IDS LIFE INSURANCE COMPANY OF NEW YORK'S DESCRIPTION OF TRANSFER AND REDEMPTION
PROCEDURES AND METHOD OF CONVERSION TO FIXED BENEFIT POLICIES
This document sets forth, as required by Rule 6e-3(T) (b) (12) (ii), the
administrative procedures that will be followed by IDS Life Insurance Company of
New York ("IDS Life of New York") in connection with the issuance of its
flexible premium variable life insurance policy ("Policy"), the transfer of
assets held thereunder, and the redemption by Policyowners of their interests in
said Policies. The document also describes the method that IDS Life of New York
will use when a Policy is exchanged for a fixed benefit insurance policy
pursuant to Rule 6e-3 (T) (b) (13) (v) (B).
TRANSFER AND REDEMPTION PROCEDURES
I. Purchase and Related Transactions
A. Premium Schedules and Underwriting Standards
This Policy is a flexible premium policy. The Policyowner has
flexibility, subject to certain restrictions, in determining the
amount and frequency of premium payments. At the time of application,
the Policyowner will determine A Scheduled Premium. The Scheduled
Premium is a level amount at a fixed interval of time. However, the
Policyowner can change the Scheduled Premium, skip premium payments or
make additional premium payments. Generally, the Policyowner may,
subject to certain restrictions, make premium payments in any amount
and at any frequency.
Failure to pay a Scheduled Premium will not itself cause a Policy to
lapse. Payment of Scheduled Premiums, however, will not guarantee that
it will remain in force. (For further information about when a Policy
will lapse, see page 7.)
Each month, a deduction is made form the Policy Value for the cost of
insurance and the cost of any riders. This deduction is based on the
age, sec and rate classification of the Insured.
The Policies will be offered and sold pursuant to established
underwriting standards, and in accordance with state insurance laws,
which prohibit unfair discrimination among Policyowners, but recognize
that insurance costs must be based upon factors such as age, sex,
health or occupation.
B. Application and Initial Premium Processing
Upon receipt of a completed application, IDS Life of New York will
follow certain insurance underwriting (i.e., evaluation of risks)
procedures designed to determine whether the proposed Insured is
insurable. This process may involve such verification procedures as
medical examinations and may require that further information be
provided by the proposed Insurance before a determination can be made.
A Policy will not be issued and consequently a Policy Data
established, until this underwriting procedure has been completed.
If a premium is submitted with the policy application, insurance
coverage will begin immediately if the Insured is insurable under a
temporary insurance agreement. Otherwise, insurance coverage will not
begin until coverage is approved by IDS Life of New York.
If a premium is not paid with the application, insurance coverage will
begin on the date the premium is received, if the Insured is insurable
under a temporary insurance agreement, or on the later of the date the
premium is received or the date IDS Life of New York approves coverage
if the Insured is not insurable under a temporary insurance agreement.
C. Premium Allocation
In the application for a Policy, the Policyowner can allocate premiums
to the Fixed Account and/or the subaccounts. Until the date that an
application is approved by IDS Life of New York's underwriting
department, the premiums received by IDS Life of New York are held in
IDS Life of New York's Fixed Account and interest at the current Fixed
Account rate is credited on the net premiums. As of the date IDS Life
of New York's underwriting department approves the application, the
net premiums plus interest accrued thereon will be allocated to the
Fixed Account and/or the subaccounts in accordance with the allocation
instructions received from the Policyowner in the application. Future
net premiums will be allocated to the Fixed Account and/or the
subaccounts, in accordance with the application allocation
instructions unless the Policyowner changes the allocation
instructions by written request. Net premiums received after the date
IDS Life of New York receives the new instructions, will be allocated
to the Fixed Account and/or the subaccounts, based on the new
allocation instructions.
D. Repayment of Loan
A loan made under the policy will be subject to an interest rate
of 6% per year. The Policyowner can at any time make a loan repayment
which must be at least $25 or 100% of the amount of the outstanding
loan, if less.
When a loan is made, any loan taken from the subaccounts will be
transferred to the Fixed Account. The portion of the Fixed Account
Value which equals indebtedness will be credited with interest at a
rate of 4%.
All loan repayments will be allocated to the Fixed Account and/or
the subaccounts, using the premium allocation percentages in effect at
the time of payment unless the Policyowner specifies that the loan
repayment is to be allocated in a different manner.
II. Transfer Among the Subaccounts and the Fixed Account.
The Policy currently has a Fixed Account and fifty-five subaccounts. Except
as noted in the next paragraph, the Policyowner may transfer at any time
all or part of the value of a subaccount to other subaccounts, or to the
Fixed Account by written request or other requests acceptable to IDS Life
of New York. Each transfer must be for a minimum of $250 or, if the value
of the subaccount is less than $250, the value of the subaccount. The
transfer will take effect on the date the request is received by IDS Life
of New York. IDS Life of New York reserves the right to limit transfers to
five each policy year.
The Policyowner may also transfer from the Fixed Account to the subaccounts
once a year but only on the policy anniversary or within 30 days after such
policy anniversary. If such a transfer is made, the Policyowner cannot
transfer from the subaccounts back to the Fixed Account until the next
policy anniversary. If IDS Life of New York received a request within 30
days before a policy anniversary date, the transfer will be effective on
the anniversary date. If IDS Life of New York receives a request within 30
days after a policy anniversary date, the transfer will be effective on the
date the request is received by IDS Life of New York. The minimum transfer
amount is $250 or the Fixed Account Value less indebtedness, if less. The
maximum transfer amount is the Fixed Account Value less indebtedness.
The owner also may request a transfer by calling IDS Life of New York. IDS
Life of New York has the authority to honor any telephone transfer request
believed to be authentic. IDS Life of New York is not responsible for
determining the authenticity of such calls. A transfer request received
before 4:00 p.m. Eastern time will be processed the same day. If a call or
written request is received after 4:00 p.m. Eastern time, the request will
be processed the following business day.
III. "Redemption" Procedures: Surrender and Related Transactions
A. Surrender for Cash Value
At any time before the death of the Insured, the Policyowner may
completely Surrender the Policy by written request. Any Surrender
payment from the subaccounts will be made within seven days after IDS
Life of New York received the Written request, unless payment is
postponed pursuant to the relevant provisions of the Investment
Company Act or 1940. Any surrender payment from the Fixed Account may
be postponed for up to 6 months. If IDS Life of New York postpones
payment more than 30 days, interest at an annual rate of 3 percent
will be paid on the amount surrendered for the period of postponement.
The Surrender payment will equal the Policyowner's Policy Value minus
Indebtedness and, during the first ten Policy Years, or during the ten
years after a requested increase in Specified Amount, the Surrender
Charge.
After the first policy year, the Policyowner may also request a
partial surrender up to 90% of the Policy's Cash Surrender Value by
written request or by calling IDS Life of New York. IDS Life of New
York has the authority to honor any telephone surrender request
believed to be authentic. IDS Life is not responsible for determining
the authenticity of such calls. A surrender request received before 4
p.m. Eastern time will be processed the same day. If the call or
written request is received after 4 p.m., the request will be
processed the following business day. A fee of $25, but not exceeding
2% of the amount surrendered is assessed for each partial surrender.
The amount of any partial surrender must be at least $500.
B. Benefit Claims
As long a the Policy remains in force, IDS Life of New York will pay a
death benefit to the named beneficiary after receipt of due proof of
death of the Insured unless the Policy is contested. The amount of the
death benefit will be determined as of the date of death of the
Insured. The death benefit proceeds will include interest from the
date of death until the date of payment. The death benefit proceeds
payable will be reduced by any Loan Balance.
The policy provides two Death Benefit Options - Option 1 (a level
amount option) and Option 2 (a variable amount option). The
Policyowner chooses which option applies.
Under Option 1, the death benefit is the greater of
1) the Specified Amount; or
2) the applicable percentage of the Policy Value.
Under Option 2, the death benefit is the greater of
1) the Policy Value plus the Specified Amount; or
2) the applicable percentage of the Policy Value.
In lieu of payment of the death benefit in a single sum, an election
may be made to apply all or a portion of the proceeds under one of the
fixed benefit settlement options described in the Policy. The
beneficiary may make an election unless the Policyowner has already
done so. The fixed benefit settlement options are subject to the
restriction and limitations set forth in the policy.
C. Policy Lapsation
A lapse will occur if, on the monthly date, the Cash Surrender Value
is less than the monthly deduction for the policy month following such
monthly date, and the policy is not being continued under the No Lapse
Guarantee provision. It lapse is going to occur, IDS Life of New York
will notify the Policyowner, and the Policyowner will have a 61 day
grace period to make a premium payment so that the estimated Cash
Surrender Value will be sufficient to cover the next three monthly
deductions.
The No Lapse Guarantee provision provides that until five years from
the Policy Date, the policy will not lapse even if the Cash Surrender
Value cannot cover the monthly deduction on a monthly date if (a)
equals or exceeds (b) where:
(a) is the sum of all premiums paid minus any partial surrenders
and minus any indebtedness, and
(b) in the minimum monthly premiums shown in the Policy times
the number of months since the Policy Date, including the
current month.
D. Loans
The Policyowner may take loans under the Policy at any time as long as
the resulting Indebtedness (including any existing indebtedness) does
not exceed 90% of the Policy Value, less surrender charges. The Policy
is the only security for the loan. The requested loan amount will be
taken from the Fixed Account and the subaccounts in proportion to
their respective Values on the date of the loan, unless the
Policyowner requests a different allocation. Any loan taken from the
subaccounts will be transferred to the Fixed Account. (For further
information about the loan provisions, see page 3.)
The owner may obtain a loan by sending a written request or calling
IDS Life of New York. IDS Life of New York has the authority to honor
any telephone loan request believed to be authentic. IDS Life of New
York is not responsible for determining the authenticity of such
calls. A loan request received before 4 p.m. Eastern time will be
processed the same day. If the call or written request is received
after 4 p.m., the request will be processed the following business
day.
CASH ADJUSTMENT UPON EXCHANGE OF CONTRACT
At any time within 24 months of the Policy's Policy Date, the
Policyowner may exchange the Policy for a Flexible Premium Adjustable
Whole Life Policy which provides for benefits that do not vary with
the investment return of the Variable Account. The exchange is
accomplished by transferring all of the Policy Value in the
subaccounts to the Fixed Account.