEPTION. WE WILL REFUND YOUR PURCHASE PAYMENT IN STATES WHERE
REQUIRED. IN STATES WHERE PERMITTED, WE WILL REFUND THE TOTAL ACCUMULATED VALUE,
WHICH MAY BE MORE OR LESS THAN YOUR PURCHASE PAYMENT. PLEASE READ YOUR CONTRACT
CAREFULLY SO YOU MAY BETTER USE ITS MANY BENEFITS.
If You have questions about this contract, please contact Your Principal Life
representative or call Our home office at 1-800-247-9988.
THIS IS A FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on Annuity
Payment Date, or death benefit if Owner dies before Annuity Payment Date.
Benefits based on the performance of the Separate Account are variable and not
guaranteed as to dollar amount. This policy is non-participating.
/s/ David J. Drury
Chairman and Chief Executive Officer
/s/ Joyce N. Hoffman
Vice President and Corporate Secretary
Owner:
Annuitant:
Contract Number:
TABLE OF CONTENTS
SUBJECT PAGE
CONTRACT DEFINITIONS.................................................... 4
BUYING AND KEEPING THIS CONTRACT IN FORCE............................... 5
PURCHASE PAYMENTS..................................................... 5
PURCHASE PAYMENT LIMITS............................................... 5
PURCHASE PAYMENT ALLOCATIONS...........................................5
PREMIUM TAXES......................................................... 6
CONTRACT VALUES..........................................................6
ACCUMULATED VALUE......................................................6
FIXED ACCOUNT VALUE....................................................6
SEPARATE ACCOUNT VALUE.................................................6
FIXED ACCOUNT............................................................7
GUARANTEED INTEREST RATES............................................. 7
INTEREST CREDITING METHOD............................................. 7
FIXED ACCOUNT FREE TRANSACTION AMOUNT..................................7
SEPARATE ACCOUNT.........................................................7
SEPARATE ACCOUNT ASSETS................................................7
SEPARATE ACCOUNT DIVISIONS............................................ 8
UNITS AND UNIT VALUE.................................................. 8
NET INVESTMENT FACTOR................................................. 8
TRANSFERS AND FEES...................................................... 9
TRANSFERS ALLOWED..................................................... 9
TRANSFERS FROM FIXED ACCOUNT.......................................... 9
TRANSFERS FROM SEPARATE ACCOUNT DIVISIONS............................ 10
TRANSACTION FEE.......................................................11
CONTRACT BENEFITS.......................................................11
SURRENDER.............................................................11
STANDARD DEATH BENEFIT................................................13
ANNUITIZATION INCOME..................................................14
TERMINATION............................................................ 14
BENEFIT OPTIONS.........................................................14
CONDITIONS............................................................15
GENERAL INFORMATION.....................................................15
THE CONTRACT..........................................................15
ALTERATIONS...........................................................15
INCONTESTABILITY......................................................16
AGE AND SEX...........................................................16
OWNERSHIP.............................................................16
CHANGE OF OWNER.......................................................16
CHANGE OF ANNUITY PAYMENT DATE........................................16
ASSIGNMENT............................................................16
STATEMENTS OF VALUE...................................................16
A copy of the application and any riders follow the last page of this contract.
3-5
SF 467 SAMPLE
ABCDEFG
DATA PAGE
================================================================================
Principal Freedom(sm) Variable Annuity
================================================================================
CONTRACT DATA
Contract Number: Sample
Owner: John Doe
Joint Owner: Jane Doe
Annuitant's Name, Age and Sex: John Doe, 35 - Male
Joint Annuitant's Name, Age and Sex: Jane Doe, 35 - Female
Contract Date: July 1, 2000
======================================= ========================================
<TABLE>
<CAPTION>
<S> <C>
The initial Purchase Payment You paid is: $10,000.00
The Minimum Transaction Amount is: $50.00
The Minimum Surrender Value is: $5,000.00
Current Daily Separate Account Administration Charge: .000000000 (0.00% annually)
(Guaranteed not to exceed .15% annually)
Current Daily Mortality and Expense Risks Charge: .000023287 (0.85% annually)
(Guaranteed not to exceed 1.25% annually)
The Minimum Contract Value is: $5,000.00
</TABLE>
======================================================= ========================
FIXED ACCOUNT DATA
<TABLE>
<CAPTION>
<S> <C>
The initial Purchase Payment interest rate for the first 5.15%
Contract Year is:
The Transaction Fee is: $30.00
The Maximum Lifetime Purchase Payment Limit is: $2,000,000.00
The Maximum Lifetime Fixed Account Value is: $1,000,000.00
The Annual Maximum Free Transaction Percentage is: 10%
The Minimum Interest Rate Variance is: 1%
The Minimum Transfer Waiting Period (for transfers to the 6 Months
Fixed Account) is:
</TABLE>
=========================================================== ====================
Initial Purchase Payment
Allocations
Fixed Account 0%
Separate Account Divisions:
American Century VP Income & Growth 10%
Blue Chip 10%
Bond 10%
Capital Value 10%
International 10%
LargeCap Growth 10%
MidCap 10%
MidCap Growth 10%
MidCap Value 10%
Money Market 10%
Stock Index 500 00%
SmallCap 00%
SmallCap Growth 00%
Templeton VP Stock 00%
-----------------------------------
100%
TABLE OF FIXED ACCOUNT SURRENDER CHARGES
<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTRACT YEARS SINCE EACH FIXED SURRENDER CHARGE APPLIED TO FIXED ACCOUNT PURCHASE
ACCOUNT PURCHASE PAYMENT WAS MADE PAYMENTS BEYOND FREE TRANSACTION AMOUNT
<S> <C> <C>
0 (Year of Purchase Payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Later 0%
</TABLE>
Each Fixed Account Purchase Payment begins in Year 0 for purposes of calculating
the appropriate percentage to be applied to that payment. Purchase Payments
include amounts transferred to the Fixed Account from the Separate Account
Divisions.
TABLE OF FIXED ACCOUNT TRANSFER FEES
<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTRACT YEARS SINCE EACH FIXED TRANSFER FEE APPLIED TO FIXED ACCOUNT TRANSFERS BEYOND
ACCOUNT PURCHASE PAYMENT WAS MADE FREE TRANSACTION AMOUNT
<S> <C> <C>
0 (Year of Purchase Payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and Later 0%
</TABLE>
Each Fixed Account Purchase Payment begins in Year 0 for purposes of calculating
the appropriate percentage to be applied to that payment. Purchase Payments
include amounts transferred to the Fixed Account from the Separate Account
Divisions.
22
SF 467 SAMPLE
CONTRACT DEFINITIONS
Defined terms and phrases are capitalized throughout the contract. Please read
them carefully as they will help You understand the provisions.
ACCUMULATED VALUE -- the value described in the Accumulated Value provision of
this contract.
ANNUITANT -- the person, including any Joint Annuitant, on whose life the
benefit payments are based. This person may or may not be the Owner.
ANNUITY PAYMENT DATE -- the date We notify You that Your Accumulated Value may
be applied under a Benefit Option to make annuitization income payments.
BENEFIT OPTION -- the options described in the Benefit Options section of this
contract.
CONTRACT DATE -- the day this contract was issued by Us and shown on the current
Data Page.
CONTRACT YEARS AND ANNIVERSARIES -- The length of time Your contract has been in
force, derived from the Contract Date. For example, if the Contract Date is June
5, 1998, the first Contract Year ends on June 4, 1999, and the first Contract
Anniversary falls on June 5, 1999.
DIVISION -- a part of the Separate Account to which Purchase Payments may be
allocated or amounts transferred.
FIXED ACCOUNT -- an account which is part of our general account to which
Purchase Payments may be allocated or amounts transferred, which earns
guaranteed interest.
FIXED ACCOUNT SURRENDER CHARGE -- the charge described in the Fixed Account
Surrender Charge sub-provision of this contract.
FIXED ACCOUNT VALUE -- the amount described in the Fixed Account Value provision
of this contract.
JOINT ANNUITANT -- an additional Annuitant. The Joint Annuitants must be
husband and wife, and must be named as Owner and Joint Owner.
JOINT OWNER -- means an Owner who has an undivided interest with the right of
survivorship in this contract with another Owner. The Joint Owners must be
husband and wife, and must be named as Annuitant and Joint Annuitant. In this
contract, any reference to the Owner's death means the death of the last
surviving Owner.
MUTUAL FUND -- a registered open-end investment company or series thereof in
which a Division invests.
NET INVESTMENT FACTOR -- the investment performance measure described in the Net
Investment Factor provision of the contract.
NOTICE -- any form of communication providing the information We need, either in
writing or another manner that We approve in advance and receive in Our home
office.
OWNER -- the person, including any Joint Owner, who owns all rights and
privileges of this contract. If the Owner is not a natural person, the Owner
must be an entity with its own taxpayer identification number.
PURCHASE PAYMENT -- any amount You pay Us under this contract as consideration
for the benefits it provides, reduced by the amount We deduct to pay required
premium taxes. For purposes of the Fixed Account, Purchase Payments shall
include any amounts transferred into the Fixed Account from the Separate Account
Divisions.
SEPARATE ACCOUNT -- Principal Life Insurance Company Separate Account B, a
registered unit investment trust with Divisions and segregated assets to which
Purchase Payments may be allocated under this contract and others We issue.
SEPARATE ACCOUNT VALUE -- the amount described in the Separate Account Value
provision of this contract.
TRANSACTION FEE -- the fee described in the Transaction Fee provision of this
contract.
UNIT -- the accounting measure used to calculate the Separate Account Value.
VALUATION DATE -- the date the net asset value of a Mutual Fund is determined.
VALUATION PERIOD -- the period between when the net asset value of a Mutual Fund
is determined on one Valuation Date and when such value is determined on the
next following Valuation Date.
WE, OUR, US -- Principal Life Insurance Company.
YOU, YOUR -- the Owner of this contract.
BUYING AND KEEPING THIS CONTRACT IN FORCE
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Contract Date and is shown on the
initial Data Page. Subsequent Purchase Payments must be sent to the home office
address We provide to You either with Your annual report or in another manner.
You may make Purchase Payments at any time and in any amount while the contract
is in force and before You choose a Benefit Option, subject to the provisions
below.
PURCHASE PAYMENT LIMITS
The total Purchase Payments You make during the lifetime of this contract may
not exceed the Maximum Lifetime Purchase Payment Limit as shown on the current
Data Page, except with Our prior approval.
Each Purchase Payment must equal or exceed the Minimum Transaction Amount shown
on the current Data Page. We reserve the right to change this amount but it will
never exceed $1,000.
PURCHASE PAYMENT ALLOCATIONS
You may allocate Purchase Payments as additions to the Fixed Account and/or any
of the Separate Account Divisions shown on the current Data Page. However,
allocations to the Fixed Account are not allowed if the Fixed Account Value
immediately after the allocation exceeds the Maximum Lifetime Fixed Account
Value as shown on the current Data Page except with Our prior approval. Also, We
reserve the right to allocate the initial Purchase Payment entirely to the Money
Market Division for the first 15 days after the Contract Date. If the purchase
of this annuity falls within the definition of a replacement under state law, We
reserve the right to allocate the initial Purchase Payment (or any Purchase
Payment that may qualify as a replacement) to the Money Market Division beyond
15 days as may be necessary.
Allocations to the Fixed Account and/or each of the Separate Account Divisions
may be made as a percentage of each Purchase Payment. Percentages may be either
zero or any whole number and must total 100%. You may specify these allocations
with each Purchase Payment by providing Us Notice. Otherwise, We will allocate
each Purchase Payment in the same way You allocated the initial Purchase Payment
(as shown in the initial Data Page) unless You change this default allocation.
You may change this default allocation by providing Us Notice.
PREMIUM TAXES
We reserve the right to deduct amounts to cover any premium taxes required by
state or local law, where applicable. Any such deduction will be made from
either a Purchase Payment when received, or the Accumulated Value when
surrendered (in whole or part) or applied under a Benefit Option.
CONTRACT VALUES
The values and benefits are equal to or greater than those required by any
applicable law.
ACCUMULATED VALUE
Your contract values are calculated based on Your Accumulated Value. Your
Accumulated Value at any time is equal to Your Fixed Account Value plus Your
Separate Account Value.
FIXED ACCOUNT VALUE
Your Fixed Account Value at any time is equal to:
1. Purchase Payments You allocate to the Fixed Account; plus
2. Any transfers to the Fixed Account from Your interest in a Separate Account
Division; plus
3. Interest credited; minus
4. Any transfers from the Fixed Account to Your interest in a Separate Account
Division; minus
5. Any amounts from the Fixed Account that You received due to partial
surrenders; minus
6. Any Surrender Charges deducted from the Fixed Account due to partial
surrenders; minus
7. Any Transaction Fees deducted from the Fixed Account.
SEPARATE ACCOUNT VALUE
Your Separate Account Value at any time is equal to the sum of the values of
Your interests in all of the Separate Account Divisions. The value of Your
interest in each Separate Account Division at any time is equal to the total
number of Units multiplied by the Unit value of the Separate Account Division at
the time of valuation. The total number of Units is equal to:
1. The number of Units credited due to Purchase Payments You allocate to Your
interest in the Separate Account Division; plus
2. The number of Units credited due to any transfers from the Fixed Account or
Your interest in another Separate Account Division; minus
3. The number of Units canceled due to any transfers to the Fixed Account or
Your interest in another Separate Account Division; minus
4. The number of Units canceled due to any partial surrenders You made from Your
interest in the Separate Account Division; minus
5. The number of Units canceled due to any Transaction Fees deducted from Your
interest in the Separate Account Division.
FIXED ACCOUNT
GUARANTEED INTEREST RATES
Your Fixed Account Value will earn interest at a guaranteed interest rate. In no
event will the guaranteed interest rate be less than 3% compounded annually.
INTEREST CREDITING METHOD
Each Purchase Payment allocated or amount transferred to the Fixed Account earns
interest at the guaranteed rate in effect on the date it is received or
transferred. This rate applies to each Purchase Payment or amount transferred
until the end of the Contract Year. The interest rate applicable during the
first Contract Year to any initial Purchase Payment allocated to the Fixed
Account is shown on the initial Data Page.
Each Anniversary We will declare a renewal interest rate that is guaranteed and
applies to the Fixed Account Value in existence at that time. This rate applies
until the end of the Contract Year.
Interest is earned daily and will be compounded annually at the end of each
Contract Year.
FIXED ACCOUNT FREE TRANSACTION AMOUNT
You will not incur a Surrender Charge or Transfer Fee, as applicable, in any
Contract Year, for amounts surrendered or unscheduled transfers from the Fixed
Account which do not exceed the greater of:
A. The Fixed Account's earnings (Fixed Account Value minus
unsurrendered/non-transferred Purchase Payments still subject to a Surrender
Charge or Transfer fee);
B. The Annual Maximum Free Transaction Percentage (shown on Your current Data
Page) of Your Fixed Account Value as of the later of the Contract Date or the
last Anniversary; or
C. Any amounts required to satisfy the minimum distribution amount requirement
of the Internal Revenue Code (for Qualified contracts only).
Surrenders, transfers, and any combination of surrenders and transfers will be
aggregated into one sum for purposes of calculating the Fixed Account Free
Transaction Amount in a particular Contract Year. The Fixed Account Free
Transaction Amount will increase by the Maximum Free Transaction Percentage
multiplied by any Purchase Payments made to the Fixed Account during the current
Contract Year.
SEPARATE ACCOUNT
SEPARATE ACCOUNT ASSETS
Our Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940 (as
amended). Assets We put into Our Separate Account to support this contract are
not part of Our general account. Income, gains and losses of Our Separate
Account, whether or not realized, are credited to or charged against Our
Separate Account assets, without regard to Our other income, gains or losses.
The assets of the Separate Account will be available to cover the liabilities of
Our general account only to the extent that the assets of the Separate Account
exceed the liabilities of the Separate Account arising under the contracts
supported by the Separate Account.
SEPARATE ACCOUNT DIVISIONS
Our Separate Account is comprised of the Divisions shown on the current Data
Page. Each Division invests in a series of a Mutual Fund with a different
investment objective. Income, gains and losses, whether or not realized, from
each Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or Our other income, gains
or losses.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a series
of a Mutual Fund are no longer available for investment, or in Our judgment
investment in a series of a Mutual Fund becomes inappropriate considering the
purposes of the Separate Account, We may eliminate the shares of a series of a
Mutual Fund and substitute shares of another. Substitution may be made with
respect to both existing investments and the investment of future Purchase
Payments. However, no such changes will be made without notifying You and
getting any required approval from the appropriate state and/or federal
regulatory authorities.
UNITS AND UNIT VALUE
Purchase Payments allocated or amounts transferred to a Separate Account
Division are credited as Units dividing the amount allocated or transferred by
the division's Unit value for the Valuation Period during which the amount is
allocated or transferred. Units are canceled when amounts are surrendered or
transferred from a Division.
The Unit value for each Division was arbitrarily set at $10 as of the date the
Division first purchased Mutual Fund shares. Thereafter, the Unit value on any
Valuation date is calculated by multiplying the Unit value on the previous
Valuation Date by that Division's Net Investment factor for the current
Valuation Period. The number of Units will not change due to a subsequent change
in Unit value. The Unit value for any Valuation Period is the Unit value
determined as of the end of the Valuation Period.
NET INVESTMENT FACTOR
The Net Investment Factor measures the performance of each Division and is used
to determine changes in Unit value from one Valuation Period to the next. The
Net Investment Factor for a Valuation Period is equal to:
1. The quotient obtained by dividing:
a. The net asset value of a share of the Division's underlying series
of a Mutual Fund shown on the current Data Page 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, by
b. The net asset value of a share of such series of a Mutual Fund as of
the end of the immediately preceding Valuation Period;
minus
2. An administration fee equal to the number of days within such Valuation
Period times the Daily Separate Account Administration Charge shown on the
current Data Page. We reserve the right to change the Daily Separate Account
Administration Charge but it will never exceed the maximum shown on the current
Data Page;
minus
3. A mortality and expense risks charge equal to the number of days within such
Valuation Period times the Daily Mortality and Expense Risks Charge shown on the
current Data Page. We reserve the right to change the Daily Mortality and
Expense Risks Charge but it will never exceed the maximum shown on the current
Data Page.
We reserve the right to adjust the above formula to provide for any taxes
attributable to the operations of this contract or the Separate Account. The
Daily Separate Account Administration Charge and Daily Mortality and Expense
Risks Charge will be accrued daily and will be deducted from the Separate
Account at Our discretion.
TRANSFERS AND FEES
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Separate Account
Divisions prior to the Annuity Payment Date and as provided below. To request a
transfer, You must provide Us Notice. Transfers to the Fixed Account are
considered Purchase Payments for purposes of calculating any applicable
Surrender Charges and/or Transfer Fees. We reserve the right not to accept
transfer instructions from someone providing them for multiple contracts for
which he or she is not the Owner(s).
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to a Separate Account Division
by making either a scheduled or unscheduled Fixed Account transfer, provided
that either unscheduled Fixed Account transfers or scheduled Fixed Account
transfers (not both) may occur during the same Contract year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS--You may make an unscheduled transfer from
the Fixed Account each Contract Year, as follows:
1. The transfer will occur within one business day of the date We receive Your
Notice;
2. You must specify the dollar amount or percentage to be transferred;
3. Amounts in excess of the Fixed Account Free Transaction Amount (as described
in the Fixed Account Free Transaction Amount sub-provision) may be subject to a
Transfer Fee;
4. However, You may transfer up to 100% of Your Fixed Account Value (without
incurring a Transfer Fee) within 30 days after the first and following
Anniversaries if:
1. Your Fixed Account Value is less than $1,000; or
2. The difference between the renewal interest rate declared for Your
Fixed Account Value for the current Contract Year and the weighted
average interest rate earned on Your Fixed Account Value is more than
the Minimum Interest Rate Variance shown on Your current Data Page (in
that event, We will notify You).
SCHEDULED FIXED ACCOUNT TRANSFERS-(Dollar Cost Averaging)-You may make scheduled
transfers on a periodic basis from the Fixed Account, as follows:
1. The transfer will occur on a date You specify in Your Notice (other than the
29th, 30th or 31st of any month);
2. The transfers will continue until Your Fixed Account Value is exhausted or We
receive Notice to stop them;
3. If You stop the transfers, You may not start them again without Our prior
approval; and
4. To initiate transfers, the amount transferred must equal or exceed the
Minimum Transaction Amount shown on the current Data Pages.
FIXED ACCOUNT TRANSFER FEE--A Transfer Fee, as determined below, may be deducted
from Your Fixed Account Value if You request a transfer from the Fixed Account
which is greater than the amounts provided in the Fixed Account Free Transaction
Amount provision, or is not otherwise exempt from Transfer Fees as provided
elsewhere in this contract. No Transfer Fees will apply to any amounts in the
Separate Account Divisions.
The amount of the Transfer Fee applicable to amounts in Your Fixed Account is
calculated as a percentage of the Fixed Account Purchase Payments transferred.
The Table of Fixed Account Transfer Fees shown on the current Data Page
indicates the appropriate percentage, if any, to be applied to the sum of the
Fixed Account Purchase Payments. This percentage is based on the number of
completed Contract Years between the Contract Year of the Fixed Account Purchase
Payment and the Contract Year of transfer. The Transfer Fee is equal to the
total of the sums determined for each Contract Year shown in the Table during
which Fixed Account Purchase Payments were made, considering the Fixed Account
Free Transaction Amount provision.
For purposes of calculating any Fixed Account Transfer Fee, amounts are
considered as transferred in the following order:
1. Fixed Account Purchase Payments made in Contract Years that are no longer
subject to a Surrender Charge;
2. Amounts described in the Fixed Account Free Transaction Amount provision,
first from the Fixed Account's earnings, then from the oldest Fixed Account
Purchase Payments (first-in, first-out); and
3. Fixed Account Purchase Payments made in Contract Years that are still subject
to a Surrender Charge, first-in, first-out.
We reserve the right to reduce Surrender Charges for any amounts transferred
from this contract that are attributable to a conversion from other products
issued by Principal Life Insurance Company and its subsidiaries and as otherwise
permitted by the Investment Company Act of 1940 (as amended).
TRANSFERS FROM SEPARATE ACCOUNT DIVISIONS
You may transfer amounts from a Separate Account Division to either the Fixed
Account or another Separate Account Division by making either a scheduled or
unscheduled Separate Account transfer subject to the following conditions:
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at least the
Minimum Transfer Waiting Period shown on the current Data Page; and
2. Your Fixed Account Value immediately after the transfer does not exceed the
Maximum Lifetime Fixed Account Value except with Our prior approval.
UNSCHEDULED SEPARATE ACCOUNT DIVISION TRANSFERS--You may make unscheduled
transfers from a Separate Account Division as follows:
1. The transfer will occur within one business day of the date We receive Your
Notice; and
2. You must specify the dollar amount or percentage to transfer from each
Separate Account Division, and the resulting total amount must equal or exceed
the lesser of the value of Your interest in the Separate Account Divisions or
the Minimum Transaction Amount shown on the current Data Page.
SCHEDULED SEPARATE ACCOUNT DIVISION TRANSFERS-(Dollar Cost Averaging/Automatic
Portfolio Rebalancing)-You may make scheduled transfers from a Separate Account
Division, as follows:
1. The transfers will occur on a date You specify in Your Notice (other than the
29th, 30th or 31st of any month);
2. You must specify how often the transfers will occur (annually, semi-annually,
quarterly for automatic portfolio rebalancing; annually, semi-annually,
quarterly or monthly for dollar cost averaging);
3. You must specify the dollar amount or percentage to transfer from each
Separate Account Division, and the resulting total amount must equal or exceed
the lesser of the value of Your interest in the Separate Account Divisions or
the Minimum Transaction Amount shown on the current Data Page.
4. The transfers will continue until Your interest in the Division is exhausted
or We receive Notice to stop them; and
5. We reserve the right to limit the number of Separate Account Divisions from
which transfers will be made at the same time. In no event will it ever be less
than two.
TRANSACTION FEE
The Transaction Fee is shown on the current Data Page. It will be
deducted for each unscheduled Separate Account Division transfer after the
twelfth such transfer in each Contract Year and for each
unscheduled partial surrender after the twelfth such surrender in each
Contract Year.
The Transaction Fee will be deducted on a pro-rata basis from Your Fixed Account
Value and/or the value of Your interest in a Separate Account Division from
which the amount is surrendered or transferred.
CONTRACT BENEFITS
You may surrender this contract, receive annuitization income payments
or a death benefit will be paid as provided below.
We will pay any Separate Account Division surrender within seven days after We
receive Notice. We will pay any death benefit within seven days after We receive
Notice (including proof) of the Owner's death and all documentation We require
to process the claim. However, We reserve the right to delay payment of the
Fixed Account Value for up to six months after You provide Us Notice of a
surrender. Also, We reserve the right to require that You send Us this contract
so We can record any changes.
SURRENDER
You may surrender this contract on or before the Annuity Payment Date. You may
make a full or partial surrender of this contract and receive all or a portion
of its Accumulated Value minus any applicable Fixed Account Surrender Charges,
or Transaction Fees.
To request a surrender, You must provide Us Notice. For a partial surrender, You
must specify the dollar amount to surrender. The amount will be deducted from
Your Fixed Account Value and/or Your interest in any Separate Account Division
according to surrender allocation percentages You provide Us. Percentages may be
either zero or any whole number and must total 100%.
You may specify surrender allocation percentages with each surrender request by
providing Us Notice. Otherwise, We will use the Purchase Payment allocation
percentages You provide. You may change Purchase Payment allocation percentages
at any time by providing Us Notice.
UNSCHEDULED PARTIAL SURRENDERS--You may make unscheduled partial surrenders, as
follows:
1. Each unscheduled partial surrender must equal or exceed the Minimum
Transaction Amount shown on the current Data Page; and
2. The Accumulated Value after an unscheduled partial surrender must equal or
exceed the Minimum Surrender Value shown on the current Data Page. We reserve
the right to change this amount but it will never exceed $10,000.
SCHEDULED PARTIAL SURRENDERS--You may make scheduled partial surrenders, as
follows:
1. The surrender will occur on a date You specify in Your Notice (other than the
29th, 30th, or 31st of any month);
2. You must specify how often scheduled partial surrenders will occur (annually,
semi-annually, quarterly or monthly);
3. Your Accumulated Value must equal or exceed the Minimum Surrender Value shown
on the current Data Page; and
4. The surrenders will continue until the Accumulated Value is exhausted or We
receive Notice to stop them.
FIXED ACCOUNT SURRENDER CHARGE--A Surrender Charge, as determined below, may be
deducted from Your Fixed Account Value if You request a full or partial
surrender on or prior to the Annuity Payment Date. No Surrender Charges will
apply to any amounts in the Separate Account Divisions.
The amount of the Surrender Charge applicable to amounts in Your Fixed Account
is calculated as a percentage of the Fixed Account Purchase Payments
surrendered. The Table of Fixed Account Surrender Charges shown on the current
Data Page indicates the appropriate percentage, if any, to be applied to the sum
of the Fixed Account Purchase Payments. This percentage is based on the number
of completed Contract Years between the Contract Year of the Fixed Account
Purchase Payment and the Contract Year of surrender. The Surrender Charge is
equal to the total of the sums determined for each Contract Year shown in the
Table during which Fixed Account Purchase Payments were made, considering the
Fixed Account Free Transaction Amount sub-provision.
For purposes of calculating any Fixed Account Surrender Charge, amounts are
considered as surrendered in the following order:
1. Fixed Account Purchase Payments made in Contract Years that are no longer
subject to a Surrender Charge;
2. Amounts described in the Fixed Account Free Transaction Amount sub-provision,
first from the Fixed Account's earnings, then from the oldest Fixed Account
Purchase Payments (first-in, first-out); and
3. Fixed Account Purchase Payments made in Contract Years that are still subject
to a Surrender Charge, first-in, first-out.
We reserve the right to reduce Surrender Charges for any amounts surrendered
from this contract that are attributable to a conversion from other products
issued by Principal Life Insurance Company and its subsidiaries and as otherwise
permitted by the Investment Company Act of 1940 (as amended).
STANDARD DEATH BENEFIT
If You die prior to the Annuity Payment Date, We will pay a death
benefit. No death benefit is payable under this provision after the Annuity
Payment Date. No Surrender Charge applies when We pay a death benefit.
The amount of the standard death benefit equals the greater of:
1. Your Accumulated Value on the date We receive Notice (including proof) of
death and all documentation We require to process the claim; or
2. The total Purchase Payments minus any partial surrenders, fees and
charges as of the date We receive Notice (including proof) of death and all
documentation We require to process the claim.
If benefit instructions are in effect, the death benefit will be paid according
to these instructions.
If the Annuitant dies before You and is not a Joint Owner, You may name a new
Annuitant. If the new Annuitant is not named within 60 days after the date We
receive Notice (including proof) of death of the Annuitant, You will become the
Annuitant. If the Owner is not a natural person, the death of the Annuitant will
be treated as the death of the Owner.
If You die before the Annuitant and Your beneficiary is Your spouse, We will
continue the contract with Your surviving spouse as the new Owner or Your
surviving spouse may choose to:
1. Apply the death benefit under a Benefit Option; or
2. Receive the death benefit as a single payment.
Any choice in 1 or 2 above must be made within 60 days after Your death.
If Your beneficiary is a natural person, but not Your surviving spouse, the
death benefit may be paid as:
1. Fixed income for a period of years that does not exceed the life expectancy
of the beneficiary;
2. Life income with no minimum guaranteed period or a minimum guaranteed period
that does not exceed the life expectancy of the beneficiary; or
3. An individual arrangement approved by Us.
If Your beneficiary is not a natural person, the death benefit must be paid out
within five years of Your death.
We will pay interest on the death benefit from the date We receive Notice
(including proof) of death and all required documentation to process the claim
until date of payment or until the death benefit is applied under a Benefit
Option.
We will pay interest at a rate equal to or greater than 3%.
Life expectancy is based on the appropriate life expectancy tables published by
the United State Treasury Department, as amended.
BENEFIT INSTRUCTIONS-- Before the Annuity Payment Date, You may file benefit
instructions for the payment of the death benefit under a Benefit Option. Such
benefit instructions, or a change of benefit instructions, must be in a written
Notice. A change of beneficiary will revoke any prior benefit instructions.
BENEFICIARY--The beneficiary is the person or persons You name in the
application to receive benefits payable upon Your death, or if the Owner is not
a natural person, upon the Annuitant's death. You may change Your beneficiary
designation at any time, unless You have named an irrevocable beneficiary. Any
change in beneficiary must be made in writing in a manner acceptable to Us.
If any beneficiary dies before You, upon Your death We will make an equal
distribution of that beneficiary's portion of the death benefit to Your
surviving beneficiaries unless We have approved other written instructions from
You. If none of Your beneficiaries survives You, We will pay the death benefit
to Your estate in one sum.
ANNUITIZATION INCOME
On the Annuity Payment Date, We will notify You that Your Accumulated Value may
be applied under a Benefit Option and, if elected, will make annuitization
income payments to You if the Annuitant is living and the contract is in force
on that date. No Surrender Charge will be deducted from Your Fixed Account Value
when Your Accumulated Value is applied under a Benefit Option.
If You do not choose a different Benefit Option, We will apply Your Accumulated
Value under a life income with a ten year guarantee, or under the joint and 100%
survivor life income with a ten year guarantee with Joint Annuitants, to
determine the annuitization income benefit.
TERMINATION
This contract will continue until one of the following events occurs:
1. Your Accumulated Value is applied under a Benefit Option;
2. You surrender Your contract in full; or
3. Your death occurs (unless Your spouse elects to continue the contract
pursuant to the Death Benefit provision), or, if the Owner is not a natural
person, the Annuitant's death occurs.
We reserve the right to terminate this contract by paying You the Accumulated
Value, in one sum, if Your Accumulated Value is less than the Minimum Contract
Value shown on Your current Data Page.
We will notify You and give You 60 days to increase the Accumulated Value to the
Minimum Contract Value shown on Your current Data Page before We exercise this
right.
BENEFIT OPTIONS
On the Annuity Payment Date, You may choose to use one of the following Benefit
Options, or any other Benefit Option We make available. The tables shown
illustrate guaranteed minimum benefits. The benefits You receive may be greater.
Option A. SPECIAL BENEFIT ARRANGEMENT--You may arrange an individually designed
Benefit Option with Our approval. Any arrangement that will not qualify this
contract as an annuity under the United States Internal Revenue Code , as
amended, will not be permitted.
Option C. FIXED INCOME-- We will pay an income of a fixed amount or an income
for a fixed period of at least 5 years but not exceeding 30 years. If You die
after annuity payments begin, the remaining payments will be paid to the
beneficiary named under Your Benefit Option.
Option D. LIFE INCOME--We will pay an income during a person's lifetime. A
minimum guaranteed period may be used. If You die after annuity payments begin
and before the end of the minimum guaranteed period (if applicable), the
remaining payments will be paid to the beneficiary named under Your Benefit
Option.
Option E. JOINT AND SURVIVOR LIFE INCOME--We will pay an income during the
lifetime of two persons, and continuing until the death of the survivor. This
option includes a minimum guaranteed period of 10 years. If both persons die
before the end of the minimum guaranteed period, the remaining payments will
be paid to the beneficiary named under Your Benefit Option.
Option F. JOINT AND TWO-THIRDS SURVIVOR LIFE INCOME--We will pay an income
during the lifetime of two persons, and two-thirds of the original amount during
the remaining lifetime of the survivor. If one of the persons dies after annuity
payments begin, We will continue to pay two-thirds of the original amount to the
survivor until that person's death.
CONDITIONS
When a Benefit Option is chosen, the following conditions will apply:
1. This contract must be exchanged for a supplementary contract providing the
Benefit Option You choose;
2. No changes may be made as to the Benefit Option once the supplementary
contract is issued;
3. Until proceeds are applied under a Benefit Option, any death benefit will be
held In a new account at an interest rate determined by Us which will not be
less than 3% a year;
4. We reserve the right to pay the Accumulated Value in a single sum if it does
not exceed the Minimum Contract Value shown on the current Data Page, or if the
amount to be applied for under a Benefit Option would result in periodic
payments that do not exceed other minimum requirements that are in effect at
that time for Annuitants in the same class;
5. Benefit Options are restricted if the recipient of benefits is not a natural
person;
6. One of the natural persons on whose life payment under Options D, E, and F
are based must be the Annuitant or a beneficiary. The size of payments depends
on the age and sex of the person or persons on whose life payments are based,
determined as of the date this contract is exchanged for a supplementary
contract. We reserve the right to require evidence of age, sex, and continuing
survival; and
7. At the time payments begin, any benefits will be at least that which would be
provided by any single premium immediate annuity contract then being offered by
Us for the same class of Annuitants.
GENERAL INFORMATION
THE CONTRACT
This contract, any attached application, or amendments to it, any attached
riders or endorsements, and the current Data Pages make up the entire contract.
Any statements made in an application will be considered representations and not
warranties.
ALTERATIONS
This contract may be altered by mutual agreement unless otherwise provided. Only
Our corporate officers may agree to modify or waive anything in or approve
amendments to Your contract. Any alterations must be in writing and signed by
one of Our corporate officers. No one else, including the agent, may change this
contract or waive any provisions.
INCONTESTABILITY
This contract will be incontestable after it has been in force for two years
from the Contract Date. The time limit in this Incontestability provision does
not apply to fraud.
AGE AND SEX
If the Annuitant's age or sex is not correctly shown on the current Data Page,
We will adjust the monthly income payable under Your contract. The age shown
should be the Annuitant's age on the Contract Date. Any adjustment will be based
on the amount of monthly income that would have been purchased at the correct
age and sex.
OWNERSHIP
The Owners and Joint Owners are named on the current Data Page. Ownership may be
changed as provided below. As Owner or Joint Owners, You may exercise every
right and privilege provided by this contract. These rights include the right to
receive income payments or to name a payee to receive these payments. The
exercise of Your rights is subject to the rights of any irrevocable beneficiary.
If Joint Owners are named, both must consent to any exercise of these rights.
CHANGE OF OWNER
You may change Your ownership designation at any time. Your request must be in
writing in a manner acceptable to Us. No change is effective without Our prior
approval. Once approved, the change is effective as of the date You signed the
request. We reserve the right to require that You send Us this contract so We
can record the change.
CHANGE OF ANNUITY PAYMENT DATE
You may change the Annuity Payment Date any time before a supplementary contract
which provides a Benefit Option is issued. Your request must be in writing and
have Our approval.
ASSIGNMENT
You may assign Your contract as collateral for a loan. The assignment must be in
writing and filed in Our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the Owner,
but the rights of any beneficiaries, whenever named, become subordinate to those
of the assignee. Any amount paid an assignee will be treated as a partial or
full surrender, as applicable, and will be paid in one sum.
STATEMENTS OF VALUE
We will mail You statements of Your current Accumulated Value at least once each
year until Your contract is applied under a Benefit Option or surrendered in
full. These will include current statements of the number of Units credited to a
Separate Account Division and the dollar value of a Unit. We will mail the
statements to Your last post office address known to Us.
ENDORSEMENTS
SF 467 SAMPLE
FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on Annuity Payment
Date, or death benefit if Owner dies before Annuity Payment Date. Benefits based
on the performance of the Separate Account are variable and not guaranteed as to
dollar amount. NON-PARTICIPATING.
SF 469 2 SAMPLE
WAIVER OF SURRENDER CHARGE RIDER
This rider is part of Your contract. All definitions, provisions, and exceptions
of the contract apply to this rider unless changed by this rider. The effective
date is the same as the Contract Date unless another date is shown on page 3 of
Your contract.
DEFINITIONS
CRITICAL NEED means being either confined to a Health Care Facility, diagnosed
with a Terminal Illness, or Totally and Permanently Disabled.
HEALTH CARE FACILITY means a licensed hospital or inpatient nursing facility
providing daily medical treatment and keeping daily medical records for each
patient (not primarily providing just residency or retirement care). This does
not include a facility that primarily provides drug or alcohol treatment, or a
facility owned or operated by the Owner or Annuitant or a member of their
immediate families.
TERMINAL ILLNESS means a sickness or injury that results in the Owner's or
Annuitant's life expectancy being 12 months or less from the date You provide Us
notice to receive benefits under this rider.
TOTALLY AND PERMANENTLY DISABLED means the Owner or Annuitant qualifies to
receive Social Security disability benefits.
BENEFITS AND CONDITIONS
We will waive the Surrender Charge and any administrative or transaction fee
that would apply to a full surrender or any partial surrender that would
otherwise incur a Surrender Charge, subject to the following conditions:
1. After the effective date of this rider, the original Owner (if a natural
person) must have a Critical Need; and on the effective date of this rider,
the original Owner must not have had a Critical Need; or
After the effective date of this rider, the original Annuitant must have a
Critical Need; and on the effective date of this rider, the original
Annuitant must not have had a Critical Need.
2. To exercise this rider based on Health Care Facility confinement, the
confinement must continue for at least 60 consecutive days after the
effective date of this rider.
3. There is a one year waiting period before You can exercise this rider. You
must provide Us notice, and proof which is acceptable to Us that the
conditions of this rider have been met, after one year following the
effective date of this rider. In addition, for Health Care Facility
confinement, this must be provided within 90 days after the confinement
ends.
4. You cannot pay any additional premiums or purchase payments that Your
contract would otherwise allow after You exercise this rider.
IJKLMNOP
ABCDEF
TERMINATION
This rider ends on the first of the following events:
1. You terminate the contract to which this rider is attached; or
2. You cancel this rider. We reserve the right to require that You send Us Your
contract so We can record the cancellation.
SF 470 3 SAMPLE
IRA RIDER
This rider is a part of Your contract. The contract to which it is attached is
modified, as specified below, in order to qualify as an Individual Retirement
Annuity (IRA) under the terms of the Internal Revenue Code as amended (the
Code). The rider's effective date is the same as the Contract Date unless
another date is shown on page 3 of Your contract.
We reserve the right to amend this rider to comply with future changes in the
Code. We will send You a copy of any such amendment.
The following statements shall apply:
1. At all times, the Annuitant (You) must be one individual and the only
Owner of the contract. Ownership of the contract is nontransferable.
The Annuitant's rights under the contract are nonforfeitable and for
the exclusive benefit of the Annuitant and his or her beneficiaries.
2. Benefits under the contract may not be sold, assigned, or pledged as
collateral for a loan, or as security for the performance of an
obligation, or for any other purpose; except that the contract may be
transferred to the Annuitant's former spouse under a divorce decree or
written instrument incident to such divorce. In the event of such a
transfer, the transferee will for all purposes be treated as the
Annuitant under the contract.
3. Except in the case of a rollover contribution (as permitted by Code
sections 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), or a contribution
made in accordance with the terms of a Simplified Employee Pension
(SEP), as described in Code section 408(k), no contributions will be
accepted unless they are in cash, and the total of such contributions
shall not exceed $2,000 for any taxable year (or such other amount
specified in Code section 408).
4. Any dividend or other refund of premiums or purchase payments (other
than those attributable to excess contributions) will be applied,
before the close of the calendar year following the year of the refund,
toward the payment of future premiums or the purchase of additional
benefits.
5. The Accumulated Value of the contract must be distributed, or begin to
be distributed, no later than April 1st following the calendar year in
which You attain age 70 1/2 (required beginning date) over (a) your
life, or the lives of You and Your designated beneficiary, or (b) a
period not extending beyond Your life expectancy, or the joint and last
survivor life expectancy of You and Your designated beneficiary.
Payments must be made in periodic payments at intervals of no longer
than one year. In addition, payments must be either nonincreasing or
they may increase only as provided in Q&A F-3 of section 1.401(a)(9)-1
of the Proposed Income Tax Regulations. All distributions will be made
in accordance with the requirements of Code section 401(a)(9) including
the incidental death benefit requirements of Code section 401(a)(9)(G),
and the regulations thereunder, including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the Proposed
Income Tax Regulations.
HIJKLMNOPABCDEF
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. Unless
You notify Us in writing by the time distributions are required to
begin, life expectancies will be recalculated annually. Such election
will be irrevocable by You and will apply to all subsequent years. The
life expectancy of a non-spouse beneficiary
may not be recalculated. Instead, life expectancy will be calculated
using the attained age of such beneficiary during the calendar year in
which the individual attains age 70 1/2, and the payments for
subsequent years will be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the
calendar year life expectancy was first calculated.
You may choose to receive payments through scheduled partial
surrenders, or a Benefit Option described in Your contract. Any amount
distributed as a result of the minimum distribution requirements of the
Income Tax Regulations will not be subject to a Surrender Charge.
6. If You die on or after the distribution of your Accumulated Value has
begun, but before the entire Accumulated Value has been distributed,
the remaining balance will continue to be distributed at least as
rapidly as under the method of distribution in effect at time of Your
death.
7. If You die before the distribution of your Accumulated Value has begun,
Your entire Accumulated Value will be distributed by December 31 of the
calendar year in which the fifth anniversary of Your death occurs,
except to the extent that an election is made to receive distributions
in accordance with a. or b. below:
a. If You have named a designated beneficiary, the Accumulated
Value may be distributed to Your designated beneficiary
provided that 1) payments begin on or before December 31 of
the calendar year immediately following the calendar year in
which You died and 2) payments are made over the life or a
period certain not greater than the life expectancy of the
designated beneficiary.
b. If Your designated beneficiary is your surviving spouse, the
date distributions are required to begin in accordance with a.
above shall not be earlier than the later of 1) December 31 of
the calendar year immediately following the calendar year in
which You died, or 2) December 31 of the calendar year in
which You would have attained age 70 1/2.
c. If Your designated beneficiary is Your surviving spouse, Your
spouse may treat the contract as his or her own IRA. This
election will be deemed to have been made if Your spouse makes
a regular contribution to the contract, makes a rollover to or
from the contract, or fails to elect any of the above.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the Income Tax Regulations. For
purposes of distributions beginning after Your death, unless Your
surviving spouse elects otherwise (notifying Us in writing) by the time
distributions are required to begin, life expectancies will be
recalculated annually. Such election will be irrevocable by Your
surviving spouse and will apply to all subsequent years. In the case of
any other designated beneficiary, life expectancies will be calculated
using the attained age of such beneficiary during the calendar year in
which distributions are required to begin pursuant to this section, and
payments for any subsequent calendar year will be calculated based on
such life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first calculated.
8. Distributions under statements 6 and 7 are considered to have begun if
distributions are made on account of the individual reaching his or her
required beginning date or, if prior to the required beginning date,
distributions irrevocably commence to an individual over a period
permitted and in an annuity form acceptable under section 1.401(a)(9)
of the Income Tax Regulations.
9. On the Annuity Payment Date we will will notify You that Your
Accumulated Value may be applied under a Benefit Option and, if
elected, will apply your Accumulated Value under a Benefit Option and
make annuitization income payments to You if the Annuitant is living
and the contract is in force on that date.
If You do not choose a different Benefit Option, We will apply Your
Accumulated Value under Benefit Option D (Life Income with a 10 year
guarantee) to determine the annuitization income benefit. No Surrender
Charge will be deducted from your Accumulated Value when it is applied
under a Benefit Option.
10. We will mail You a statement of Your current Accumulated Value once
each year until Your contract is applied under a Benefit Option or
surrendered in full. We will mail the statement to Your last post
office address known to Us.
SF 471 SAMPLE
CHANGE OF ANNUITANT RIDER
This rider is part of Your contract. It is issued in consideration of the
application. No premiums are charged for this rider. Its issue date is the same
as the Contract Date unless another date is shown on page 3 of Your contract.
EXCHANGE PRIVILEGE
This contract may be exchanged to a new one with another person as the new
Annuitant, if You are the original Owner. If the original Owner is a natural
person, the person named as the new Annuitant must also be made the new Owner.
The exchange privilege can be used only once if the original Owner is a natural
person.
LIMITATIONS AND CONDITIONS
These limitations and conditions apply:
1. The new contract must be the same plan as this contract.
2. The date of exchange is the date We approve the application for exchange.
3. The date of issue of the new contract is the later of:
a. This contract's issue date; or
b. This contract's Anniversary following the new Annuitant's date of
birth.
4. The Accumulated Value under this contract will become the Accumulated Value
under the new contract.
5. The new contract is subject to any assignments of this contract.
TERMINATION
This rider ends on the first of:
1. The Contract Anniversary following the Annuitant's 70th birthday;
2. This contract's Annuity Payment Date; or
3. Termination of this contract.
IJKLMNOP ABCDEF
(LOGO)
Principal Principal Life
Financial Group Insurance Company
Principal Freedom(sm)
Mailing Address: Variable Annuity Application
Des Moines, IA 50392-1840 (Flexible Variable Annuity Application)
___Rollover IRA ___Non-Qualified___Transfer IRA:Nondeductible amount $__(if any)
___Other___________
Annuitant
Name-First__________ Middle_________ Last______________________________
Address-Street_________________________ City_____________State______ Zip_______
___Male___Female Birth Date______________ Social Security Number____________
Owner
Name-First__________ Middle_________ Last______________________________
Address-Street_________________________ City_____________State______ Zip_______
___Male___Female Birth Date______________ Taxpayer ID Number________________
Is Owner a:___Corporation? ___Trust? ___Partnership?
Joint Owner/Joint Annuitant (Must be Spouse)
Name-First__________ Middle_________ Last______________________________
Address-Street_________________________ City_____________State______ Zip_______
___Male___Female Birth Date______________ Social Security Number____________
Beneficiary (For Owner)
Name-First__________ Middle_________ Last______________________________
Relationship to Owner:_________________________________________________________
If owner is not a natural person, death benefits are paid to the designated
beneficiary upon the death of the annuitant. This section should ONLY be
completed if the owner is not a natural person.
Beneficiary
Name-First__________ Middle_________ Last______________________________
Relationship to Annuitant:_____________________________________________________
Power of Attorney (Enclose Documents)
___Yes ___No If "Yes", ___Durable ___Non Durable ___Durable Postponed
Name of Authorized Person given Power of Attorney______________________________
Address_____________________ Phone Number_____________________________________
Employer Information (Complete this section if Payroll deduct IRA or in
connection with a Nonqualified Employer Arrangement)
Name of Employer__________________ Contact Name_________Phone Number___________
Address-Street_________________________ City_____________State______ Zip_______
Purchase Payment Information
___Monthly PreAuthorized Withdrawal(PAW)-First Payment Drawn on (Date)__________
MM/DD/YYYY
(Not available on the 29th, 30th, or 31st of any month)
___Listbill (choose only 1 frequency):
___Monthly ___Quarterly ___Semiannual ___Annual
Annualized Amount: $_______________
Purchase Payment Allocation
(Selection must be in whole percentages totaling 100%.)
American Century VP Income & Growth Division ___%
Blue Chip Division ___%
Bond Division ___%
Capital Value Division ___%
Fixed Account ___%
International Division ___%
LargeCap Growth Division ___%
MidCap Division ___%
MidCap Growth Division ___%
MidCap Value Division ___%
Money Market Division ___%
Stock Index 500 Division ___%
SmallCap Division ___%
SmallCap Growth Division ___%
Templeton VP Stock Division ___%
TOTAL 100%
Initial Purchase Payment $______________(minimum payment of $10,000.00)
Make all checks payable to: Principal Life Insurance Company
Rate Lock-In (Applies only to initial Purchase Payment allocated to the Fixed
Account
___Lock-in current rate_______%for one year. This rate is guaranteed only if the
money is received in our home office within 90 days of the date of this
application.
___Apply interest rate in effect when money is received.
If neither box is marked, the rate in effect at the time the money is received
will apply to the Fixed Account.
Investor Information (For Owner)
Estimated Annual Income:
___Less than $10,000 ___$10,000-$24,999 ___$25,000-$50,999
___$51,000-$100,000 ___Greater that $100,000
Estimated Net Worth: (Do not include residence)
___Less than $24,999 ___$25,000-$50,999 ___$51,000-$100,999
___$101,000-$250,999 ___$251,000-$599,999 ___Greater that $600,000
Primary Investment Objective:
___Appreciation with Emphasis on Safety ___Appreciation with Acceptance of Risk
___Income with Emphasis on Safety ___Income with Acceptance of Risk
___Speculation
Source of amount to be invested:
___Current Income ___Personal Savings ___CD/Money Market Fund
___Mutual Fund Liquidation ___Qualified Plan Distribution
___Insurance Proceeds (Surrender/Loan) ___IRA Rollover
___Other________________________________________________
Owner Fed Tax Bracket ___15% ___28% ___Greater than 28%
Occupation _____________________________________________
Employer________________________________________________
Are you an Associated Person of a NASD Member Firm?___Yes___No
*Investor Information (For Joint Owner if Applicable)
Estimated Annual Income:
___Less than $10,000 ___$10,000-$24,999 ___$25,000-$50,999
___$51,000-$100,000 ___Greater than $100,000
Estimated Net Worth: (Do not include residence)
___Less than $24,999 ___$25,000-$50,999 ___$51,000-$100,999
___$101,000-$250,999 ___$251,000-$599,999 ___Greater that $600,000
Primary Investment Objective:
___Appreciation with Emphasis on Safety ___Appreciation with Acceptance of Risk
___Income with Emphasis on Safety ___Income with Acceptance of Risk
___Speculation
Source of amount to be invested:
___Current Income ___Personal Savings ___CD/Money Market Fund
___Mutual Fund Liquidation ___Qualified Plan Distribution
___Insurance Proceeds (Surrender/Loan) ___IRA Rollover
___Other________________________________________________
Joint Owner Fed Tax Bracket ___15% ___28% ___Greater than 28%
Occupation _____________________________________________
Employer________________________________________________
Are you an Associated Person of a NASD Member Firm? ___Yes___No
Is the Registered Representative registered in the client's resident state?
___Yes___No
Will this annuity replace or change any existing life insurance or annuity?
___Yes___No
If "yes", give details, listing company name and policy number__________________
If "yes", are you attempting a: ___1035 exchange or a
___Direct Transfer of IRA Proceeds?
Waiver of Surrender Charge Rider. On the contract date, if you or any annuitant
are confined in a Health Care Facility, eligible for Social Security disability
payments or diagnosed with a terminal illness, you will not be able to use that
condition to qualify for benefits under the Waiver of Surrender Charge Rider.
There is a one-year waiting period before the rider is effective and the rider
will not be issued to persons age 86 and over.
OPTIONAL FEATURES
___A.Telephone Transfer. I (We) do not want telephone transaction services as
described in the prospectus where allowed by state. (If this box is not
checked, telephone services will apply.)
___B.Flexible Withdrawal Option (Scheduled Partial Surrenders)
Choose one option under 1 or 2:
1.___Minimum Required Distribution age 70 1/2 or older
Choose a or b
___a Life expectancy. ___b Joint life expectancy with my spouse.
Spouse's Date of Birth __________
MM/DD/YYYY
and Social Security Number_________________
___Specified Amount $________
Payment Made From Percentage
1.________________________ _________%
2.________________________ _________%
3.________________________ _________%
4.________________________ _________%
TOTAL must equal 100 %
2.(Fixed Account only)
___Maximum allowed without surrender charge** ___Accumulated Interest
**Based on the value as of the last contract anniversary and assuming
no transfers.
Payment Start Date____________(Not available on the 29th, 30th, or 31st day
MM/DD/YYYY of any month)
(must be 30 days after the effective date of
the contract)
Frequency: ___Monthly ___Quarterly ___Semiannually ___Annually
Tax Withholding from payment: ___Yes, withhold ___No, do not withhold
___ C. Dollar Cost Averaging (Scheduled transfers using whole number
percentages and dollar amounts from the selected Division or Fixed
Account. Minimum transfer amount is $50.
Transfer from: Transfer to:
Division Name Dollar Amount Division Name Percent
1. ____________________ $_____________ ____________________ ______%
2. ____________________ $_____________ ____________________ ______%
3. ____________________ $_____________ ____________________ ______%
4. ____________________ $_____________ ____________________ ______%
Choose only 1 of the following if Dollar Cost Averaging is to be made
from the fixed account.
5. Fixed Account
___ Maximum allowed without transfer fee** _________ ____%
___ Specific dollar amount $___________ _________ ____%
___ Specified percentage ______________% _________ ____%
Payment Start Date ______________ (Not available on the 29th, 30th, or
MM/DD/YYYY 31st day of any month. Start date
must be 30 days after the effective
date of the contract.)
Frequency: ___Monthly ___Quarterly ___Semiannually ___Annually
**Based on the value as of the last contract anniversary and assuming
no withdrawals.
___ D. Automatic Portfolio Rebalancing
Please select only one option, either 1, 2, or 3 for your frequency.
1. ___ Quarterly--Based on a calendar year (March 31st, June 30th,
September 30th, December 31st)
2. ___ One Time Rebalancing choose either: ___ Date Request Received
in Home Office or
___ Specified Future Date
_____________________
MM/DD/YYYY
3. ___ Select One From Column I and II:
Column I Column II
___ Quarterly ___ Based on Contract Anniversary Date
___ Semiannually ___ Specified Future Date ______________
MM/DD/YYYY
___ Annually (Not available on the 29th, 30th, or
31st of any month)
Investment Division Options - (Whole Percentages Only) (Automatic Portfolio
Rebalancing is NOT available for the Fixed Account and you cannot simultaneously
participate in the Automatic Portfolio Rebalancing and Dollar Cost Averaging
from the same investment divisions.)
Rebalance my contract in the following way:
American Century VP MidCap Growth Division ___%
Income & Growth Division ___% MidCap Value Division ___%
Blue Chip Division ___% Money Market Division ___%
Bond Division ___% Stock Index 500 Division ___%
Capital Value Division ___% SmallCap Division ___%
International Division ___% SmallCap Growth Division ___%
LargeCap Growth Division ___% Templeton VP Stock Division ___%
MidCap Division ___% TOTAL 100%
Signature and Tax Certification
I have read this application and have had the opportunity to read the prospectus
and agree to all its terms. In addition, I authorize the instructions in this
application. I have been given the opportunity to ask questions regarding this
investment, and they have been answered to my satisfaction. All of the
statements in this application are true and complete to the best of my knowledge
and are the basis of any annuity issued. I certify under penalty of perjury
(Check the appropriate response):
___ That the Social Security number or taxpayer identification number show is
correct and that the IRS has never notified me that I am subject to backup
withholding, or has notified me that I am no longer subject to backup
withholding. The International Revenue Service does not require your
consent to any provision of this document other than the certifications
required to avoid backup withholding.
___ I have not been issued a taxpayer identification number but have applied
for such number, or intend to apply for such number in the near future. I
understand that if I do not provide a correct taxpayer identification
number to Principal Life Insurance Company within 60 days from the date of
this certification, backup withholding as described in the prospectus will
commence.
___ I am subject to backup withholding.
Signature of Owner Date MM/DD/YYYY
_______________________________________ __________________________
Signature of Annuitant (If other than Owner) Date MM/DD/YYYY
_______________________________________ __________________________
___ Check here to request a copy of the Statement of Additional Information for
this contract.
Signature of Representative City State Date MM/DD/YYYY
_______________________________________________________________________________
Printed Name of Representative Phone Number
( )
_____________________________________________________________ ________________
Home Office Use Only
Princor Financial Services Corporation
Review (Home Office) Date (MM/DD/YYYY)
_______________________________________________________________________________
Agent Information
Rollover IRA from Pension account number ______________________________________
ALL REPLACEMENT QUESTIONS MUST BE ANSWERED BY THE REPRESENTATIVE AND THIS REPORT
MUST BE SIGNED.
1. Do you know, or have reason to believe, that replacement is or may be
involved in this transaction? ___Yes ___No
If "Yes", is this a ___Section 1035 Exchange or a ___Direct Transfer of IRA
Proceeds? (Please choose only one)
2. Please answer the following question about existing insurance or annuity
contracts, issued or under a binding conditional receipt by this or any
other company. Do you have reason to believe that any such other contract
has been or will be subjected to borrowing, assigned, reduced, modified,
adjusted, lapsed, canceled, exchanged, partial or fully surrendered,
changed to reduced paid-up or extended term, or subject to an automatic
premium loan in connection with the purchase of the insurance or annuity
contract applied for? ___Yes ___No
If "Yes", to either question above, give all details not already provided
on this application, including company name and contract number and what
has been or will be done to the existing contract(s):
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
3. Do you certify you have explained to the applicant that discontinuing or
changing the existing policy or annuity contract may involve disadvantages,
including but not limited to surrender charges or tax consequences, and
that a careful comparison if existing benefits should be made before
applying for this contract? ___Yes ___No
The answers to each question on the application were recorded exactly as given,
and true to the best of my knowledge.
Soliciting Representative Signature City State Date MM/DD/YYYY
Agency Name Agency Number
_______________________________________________________________________________
Registered Representative Tax ID Number
_______________________________________________________________________________
Detail Code
_______________________________________________________________________________
Registered Representative Tax ID Number
_______________________________________________________________________________
Detail Code
_______________________________________________________________________________
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PRINCIPAL LIFE INSURANCE COMPANY
Effective July 1, 1998
ARTICLE I.
The name of the corporation is Principal Life Insurance Company, by which name
(or by the name Principal Mutual Life Insurance Company which it may continue to
use subject to any applicable law) it shall do business and shall have and
retain all its property, rights and privileges.
ARTICLE II.
The street address of the initial registered office of the corporation is 711
High Street, Des Moines, Iowa 50392, and the name of its initial registered
agent at that office is Gregg R. Narber.
ARTICLE III.
The purposes of this corporation are and it shall have full power to engage in,
pursue, maintain and transact a general life, health and accident insurance and
annuity business, and to insure other risks, perform other services and engage
in other businesses allowed by law. It may issue participating or
nonparticipating contracts. It shall further have the power to enter into
contracts with respect to proceeds of such insurance, to accept and reinsure
risks, to enter into coinsurance agreements, to issue and perform policies and
contracts of all types, including but not limited to individual and group, to
act as trustee or advisor in any capacity, and to offer all services, including
those of a financial, accounting or information technology nature, to all
persons, partnerships, corporations and other business organizations, directly
or indirectly incidental to its business. It shall have all the rights, powers
and privileges granted or permitted by the Constitution and laws of the State of
Iowa governing the conduct of insurance companies and by Subtitle I of Title
XIII of the Iowa Code and all acts amendatory thereof or additional thereto.
The corporation shall be empowered: To sue and be sued, complain and defend, in
its corporate or assumed name; to have a corporate seal which may be altered at
pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced; to purchase, take,
receive, lease, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with, real or tangible or intangible personal property, or any interest
therein, wherever situated; to sell, convey, mortgage, pledge, lease, exchange,
transfer and otherwise dispose of all or any part of its property and assets; to
lend money to, and otherwise assist its employees, agents, officers and
directors unless prohibited by law; to purchase, take, receive, subscribe for,
or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with, shares,
options, warrants or other interests in, or obligations of, other domestic or
foreign corporations, associations, partnerships or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, governmental district or municipality or of any instrumentality
thereof unless prohibited by law; to make contracts and guarantees and incur
liabilities; to lend and borrow money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as security for
the payment of funds so loaned or invested; to acquire or organize subsidiaries;
to conduct its business, carry on its operations, and have offices and exercise
the powers granted in any state, territory, district or possession of the United
States, or in any foreign country; to make donations for the public welfare, and
for religious, charitable, scientific or educational purposes; to pay pensions
and establish pension plans, pension trusts, profit-sharing plans and other
incentive, insurance and welfare plans for any or all of its directors,
officers, agents and employees; to enter into general partnerships, limited
partnerships or limited liability partnerships whether the corporation be a
limited or general partner, joint ventures, syndicates, pools, associations and
other arrangements for carrying on any or all of the purposes for which the
corporation is organized, jointly or in common with others; and to have and
exercise all powers necessary or convenient to effect any or all of the purposes
for which the corporation is organized.
ARTICLE IV.
The corporation shall have perpetual existence.
ARTICLE V.
The private property of the shareholders, directors and other officers and
managers of the corporation shall in no case be liable for corporate debts, but
shall be exempt therefrom.
ARTICLE VI.
SECTION 1. The aggregate number of shares of stock which the corporation is
authorized to issue is 6,000,000 shares, consisting of (a) 5,000,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), and (b) 1,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"),
issuable in one or more series.
SECTION 2. The Board of Directors of the corporation is hereby expressly
authorized, at any time and from time to time, to divide the shares of Preferred
Stock into one or more series, to issue from time to time in whole or in part
the shares of Preferred Stock or the shares of any series thereof, and in the
resolution or resolutions providing for the issue of shares of Preferred Stock
or of a particular series to fix and determine the voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that may be desired, to the fullest extent now or
hereafter permitted by Section 602 of Chapter 490 of Title XII of the Iowa Code
("Chapter 490"), as amended from time to time, and the other provisions of these
Articles of Incorporation; provided, however, that in no event shall Preferred
Stock have more than one vote per share of Preferred Stock.
SECTION 3. Subject to any other provisions of these Amended and Restated
Articles of Incorporation, holders of Common Stock shall be entitled to receive
such dividends and other distributions in cash, stock or property of the
corporation as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the corporation legally available therefor.
SECTION 4. No shareholder of the corporation shall be entitled to exercise any
right of cumulative voting.
SECTION 5. No shareholder of the corporation shall have any preemptive or
preferential right, nor be entitled as a matter of right to subscribe for or
purchase any part of any new or additional issue of stock of the corporation of
any class or series, whether issued for money or for consideration other than
money, or of any issue of securities convertible into stock of the corporation.
SECTION 6. The corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the corporation shall
have notice thereof, except as expressly provided by applicable law.
SECTION 7. The corporation shall not issue any shares of Voting Stock (as
hereinafter defined) of the corporation or securities convertible into Voting
Stock of the corporation to persons other than Principal Financial Services,
Inc. ("Principal Financial Services") if, as a result of such issuance, the
issued and outstanding Voting Stock of the corporation not held by Principal
Financial Services equals or exceeds that held by Principal Financial Services.
For purposes of this Section 7, "Voting Stock" means securities of any class or
any ownership interest having voting power for the election of directors of the
corporation, other than securities having voting power only to elect additional
directors only because of the occurrence of a contingency. For purposes of the
limitations set forth in this Article VI, any issued and outstanding securities
of the corporation that are convertible into Voting Stock are considered issued
and outstanding Voting Stock of the corporation as though such convertible
securities had been converted into Voting Stock in accordance with their terms.
ARTICLE VII.
The corporate powers of the corporation (except as at the time otherwise
provided by law, these Amended and Restated Articles of Incorporation or the
By-Laws of the corporation) shall be exercised by the Board of Directors, and by
such officers and agents as the Board of Directors may authorize, elect or
appoint. Subject to the rights of any holders of any class or series of
Preferred Stock to elect additional directors under specified circumstances, the
Board of Directors shall consist of not less than nine nor more than 21
directors, the number to be determined from time to time by the shareholders or
a majority of the entire Board of Directors. The Board of Directors, other than
with respect to those directors who may be elected by the holders of any class
or series of Preferred Stock, shall be divided into three classes, as nearly
equal numerically as possible, determined by terms expiring in successive years.
Each director shall serve a term of approximately three years except as
otherwise provided or where it is necessary to fix a shorter term in order to
preserve classification. The term of office of each director shall begin at the
annual meeting at which such director is elected or at the time elected by the
Board of Directors. No decrease in the number of directors shall shorten the
term of any incumbent director. Each director shall serve until a successor is
duly elected and qualified and shall be eligible for re-election. Subject to the
rights of any holders of any class or series of Preferred Stock to elect
additional directors under specified circumstances, any vacancy or vacancies on
the Board of Directors may be filled by the shareholders, by the Board of
Directors at any meeting of the Board of Directors or, if the directors
remaining in office constitute fewer than a quorum of the Board of Directors, by
the affirmative vote of a majority of directors remaining in office. The term of
office of each director of the corporation shall not extend beyond the annual
meeting of the corporation next following the date such director attains age 70,
or such younger age as may be established for all directors by the Board of
Directors, except that the terms of directors holding office prior to the annual
meeting in 1984 may extend to the annual meeting next following the date such
director attains age 72 and except that for officer-directors, other than one
who is or has been Chief Executive Officer of the corporation, the term as
director shall not extend beyond the annual meeting next following the date such
director retires as an active officer of the corporation. Members of the Board
of Directors shall not be required to be policyowners of the corporation.
Subject to the rights of any holders of any class or series of Preferred Stock
to elect additional directors under specified circumstances, any director may be
removed, but only for cause, at a meeting of shareholders called for that
purpose in the manner prescribed by law, upon the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding stock
of the corporation entitled to vote generally in the election of directors.
The Board of Directors shall have the power without the assent or vote of the
shareholders of the corporation to adopt such By-Laws and rules and regulations
for the transaction of the business of the corporation not inconsistent with
these Amended and Restated Articles of Incorporation or the laws of the State of
Iowa, and to amend, alter or repeal such By-Laws, rules and regulations. In
addition to any requirements of law and any other provision of these Articles of
Incorporation, the shareholders of the corporation may adopt, amend, alter or
repeal the By-Laws of the corporation upon the affirmative vote of holders of
more than 50% of the combined voting power of the outstanding stock of the
corporation entitled to vote generally in the election of directors. Advance
notice of nominations for the election of directors and of business to be
brought by shareholders before any meeting of shareholders of the corporation
shall be given in the manner and to the extent provided in the By-Laws of the
corporation. The Board of Directors may fix reasonable compensation of the
directors for their services. The Board of Directors shall elect a President,
and shall authorize, elect or appoint such other officers, agents or committees
as in their judgment may be necessary or advisable.
A director, in determining what is in the best interests of the corporation when
considering a proposal of acquisition, merger or consolidation of the
corporation or a similar proposal, may consider any or all of the following
community interest factors, in addition to consideration of the effects of any
action on shareholders: (i) the effects of action on the corporation's
employees, suppliers, creditors and customers; (ii) the effects of the action on
the communities in which the corporation and its subsidiaries operate; and (iii)
the long-term as well as short-term interests of the corporation and its
shareholders, including the possibility that these interests may be best served
by the continued independence of the corporation.
If on the basis of the community interest factors described above, the Board of
Directors of the corporation determines that a proposal to acquire or merge the
corporation is not in the best interests of the corporation, it may reject the
proposal. If the Board of Directors of the corporation determines to reject any
such proposal, the Board of Directors has no obligation to facilitate, to remove
any barriers to or to refrain from impeding the proposal. Consideration of any
or all of the community interest factors is not a violation of the business
judgment rule or of any duty of the director to the shareholders, or a group of
shareholders, even if the director reasonably determines that a community
interest factor or factors outweigh the financial or other benefits to the
corporation or a shareholder or group of shareholders.
ARTICLE VIII.
The corporation shall indemnify directors, officers, employees and agents of the
corporation as provided in Sections 850 through 858 of Chapter 490, subject to
such limitations as may be established by the Board of Directors. Any repeal or
modification of this Article VIII or of Sections 850 through 858 of Chapter 490
shall not adversely affect any right of indemnification of a director, officer,
employee or agent of the corporation existing at any time prior to such repeal
or modification.
ARTICLE IX.
A director of the corporation shall not be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (a) for a breach of the director's duty of
loyalty to the corporation or its shareholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (c) for a transaction from which the director derives an improper personal
benefit or (d) under Section 833 of Chapter 490, as amended from time to time.
If Chapter 490 is hereafter amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the corporation, in addition to the limitation on personal liability provided
herein, shall be eliminated or limited to the extent of such amendment,
automatically and without any further action, to the maximum extent permitted by
law. Any repeal or modification of the provisions of this Article IX by the
shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation in the personal liability or any other right or
protection of a director of the corporation with respect to any state of facts
existing at or prior to the time of such repeal or modification.
ARTICLE X.
Effective as of such time as the Common Stock shall be registered pursuant to
the provisions of the Securities Exchange Act of 1934, as amended, any action
required or permitted to be taken by the shareholders of the corporation must be
effected at a duly called annual or special meeting of the shareholders of the
corporation, and the ability of the shareholders to consent in writing to the
taking of any action is specifically denied.
ARTICLE XI.
Amendments to these Articles of Incorporation are subject to the approval of the
Iowa Insurance Commissioner and the Iowa Attorney General as provided in Section
508.4 of Title XIII of the Iowa Code.
AMENDED AND RESTATED BY-LAWS
OF
PRINCIPAL LIFE INSURANCE COMPANY
Effective July 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I PRINCIPAL OFFICE..........................................1
ARTICLE II REGISTERED OFFICE AND AGENT...............................1
ARTICLE III MEETINGS OF SHAREHOLDERS .................................1
3.1 Annual Meeting............................................1
3.2 Special Meetings..........................................1
3.3 Notices and Reports to Shareholders.......................1
3.4 Notice of Shareholder Business and Nominations ...........1
3.5 Waiver of Notice..........................................2
3.6 Record Date...............................................2
3.7 Shareholders' List........................................3
3.8 Quorum....................................................3
3.9 Organization..............................................3
3.10 Voting of Shares..........................................3
3.11 Voting by Proxy or Representative.........................3
3.12 Conduct of Business.......................................4
3.13 Action Without Meeting....................................4
ARTICLE IV BOARD OF DIRECTORS........................................4
4.1 Qualifications and General Powers.........................4
4.2 Number and Term of Office.................................4
4.3 Quorum and Manner of Acting...............................4
4.4 Resignation...............................................4
4.5 Compensation of Directors.................................4
4.6 Meetings..................................................4
4.7 Waiver of Notice..........................................5
4.8 Director's Assent Presumed................................5
4.9 Action Without Meeting....................................5
4.10 Dividends.................................................5
4.11 Officers of the Board of Directors........................5
ARTICLE V THE EXECUTIVE COMMITTEE AND OTHER COMMITTEES..............5
5.1 Executive Committee.......................................5
5.2 Powers of Executive Committee.............................5
5.3 Other Committees..........................................5
ARTICLE VI OFFICERS..................................................5
6.1 President.................................................5
6.2 Chief Executive Officer...................................6
6.3 Secretary.................................................6
6.4 Other Officers Elected by Board of Directors..............6
6.5 Other Officers............................................6
6.6 Resignation and Removal...................................6
6.7 Compensation of Officers..................................6
ARTICLE VII SHARES, THEIR ISSUANCE AND TRANSFER.......................6
7.1 Consideration for Shares..................................6
7.2 Certificates for Shares...................................6
7.3 Execution of Certificates.................................6
7.4 Share Record .............................................6
7.5 Cancellation..............................................6
7.6 Transfers of Stock........................................7
7.7 Regulations...............................................7
7.8 Lost, Destroyed or Mutilated Certificates.................7
ARTICLE VIII MISCELLANEOUS PROVISIONS..................................7
8.1 Facsimile Signatures......................................7
8.2 Execution of Instruments..................................7
8.3 Disposition of Funds......................................7
8.4 Fiscal Year...............................................7
8.5 Books and Records.........................................7
8.6 Voting of Stocks Owned by the Corporation.................7
ARTICLE IX INDEMNITY.................................................7
ARTICLE X AMENDMENTS................................................7
<PAGE>
ARTICLE I
PRINCIPAL OFFICE
The location of the principal office of the corporation in the State of Iowa
will be identified in the corporation's annual report filed with the Secretary
of State of the State of Iowa. The corporation may have such other offices
either within or without the State of Iowa as the business of the corporation
may from time to time require.
ARTICLE II
REGISTERED OFFICE AND AGENT
The initial registered agent and office of the corporation are set forth in the
Articles of Incorporation. The registered agent or registered office, or both,
may be changed by resolution of the Board of Directors.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 3.1 Annual Meeting. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting, shall be held on the third Monday in May of
each year at such place and time as the Board of Directors shall each year fix,
or at such other place, time and date as the Board of Directors shall fix.
Section 3.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by law (which for purposes of
these By-Laws shall mean as required from time to time by the Iowa Business
Corporation Act or the Articles of Incorporation of the corporation), may be
called by the Chairman of the Board, the Chief Executive Officer or the Board of
Directors, and shall be called by the Board of Directors upon the written
demand, signed, dated and delivered to the Secretary, of the holders of at least
10% of all the votes entitled to be cast on any issue proposed to be considered
at the meeting. Such written demand shall state the purpose or purposes for
which such meeting is to be called. The time, date and place of any special
meeting shall be determined by the Board of Directors, or, at its direction, by
the Chief Executive Officer.
Section 3.3 Notices and Reports to Shareholders.
(a) Notice of the place, date and time of all meetings of shareholders and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be communicated not fewer than 10 days nor more than 60 days
before the date of the meeting to each shareholder entitled to vote at such
meeting. The Board of Directors, as provided in Section 3.6 of these By-Laws,
may establish a record date for the determination of shareholders entitled to
notice. Notice of adjourned meetings need only be given if required by law or
Section 3.8 of these By-Laws.
(b) If notice of proposed corporate action is required by law to be given
to shareholders not entitled to vote and the action is to be taken by consent of
the voting shareholders, the corporation shall give all shareholders written
notice of the proposed action at least 10 days before the action is taken. The
notice must contain or be accompanied by the same material that would have been
required by law to be sent to shareholders not entitled to vote in a notice of
meeting at which the proposed action would have been submitted to the
shareholders for action.
(c) In the event corporate action is taken without a meeting in accordance
with the Articles of Incorporation of the corporation and Section 3.13 of these
By-Laws by less than unanimous written consent, prompt notice of the taking of
such corporate action shall be given to those shareholders who have not
consented in writing to the taking of such corporate action.
Section 3.4 Notice of Shareholder Business and Nominations.
(a) Annual Meetings of Shareholders.
(i) Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the shareholders may be made
at an annual meeting of shareholders of the corporation (1) by or at the
direction of the Board of Directors or the Chairman of the Board or (2) by
any shareholder of the corporation who is entitled to vote at the meeting,
who complies with the notice procedures set forth in clauses (ii) and (iii)
of this paragraph (a) of Section 3.4 and who was a shareholder of record at
the time such notice was delivered to the Secretary.
(ii) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (2) of paragraph (a)(i)
of this Section 3.4, the shareholder must have given timely notice thereof
in writing to the Secretary. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the
corporation not less than 90 days nor more than 120 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that
if the date of the annual meeting is advanced by more than 20 days or
delayed by more than 70 days from such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than 120 days
prior to such annual meeting and not later than the close of business on
the later of the 90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting
is first made. In no event shall the adjournment of an annual meeting
commence a new time period for the giving of a shareholder's notice as
described above. Such shareholder's notice shall set forth (1) as to each
person whom the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors or is
otherwise required pursuant to Regulation 14A under Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and Rule 14a-11 thereunder,
including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected; (2) as to
any other business that the shareholder proposes to bring before the
meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and of any
beneficial owner on whose behalf the proposal is made; and (3) as to the
shareholder giving the notice and any beneficial owner on whose behalf the
nomination or proposal is made (A) the name and address of such
shareholder, as they appear on the corporation's books, and of such
beneficial owner and (B) the class and number of shares of the corporation
which are owned beneficially and of record by such shareholder and such
beneficial owner.
(iii) Notwithstanding anything in the second sentence of paragraph
(a)(ii) of this Section 3.4 to the contrary, in the event that the number
of directors to be elected to the Board of Directors is increased and there
is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the
corporation at least 100 days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice under this Section
3.4 shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the corporation not later
than the close of business on the 10th day following the day on which such
public announcement is first made by the corporation.
(b) Special Meetings of Shareholders. Only such business as shall have been
brought before the special meeting of the shareholders pursuant to the
corporation's notice of meeting pursuant to Section 3.3 of these By-Laws shall
be conducted at such meeting. Nominations of persons for election to the Board
of Directors may be made at a special meeting of shareholders at which directors
are to be elected pursuant to the corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) by any shareholder of the
corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this paragraph (b) of Section 3.4 and who is a
shareholder of record at the time such notice is delivered to the Secretary.
Nominations by shareholders of persons for election to the Board of Directors
may be made at such special meeting of shareholders if the shareholder's notice
as required by paragraph (a)(ii) of this Section 3.4 shall be delivered to the
Secretary at the principal executive offices of the corporation not earlier than
the 120th day prior to such special meeting and not later than the close of
business on the later of the 90th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the adjournment of special meeting
commence a new time period for the giving of a shareholder's notice as described
above.
(c) General.
(i) Only persons who are nominated in accordance with the procedures
set forth in this Section 3.4 shall be eligible to serve as directors and
only such business shall be conducted at a meeting of shareholders as shall
have been brought before the annual or special meeting in accordance with
the procedures set forth in this Section 3.4. Except as otherwise provided
by law, the Articles of Incorporation of the corporation or these By-Laws,
the chairperson of the annual or special meeting shall have the power and
duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set
forth in this Section 3.4 and, if any proposed nomination or business is
not in compliance with this Section 3.4, to declare that such defective
proposal or nomination shall be disregarded.
(ii) For purposes of this Section 3.4, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or (15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 3.4, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
mattes set forth in this Section 3.4. Nothing in this Section 3.4 shall be
deemed to affect any rights of (1) shareholders to request inclusion of
proposals in the corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act or (2) the holders of any series of Preferred Stock to
elect directors if so provided under any applicable certificates of
designation relating to the series of Preferred Stock.
Section 3.5 Waiver of Notice.
(a) Any shareholder may waive any notice required by law or these By-Laws
if such waiver is in writing and signed by the shareholder entitled to such
notice, whether before or after the date and time stated in such notice. Such a
waiver shall be equivalent to notice to such shareholder in due time as required
by law or these By-Laws. Any such waiver shall be delivered to the corporation
for inclusion in the minutes or filing with the corporate records of the
corporation.
(b) A shareholder's attendance at a meeting, in person or by proxy, waives
(i) objection to lack of notice or defective notice of such meeting, unless the
shareholder at the beginning of the meeting or promptly upon the shareholder's
arrival objects to holding the meeting or transacting business at the meeting
and (ii) objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented.
Section 3.6 Record Date. The Board of Directors may fix, in advance, a date as
to the record date for any determination of shareholders for any purpose, such
date in every case to be not more than 70 days prior to the date on which the
particular action or meeting requiring such determination of shareholders is to
be taken or held. If no record date is so fixed for the determination of
shareholders, the close of business on the day before the date on which the
first notice of a shareholders' meeting is communicated to shareholders or the
date on which the Board of Directors authorizes a share dividend or a
distribution (other than one involving a repurchase or reacquisition of shares),
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 3.6, such
determination shall apply to any adjournment thereof, unless the Board of
Directors selects a new record date or unless a new record date is required by
law.
Section 3.7 Shareholders' List. After fixing a record date for a meeting, the
corporation shall prepare an alphabetical list of the names of all shareholders
who are entitled to notice of a shareholders' meeting. The list must be arranged
by voting group and within each voting group by class or series of shares, and
show the address of and number of shares held by each shareholder. The
shareholders' list must be available for inspection by any shareholder beginning
two business days after notice of the meeting is given for which the list was
prepared and continuing through the meeting at the corporation's principal
office or at a place in the city where the meeting will be held which such place
shall be identified in the notice of the meeting. A shareholder, or a
shareholder's agent or attorney, is entitled on written demand to inspect and,
subject to the requirements of law, to copy the list, during regular business
hours and at the person's expense, during the period the list is available for
inspection. The corporation shall make the shareholders' list available at the
meeting, and any shareholder, or a shareholder's agent or attorney, is entitled
to inspect the list at any time during the meeting or any adjournment thereof.
Section 3.8 Quorum.
(a) At any meeting of the shareholders, a majority of the votes entitled to
be cast on the matter by a voting group constitutes a quorum of that voting
group for action on that matter, unless the representation of a different number
is required by law, and in that case, the representation of the number so
required shall constitute a quorum. If at the time for which a meeting of
shareholders has been called less than a quorum is present, the chairperson of
the meeting or a majority of the shareholders present or represented by proxy
and entitled to vote thereat may adjourn the meeting to another place, date or
time.
(b) When a meeting is adjourned to another place, date or time, notice need
not be given of the adjourned meeting if the place, date and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than 120 days after the date
for which the meeting was originally noticed, or if a new record date is fixed
for the adjourned meeting, notice of the place, date and time of the adjourned
meeting shall be given in conformity with these By-Laws. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
(c) Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment thereof unless a new record date is or must be set for that
adjourned meeting.
Section 3.9 Organization.
(a) The Chairman of the Board, or in the absence of the Chairman of the
Board, the acting Chairman of the Board, or in his or her absence, such person
as shall be designated by the holders of a majority of the votes present at the
meeting shall call meetings of the shareholders to order and shall act as
presiding officer of such meetings.
(b) The Secretary shall act as secretary at all meetings of the
shareholders, but in the absence of the Secretary at any meeting of the
shareholders, the presiding officer may appoint any person to act as secretary
of the meeting.
Section 3.10 Voting of Shares.
(a) Every shareholder entitled to vote may vote in person or by proxy.
Except as provided in subsection (c) of this Section 3.10 or unless otherwise
provided by law, each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of shareholders.
Unless otherwise provided by law, directors in each class shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. Shareholders do not have the right to
cumulate their votes for directors unless the Articles of Incorporation of the
corporation so provide.
(b) The shareholders having the right to vote shares at any meeting shall
be only those of record on the stock books of the corporation on the record date
fixed by law or pursuant to the provisions of Section 3.6 of these By-Laws.
(c) Absent special circumstances, the shares of the corporation held,
directly or indirectly, by another corporation are not entitled to vote if a
majority of the shares entitled to vote for the election of directors of such
other corporation is held by the corporation. The foregoing does not limit the
power of the corporation to vote any shares held by the corporation in a
fiduciary capacity.
(d) If a quorum exists, action on a matter other than the election of
directors, by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless a
greater number is required by law.
Section 3.11 Voting by Proxy or Representative.
(a) At all meetings of the shareholders, a shareholder entitled to vote may
vote in person or by proxy appointed in writing, which appointment shall be
effective when received by the secretary of the meeting or other officer, agent
or inspector authorized to tabulate votes. An appointment of a proxy is valid
for 11 months from the date of its execution, unless a longer period is
expressly provided in the appointment form.
(b) Shares held by an administrator, executor, guardian, conservator,
receiver, trustee, pledgee or another corporation may be voted as provided by
law.
Section 3.12 Conduct of Business. The person acting as the presiding officer of
any meeting of shareholders shall determine the order of business and procedure
at the meeting, including such regulation of the manner of voting and the
conduct of business as seem to him or her to be in order.
Section 3.13 Action Without Meeting. Except as otherwise set forth in this
Section 3.13 and subject to Section 3.3(c) of these By-Laws and the Articles of
Incorporation of the corporation, any action required or permitted by law to be
taken at a meeting of the shareholders of the corporation may be taken without a
meeting or vote, and without notice, if one or more consents in writing setting
forth the action taken shall be signed and dated by the holders of outstanding
shares having not less than 90% of the votes entitled to be cast at a meeting at
which all shares entitled to vote on the action were present and voted, and are
delivered to the corporation for inclusion in the minutes or filing with the
corporate records of the corporation; provided, however, that a director shall
not be removed by written consents unless written consents are obtained from the
holders of all of the outstanding shares of the corporation that are entitled to
vote on the removal of the director. Written consents from a sufficient number
of shareholders must be obtained within 60 days from the date of the earliest
dated consent for such consents to be effective to take corporate action. If not
otherwise fixed by law or in accordance with these By-Laws, the record date for
determining shareholders entitled to take action without a meeting is the date
the first shareholder signs such a written consent.
ARTICLE IV
BOARD OF DIRECTORS
Section 4.1 Qualifications and General Powers. No director is required to be an
officer, employee, shareholder or policyowner of the corporation or a resident
of the State of Iowa. The business and affairs of the corporation shall be
managed under the direction of the Board of Directors. The Board of Directors
may authorize any officer or officers or agent or agents to enter into any
contract or to execute and deliver any instrument in the name and on behalf of
the corporation, and such authority may be general or confined to specific
instances.
Section 4.2 Number and Term of Office. The Board of Directors shall be elected
in the manner and for the term specified in the Articles of Incorporation of the
corporation and in Section 3.4 of these By-Laws. Each director (whenever
elected) shall hold office until his or her death, resignation or removal,
except that each director who attains retirement age, as set forth in the
Articles of Incorporation of the corporation or as determined by the Board of
Directors, during the term for which elected shall hold office only until the
next annual meeting of shareholders following attainment of retirement age, at
which time a person may be elected as director to complete the unexpired term of
office, if any, for which the director attaining retirement age had been
elected.
Section 4.3 Quorum and Manner of Acting. A quorum of the Board of Directors
consists of a majority of the number of directors prescribed in accordance with
Section 4.2 of these By-Laws. If at any meeting of the Board of Directors less
than a quorum is present, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. At all meetings of directors where a quorum
is present, the act of the majority of the directors present at the meeting
shall be the act of the Board of Directors.
Section 4.4 Resignation. Any director of the corporation may resign at any time
by delivering written notice to the Chairman of the Board, the Board of
Directors, or the corporation. A resignation is effective when the notice is
delivered unless the notice specifies a later effective date.
Section 4.5 Compensation of Directors. Directors who are not officers of the
corporation shall be entitled to an annual retainer and an additional amount for
attendance at each regular or special meeting of the Board of Directors or
meetings of committees of the Board of Directors, plus the expense of attending
such meetings, if any, as may be fixed from time to time by resolution of the
Board of Directors.
Section 4.6 Meetings. Regular meetings of the Board of Directors shall be held
without notice once in each calendar quarter on such date and at such hour and
place, within or without the State of Iowa, as may be fixed by the Board of
Directors, except that the meeting in the second quarter shall be held in the
principal office of the corporation in Des Moines on the date of the annual
meeting of the shareholders of the corporation. The date, time and place of any
regular meeting other than the meeting in the second quarter may be changed by
the Chairman of the Board, if any, or the President, by written notice to all
directors at least 30 days before the regular meeting date, provided that the
date to which any meeting is changed shall not be more than 15 days earlier or
later than the date fixed by the Board of Directors. Special meetings of the
Board of Directors may be called at any time upon two days' written notice given
by the Chairman of the Board, if any, the President or a majority of directors
then in office, which notice shall state the date, time and place of the special
meeting. In the alternative, upon oral or written notice received prior to the
time of the meeting by at least two-thirds of the directors, the Chairman of the
Board, or the acting Chairman of the Board, may call a special meeting of the
Board of Directors to be held through communications equipment which permits all
participants to communicate with each other, with such participation
constituting attendance at such meeting. Any meeting may be continued to the
succeeding day if the Board of Directors does not complete the business coming
before it on the meeting date. At any meeting at which every director shall be
present, even without notice, any business may be transacted.
Section 4.7 Waiver of Notice. A director may waive any notice required by law or
these By-Laws if the waiver is in writing and signed by the director entitled to
such notice, whether before or after the date and time stated in such notice.
Such a waiver shall be equivalent to notice in due time as required by these
By-Laws. Attendance of a director at or participation in a meeting shall
constitute a waiver of notice of such meeting, unless the director at the
beginning of the meeting or promptly upon arrival objects to holding the meeting
or transacting business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
Section 4.8 Director's Assent Presumed. A director who is present at a meeting
of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to the action taken unless the director's dissent
shall be entered in the minutes of the meeting or unless the director shall file
a written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered or certified mail to the Secretary immediately after the adjournment
of the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 4.9 Action Without Meeting. Any action required or permitted by law to
be taken at any meeting of the Board of Directors may be taken without a meeting
of the action is taken by all of the directors then in office and if one or more
consents in writing describing the action so taken shall be signed by each
director then in office and included in the minutes or filed with the corporate
records reflecting the action taken. Action taken under this section is
effective when the last director signs the consent, unless the consent specifies
a different effective date.
Section 4.10 Dividends. Subject to applicable law and any applicable provisions
of the Articles of Incorporation of the corporation, the Board of Directors may
authorize and the corporation may make distribution to its shareholders in cash
or property.
Section 4.11 Officers of the Board of Directors.
(a) The Board of Directors shall elect from its number a Chairman of the
Board to serve at the pleasure of the Board of Directors. The Chairman of the
Board shall, if present, preside at each meeting of the Board of Directors and
shall have such powers and shall perform such duties as may be assigned to him
or her by these By-Laws or by or pursuant to authorization of the Board of
Directors.
(b) The Board of Directors shall by resolution establish a procedure to
provide for an acting Chairman of the Board in the event the current Chairman of
the Board is unable to serve or act in that capacity.
ARTICLE V
THE EXECUTIVE COMMITTEE AND
OTHER COMMITTEES
Section 5.1 Executive Committee. The Board of Directors shall appoint an
Executive Committee composed of five directors, including the Chairman of the
Board and the Chief Executive Officer if other than the Chairman of the Board.
Members of the Executive Committee shall be appointed by and serve at the
pleasure of the Board of Directors. If the Board of Directors has elected a
Chairman of the Board he or she shall, if present, preside at each meeting of
the Executive Committee. In the absence or vacancy in the office of the Chairman
of the Board, the Chief Executive Officer shall preside. If the Chairman of the
Board is also the Chief Executive Officer, any other member of the Executive
Committee, as determined by the members of the Executive Committee present,
shall preside at a meeting of the Executive Committee in the absence of the
Chairman of the Board. The Secretary shall act as secretary of the Executive
Committee and shall keep a record of all proceedings of the Executive Committee.
A majority of the members of the Executive Committee shall constitute a quorum.
Section 5.2 Powers of Executive Committee. The Executive Committee shall have
and may exercise all of the powers of the Board of Directors in the management
and affairs of the corporation except when the Board of Directors is in session.
Actions of the Executive Committee, except when the rights or acts of third
parties would be adversely affected, shall be subject to the approval of the
Board of Directors, which approval shall be implied unless contrary action is
taken by the Board of Directors.
Section 5.3 Other Committees. The Board of Directors, by resolution adopted by
the affirmative vote of a majority of the number of directors then in office,
may establish one or more other committees of the Board of Directors, each
committee to consist of two or more directors appointed by the Board of
Directors. Any such committee shall serve at the pleasure of the Board of
Directors. Each such committee shall have the powers and duties delegated to it
by the Board of Directors, subject to the limitations set forth in applicable
Iowa law. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request of the Chairman
of the Board or the chairperson of such committee.
ARTICLE VI
OFFICERS
Section 6.1 President. The Board of Directors shall elect a President of the
corporation to serve at the pleasure of the Board of Directors. The President,
if not the Chief Executive Officer, shall have such powers and perform such
duties as may be assigned to him or her by these By-Laws, as may from time to
time be assigned to him or her by or pursuant to authorization of the Board of
Directors or by the Chief Executive Officer, and as may be incident to the
office of President.
Section 6.2 Chief Executive Officer. The Board of Directors shall empower either
the Chairman of the Board, if one is elected, or the President to serve as the
Chief Executive Officer of the corporation. The Chief Executive Officer shall
(a) supervise the carrying out of policies adopted or approved by the Board of
Directors, (b) exercise a general supervision and superintendence over all the
business and affairs of the corporation, and (c) possess such other powers and
perform such other duties as may be assigned to him or her by these By-Laws, as
may from time to time be assigned by the Board of Directors and as may be
incident to the office of Chief Executive Officer.
Section 6.3 Secretary. The Board of Directors shall appoint a Secretary to serve
at the pleasure of the Board of Directors. The Secretary shall (a) keep minutes
of all meetings of the shareholders and of the Board of Directors, (b)
authenticate records of the corporation and (c) in general, have such powers and
perform such other duties as may be assigned to him or her by these By-Laws, as
may from time to time be assigned to him or her by the Board of Directors or the
Chief Executive Officer and as may be incident to the office of Secretary.
Section 6.4 Other Officers Elected by Board of Directors. At any meeting of the
Board of Directors, the Board of Directors may elect such other officers of the
corporation as the Board of Directors may deem necessary, to serve at the
pleasure of the Board of Directors. Other officers elected by the Board of
Directors shall have such powers and perform such duties as may be assigned to
them by or pursuant to authorization of the Board of Directors or by the Chief
Executive Officer.
Section 6.5 Other Officers. The Board of Directors may authorize the corporation
to elect or appoint other officers, each of whom shall serve at the pleasure of
the corporation. Officers elected or appointed by the corporation shall have
such powers and perform such duties as may be assigned to them by the
corporation.
Section 6.6 Resignation and Removal. An officer may resign at any time by
delivering notice to the Secretary. A resignation is effective when the notice
is delivered unless the notice specifies a later effective date. Any officer may
be removed, for or without cause, by the Board of Directors at any time.
Section 6.7 Compensation of Officers. The compensation of all officers elected
by the Board of Directors shall be fixed by the Board of Directors. The
compensation of officers elected or appointed by the corporation shall be fixed
as provided by resolution of the Board of Directors.
ARTICLE VII
SHARES, THEIR ISSUANCE AND TRANSFER
Section 7.1 Consideration for Shares. The Board of Directors may authorize
shares to be issued for consideration consisting of any tangible or intangible
property or benefit to the corporation, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the corporation. Before the corporation issues shares, the Board of Directors
must determine that the consideration received or to be received for shares to
be issued is adequate.
Section 7.2 Certificates for Shares. Every shareholder of the corporation shall
be entitled to a certificate or certificates, to be in such form as the Board of
Directors shall prescribe, certifying the number and class of shares of the
corporation owned by such shareholder.
Section 7.3 Execution of Certificates. The certificates for shares of stock
shall be numbered in the order in which they shall be issued and shall be signed
by the Chief Executive Officer or President and the Secretary or an Assistant
Secretary of the corporation. The signatures of the Chief Executive Officer or
President and the Secretary or Assistant Secretary or other persons signing for
the corporation upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation. In case any officer or
other authorized person who has signed or whose facsimile signature has been
placed upon such certificate for the corporation shall have ceased to be such
officer or employee or agent before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer or
employee or agent at the date of the issuance of such certificate.
Section 7.4 Share Record. A record shall be kept by the Secretary, or by any
other officer, employee or agent designated by the Board of Directors, of the
name and address of each shareholder of the corporation, the number and class of
shares held by such shareholder, the number of the certificates representing
such shares and the respective dates of issuance of such certificates and, in
case of cancellation of any such certificate, the respective date of
cancellation.
Section 7.5 Cancellation. Every certificate surrendered to the corporation for
exchange or transfer shall be cancelled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such existing
certificate shall have been so cancelled, except in cases provided in Section
7.8 of these By-Laws. Section 7.6 Transfers of Stock. Transfers of shares of the
capital stock of the corporation shall be made only on the books of the
corporation by the record holder thereof, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary, and
on surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in whose name shares
of stock stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation; provided, however, that whenever
any transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary, shall be so expressed in the
entry of transfer.
Section 7.7 Regulations. The Board of Directors may make such other rules and
regulations as it may deem expedient, not inconsistent with law, concerning the
issue, transfer and registration of certificates for shares of the capital stock
of the corporation.
Section 7.8 Lost, Destroyed or Mutilated Certificates. In the event of the loss,
theft or destruction of any certificate of stock, another may be issued in its
place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Facsimile Signatures. In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these By-Laws,
facsimile signatures of any officer or officers of the corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof. If
any officer whose facsimile signature has been placed upon any form of
instrument shall have ceased to be such officer before an instrument in such
form is issued, such instrument may be issued with the same effect as if he or
she had been such officer at the time of its issue.
Section 8.2 Execution of Instruments. Instruments affecting or relating to real
estate or the investment of funds of the corporation may be executed as
authorized by resolution of the Board of Directors or as may be authorized by
such officers of the corporation as the Board of Directors designates.
Section 8.3 Disposition of Funds. The funds of the corporation shall be paid
out, transferred or otherwise disposed of only in such manner and under such
controls as may be authorized by resolution of the Board of Directors or as may
be authorized by such officers of the corporation as the Board of Directors
designates.
Section 8.4 Fiscal Year. The fiscal year of the corporation shall be from the
first day of January through the last day of December.
Section 8.5 Books and Records. The books and records of the corporation shall be
kept (except that the shareholder list must also be kept at the places described
in Section 3.7 of these By-Laws) at the principal office of the corporation.
Section 8.6 Voting of Stocks Owned by the Corporation. In the absence of a
resolution of the Board of Directors to the contrary, the Chief Executive
Officer and the President are authorized and empowered on behalf of the
corporation to attend and vote, or to grant discretionary proxies to be used, at
any meeting of shareholders of any corporation in which this corporation holds
or owns shares of stock, and in that connection, on behalf of this corporation,
to execute a waiver of notice of any such meeting or a written consent to action
without a meeting. The Board of Directors shall have authority to designate any
officer or person as a proxy or attorney-in-fact to vote shares of stock in any
other corporation in which the corporation may own or hold shares of stock.
ARTICLE IX
INDEMNITY
The Board of Directors shall indemnify, or authorize the officers of the
corporation to indemnify, directly and through insurance coverage, each person
now or hereafter a director, officer, employee or other representative of the
corporation, and that person's heirs and legal representatives, against all
damages, awards, costs and expenses, including counsel fees, reasonably incurred
or imposed in connection with or resulting from any action, suit or proceeding,
or the settlement thereof prior to final adjudication, to which such person is
or may be made a party by reason of being or having been a director, officer,
employee or other representative of the corporation or by reason of service at
the request of the corporation in any capacity with another entity or
organization. Such rights or indemnification shall be in addition to any rights
to which any director, officer, employee or other representative of the
corporation, former, present or future, may otherwise be entitled as a matter of
law and subject to such limitations permitted by law as may be established by
the Board of Directors.
ARTICLE X
AMENDMENTS
These By-Laws may be amended, altered or repealed by the Board of Directors at
any regular or special meeting of the Board of Directors, provided written
notice expressing in substance the proposed change shall have been given to each
director at least two days prior to the date of such regular or special meeting.
Notice of any proposed amendment, alteration or repeal may be waived by any
director by filing a written waiver of notice with the Secretary before, on or
after the meeting date. The shareholders of the corporation may also amend,
alter or repeal these By-Laws as provided in the Articles of Incorporation of
the corporation. Any amendment to these By-Laws shall be submitted to the Iowa
Insurance Commissioner for review not less than thirty (30) days prior to the
effective date of the amendment, or pursuant to such other procedure as is
established by law or regulation.
September 14, 1998
Board of Directors
Principal Life Insurance Company
711 High Street
Des Moines, IA 50392
Re Separate Account B
Dear Board of Directors
The establishment of Separate Account B by the Board of Directors of Principal
Life Insurance 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 the Registration Statement on Form
N-4 to be filed by Principal Life Insurance Company with the Securities and
Exchange Commission under the Securities Act of 1933 with respect to the
Principal Freedomsm Variable Annuity Contract.
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
eighteen distinct Divisions.
2. The Principal Freedomsm Variable Annuity Contract, when issued in
accordance with the Prospectuses contained or referred to in the
Registration Statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company enforceable in
accordance with their terms.
3. All income and expenses and all gains and losses, whether or not
realized, of Separate Account B, shall be credited to or charged
against those assets, without regard to income and expenses or gains
and losses of the Company.
4. The assets of Separate Account B, equal to the reserves and other
liabilities arising under the contracts, shall not be charged with any
liabilities arising from any other business conducted by the Company.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the caption "Legal Opinions" in the
prospectus contained in the Registration Statement.
Very truly yours
/s/ Gregg R. Narber
G. R. Narber
Senior Vice President
and General Counsel
GRN/ap
