This contract is a legal contract between you, as Owner, and us, Principal
Mutual 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 IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
CONTRACT. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR CONTRACT TO EITHER
YOUR AGENT OR OUR HOME OFFICE WITHIN 10 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.
FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on Retirement Date,
or death benefit if Annuitant or Owner dies before Retirement Date. Benefits
based on the performance of the Separate Account are variable and not
guaranteed as to dollar amount. PARTICIPATING.
A mutual company serving contractowners and beneficiaries since 1879.
Signed for Principal Mutual Life Insurance Company at Des Moines, Iowa on the
Contract Date.
OWNER John Doe
JOINT OWNER Jane Doe
ANNUITANT John Do ISSUE AGE-SEX 35-Male
JOINT ANNUITANT Jane ISSUE AGE-SEX 35-Female
CONTRACT NUMBER Sample CONTRACT Flexible Variable Annuity
CONTRACT DATE January 1, 2000 RETIREMENT DATE January 1, 2035
<PAGE>
INDEX
Accumulated Value................. 6 Incontestability.................21
Age and Sex (Annuitant)...........21 Ownership........................21
Annual Fee........................11 Participating....................21
Annuitant ........................ 4 Purchase Payments ............... 5
Assignment .......................22 Retirement Date (Change) ........22
Beneficiary ......................14 Retirement Income ...............15
Benefit Options ..................15 Separate Account ................ 8
Contract .........................21 Separate Account Value .......... 7
Contract Benefits ................11 Surrender .......................12
Death Benefits ...................13 Surrender Charge ................12
Definitions ...................... 4 Termination .....................15
Fixed Account .................... 8 Transaction Fee .................11
Fixed Account Value .............. 6 Transfers ....................... 9
A copy of any application and additional
benefits provided by rider follow the
last page of this contract.
-------------------------------------------------------------------------------
<PAGE>
DATA PAGE
OWNER John Doe
JOINT OWNER Jane Doe
ANNUITANT John Doe ISSUE AGE-SEX 35-Male
JOINT ANNUITANT Jane Doe ISSUE AGE-SEX 35-Female
CONTRACT NUMBER Sample CONTRACT Flexible Variable Annuity
CONTRACT DATE January 1, 2001 RETIREMENT DATE January 1, 2049
FORM
NO. CONTRACT AND RIDERS
SF324 Flexible Variable Annuity
SF321 Change of Annuitant Rider
SF313 Waiver of Surrender Charge Rider
SF568 Purchase Payment Credit Rider
The initial Purchase Payment you paid is $2,500.00
The Fixed Account's initial Purchase Payment interest rate is 4.79%
Annual Fee: Lesser of $30 or 2.00% of Accumulated Value
Transaction Fee: $00.00
SEPARATE ACCOUNT CHARGES THROUGH THE 8TH CONTRACT ANNIVERSARY
Daily Separate Account Administration Charge:$.000000000(0.00% annually)
Daily Mortality and Expense Risks Charge: $.000034246(1.25% annually)
Daily Purchase Payment Credit Rider Charge: $.000016438(0.60% annually)
TOTAL: $.000050684(1.85% annually)
SEPARATE ACCOUNT CHARGES AFTER THE 8TH CONTRACT ANNIVERSARY
Daily Separate Account Administration Charge:$.000000000(0.00% annually)
Daily Mortality and Expense Risks Charge: $.000034246(1.25% annually)
Daily Purchase Payment Credit Rider Charge: $.000000000(0.00% annually)
TOTAL: $.000034246(1.25% annually)
CONTRACT LIMITS
Minimum Transaction Amount: $100.00
Minimum Surrender Value: $5,000.00
Minimum Transfer Value:
Fixed Account $5,000.00
Separate Account $0.00
Maximum Retirement Date: January 1, 2051
(Date your Accumulated Value must be applied under a Benefit Option.)
<PAGE>
DATA PAGE
OWNER John Doe
JOINT OWNER Jane Doe
ANNUITANT John Doe ISSUE AGE-SEX 35-Male
JOINT ANNUITANT Jane Doe ISSUE AGE-SEX 35-Female
CONTRACT NUMBER Sample CONTRACT Flexible Variable Annuity
CONTRACT DATE January 1, 2001 RETIREMENT DATE January 1, 2049
INITIAL
PURCHASE PAYMENT
ALLOCATION PERCENTAGES
FIXED ACCOUNT 10%
SEPARATE ACCOUNT DIVISIONS: 10%
SF 324 PPCR (Continued on Page 3-2)
SEPARATE ACCOUNT DIVISIONS:
Aggressive Growth 10%
AIM V. I. Growth 00%
AIM V. I. Growth and Income 00%
AIM V. I. Value 00%
Asset Allocation 00%
Balanced 20%
Bond 20%
Capital Value 00%
Fidelity VIP Growth 00%
Fidelity VIP II Contrafund 00%
Government Securities 00%
Growth 20%
International 00%
International Emerging Markets 00%
International SmallCap 00%
Janus Aspen Aggressive Growth 00%
LargeCap Growth 00%
LargeCap Growth Equity 00%
LargeCap Stock Index 00%
MicroCap 00%
MidCap 00%
MidCap Growth 00%
MidCap Growth Equity 00%
Money Market 00%
Real Estate 00%
SmallCap 00%
SmallCap Growth 00%
SmallCap Value 00%
Utilities 00%
___
TOTAL 100%
SF 324
<PAGE>
DATA PAGE
OWNER John Doe
JOINT OWNER Jane Doe
ANNUITANT John Doe ISSUE AGE-SEX 35-Male
JOINT ANNUITANT Jane Doe ISSUE AGE-SEX 35-Female
CONTRACT NUMBER Sample CONTRACT Flexible Variable Annuity
CONTRACT DATE January 1, 2001 RETIREMENT DATE January 1, 2049
TABLE OF SURRENDER CHARGES
NUMBER OF COMPLETED CONTRACT YEARS SURRENDER CHARGE APPLIED TO
SINCE PURCHASE PAYMENT WAS MADE ALL PURCHASE PAYMENTS MADE
IN THAT CONTRACT YEAR
0 (Year of Purchase Payment) 8%
1 8%
2 8%
3 8%
4 7%
5 6%
6 5%
7 4%
8 3%
9 and later 0%
SF 324
<PAGE>
DEFINITIONS
ACCUMULATED VALUE--means the value described in the Accumulated Value provision
of this contract.
ANNIVERSARY--means the same date and month of each year following the Contract
Date shown on the current Data Page.
ANNUAL FEE--means the fee described in the Annual Fee provision of this
contract.
ANNUITANT--means the person, including any Joint Annuitant, on whose life the
benefit payments are based. This person may or may not be the Owner.
BENEFIT OPTION--means the options described in the Benefit Options section of
this contract.
CONTRACT DATE--means the date shown on the current Data Page.
CONTRACT YEAR--means the one year period beginning on the Contract Date and
ending one day before the Anniversary, and any subsequent one year period
beginning on an Anniversary.
EXAMPLE: If the Contract Date is June 5, 2000, the first Contract Year
ends on June 4, 2001, and the first Anniversary falls on June 5, 2001.
The second Contract Year ends on June 4, 2002, and the second
Anniversary falls on June 5, 2002, etc.
DIVISION--means a part of the Separate Account to which Purchase Payments may be
allocated or amounts transferred.
FIXED ACCOUNT--means an account to which Purchase Payments may be allocated or
amounts transferred, which earns guaranteed interest.
FIXED ACCOUNT VALUE--means the amount described in the Fixed Account Value
provision of this contract.
JOINT ANNUITANT--means an additional Annuitant. The Joint Annuitants must be
husband and wife, and must be named as Owner and Joint Owner. In this contract,
any reference to the Annuitant's death means the death of the last surviving
Annuitant.
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--means a registered open-end investment company in which a Division
invests.
NET INVESTMENT FACTOR--means the investment performance measure described in the
Net Investment Factor provision of this contract.
NOTICE--means 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.
SF 324
<PAGE>
OWNER--means 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--means any amount you pay us under this contract as
consideration for the benefits it provides, reduced by the amount we may deduct
to pay any required premium taxes.
RETIREMENT DATE--means the date your Accumulated Value is applied under a
Benefit Option to make retirement income payments.
SEPARATE ACCOUNT--means Principal Mutual 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--means the amount described in the Separate Account Value
provision of this contract.
SURRENDER CHARGE--means the charge described in the Surrender Charge sub-
provision of this contract.
TRANSACTION FEE--means the fee described in the Transaction Fee provision of
this contract.
UNIT--means the accounting measure used to calculate the Separate Account Value.
VALUATION DATE--means the date the net asset value of a Mutual Fund is
determined.
VALUATION PERIOD--means 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--means Principal Mutual Life Insurance Company.
YOU, YOUR--means the Owner of this contract, including any Joint Owner.
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 following
conditions.
PURCHASE PAYMENT LIMITS
The total Purchase Payments you make during the lifetime of this contract may
not exceed $1,000,000, 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.
<PAGE>
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 $1,000,000, 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.
Allocations to the Fixed Account and/or each of the Separate Account Divisions
must 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 on the initial Data Page) unless you change this default allocation.
You may change this default allocation at any time by providing us Notice.
PREMIUM TAXES
We reserve the right to deduct amounts to cover any premium taxes required by
TAXES state or local law, when 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. We will inform you of their amount on request.
ACCUMULATED VALUE
Your contract values are calculated based on your Accumulated Value as stated
below.
Your Accumulated Value at any time is equal to:
1. Your Fixed Account Value;
PLUS
2. 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;
SF 324
<PAGE>
MINUS
4. Any transfers to your
interest in a Separate
Account Division;
MINUS
<PAGE>
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 and/or Annual 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:
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 cancelled due to any transfers to the Fixed Account
or your interest in another Separate Account Division;
MINUS
4. The number of Units cancelled due to any partial surrenders you made
from your interest in the Separate Account Division;
MINUS
5. The number of Units cancelled due to any Surrender Charges collected
from your interest in the Separate Account Division due to partial
Surrenders;
MINUS
6. The number of Units cancelled due to any Transaction Fees and/or Annual
Fees deducted from your interest in the Separate Account Division.
This total number of Units is then:
MULTIPLIED BY
7. The Unit value of the Separate Account Division at the time of
valuation.
SF 324
<PAGE>
SF 324
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.
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 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 Mutual
Fund are no longer available for investment, or in our judgment investment in a
Mutual Fund becomes inappropriate considering the purposes of the Separate
Account, we may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future 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 by dividing the amount by the Division's Unit
value for the Valuation Period during which the amount is allocated or
transferred. Units are cancelled 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
<PAGE>
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 Investment 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 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 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 change
the Daily Mortality and Expense Risks Charge but it will never exceed
1.25% annually.
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 Retirement Date and as provided below. To request a
transfer, you must provide us Notice. We reserve the right to not accept
transfer instructions from someone providing them for multiple contracts.
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, subject to
the following conditions.
You must provide us Notice within 30 days following either the Contract Date or
any Anniversary.
Either unscheduled Fixed Account transfers or scheduled Fixed Account transfers
(not both) may occur during the same Contract Year.
SF 324
<PAGE>
UNSCHEDULED FIXED ACCOUNT TRANSFERS--You may make one unscheduled transfer from
the Fixed Account each Contract Year, as follows:
1. The transfer will occur within 1 business day of the date we receive
your Notice; and
2. You must specify the dollar amount or percentage to be transferred, and
the resulting amount must not exceed 25% of your Fixed Account Value as
of the later of the Contract Date or the last Anniversary. However, you
may transfer up to 100% of your Fixed Account Value within 30 days
after the first and following Anniversaries if:
a. Your Fixed Account Value is less than $1,000; or
b. The renewal interest rate declared for your Fixed Account Value
for the current Contract Year is more than 1 percentage point
lower than an average of your total Fixed Account earnings for the
preceding Contract Year (in that event, we will notify you).
SCHEDULED FIXED ACCOUNT TRANSFERS--You may make scheduled transfers on a monthly
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. Your Fixed Account Value must equal or exceed the Minimum Transfer
Value shown on the current Data Page. We reserve the right to change
this amount but it will never exceed $10,000;
3. The monthly amount transferred must equal 2% of your Fixed Account
Value as of the later of the Contract Date or the last Anniversary;
4. The transfers will continue until your Fixed Account Value is exhausted
or we receive Notice to stop them; and
5. If you stop the transfers, you may not start them again without our
prior approval.
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 Division 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
6 months; and
2. Your Fixed Account Value immediately after the transfer does not exceed
$1,000,000, 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 1 business day of the date we receive
your Notice; and
<PAGE>
2. You must specify the dollar amount or percentage to transfer from each
Separate Account Division, and the resulting amount must equal or
exceed the lesser of the value of your interest in the Separate Account
Division or the Minimum Transaction Amount shown on the current Data
Page.
SCHEDULED SEPARATE ACCOUNT DIVISION TRANSFERS--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 or monthly);
3. You must specify the dollar amount to transfer from each Separate
Account Division, and that amount must equal or exceed the lesser of
the value of your interest in the Separate Account Division or the
Minimum Transaction Amount shown on the current Data Page;
4. The value of each Separate Account Division from which transfers are
made must equal or exceed the Minimum Transfer Value shown on the
current Data Page;
5. The transfers will continue until your interest in the Division is
exhausted or we receive Notice to stop them; and
6. 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 2.
ANNUAL FEE
The Annual Fee is shown on the current Data Page. The Annual Fee will be
reduced, as necessary, so that it never decreases the guaranteed minimum 3%
annual interest earnings of any amount in the Fixed Account.
The Annual Fee will be deducted on the last day of each Contract Year prior to
the Retirement Date. If you surrender this contract in full, the Annual Fee will
be deducted at that time. The Annual Fee will be deducted from either your Fixed
Account Value or your interest in a Separate Account Division, whichever of them
has the largest value on the date it is to be deducted.
TRANSACTION FEE
The Transaction Fee is shown on the current Data Page. It will be deducted for
each unscheduled partial surrender after the first unscheduled partial surrender
in each Contract Year. Also, we reserve the right to charge the Transaction Fee
for each unscheduled Separate Account Division transfer after the twelfth such
transfer in each Contract Year.
The Transaction Fee will be deducted 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, on a pro rata basis.
CONTRACT BENEFITS
You may surrender this contract, receive retirement income payments or a death
benefit will be paid, as provided below.
SF 324
<PAGE>
We will pay any Separate Account Division surrenders within 7 days after we
receive Notice. We will pay any death benefit within 7 days after we receive
Notice (including proof) of the Owner's or Annuitant's death. However, we
reserve the right to defer surrender or death benefit payments as permitted by
the Investment Act of 1940 or other laws in effect at the time payments are to
be made. 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 Retirement 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 Surrender Charges, Transaction Fees or
Annual 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 a 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 default percentages you provide.
You may change default 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 surrenders 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.
SURRENDER CHARGE--A Surrender Charge, as determined below, may be deducted if
you request a full or partial surrender on or prior to the Retirement Date. For
a full surrender, any Surrender Charge will be deducted from your Accumulated
Value.
For a partial surrender, any Surrender Charge will be deducted from your Fixed
Account Value and/or the value of your interest in a Separate Account Division
from which the amount is surrendered, on a pro rata basis.
<PAGE>
The amount of the Surrender Charge is calculated as a percentage of the Purchase
Payments surrendered. The Table of Surrender Charges shown on the current Data
Page indicates the appropriate percentage, if any, to be applied to the sum of
the Purchase Payments made during each of the Contract Years noted in the Table.
This percentage is based on the number of completed Contract Years between the
Contract Year of the 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 Purchase Payments were made, considering
the Free Surrender Privilege sub-provision.
For purposes of calculating any Surrender Charge, amounts are considered as
surrendered in the following order:
1. Purchase Payments made in Contract Years that are no longer subject to
a Surrender Charge;
2. Amounts described in the Free Surrender Privilege sub-provision,
first from this contract's earnings, then from the least recent
Purchase Payments (first-in, first-out); and
3. 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 existing products
issued by Principal Mutual Life Insurance Company and its subsidiaries and as
otherwise permitted by the Investment Company Act of 1940 (as amended).
FREE SURRENDER PRIVILEGE--No Surrender Charge applies to surrenders, each
Contract Year, totalling an amount equal to the greater of:
1. This contract's earnings (your Accumulated Value minus unsurrendered
Purchase Payments, as of the surrender date); or
2. 10% of the Purchase Payments made in Contract Years that are still
subject to a Surrender Charge, decreased by any partial surrenders made
since the last Anniversary.
DEATH BENEFIT
If you or the Annuitant dies prior to the Retirement Date, we will pay a death
benefit. No death benefit is payable under this provision after the Retirement
Date. No Surrender Charge applies when we pay a death benefit.
The amount of the death benefit equals the greater of:
1. Your Accumulated Value on the date we receive Notice (including proof)
of death:
2. The total Purchase Payments minus any partial surrenders as of the
date we receive Notice (including proof) of death; or
3. The death benefit that was in effect on any prior Anniversary that is
divisible equally by 7, plus any Purchase Payments and minus any
partial surrenders made after that Anniversary.
If benefit instructions are in effect, the death benefit will be paid according
to those instructions.
<PAGE>
If the Annuitant dies before you, we will pay the death benefit to the
Annuitant's beneficiary. If no benefit instructions are in effect, the
Annuitant's beneficiary may choose to apply any unpaid death benefit under a
Benefit Option.
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 under Benefit Option C for a period of years that does
not exceed the life expectancy of the beneficiary;
2. Life income under Benefit Option D 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 under Benefit Option A.
If your beneficiary is not a natural person, the death benefit must be paid out
within 5 years of your death.
We will pay interest on the death benefit from the date we receive Notice
(including proof) of death 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 States Treasury Department, as amended.
BENEFIT INSTRUCTIONS--While the Annuitant is alive and before the Retirement
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 the Annuitant's or your death. You
may change your beneficiary designation at any time. You may also change the
Annuitant's beneficiary while the Annuitant is alive. Your request must be in
writing. No change is effective without our prior approval. Once approved, the
change is effective as of the date you signed the request.
BENEFICIARY IF YOU ARE THE ANNUITANT--If you are the Annuitant or Joint
Annuitant, we will pay any death benefits to your beneficiary.
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.
<PAGE>
BENEFICIARY IF YOU ARE NOT THE ANNUITANT--If you are not the Annuitant, two
beneficiary designations are possible: your's and the Annuitant's. Unless you
provide otherwise in a written beneficiary designation that we approve, your
beneficiary is the Annuitant. The Annuitant's beneficiary receives any benefits
payable upon the death of the Annuitant.
If any Annuitant's beneficiary dies before the Annuitant, upon the death of the
Annuitant, we will make an equal distribution of that beneficiary's portion of
the death benefit to any surviving beneficiaries of the Annuitant unless we have
approved other written instructions from you. If no beneficiary of the Annuitant
survives, we will pay the death benefit to you or your estate in one sum.
SIMULTANEOUS DEATH--If you and the Annuitant die and there is not sufficient
evidence that the deaths occurred other than at the same time, the death benefit
will be paid as if the Annuitant outlived you.
RETIREMENT INCOME
On the Retirement Date we will apply your Accumulated Value under a Benefit
Option and make retirement 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 Accumulated Value when it is applied under a Benefit Option.
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), or Benefit
Option E (Joint and 100% Survivor Life Income with a 10 year guarantee) with
Joint Annuitants, to determine the retirement income benefit.
TERMINATION
CONTRACT 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;
3. The Annuitant's death occurs; or
4. Your death occurs (unless your spouse elects to continue the contract
pursuant to the Death Benefit provision).
We reserve the right to terminate this contract by paying you the Accumulated
Value, in one sum, if you pay no Purchase Payments for two or more consecutive
Contract Years and both of the following are less than $2,000:
1. Your total Purchase Payments for this policy, less any partial
surrenders and Surrender Charges; and
2. Your Accumulated Value.
We will notify you and give you 60 days to increase the Accumulated Value to
$2,000 before we exercise this right.
<PAGE>
BENEFIT OPTIONS
You may choose to use one of the following Benefit Options, or any other Benefit
Option we make available, on the Retirement Date. 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. Refer to Option C
tables to determine the minimum number of fixed amount payments or the minimum
amount of each fixed period payment. On request, we will furnish benefit
information not shown in the tables. 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, as shown in the Option D table. Payments
will be in an amount we determine, but not less than shown in the table. 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. Payments will be in an
amount we determine, but not less than shown in the Option E table. On request,
we will furnish minimum income information for age combinations not shown in the
table. 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. Payments during the time both persons
are alive will be in an amount we determine (the "original amount"), but not
less than shown in the Option F table. On request, we will furnish minimum
income information for age combinations not shown in the table. 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.
<PAGE>
OPTION C TABLES
Minimum Monthly Joint and Survivor Life Income for Each $1,000 Applied. First
Payment on Effective Date of Supplementary Contract.
Amount No. of No. of No. of
Applied Income Pymts* Income Pymts* Income Pymts*
$10,000 $50 274 $100 114 $175 61
25,000 150 214 250 114 400 67
50,000 250 274 500 114 750 72
100,0 450 321 1,000 114 1,500 72
*Minimum number of months for which full monthly income will be paid. There may
be part of a payment made one month after the last one. This partial payment
will be the balance, if any, of the amount applied less the payments, all
accumulated at interest.
Minimum Monthly Income To Be Paid for Number Of Years. First Payment on
Effective Date of Supplementary Contract.
Amount Number of Years
Applied
5 10 15 20 25 30
10,000 179.10 96.10 68.70 55.10 47.10 41.80
25,000 447.75 240.25 171.75 137.75 117.75 104.50
50,000 895.50 480.50 343.50 275.50 235.50 209.00
100,000 1,791.00 961.00 687.00 551.00 471.00 418.00
0
<PAGE>
BENEFIT OPTIONS
You may choose to use one of the following Benefit Options, or any other Benefit
Option we make available, on the Retirement Date. 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 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. Refer to
option C tables to determine the minimum number of fixed amount payments or the
minimum amount of each fixed period payment. On request, we will furnish
benefit information not shown in the tables. If you die after annuity payments
begin, the remaining payments will be paid to the beneficiary names 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, as shown in the Option D table. Payments
will be in an amount we determine, but not less than shown in the table. 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 person, and continuing until the death of the survivor. This
option includes a minimum guaranteed period of 10 years. Payments will be in an
amount we determine, but not less than shown in the Option E table. On request,
we will furnish minimum income information for age combinations not shown in the
table. 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. Payments during the time both persons
are alive will be in an amount we determine (the "original amount"), but not
less than shown in the Option F table. On request, we will furnish minimum
income information for age combinations not shown in the table. 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.
OPTION D TABLES
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on Effective
Date of Supplementary Contract.
Age Minimum Guaranteed Period
Last Birthday
Male Payee
Inst.*
None 5 Yrs. 10 Yrs. 15 Yrs. 20 Yrs. Rfd.
55 4.45 4.44 4.40 4.33 4.23 4.24
56 4.54 4.53 4.48 4.41 4.29 4.31
57 4.64 4.62 4.57 4.48 4.35 4.38
58 4.74 4.72 4.66 4.56 4.42 4.46
59 4.84 4.82 4.76 4.65 4.48 4.54
60 4.96 4.94 4.87 4.74 4.55 4.63
61 5.08 5.06 4.97 4.83 4.61 4.72
62 5.21 5.18 5.09 4.92 4.68 4.82
63 5.35 5.32 5.21 5.01 4.75 4.92
64 5.50 5.46 5.33 5.11 4.81 5.02
65 5.66 5.62 5.47 5.21 4.87 5.13
66 5.83 5.78 5.60 5.31 4.94 5.25
67 6.01 5.95 5.75 5.41 4.99 5.37
68 6.21 6.13 5.89 5.52 5.05 5.50
69 6.42 6.33 6.05 5.62 5.11 5.64
70 6.64 6.53 6.21 5.72 5.16 5.78
71 6.87 6.74 6.37 5.82 5.20 5.93
72 7.12 6.97 6.54 5.91 5.25 6.09
73 7.39 7.21 6.71 6.01 5.29 6.25
74 7.67 7.46 6.88 6.10 5.32 6.42
75 7.98 7.73 7.05 6.18 5.35 6.60
*Income payments continue until the total received equals the amount applied
under the option.
<PAGE>
OPTION D TABLES
Minimum Monthly Life Income for Each $1,000 Applied. First Payment on Effective
Date of Supplementary Contract.
Age Minimum Guaranteed Period
Last Birthday
Female Payee
Inst.*
None 5 Yrs. 10 Yrs. 15 Yrs. 20 Yrs. Rfd.
55 4.05 4.05 4.03 4.00 3.95 3.94
56 4.12 4.12 4.10 4.06 4.01 4.00
57 4.20 4.19 4.17 4.13 4.07 4.06
58 4.28 4.27 4.25 4.20 4.13 4.13
59 4.36 4.35 4.33 4.28 4.20 4.20
60 4.45 4.44 4.41 4.35 4.26 4.27
61 4.55 4.54 4.50 4.43 4.33 4.35
62 4.65 4.64 4.60 4.52 4.40 4.43
63 4.76 4.74 4.70 4.61 4.47 4.52
64 4.87 4.86 4.80 4.70 4.54 4.61
65 5.00 4.98 4.91 4.80 4.61 4.70
66 5.13 5.11 5.03 4.89 4.69 4.81
67 5.27 5.24 5.16 5.00 4.76 4.91
68 5.42 5.39 5.29 5.10 4.83 5.02
69 5.58 5.55 5.43 5.21 4.90 5.14
70 5.76 5.71 5.57 5.32 4.97 5.27
71 5.94 5.89 5.73 5.43 5.03 5.40
72 6.15 6.09 5.89 5.55 5.09 5.54
73 6.37 6.30 6.06 5.66 5.15 5.69
74 6.60 6.52 6.24 5.77 5.20 5.85
75 6.86 6.75 6.42 5.88 5.25 6.02
*Income payments continue until the total received equals the amount applied
under the option.
<PAGE>
OPTION E TABLE
Minimum Monthly Joint and Survivor Life Income for Each $1,000 Applied. First
Payment on Effective Date of Supplementary Contract.
Age Last Birthday Age Last Birthday of Female Payee
of Male Payee
55 60 62 65 70
60 3.82 4.04 4.12 4.25 4.45
62 3.85 4.09 4.19 4.33 4.57
65 3.90 4.16 4.28 4.45 4.74
70 3.95 4.26 4.40 4.62 5.01
75 3.99 4.33 4.48 4.75 5.24
OPTION F TABLE
Minimum Monthly Joint and Two-Thirds Survivor Life Income for Each $1,000
Applied. First Payment on Effective Date of Supplementary Contract.
Age Last Birthday Age Last Birthday of Female Payee
of Male Payee
55 60 62 65 70
60 4.22 4.45 4.55 4.71 5.00
62 4.30 4.54 4.65 4.82 5.14
65 4.41 4.68 4.80 4.99 5.35
70 4.61 4.92 5.06 5.29 5.74
75 4.82 5.17 5.33 5.60 6.14
INTEREST
Interest on amounts applied under a Benefit Option is at a rate we set, but
never less than 3% a year. All values in the tables shown are based on the 1983
Table A with 3% interest compounded annually. The benefit you receive may be
greater.
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% per 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 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;
<PAGE>
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 and 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 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 is has been in force for 2 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.
PARTICIPATING
Your contract is eligible to share in our divisible surplus. We will determine
its share and credit it as a dividend at the end of each Contract Year. We do
not expect any dividends will be paid under this contract. Dividends, if any,
will be paid in cash.
OWNERSHIP
The Owner or Joint Owners are named on the current Date 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.
Your rights and privileges end at the Annuitant's death. 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. 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.
<PAGE>
You may change the Retirement Date any time before a supplementary contract
which provides a Benefit Option is issued. The new date must be any Anniversary
on or before the Maximum Retirement Date shown on the current Data Page.
Your request must be in writing and have our prior approval. We reserve the
right to require that you send us this contract so we can record the change.
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 beneficiaries, whenever named, become subordinate to those of
the assignee. Any amount paid an assignee will be treated as a partial surrender
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. This 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.
<PAGE>
ENDORSEMENTS
<PAGE>
FLEXIBLE VARIABLE ANNUITY CONTRACT. Income payable starting on Retirement
Date, or death benefit if Annuitant or Owner dies before Retirement Date.
Benefits based on the performance of the Separate Account are variable and not
guaranteed as to dollar amount. PARTICIPATING.
(Logo)
Principal Financial Group
SF 568 SAMPLE
PURCHASE PAYMENT CREDIT 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. In the case of
a conflict with any provision in the contract, the provisions of this rider will
control. This rider must be elected prior to the Contract Date and is effective
on the Contract Date. This rider cannot be terminated by you unless the contract
terminates. The charge for this rider is shown on the current Data Page.
PURCHASE PAYMENT CREDIT
During the first Contract Year, on the date each Purchase Payment is applied to
the contract, we will credit the Accumulated Value with an amount equal to 5
percent of the amount of the Purchase Payment. For example, if the Purchase
Payment applied to the contract is $10,000, the Purchase Payment credit amount
will be .05 x $10,000, or $500.
If a Purchase Payment is applied to the contract after the first contract
Anniversary, no credit will be given.
Purchase Payment credits are allocated to the Fixed Account and/or Separate
Account Divisions in the same proportion as the Purchase Payments are allocated.
If the initial Purchase Payment is allocated to the Money Market Division under
the Purchase Payment Allocations provision of the contract, the credit for that
Purchase Payment will also be allocated to the Money Market Division.
If the contract terminates under the Examination Offer described on the contract
cover, all Purchase Payment credits applied through the termination date will be
subtracted from the amount returned to you.
