Registration No. 333-89446
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
--------
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Registrant)
--------
PRINCIPAL LIFE INSURANCE COMPANY
(Name of Depositor)
--------
711 High Street
Des Moines, Iowa 50309
(Address of Depositor's Principal Executive Offices)
--------
(515) 247-5111
(Depositor's Telephone Number, Including Area Code)
--------
Sarah H. Pitts
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50309
(Name and Address of agent for service of process)
--------
Please send copies of all communications to
J. SUMNER JONES
Jones & Blouch
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
--------
Title and Amount of Securities: Principal Benefit Variable Universal Life
Policy. (Pursuant to Rule 24F-2 under the Investment Company Act of 1940, the
Registrant elects to register an indefinite amount of securities being
registered.)
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement. The Registrant hereby amends its
Registration Statement under the Securities Act of 1933 on such date or dates as
may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PRINCIPAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
Registration Statement on Form S-6
Cross Reference Sheet
Items of
Form N-8B-2 Captions in Prospectus
1.............. Cover Page
2.............. Cover Page
3.............. Not Applicable
4.............. Distribution of the Policy
5.............. Principal Life Insurance Company Variable Life
Separate Account
6(a)........... Not Applicable
6(b)........... Not Applicable
7.............. Not Required
8.............. Not Required
9.............. General Information (Legal Proceedings)
10(a).......... Ownership, Beneficiary, Assignment
10(b).......... Policy Values
10(c), 10(d)... Summary; Division Transfers; Automatic Portfolio
Rebalancing; Surrenders; Right to Exchange Policy
10(e).......... Summary; Policy Termination and Reinstatement
10(f).......... Other Matters (Voting Rights)
10(g)(1),
10(g)(2),
10(h)(1),
10(h)(2)....... Principal Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments)
10(g)(3),
10(g)(4),
10(h)(3),
10(h)(4)....... Not Applicable
10(i).......... Principal Life Insurance Company Variable Life
Separate Account, The Policy (Policy Values); General
Provisions (Addition, Deletion or Substitution of
Investments); General Provisions (Optional Insurance
Benefits); Federal Tax Matters
11............. Principal Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments); Appendix
12(a).......... Cover page
12(b).......... Not Applicable
12(c).......... Principal Life Insurance Company Variable Life
Separate Account
12(d).......... Distribution of the Policy
12(e).......... Principal Life Insurance Company Variable Life
Separate Account
13(a).......... Principal Life Insurance Company Variable Life
Separate Account; Charges and Deductions
13(b), 13(c),
13(d), 13(e),
13(f), 13(g)... Summary (Charges and Deductions); Charges and
Deductions
14............. The Policy (To buy a Policy); Distribution of the
Policy
15............. Summary (Premiums); The Policy (Payment of Premiums;
Premium Limitations; Allocation of Initial Premiums)
16............. Summary (The Policy); Principal Life Insurance Company
Variable Life Separate Account; The Policy (Policy
Values); General Provisions (Addition, Deletion or
Substitution of Investments)
17(a), 17(b),
17(c).......... Captions referenced under Items 10(c), 10(d), 10(e),
and 10(i) above
18(a).......... Summary (Policy Value); The Policy (Policy Values)
18(b).......... Summary (Policy Value); The Policy (Policy Values)
18(c).......... Summary (Policy Loans); The Policy (Policy Values;
Policy Loans; Loan Account)
18(d).......... Not Applicable
19............. Other Matters (Voting Rights; Statement of Values)
20(a), 20(b)... Principal Life Insurance Company Variable Life
Separate Account; General Provisions (Addition,
Deletion or Substitution of Investments); Other
Matters (Voting Rights)
20(c), 20(d),
20(e), 20(f)... Not Applicable
21(a), 21(b)... Summary (Policy Loans); The Policy (Policy Values;
Policy Loans)
21(c).......... Summary (Policy Value; Policy Loans); The Policy
(Policy Values; Policy Loans)
22............. General Provisions (The Contract; Incontestability)
23............. Not Applicable
24............. Summary
25............. The Company
26............. Summary (Investment Account); The Policy (Division
Transfers)
27............. The Company
28............. Executive Oficers (Other than Directors); Directors)
Principal Life Insurance Company
29............. The Company
30............. Not Applicable
31............. Not Applicable
32............. Not Applicable
33............. Not Applicable
PRINCIPAL BENEFIT VARIABLE UNIVERSAL LIFE
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This prospectus is dated__________________.
The Principal Benefit Variable Universal Life Insurance Policy (the "Policy") is
issued by Principal Life Insurance Company (the "Company").
This Policy is for use by corporations, employers, trusts, associations or
similar entities. The Policy is designed for financing non-qualified executive
deferred compensation plans, salary continuation plans, post-employment benefits
or other similar purposes. As in the case of other life insurance policies, it
may not be in your best interest to buy this Policy as a replacement for, or in
addition to, existing insurance coverage.The Policy involves investment risk,
including possible loss of principal.
This prospectus provides information that you should know before buying a
Policy. It is accompanied by a current prospectus for the underlying mutual
funds that are available as investment options under the Policy. Please read
these prospectuses carefully and keep them for future reference.
The Securities and Exchange Commission ("SEC") has not approved of disapproved
this security or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The Policy 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 Policy
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 Policy other than those contained in this prospectus.
1
TABLE OF CONTENTS
GLOSSARY................................................................
SUMMARY.................................................................
THE COMPANY.............................................................
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT.........
THE FUNDS...............................................................
THE POLICY..............................................................
DEATH BENEFITS AND RIGHTS...............................................
CHARGES AND DEDUCTIONS..................................................
POLICY TERMINATION AND REINSTATEMENT....................................
OTHER MATTERS...........................................................
GENERAL PROVISIONS......................................................
OFFICERS AND DIRECTORS OF PRINCIPAL MANAGEMENT CORPORATION..............
EXECUTIVE OFFICERS OF PRINCIPAL LIFE INSURANCE COMPANY (OTHER THAN DIRECTORS)
DIRECTORS OF PRINCIPAL LIFE INSURANCE COMPANY...........................
DISTRIBUTION OF THE POLICY..............................................
STATE REGULATION........................................................
FEDERAL TAX MATTERS.....................................................
GENERAL INFORMATION.....................................................
FINANCIAL STATEMENTS....................................................
APPENDIX A - INVESTMENT DIVISIONS.......................................
APPENDIX B - ILLUSTRATIONS..............................................
APPENDIX C - TARGET PREMIUMS............................................
APPENDIX D - APPLICABLE PERCENTAGES (for Life Insurance Definition Test)
2
GLOSSARY
ADJUSTMENT - change to the Policy resulting from an increase or decrease in
total face amount or a change in smoking status, death benefit option, rating or
riders.
ADJUSTMENT DATE - the monthly date on or next following the Company's approval
of a requested adjustment.
ATTAINED AGE - the insured's issue age plus the number of full policy years
since the policy date.
BUSINESS DAY - any date that the New York Stock Exchange ("NYSE") is open for
trading and trading is not restricted.
DIVISION - a part of the separate account which invests in shares of a
corresponding mutual fund.
EFFECTIVE DATE - the date on which all requirements for issuance of a Policy
have been satisfied.
GENERAL ACCOUNT - assets of the Company other than those allocated to any of our
separate accounts.
INSURED - the person named as the "insured" on the application for the Policy.
The insured may or may not be the owner of the Policy.
LOAN ACCOUNT - that part of the dollar amount in the policy value that reflects
the total loan indebtedness.
MONTHLY DATE - the day of the month which is the same day as the policy date.
Example: If the policy date is May 5, 2003, the first monthly date is June
5, 2003.
MONTHLY POLICY CHARGE - the amount subtracted from the policy value on each
monthly date equal to the sum of the cost of insurance and of additional
benefits provided by any rider plus the asset based charge in effect on the
monthly date.
NET POLICY VALUE - the policy value minus any outstanding policy loans and
unpaid loan interest.
NET PREMIUM - the gross premium less the deductions for the premium expense
charge. It is the amount of premium allocated to the divisions.
NET SURRENDER VALUE - surrender value minus any outstanding policy loans and
unpaid loan interest.
NOTICE - any form of communication that we receive that provides the information
we need which may be in writing sent to us by mail or by facsimile or by calling
the service office.
OWNER - the party which owns all the rights and privileges of this Policy.
POLICY DATE - the date from which monthly dates, policy years and policy
anniversaries are determined.
POLICY FACE AMOUNT - the insurance benefit provided by the Policy without any
riders.
POLICY MONTH - any one-month period beginning on the monthly date.
Example: The monthly date is May 5, 2003, the first policy month ends on
June 4, 2003.
POLICY VALUE - an amount equal to the division value(s) plus the loan account
value.
3
POLICY YEAR - the one-year period beginning on the policy date and ending one
day before the policy anniversary and any subsequent one year period beginning
on a policy anniversary.
Example: If the policy date is May 5, 2003, the first policy year ends on
May 4, 2004. The first policy anniversary falls on May 5, 2004.
PREMIUM EXPENSE CHARGE - the charge deducted from premium payments to cover a
sales charge, state and local premium taxes and federal taxes.
PRORATED BASIS - is the proportion that the value of a particular division bears
to the total value of all divisions.
SERVICE OFFICE - Principal Financial Group Service Center
P.O.Box 724447
Atlanta GA 31139
Phone: 1-888-737-3855
Fax: 1-770-690-1900
SURRENDER VALUE - an amount equal to the policy value minus any surrender
charges. The surrender value also includes any value provided by a rider
benefit.
TARGET PREMIUM - a premium amount used to determine any applicable premium
expense charge and surrender charge under a Policy.
TOTAL FACE AMOUNT - policy face amount plus face amount of the supplemental
benefit rider, if any.
UNDERLYING MUTUAL FUND - a registered open-end investment company, or a separate
division or portfolio thereof, in which a division invests.
UNIT - the accounting measure used to calculate the value of the divisions.
VALUATION PERIOD - the period begins at the close of normal trading on the NYSE,
generally 4:00 p.m. E.T., on each business day and ends at the close of normal
trading of the NYSE on the next business day.
WRITTEN REQUEST - actual delivery to the Company or the service office of a
written notice or request, signed and dated, on a form we supply or approve.
4
SUMMARY
This prospectus describes a flexible variable universal life policy offered by
the Company. This is a brief summary of the Policy's features. More detailed
information follows later in this prospectus.
THE POLICY
The Policy is designed to provide:
.. insurance protection;
.. a death benefit payable at the death of the insured;
.. flexibility in:
. the amount and frequency of premium payments (subject to certain
limitations); and
. the amount of life insurance proceeds payable under the Policy;
.. policy loans; and
.. a net surrender value which may be accessed by a partial or full surrender of
the Policy.
Net premium payments are allocated to divisions. All divisions may not be
available in all states. A current list of divisions available in your state may
be obtained from a sales representative or the Company.
Each division invests in shares of an underlying mutual fund. More detailed
information about the underlying mutual funds may be found in the current
prospectus for each underlying mutual fund.
The underlying mutual funds are NOT available to the general public directly.
The underlying mutual funds are available only as investment options in variable
life insurance policies or variable annuity contracts issued by life insurance
companies and qualified plans. Some of the underlying mutual funds have been
established by investment advisers that manage publicly traded mutual funds
having similar names and investment objectives. While some of the underlying
mutual funds may be similar to, and may in fact be modeled after publicly traded
mutual funds, the underlying mutual funds are not otherwise directly related to
any publicly traded mutual fund. Consequently, the investment performance of
publicly traded mutual funds and of any underlying mutual fund may differ
substantially.
The following divisions are currently available (subject to state availability):
DIVISION DIVISION
AIM V.I. Aggressive Growth JPMorganBond
AIM V.I. International Growth JPMorganSmallCap
AIM V.I. Premier Equity MFSVITEmergingGrowth
American Century VP Income & MFSVITMidCapGrowth
Growth
American Century VP International MFSVITNewDiscovery
American Century VP Value MFSVITValue
American Century VP Ultra NeubergerBermanAMTGuardian
Berger IPT MidCap Value Bond
Dreyfus VIF Appreciation CapitalValue
Dreyfus DIP Core Value EquityGrowth
Dreyfus VIF Small Cap GovernmentSecurities
Dreyfus VIF Quality Bond Growth
Dreyfus Socially Responsible International
Growth
DIP Founders Discovery InternationalSmallCap
DIP Founders Growth LargeCapBlend
Fidelity VIP II Asset Manager LargeCapGrowth
Fidelity VIP II Contrafund LargeCapValue
Fidelity VIP Equity-Income MidCap
Fidelity VIP Growth MidCapGrowth
Fidelity VIP High Income MidCapGrowthEquity
Fidelity VIP MidCap MidCapValue
Franklin Income Securities MoneyMarket
Franklin Mutual Discovery RealEstate
Franklin Mutual Shares SmallCap
Franklin Rising Dividends SmallCapGrowth
Franklin Small Cap Value SmallCapValue
Securities
INVESCO VIF - Core Equity PutnamVTGrowth&Income
INVESCO VIF - Dynamics PutnamVTInternationalGrowth
INVESCO VIF - Health Sciences PutnamVTVoyager
INVESCO VIF - Small Company Growth VanguardVIFBalanced
INVESCO VIF - Technology VanguardVIFEquityIndex
Janus Aspen Aggressive Growth VanguardVIFMidCapIndex
Janus Aspen Balanced WellsFargoVTAssetAllocation
Janus Aspen Core Equity WellsFargoVTEquityIncome
Janus Aspen Flexible Income WellsFargoVTLargeCompanyGrowth
Janus Aspen International Growth
Janus Aspen Strategic Value
Janus Aspen Worldwide Growth
5
PREMIUMS
Within certain limits, you may select the amount and frequency of premium
payments.
POLICY VALUE
The policy value is:
.. the value(s) of the policy division(s)
.. plus the value of the loan account.
It is possible that the investment performance could cause a loss of the entire
amount allocated to the divisions. Without additional premium payments or a
death benefit guarantee rider, it is possible that no death benefit would be
paid upon the insured's death.
TRANSFERS
Amounts may be transferred between the divisions.
POLICY LOANS
Loans may be taken against the policy value any time the Policy has a net
surrender value. The minimum amount of a loan is $500. The maximum amount of a
loan is 90% of the net surrender value.
LOAN ACCOUNT
When a policy loan is taken, a loan account is established. Interest is charged
on the policy loan. An amount equal to the amount of the policy loan is redeemed
from the divisions and the proceeds are transferred to the loan account. The
loan account earns interest.
SURRENDERS (FULL AND PARTIAL)
Full Surrender
- --------------
.. The Policy may be surrendered and the net surrender value paid to the owner.
.. We calculate the net surrender value as of the business day we receive the
written surrender request.
Partial Surrender
- -----------------
.. After the first policy year, a Policy may be partially surrendered and the
proceeds paid to the owner.
.. The minimum amount of partial surrender is $500.
.. The amount surrendered may not be greater than 90% of the net surrender value.
.. The total face amount may be reduced by the amount of the partial surrender
(and any transaction fee).
7
Preferred Partial Surrender (available if Death Benefit Option 1 is in effect)
- ------------------------------------------------------------------------------
.. In any policy year, 5% of the net surrender value as of the end of the prior
policy year may be surrendered without a resulting decrease in the total face
amount.
.. Any amount surrendered in excess of 5% may cause a reduction in the total face
amount.
.. The 5% preferred partial surrender privilege is not cumulative from
year-to-year.
CHARGES AND DEDUCTIONS
The following tables describe the fees and expenses that you will pay when
buying, owning, and surrendering the Policy. The first table describes the fees
and expenses that you will pay at the time that you buy the Policy, surrender
the Policy, or transfer cash value between investment options.
TRANSACTION FEES
------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Premiums
up to Target Premium from each premium paid 6.50% of premium paid
- all years
------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Premiums
over Target Premium -
years 1-5 (after from each premium paid 5.00% of premium paid
issue or adjustment)
------------------------------------------------------------------------------
Maximum Sales Charge
Imposed on Premiums
over Target Premium -
years 6 and later
(after issue or from each premium paid 6.50% of premium paid
adjustment)
------------------------------------------------------------------------------
Premium Taxes
(federal, state and from each premium paid 3.45% of premium paid
local)
------------------------------------------------------------------------------
Maximum Deferred from surrender proceeds 75% of target premium
Sales Charge*
------------------------------------------------------------------------------
from each partial
surrender after the 2nd $25 per partial
Other Surrender Fee partial surrender in a surrender
policy year
------------------------------------------------------------------------------
upon each unscheduled currently zero but we
transfer after the first reserve the right to
Transfer Fees unscheduled transfer in a impose a transfer fee of
policy month. no more than $25
------------------------------------------------------------------------------
* Deferred sales charges (surrender fees) decline over time.
DEFERRED SALES CHARGE (AS % OF TARGET PREMIUM)
------------------------------------------------------------------
POLICY YEAR AGES 20-65* AGES 66-70* AGES 71-75*
------------------------------------------------------------------
1 75 75 55
------------------------------------------------------------------
2 75 70 50
------------------------------------------------------------------
3 75 65 45
------------------------------------------------------------------
4 70 60 40
------------------------------------------------------------------
5 60 50 35
------------------------------------------------------------------
6 50 45 30
------------------------------------------------------------------
7 40 35 25
------------------------------------------------------------------
8 30 30 20
------------------------------------------------------------------
9 20 20 15
------------------------------------------------------------------
10 10 10 5
------------------------------------------------------------------
* Age at issue or adjustment
8
The next table describes the fees and expenses that you will pay periodically
during the time that you own the Policy, not including underlying mutual fund
fees and expenses.
PERIODIC CHARGES OTHER THAN UNDERLYING MUTUAL FUND OPERATING EXPENSES
------------------------------------------------------------------------------
WHEN CHARGE
CHARGE IS DEDUCTED AMOUNT DEDUCTED
------------------------------------------------------------------------------
Cost of Insurance*:
------------------------------------------------------------------------------
$0.02 increasing to $83.33 per $1,000 of
Minimum and Maximum total face amount (equivalent to $0.25
Charge monthly increasing to $1,000 per $1,000 per
year)
------------------------------------------------------------------------------
Charge for a
representative Policy
owner $0.07 increasing to $83.33 per $1,000 of
(45-year old male total face amount (equivalent to $0.83
with a risk increasing to $1,000 per $1,000 per
classification of monthly year)
preferred non-smoker)
------------------------------------------------------------------------------
equivalent to:
Asset Based Charge monthly . policy years 1-10: 0.40% per year
. after policy year 10: 0.30% per year
------------------------------------------------------------------------------
Accounting Benefit monthly equivalent to $0.10 per $1,000 per year
Rider
------------------------------------------------------------------------------
Policy loan interest
as a percentage of
loan balance (applies policy years 1-10: 5.0% per year
only if policy loan daily after policy year 10: 4.3% per year
outstanding)
------------------------------------------------------------------------------
* The cost of insurance charge varies based on individual characteristics (the
gender, issue age and age at adjustment, duration since issue and since
adjustment, smoking status, and risk classification of the insured) and the
charge shown in the table may not be representative of the charge that a
particular policy owner will pay. You may obtain more information about the
particular cost of insurance charge that would apply to you from your
registered representative or by phoning 1-800-247-9988.
The next table describes the underlying mutual fund fees and expenses that you
will pay periodically during the time that you own the Policy. The table shows
the minimum and maximum fees and expenses charged by any of the underlying
mutual funds. More detail concerning the fees and expenses of each underlying
mutual fund is contained in the prospectus for each underlying mutual fund.
Annual Underlying Mutual Fund Operating Expenses (expenses that are deducted
from underlying mutual fund assets) as of December 31, 2001.
MANAGEMENT FEES 12B-1 OTHER EXPENSES TOTAL EXPENSES
UNDERLYING MUTUAL FUNDS AFTER REIMBURSEMENT FEES AFTER REIMBURSEMENT AFTER REIMBURSEMENT/(1)/
----------------------- ------------------- ----- ------------------- ------------------------
AIM V.I. Aggressive Growth
Division 0.80% N/A 0.41% 1.21%
AIM V.I. International Growth
Division 0.73 N/A 0.32 1.05
AIM V.I. Premier Equity 0.60 N/A 0.25 0.85
American Century VP Income &
Growth 0.70 0.25 0.00 0.95
American Century VP
International 1.19 0.25 0.00 1.44
American Century VP Ultra 0.90 0.25 0.00 1.15
American Century VP Value 0.86 0.25 0.00 1.11
Berger IPT MidCap Value 0.75 0.25 0.33 1.20/(4)/
Dreyfus DIP Core Value 0.75 0.25 0.00 1.00
Dreyfus VIF Appreciation 0.75 0.25 0.10 1.10
Dreyfus VIF Quality Bond 0.65 0.25 0.11 1.01
Dreyfus VIF Small Cap 0.75 0.25 0.11 1.11
Dreyfus Socially Responsible
Growth 0.75 0.25 0.09 1.09
DIP Founders Discovery 0.90 0.25 0.62 1.50
DIP Founders Growth 0.75 0.25 0.40 1.00
Fidelity VIP II Asset Manager 0.53 0.25 0.12 0.90/(2)/
Fidelity VIP II Contrafund 0.58 0.25 0.11 0.94/(2)/
Fidelity VIP Equity-Income 0.48 0.25 0.11 0.84/(2)/
Fidelity VIP Growth 0.58 0.25 0.10 0.93/(2)/
Fidelity VIP High Income 0.58 0.25 0.15 0.98/(2)/
Fidelity VIP MidCap 0.58 0.25 0.11 0.94/(2)/
Franklin Income Securities 0.49 0.25 0.04 0.78
Franklin Mutual Discovery 0.80 0.25 0.22 1.27
Franklin Mutual Shares
Securities 0.60 0.25 0.19 1.04
Franklin Rising Dividends 0.74 0.25 0.02 1.01
Franklin Small Cap Value
Securities 0.57 0.25 0.20 1.02
INVESCO VIF - Core Equity 0.75 N/A 0.34 1.09/(2)/
INVESCO VIF - Dynamics 0.75 N/A 0.33 1.08/(2)/
INVESCO VIF - Health Sciences 0.75 N/A 0.31 1.06/(2)/
INVESCO VIF - Small Company
Growth 0.75 N/A 0.50 1.25/(2)/
INVESCO VIF - Technology 0.75 N/A 0.32 1.07/(2)/
Janus Aspen Aggressive Growth 0.65 0.25 0.02 0.92/(3)/
Janus Aspen Balanced 0.65 0.25 0.01 0.91/(3)/
Janus Aspen Core Equity 0.65 0.25 0.40 1.30/(3)/
Janus Aspen Flexible Income 0.64 0.25 0.02 0.91/(3)/
Janus Aspen International
Growth 0.65 0.25 0.06 0.96/(3)/
Janus Aspen Strategic Value 0.65 0.25 0.70 1.50/(3)/
Janus Aspen Worldwide Growth 0.55 0.25 0.04 0.94/(3)/
JP Morgan Bond 0.30 N/A 0.45 0.75
JP Morgan SmallCap 0.60 N/A 0.55 1.15
MFS VIT Emerging Growth 0.75 0.25 0.12 1.12/(2)/
MFS VIT MidCap Growth 0.75 0.25 0.15 1.15/(2)/
MFS VIT New Discovery 0.90 0.25 0.16 1.31/(2)/
MFS VIT Value 0.75 0.25 0.15 1.15/(2)(4)/
Neuberger Berman AMT Guardian 0.85 0.25 0.13 1.23
Principal VCF Bond 0.49 N/A 0.01 0.50
Principal VCF Capital Value 0.60 N/A 0.01 0.61
Principal VCF Equity Growth 0.74 N/A 0.01 0.75
Principal VCF Government
Securities 0.48 N/A 0.01 0.49
Principal VCF Growth 0.60 N/A 0.01 0.61
Principal VCF International 0.85 N/A 0.07 0.92
Principal VCF International
SmallCap 1.20 N/A 0.21 1.41
Principal VCF LargeCap Blend 0.75 N/A 0.25 1.05/(4)/
Principal VCF LargeCap Growth 1.10 N/A 0.07 1.17
Principal VCF LargeCap Value 0.75 N/A 0.11 0.86/(4)/
Principal VCF MidCap 0.61 N/A 0.01 0.62
Principal VCF MidCap Growth 0.90 N/A 0.07 0.97
Principal VCF MidCap Growth
Equity 0.75 N/A 0.35 1.10
Principal VCF MidCap Value 1.05 N/A 0.31 1.36
Principal VCF Money Market 0.48 N/A 0.02 0.50
Principal VCF Real Estate 0.90 N/A 0.02 0.92
Principal VCF SmallCap 0.85 N/A 0.15 1.00
Principal VCF SmallCap Growth 1.00 N/A 0.05 1.05
Principal VCF SmallCap Value 1.10 N/A 0.14 1.24
Putnam VT Growth & Income 0.46 0.25 0.04 0.75
Putnam VT International
Growth 0.76 0.25 0.18 1.19
Putnam VT Voyager 0.51 0.25 0.05 0.81
Vanguard VIF Balanced 0.28 N/A 0.02 0.30
Vanguard VIF Equity Index 0.16 N/A 0.02 0.18
Vanguard VIF MidCap Index 0.24 N/A 0.06 0.30
Wells Fargo VT Asset
Allocation 0.49 0.25 0.26 1.00/(4)/
Wells Fargo VT Equity Income 0.32 0.25 0.43 1.00
Wells Fargo VT Large Company
Growth 0.54 0.25 0.21 1.00/(4)/
/ //(1)/ The Company and Princor Financial Services Corporation may receive a
portion of the underlying fund expenses for recordkeeping, marketing and
distribution services.
/ //(2)/ Actual annual class operating expenses were lower because a portion of
the brokerage commissions that the fund paid was used to reduce the fund's
expenses, and/or because through arrangements with the fund's custodian,
credits realized as a result of uninvested cash balances were used to reduce a
portion of the fund's custodian expenses. See the accompanying fund prospectus
for details.
/ //(3)/ All expenses are shown without the effect of any expense offset
arrangements.
/ //(4)/ Expenses for this fund are estimated for 2002.
.. Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows
MANAGEMENT FEES 12B-1 OTHER EXPENSES TOTAL EXPENSES
UNDERLYING MUTUAL FUNDS BEFORE REIMBURSEMENT FEES BEFORE REIMBURSEMENT BEFORE REIMBURSEMENT/(1)/
----------------------- -------------------- ----- -------------------- -------------------------
Dreyfus DIP Core Value 0.75 0.25 0.27 1.27/(2)
DIP Founders Discovery 0.90 0.25 0.62 1.77/(2)
DIP Founders Growth 0.75 0.25 0.40 1.40/(2)
Franklin Rising Dividends 0.75 0.25 0.02 1.02/(3)
Franklin Small Cap Value Securities 0.60 0.25 0.20 1.05/(3)
INVESCO VIF - Small Company Growth 0.75 N/A 0.54 1.29/(4)
Janus Aspen Strategic Value 0.65 0.25 0.70 1.60/(2)
MFS VIT MidCap Growth 0.75 0.25 0.20 1.20/(6)
MFS VIT New Discovery 0.90 0.25 0.19 1.34/(6)
MFS VIT Value 0.75 0.25 0.44 1.44/(6)
Principal VCF MidCap Growth Equity 1.00 N/A 0.35 1.35/(5)
Wells Fargo VT Asset Allocation 0.55 0.25 0.26 1.06/(2)
Wells Fargo VT Equity Income 0.55 0.25 0.43 1.23/(2)
Wells Fargo VT Large Company Growth 0.55 0.25 0.21 1.01/(2)
/ //(1)/ The Company and Princor Financial Services Corporation may receive a
portion of the underlying fund expenses for recordkeeping, marketing and
distribution services.
/ //(2) /This a contractual waiver through December 31, 2002.
/ //(3) /The manager agreed in advance to reduce its fees to reflect reduced
services from the Fund's investment in a Franklin Templeton money fund, as
required by the Board and an SEC order.
/ //(4)/ Actual annual class operating expenses were lower because a portion of
the brokerage commissions that the fund paid was used to reduce the fund's
expenses, and/or because through arrangements with the fund's custodian,
credits realized as a result of uninvested cash balances were used to reduce a
portion of the fund's custodian expenses. See the accompanying fund prospectus
for details.
/ //(5) /This a voluntary waiver.
/ //(6)/ All expenses are shown without the effect of any expense offset
arrangements.
/ //(7) /This a contractual waiver through May 1, 2003.
/ //(8)/ Expenses for this fund are estimated for 2002.
DEATH BENEFITS AND PROCEEDS
The death proceeds are paid to the beneficiary(ies) when the insured dies. Death
proceeds are calculated as of the date of death of the insured. The amount of
the death proceeds is:
.. the death benefit plus interest (as explained in DEATH PROCEEDS AND RIGHTS -
Death Proceeds);
.. minus outstanding policy loans and unpaid loan interest;
.. minus any overdue monthly policy charges (Overdue monthly policy charges arise
when a policy is in a grace period and the net policy value is insufficient to
cover the sum of the cost of insurance and of additional benefits provided by
any rider plus the asset based charge.).
The Policy provides for three death benefit options. A death benefit option is
elected on the application. Subject to certain conditions, the death benefit
option may be changed after the Policy has been issued. Death proceeds are paid
in cash or applied under a benefit payment option. We pay interest on the death
proceeds as required by state law.
MATURITY PROCEEDS
If the insured is living on the maturity date (shown on your current data
pages), we will pay the owner an amount equal to the net surrender value. The
Policy then terminates. Maturity proceeds are paid in cash lump sum or applied
under a benefit payment option.
ADJUSTMENT OPTIONS
The total face amount may be increased or decreased. The minimum amount of an
increase is $10,000 and is subject to our underwriting guidelines in effect at
the time the increase is requested. A decrease in total face amount may be
requested:
.. on or after the first policy anniversary; and
.. if the request does not decrease the total face amount below $100,000.
TERMINATION AND REINSTATEMENT
The Policy terminates:
.. upon a full policy surrender;
.. when death proceeds are paid;
.. when maturity proceeds are paid; or
.. if sufficient premium payments are not made before the expiration of a 61-day
grace period.
Subject to certain conditions, a Policy that terminated because of insufficient
policy value may be reinstated.
EXAMINATION PERIOD (FREE-LOOK PROVISION)
.. The Policy may be returned during the examination period that is generally 10
days but may be longer in certain states.
.. Based on state law, we return either all premiums paid or the net policy
value.
THE COMPANY
The Company is a stock life insurance company with its home office at: Principal
Financial Group, Des Moines, Iowa 50306. 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 Principal Financial Services, Inc.,
which in turn, is a directly wholly owned subsidiary of Principal Financial
Group, Inc.
On June 24, 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. Effective October
26, 2001, Principal Mutual Holding Company converted to a stock company and
Principal Financial Group, Inc. completed its initial public offering.
PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
The separate account was established under Iowa law on November 2, 1987. It was
then registered as a unit investment trust with the SEC. This registration does
not involve SEC 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 Policy,
including the promise to make benefit option payments, are our general corporate
obligations. However, the Policy provides that the portion of the separate
account's assets equal to the reserves and other liabilities under the Policy
are not charged with any liabilities arising out of any other business of the
Company.
The assets of each division invest in a corresponding underlying mutual fund.
New divisions may be added and made available. Divisions may also be eliminated
from the separate account following SEC approval.
THE FUNDS
The funds are mutual funds registered under the Investment Company Act of 1940
as open-end management investment companies. The funds provide the investment
vehicles for the divisions. 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). Additional copies of these documents are
available from a sales representative or our home office.
Appendix A contains a brief summary of the investment objectives of each
division.
An Investment Advisor agrees to provide investment advisory services for a
specific underlying mutual fund. For these services, the Investment Advisor is
paid a fee.
The Company purchases and sells fund shares for the separate account at their
net asset value without any sales or redemption charge. The separate account has
divisions that correspond to interests in the underlying mutual funds. The
assets of each division are separate from the others. A division's performance
has no effect on the investment performance of any other division.
THE POLICY
The descriptions that follow are based on provisions of the Policy offered by
this prospectus.
TO BUY A POLICY
A completed application and required supplements must be submitted to us through
an agent or broker selling the Policy.
The minimum total face amount when the Policy is originally issued is $100,000.
We reserve the right to increase or decrease the minimum total face amount. If
the minimum total face amount is changed, the new minimum would apply only to
Policies issued after the effective date of the change.
To issue a Policy, we require that the insured be age 75 or younger as of the
policy date. Other underwriting restrictions may apply.
An applicant for the Policy must:
.. furnish satisfactory evidence of insurability of the insured; and
.. meet our insurance underwriting guidelines and suitability rules.
If you want insurance coverage to start at the time the application is
submitted, a payment must be sent with the completed application. The amount is
shown on the Policy illustration provided by your registered representative. If
this amount is submitted with the application, a conditional receipt may be
given to you. The receipt acknowledges the initial payment and details any
interim conditional insurance coverage.
We reserve the right to reject any application or related premium if we
determine that our underwriting guidelines, suitability rules or procedures have
not been met.
Policy Date
- -----------
If we issue a Policy, a policy date is determined. Policies will not be dated on
the 29th, 30th or 31st of any month. Policies that would otherwise be dated on
these dates are dated on the 28th of the same month. Policies that are issued on
a COD basis and that would otherwise be dated on the 29th, 30th or 31st of a
month will be dated on the first day of the following month. The policy date is
shown on the current data pages. Current data pages are the most recent Policy
specification pages issued to a Policy owner and are located in the Policy.
Upon specific request and our approval, the Policy may be backdated. The policy
date may not be more than six months prior to the date of application (or
shorter period if required by state law). Payment of at least the monthly policy
charges is required for the backdated period. Monthly policy charges are
deducted from the policy value for the backdated period.
Effective Date
- --------------
The Policy date and the effective date are the same unless:
.. a backdated Policy date is requested; or
.. a Policy is applied for on a COD basis (the effective date is the date we
received at least the monthly policy charge and all requirements for issuance
of the Policy have been satisfied); or
.. application amendments are required (the effective date is the date we
receive, review and accept amendments).
The insurance coverage does not take effect until you actually receive the
Policy. If the insured was to die before you actually receive the Policy, there
is no coverage under the Policy (coverage is determined solely under the terms
of conditional receipt, if any).
PAYMENT OF PREMIUMS
The amount and frequency of the premium payments affects the policy value, the
net policy value and how long the Policy remains in force. After the initial
premium, you may determine the amount and timing of subsequent premium payments
within certain restrictions. You must pay premiums to us at:
Principal Financial Group Service Center
P.O.Box 724447
Atlanta GA 31139
Preauthorized withdrawals may be set up on a monthly basis (to allow us
automatically to deduct premium payments from a checking or other financial
institution account). We send premium reminder notices of the planned periodic
premium amount if an annual, semiannual or quarterly premium payment schedule is
established. Unscheduled payments may be sent to our service office.
TARGET PREMIUM,
The target premium is based on the gender, if applicable, age and risk
classification of the insured (see APPENDIX C - TARGET PREMIUM). The target
premium is a calculated premium amount used to determine the premium expense
charge and the surrender charge. The target premium is not required to be paid.
Payment of a required minimum premium provides for the Death Benefit Guarantee
Rider (as described in GENERAL PROVISIONS - Optional Insurance Benefits).
PREMIUM LIMITATIONS
In no event may the total of all premiums paid, both scheduled and unscheduled,
be more than the current maximum premium payments allowed for life insurance
under the Internal Revenue Code (the "Code"). If a premium payment is made that
would result in total premiums exceeding the current maximum limitation, we only
accept that portion of the payment that makes total premiums equal the maximum.
Unless otherwise directed, any excess will be returned and no further premiums
accepted until allowed by the current maximum premium limitations.
EXAMINATION PERIOD (FREE-LOOK PROVISION)
Under state law, the Policy may be returned for any reason during the
examination period. The request and the Policy must be mailed to us or returned
to the agent no later (as determined by the postmark) than the last day of the
examination period as shown below.
The examination period is the later of:
.. 10 days after the Policy is delivered to you; and
.. such later date as specified by applicable state law.
NOTE: If the purchase of this Policy is a replacement for another life insurance
policy or an annuity contract, different examination periods may apply. In
those states which require return of premium, we reserve the right to
retain the initial net premium payment in the Money Market division longer
than 10 days to correspond to the examination period of a particular
state's replacement requirements.
ALLOCATION OF INITIAL PREMIUMS
We allocate initial net premiums on the later of the policy date or the
effective date.
Certain states require that the premium be refunded if the Policy is returned
during the examination period. If the Policy is issued in one of those states,
the initial net premium is allocated to the Money Market division on the later
of the policy date or the effective date. After the examination period, the
initial net premium is re-allocated to the divisions according to your
instructions. If the day following the examination period is not a business day,
the transfer will occur on the next business day.
Example: If the examination period is 10 days and the effective date of the
Policy is February 1st, at the close of business on February 11th,
the net premium is reallocated to the division(s) that you selected.
If the Policy is issued in a state which does not require refund of premiums
paid, the initial net premium is allocated to the divisions on the later of the
policy date or the effective date. States which do not require refund of
premiums paid are: Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Florida, Iowa, Kansas, Oregon, South Dakota, Tennessee, Washington, Wisconsin
and Wyoming. Different rules may apply if this Policy is a replacement for
another life insurance policy or an annuity contract.
Allocations are made to the divisions according to your instructions. The total
of all the percentages for the divisions must equal 100. The percentage
allocation for future premium payments may be changed, without charge, at any
time by:
.. sending a notice to our service office;
.. calling us (if telephone privileges apply (1-888-737-3855)); or
.. faxing the notice to us (1-770-690-1900).
The allocation changes are effective at the end of the valuation period in which
the new instructions are received.
NOTE: See GENERAL PROVISIONS - Delay of Payments.
POLICY VALUES
The policy value is equal to the sum of the values in the divisions and loan
account (see THE POLICY - Loan Account). The policy value also reflects premium
payments, partial surrenders, transaction charges, policy loans and the policy
expenses deducted from the divisions.
There is no guaranteed minimum division value. Its value reflects the investment
experience of the division. It is possible that the investment performance could
cause a loss of the entire amount allocated to the division. Without additional
premium payments or a rider, it is possible that no death benefit would be paid
upon the insured's death.
At the end of any valuation period, the Policy's value in a division is:
.. the number of units in the division attributable to the Policy
.. multiplied by the value of a unit in the division.
The number of units is the total of units purchased by allocations to the
division from:
.. the initial premium payment (less premium expense charges);
.. plus subsequent premium payments (less premium expense charges);
.. plus transfers from another division
minus units sold:
.. for partial surrenders from the division;
.. as part of a transfer to another division or the loan account; and
.. to pay monthly policy charges and any transaction fees.
Unit values are calculated each business day. To calculate the unit value of a
division, the unit value from the previous business day is multiplied by the
division's 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:
[{the share price of the underlying mutual fund at the end of the valuation
period before that day's transactions
plus
the per share amount of the dividend (or other distribution) made by the mutual
fund during the valuation period}
divided by
the share price of the underlying mutual fund at the end of the previous
valuation period after that day's transactions].
When an investment owned by an underlying mutual fund pays a dividend, the
dividend increases the net asset value of a share of the underlying mutual fund
as of the date the dividend is recorded. As the net asset value of a share of an
underlying mutual fund increases, the unit value of the corresponding division
also reflects an increase. Payment of a dividend under these circumstances does
not increase the number of units in the division attributable to the Policy.
DIVISION TRANSFERS
An unscheduled transfer may be requested or a periodic transfer established by:
.. sending the notice to our service office;
.. calling us (if telephone privileges apply (1-888-737-3855)); or
.. faxing the notice to us (1-770-690-1900).
The dollar amount or percentage to transfer from and to each division must be
specified. The transfer is made, and the values determined, as of the end of the
valuation period in which we receive the request. In states where allowed, we
reserve the right to reject transfer instructions from someone providing them
for multiple Policies for which he or she is not the owner. We also reserve the
right to modify or revoke transfer privileges (see GENERAL PROVISIONS - Market
Timing Disclosure).
Unscheduled Transfers
- ---------------------
Unscheduled transfers among divisions may be made. We reserve the right to
impose a transfer fee of up to $25 on each unscheduled transfer after the first
unscheduled transfer in a policy month. The fee, if any, is deducted from the
divisions according to the allocations used for the monthly policy charge.
Scheduled Transfers (dollar cost averaging (DCA))
- -------------------------------------------------
DCA is a program of automatic transfers out of one division into one or more of
the other divisions. You choose the investment options and the dollar amount and
timing of the transfers. DCA is designed to reduce the risks that result from
market fluctuations. It does this by spreading out the allocation of your money
to investment options over a longer period of time. This allows you to reduce
the risk of investing most of your money at a time when market prices are high.
Obviously, the success of this strategy depends on market trends and is not
guaranteed.
Example:
MONTH AMOUNT INVESTED SHARE PRICE SHARES PURCHASED
January $ 100 $ 25.00 4
February $ 100 $ 20.00 5
March $ 100 $ 20.00 5
April $ 100 $ 10.00 10
May $ 100 $ 15.00 6
June $ 100 $ 20.00 5
Total $ 600 $ 18.33 35
(average price per share)
$600 divided by 35 $ 17.14
(shares purchased) (average cost per share)
(amount invested)
In the example above, the average share price is $18.83. The average share cost
is $17.14.
Automatic transfers are made on a periodic basis without an additional charge.
.. The amount of the transfer is:
. the dollar amount selected; or
. a percentage of the division value as of the date specified (other than the
29th, 30th or 31st).
.. You select the transfer date (other than the 29th, 30th or 31st) and the
transfer frequency (annually, semi-annually, quarterly or monthly).
.. If the selected date is not a business day, the transfer is completed on the
next business day.
.. Transfers continue until we receive notice to stop them or the interest in the
division has a zero balance.
.. We reserve the right to limit the number of divisions from which simultaneous
transfers are made. In no event will it ever be less than two.
AUTOMATIC PORTFOLIO REBALANCING (APR)
APR allows you to maintain a specific percentage of your net policy value in the
divisions over time.
Example: You may choose to rebalance so that 50% of your policy values are
in the Bond division and 50% in the Capital Value division. At the
end of the specified period, market changes may have caused 60% of
the value to be in the Bond division and 40% in the Capital Value
division. By rebalancing, units from the Bond division are sold and
the proceeds are used to purchase units in the Capital Value division
so that 50% of the policy values are once again invested in each
division.
APR may be elected at the time of application or after the Policy has been
issued. APR transfers:
.. do not begin until the expiration of the examination period;
.. are done without charge;
.. may be done on the specified frequency (monthly, quarterly, semiannual or
annual) on a calendar year or policy year basis;
.. may be done by:
. calling us (if telephone privileges apply (1-888-737-3855)); or
. mailing the notice to our service office; or
. faxing the request to us (1-770-690-1900).
.. are made at the end of the next valuation period after we receive the
instruction; and
.. are not available if you have scheduled transfers from divisions.
POLICY LOANS
While the Policy is in effect and has a net surrender value, you may borrow
money from us with the Policy as the security for the policy loan.
.. The minimum policy loan is $500.
.. The maximum amount you may borrow is 90% of the net surrender value as of the
date we process the policy loan.
.. If you elect telephone privileges, you may request a policy loan of $100,000
or less by calling us at 1-888-737-3855. If you do not have telephone
privileges or are requesting a policy loan of more than $100,000, the request
must be made in writing.
.. Generally, policy loan proceeds are sent within five business days from the
date we receive the request (see GENERAL PROVISIONS - Delay of Payments). Loan
proceeds are sent to the owner's address of record.
LOAN ACCOUNT
When a policy loan is taken, a loan account is established. Units with a total
value equal to the amount of the loan are redeemed from the divisions. The
redemption proceeds are transferred to the loan account. You may instruct us on
the proportions to redeem from the divisions. If instructions are not provided,
the redemptions are taken in the same proportion as the allocation used for the
most recent monthly policy charge.
The loan account earns interest from the date of transfer. The loan account
interest rate is 4.00% per year. Interest accrues daily. Loan accounts are part
of our general account.
Interest is charged on the policy loan. During the first ten policy years, the
interest rate is 5.00% per year. After policy year ten, the interest rate is
4.30% per year. If coverage is extended beyond the maturity date, the interest
rate is 4.00% per year. Interest accrues daily and is due and payable at the end
of the policy year. If interest is not paid when due, it is added to the loan
amount. Adding unpaid interest to the loan amount causes additional units to be
redeemed from the division(s) and the redemption proceeds transferred to the
loan account. Redemptions are made in the same proportions as described above.
Outstanding policy loans and unpaid loan interest reduce the net policy value.
If the net policy value is less than the monthly policy charge on a monthly
date, the 61-day grace period provision applies (see POLICY TERMINATION AND
REINSTATEMENT - Policy Termination).
While the Policy is in force and before the insured dies, policy loans and loan
interest may be repaid, in whole or in part, as follows:
.. repayments are allocated to the division(s) in the proportions used for
allocation of premium payments; and
.. payments that we receive that are not designated as premium payments are
applied as loan repayments if a policy loan is outstanding.
A policy loan generally has a permanent effect on policy values. If a policy
loan had not been made, the policy value would reflect the investment experience
of the division(s). In addition, outstanding policy loans and unpaid loan
interest are subtracted from:
.. death proceeds at the death of the insured;
.. surrender value upon full surrender or termination of a Policy; and
.. maturity proceeds payable at maturity.
If the Policy lapses with an outstanding loan balance, there may be tax
consequences. Please consult a qualified tax advisor.
SURRENDERS
A request for any surrender must be in writing. The request must be signed by
all owners, irrevocable beneficiary(ies), if any, and any assignees.The
surrender is effective as of the end of the valuation period during which we
receive the written request for surrender.
Total and partial surrenders from the Policy are generally paid within five
business days of our receipt of the written request for surrender. Certain
delays in payment are permitted (see GENERAL PROVISIONS - Delay of Payments).
Full surrender
- --------------
The Policy may be surrendered on or before the maturity date while the Policy is
in effect. We will pay the net surrender value at the end of the valuation
period during which we receive the surrender request. If the full surrender is
within ten years of the policy date or a policy face amount increase, a
surrender charge is imposed. No adjustment is made to the net surrender value
for monthly policy charges deducted prior to a full surrender.
We reserve the right to require that the Policy be returned prior to making any
payment though this does not affect the net surrender value.
Partial surrender
- -----------------
After the first policy anniversary and prior to the maturity date, a part of the
net surrender value may be surrendered. The minimum amount of a partial
surrender is $500. The partial surrender may not be greater than 90% of the net
surrender value. A transaction fee of $25 is charged on each partial surrender
after the 2nd partial surrender in a policy year. The partial surrender may not
decrease the total face amount to less than $100,000. No surrender charge is
imposed on a partial surrender.
The policy value is reduced by the amount of the surrender plus any transaction
fee(s). We surrender units from the division(s) to equal the dollar amount of
the surrender request (plus any transaction fee). The surrender and transaction
fee, if any, is deducted from the division(s) according to the specified
surrender allocation percentages. If surrender allocation percentages are not
specified, we use the monthly policy charge allocation percentages.
If Death Benefit Option 1 is in effect and the death proceeds equal the total
face amount, the total face amount is reduced by the amount of the partial
surrender that is not deemed to be a preferred partial surrender. If the total
face amount had been increased, any reduction of the total face amount is made
on a last in, first out basis.
PREFERRED PARTIAL SURRENDER (AVAILABLE IF DEATH BENEFIT OPTION 1 IS IN EFFECT)
.. In any policy year, 5% of the net surrender value as of the end of the prior
policy year may be surrendered without a subsequent decrease in the total face
amount. Any amount surrendered in excess of 5% causes a reduction in the total
face amount. The 5% preferred partial surrender privilege is not cumulative from
year-to-year.
The maximum preferred partial surrender is equal to (a plus b) not to exceed (c)
where:
(a) is the amount of the surrender (including any transaction fee);
(b) is the amount of any preferred partial surrenders in the same policy
year; and
(c) is 5% of the net surrender value at the end of the prior policy year
(not to exceed $100,000 in any policy year and not to exceed $250,000 over
the life of the Policy).
If Death Benefit Option 2 is in effect, there is no reduction in the total face
amount upon a partial surrender.
If Death Benefit Option 3 is in effect and the death proceeds equal the total
face amount, the total face amount is reduced by the greater of (a) or (b)
where:
(a) is the amount by which the total partial surrenders exceed total
premiums paid*; and
(b) is zero.
If the total face amount had been increased, any reduction of the total face
amount is made on a last in, first out basis.
* Face amount reduction will be less if the face amount has already been
reduced due to a prior partial surrender.
DEATH PROCEEDS AND RIGHTS
DEATH PROCEEDS
If the insured dies before the maturity date, we pay death proceeds. We must
receive:
.. proof of the death of the insured;
.. Beneficiary's Statement (Claim Form)*
.. Trust Agreement (if the beneficiary is a trust)
* if the beneficiary is a corporation, the Claim Form must be signed by a
corporate officer and submitted with a copy of the Articles of Incorporation
or By-Laws indicating the authority of the officer's position and a Board
resolution providing the name of the officer currently authorized to execute
the Claim Form. The corporation must also submit a Certificate of Good
Standing or Certificate of Existence provided by the state of incorporation.
Payment is made to any assignee. The remainder is paid to the named
beneficiary(ies) under the designated death benefit option (see GENERAL
PROVISIONS - Beneficiary).
The payments are made in cash lump sum or under a benefit option selected by the
beneficiary(ies). Death proceeds are calculated as of the date of the insured's
death and include:
.. the death benefit described below;
.. minus outstanding policy loans and unpaid loan interest;
.. minus any overdue monthly policy charges if the insured died during a grace
period;
.. plus interest on the death proceeds as required by state law.
DEATH BENEFIT OPTION
The death benefit option is selected at the time of application. If a death
benefit option is not chosen, the Policy will be issued with Death Benefit
Option 1.
The three death benefit options available are:
.. Death Benefit Option 1 - the death benefit equals the greater of:
. the total face amount; or
. the amount found by multiplying the policy value by the applicable
percentage*.
.. Death Benefit Option 2 - the death benefit equals the greater of:
. the total face amount plus the policy value; or
. the amount found by multiplying the policy value by an applicable
percentage*.
.. Death Benefit Option 3 - the death benefit equals the greater of:
. the total face amount plus the greater of a) premiums paid less partial
surrenders or b) zero; or
. the amount found by multiplying the policy value by an applicable
percentage*.
* The applicable percentage tables are in Appendix D and are based on our
interpretation of Section 7702 of the Code as set forth in FEDERAL TAX
MATTERS - IRS Definition of Life Insurance.
Example: The following assumptions are made to demonstrate the use of the
Tables found in Appendix D.
Death Benefit Option: 1
Face Amount: $750,000
Policy Value: $650,000
Definition of Life Insurance Test: Guideline Premium/Cash Value
Corridor Test
Attained Age: 65
Risk Class: Class A
Applicable Percentage: 120%
Death Benefit = $780,000
If the definition of Life Insurance Test was the Cash Value
Accumulation Test, the applicable percentage would be 150.30%
(assuming the insured is a male) and the death benefit would be
$976,950.
CHANGE IN DEATH BENEFIT OPTION
The death benefit option may be changed prior to the insured's attained age 75.
The death benefit option may be changed on or after the first policy
anniversary. Up to two changes are allowed per policy year. The request must be
made in writing and approved by us. The effective date of the change will be the
monthly date that coincides with or next follows our approval. Changing the
death benefit option changes the future cost of insurance.
The option may not be changed from Death Benefit Option 1 to Death Benefit
Option 3 or from Death Benefit Option 2 to Death Benefit Option 3. We will
increase or decrease the total face amount so that the death benefit after the
change equals the death benefit immediately before the change.
CHANGING FROM DEATH BENEFIT OPTION 1 TO DEATH BENEFIT OPTION 2
We will decrease the total face amount. The amount of the decrease is equal
to the policy value on the effective date of the change. If there have been
increases in the total face amount, the decrease of total face amount will
be made on a last in, first out basis. Because the death benefit can
continue to increase under Death Benefit Option 2, we will require proof of
insurability. Cost of insurance charges will likely increase. This example
assumes that the policy face amount equals the total face amount.
--------------------------
- -------------------------------------------------------------------------------
TOTAL FACE AMOUNT DEATH BENEFIT POLICY VALUE
- -------------------------------------------------------------------------------
BEFORE THE CHANGE BEFORE THE CHANGE BEFORE THE CHANGE
- -------------------------------------------------------------------------------
$1,000,000 $1,000,000 $50,000
- -------------------------------------------------------------------------------
AFTER THE CHANGE AFTER THE CHANGE AFTER THE CHANGE
- -------------------------------------------------------------------------------
$950,000 $1,000,000 $50,000
($1,000,000 - $50,000) ($950,000+$50,000)
- -------------------------------------------------------------------------------
CHANGING FROM DEATH BENEFIT OPTION 2 TO DEATH BENEFIT OPTION 1
We will increase the total face amount. The amount of the increase is equal
to the policy value on the effective date of the change. The total face
amount increase will be in the same proportion as the policy face amount to
the total face amount. Because the death benefit will not continue to
increase under Death Benefit Option 1, no proof of insurability is required.
Cost of insurance charges will likely decrease. This example assumes that
the policy face amount equals the total face amount.
- -------------------------------------------------------------------------------
TOTAL FACE AMOUNT DEATH BENEFIT POLICY VALUE
- -------------------------------------------------------------------------------
BEFORE THE CHANGE BEFORE THE CHANGE BEFORE THE CHANGE
- -------------------------------------------------------------------------------
$1,000,000 $1,050,000 $50,000
($1,000,000+$50,000)
- -------------------------------------------------------------------------------
AFTER THE CHANGE AFTER THE CHANGE AFTER THE CHANGE
- -------------------------------------------------------------------------------
$1,050,000 $1,050,000 $50,000
($1,000,000 + $50,000)
- -------------------------------------------------------------------------------
CHANGING FROM DEATH BENEFIT OPTION 3 TO DEATH BENEFIT OPTION 1
We will increase the total face amount if the total premiums paid are
greater than total partial surrenders (including any transaction fees) as of
the effective date of the change. The increase will be in the same
proportion as the policy face amount is to the total face amount. Because
the death benefit will not continue to increase under Death Benefit Option
1, no proof of insurability is required. Cost of insurance charges will
likely decrease. This example assumes total premiums paid are $30,000, total
partial surrenders are $10,000 and the policy face amount equals the total
face amount.
-----------------------------
- -------------------------------------------------------------------------------
TOTAL FACE AMOUNT DEATH BENEFIT POLICY VALUE
- -------------------------------------------------------------------------------
BEFORE THE CHANGE BEFORE THE CHANGE BEFORE THE CHANGE
- -------------------------------------------------------------------------------
$1,000,000 $1,020,000 $50,000
($1,000,000+($30,000-$10,000))
- -------------------------------------------------------------------------------
AFTER THE CHANGE AFTER THE CHANGE AFTER THE CHANGE
- -----------------------------------------------------------------------------------
$1,020,000 $1,020,000 $50,000
($1,000,000 + ($30,000 -
$10,000))
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGING FROM DEATH BENEFIT OPTION 3 TO DEATH BENEFIT OPTION 2
We will either increase or decrease the total face amount by subtracting the policy value from the greater of a) premiums paid
less partial surrenders and b) zero. Because the death benefit can continue to increase under Death Benefit Option 2, we will
require proof of insurability. Cost of insurance charges will likely increase. This example assumes that total premiums paid are
$30,000, total partial surrenders are $10,000 and the policy face amount equals the total face amount.
-------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FACE AMOUNT DEATHBENEFIT POLICYVALUE
- -----------------------------------------------------------------------------------------------------------------------------------
BEFORE THE CHANGE BEFORETHECHANGE BEFORETHECHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
$1,000,000 $1,020,000 $50,000
($1,000,000+($30,000-$10,000))
- -----------------------------------------------------------------------------------------------------------------------------------
AFTER THE CHANGE AFTERTHECHANGE AFTERTHECHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
$970,000 $1,020,000 $50,000
($1,000,000 + ($30,000 - $10,000) - ($970,000+$50,000)
$50,000)
- -----------------------------------------------------------------------------------------------------------------------------------
MATURITY PROCEEDS
The maturity date is the policy anniversary where the insured's attained age is
100 and is shown on your current data pages. If the insured is living on the
maturity date and if the Extended Coverage Rider is not present, maturity
proceeds equal to the net surrender value are paid. The payment is either a cash
lump sum on the maturity date or under the benefit payment option you have
selected. After the payment, the Policy then terminates. If the Extended
Coverage Rider is present on the Policy, the maturity date will automatically be
extended to the date of the insured's death (as explained in GENERAL PROVISIONS
- - Optional Insurance Benefits).
ADJUSTMENT OPTIONS
Increase in total face amount
- -----------------------------
An increase in total face amount may be requested at any time provided that the
monthly policy charges are not being waived under a rider. The minimum increase
in total face amount is $10,000.
The request must be made on an adjustment application. The application must be
signed by the owner(s) and the insured. If the request is not approved, no
changes are made to the Policy.
We will approve the request if:
.. the insured is alive at the time of the request; and
.. the attained age of the insured is 75 or less at the time of the request; and
.. we receive evidence satisfactory to us that the insured is insurable under our
underwriting guidelines in place at the time of the request; and
.. the death proceeds minus the policy value do not exceed our maximum limits as
defined under our underwriting guidelines then in effect.
The increase in total face amount is in a risk classification determined by us.
The adjustment is effective on the monthly date on or next following our
approval of the request. No examination period applies to an increase in total
face amount.
Any payment made with the adjustment application is held in our general account
without interest. If we approve the adjustment, the amount of the premium
payment being held minus the premium expense charge is moved to the divisions on
the effective date of the adjustment. The current premium allocation percentages
are used to make this allocation. Approval of an adjustment can take from one to
ninety days.
The cost of insurance charge will increase in the event of an increase in the
total face amount. If there is insufficient value to pay the higher charges
after an increase in total face amount, the Policy will lapse unless the death
benefit guarantee rider is in effect. The entire Policy would be at risk of
lapsing, not just the incremental increase in face amount.
Decrease in total face amount
- -----------------------------
On or after the first policy anniversary, a decrease in the total face amount
may be requested. No transaction fee is imposed on decreases in the total face
amount. A decrease in face amount lowers the cost of insurance charges. A
decrease is requested as follows:
.. the request must be made on an adjustment application;
.. the application must be signed by the owner(s);
.. monthly policy charges are not being waived under a waiver rider; and
.. the decrease may not reduce the total face amount below $100,000.
A decrease may not be allowed if the decrease would cause a refund of premium
and/or the distribution of the policy value in order to maintain compliance with
the limits required by the Code relating to the definition of life insurance.
CHARGES AND DEDUCTIONS
We make certain charges and deductions to support operation of the Policy and
the separate account. Some charges are deducted from premium payments when they
are received. Other charges are deducted on a monthly basis while transaction
fees are deducted at the time of the transaction.
PREMIUM EXPENSE CHARGE
CURRENT PREMIUM EXPENSE CHARGE (AS A % OF PREMIUM PAID)*
----------------
YEARS SINCE ISSUE OR ADJUSTMENT SALES CHARGE** STATE AND LOCAL TAXES FEDERAL TAXES TOTAL
------------------------------- -------------- --------------------- ------------- -----
1 through 5 6.50% 2.20% 1.25% 9.95%
more than 5 years 6.50 2.20 1.25 9.95%
*Deducted from premiums paid in each period. The premium expense charge
also applies to premiums attributable to a face amount increase.
**The sales charge on premiums in excess of Target Premium is reduced to
5.0% in years 1 through 5.
The sales charge is intended to pay us for distribution expenses. These expenses
include commissions paid to registered representatives, printing of prospectuses
and sales literature, and advertising. Sales charges received in any policy year
are not necessarily related to actual distribution expenses incurred in that
year. We expect that the majority of the expenses are incurred in the early
years of a Policy and that any deficit is made up during the life of the Policy.
If distribution expenses are more than the sales charge (including the sales
charge portion of the surrender charge), the deficit is made up from our other
assets or surplus in our general account.
MONTHLY POLICY CHARGE
The monthly policy charge is intended to cover certain charges and expenses
incurred in connection with the Policy. Deductions are made up of:
.. a charge for the cost of insurance;
.. a charge for any optional benefit added by rider(s); and
.. an asset based charge.
On the policy date and each monthly date thereafter, we deduct the monthly
policy charge from the policy value. The deduction is made using the current
monthly policy charge allocation percentages. The allocation percentages may be:
.. the same as allocation percentages for premium payments;
.. determined on a prorated basis; or
.. determined by any other allocation method which we agree upon.
If you do not designate monthly policy charge allocation percentages, they will
be the same as the allocation percentages for premium payments. The total of the
allocation percentages must equal 100. Allocation percentages may be changed
without charge. A request for an allocation change is effective on the next
monthly date after the request is received. If we cannot follow the instructions
because of insufficient value in any division, the monthly policy charge is
deducted on a prorated basis.
COST OF INSURANCE CHARGE
The monthly cost of insurance charge is (a) multiplied by ((b) minus (c)) where:
(a) is the cost of insurance rate (described below) divided by 1,000;
(b) is the death benefit at the beginning of the policy month; and
(c) is the policy value at the beginning of the policy month calculated as
if the monthly policy charge was zero.
Monthly cost of insurance rates can range from $0.04 to $1,000.00 per $1,000 of
total face amount.
The cost of insurance rate at issue and for any underwritten total face amount
increase is based on the gender*, issue age and age at adjustment, duration
since issue and since adjustment, smoking status, and risk classification of the
insured. We determine the rate based on our expectation as to investment
earnings, expenses, mortality and
persistency experience. Changes in the cost of insurance rates apply to all
individuals of the same age, gender* and risk classification. The rate for the
total face amount will never exceed the rate shown in the Table of Guaranteed
Maximum Cost of Insurance Rates in the Policy. The guaranteed maximum cost of
insurance rate is based on the gender*, attained age and risk classification of
the insured.
* The cost of insurance rate for Policies issued in states which require
unisex pricing or in connection with certain employment related insurance
and benefit plans is not based on the gender of the insured.
ASSET BASED CHARGE
The expense risk we assume is that expenses incurred in issuing and
administering the Policy are greater than we estimated. The Company expects to
make a profit from this charge to the extent it is not needed to provide
benefits and pay expenses under the Policies.
Each month, we deduct a charge for these risks. The annual rate of the charge,
as a percentage of the net policy value, is 0.40% in the first ten policy years
and 0.30% after the tenth policy year. We reserve the right to increase the
annual rate but guarantee that the maximum annual rate will not exceed 0.60%. If
we increase the annual rate, the increase will only apply to policies issued on
or after the date of the increase.
SURRENDER CHARGE
Surrender charges vary based on the issue age, target premium of the policy and
the number of policy years since issue or adjustment. The charge applies only
during the first ten policy years unless there is a policy face amount increase.
A policy face amount increase has its own surrender charge period that begins on
the adjustment date. The total surrender charge on the policy is the sum of the
surrender charges for the policy face amount at issue and each policy face
amount increase. The surrender charge is not affected by any decrease in policy
face amount or any change in policy face amount resulting from a change of death
benefit options.
The surrender charge compensates us for expenses relating to the sale of the
Policy. These include commissions, advertising and printing of prospectuses and
sales literature. The surrender charge also reimburses us for expenses incurred
in issuing the Policy. These expenses include processing the application
(primarily underwriting) and setting up records. This charge is intended to
cover the average anticipated issue expenses for all Policies. There may not be
a direct relationship between the amount of the charge for any given Policy and
the amount of expenses attributable to that Policy.
The surrender charge on an early surrender or Policy lapse is significant. As a
result, you should purchase a Policy only if you have the financial capacity to
keep it in force for a substantial period of time.
Surrender charge percentage
- ---------------------------
The surrender charge is (a) multiplied by (b) where:
(a) is the target premium shown in Appendix B;
(b) is the percentage shown below which varies by issue age (or age at the
time of a face amount increase):
DEFERRED SALES CHARGE (AS % OF TARGET PREMIUM)
-----------------------------------------------------------------------------------
POLICY YEAR AGES 20-65* AGES 66-70* AGES 71-75*
-----------------------------------------------------------------------------------
1 75 75 55
-----------------------------------------------------------------------------------
2 75 70 50
-----------------------------------------------------------------------------------
3 75 65 45
-----------------------------------------------------------------------------------
4 70 60 40
-----------------------------------------------------------------------------------
5 60 50 35
-----------------------------------------------------------------------------------
6 50 45 30
-----------------------------------------------------------------------------------
7 40 35 25
-----------------------------------------------------------------------------------
8 30 30 20
-----------------------------------------------------------------------------------
9 20 20 15
-----------------------------------------------------------------------------------
10 10 10 5
-----------------------------------------------------------------------------------
* Age since issue or adjustment
TRANSACTION CHARGES
A transaction fee of $25 is charged on each partial surrender after the 2nd
partial surrender in a policy year. We reserve the right to impose a transfer
fee of up to $25 on each unscheduled transfer after the first unscheduled
transfer in a policy month.
The transaction fee, if any, and transfer fee, if any, are deducted from the
division(s) according to the specified surrender allocation percentages. If
surrender allocation percentages are not specified, we use the monthly policy
charge allocation percentages.
OTHER CHARGES
The assets of each division are used to purchase shares in a corresponding
mutual fund at net asset value. The net asset value of the mutual fund reflects
management fees and operating expenses already deducted from the assets of the
mutual fund. Current management fees and operating expenses for each mutual fund
are shown in the section of the Summary entitled Charges and Deductions - Other
Charges.
SPECIAL PROVISIONS
Charges and deductions may be reduced for Policies purchased under an
arrangement where the size or nature of the group results in savings in sales,
underwriting, administration or other costs. Reductions may be available to
employees, officers, directors, agents and immediate family members of the group
arrangement. Reductions are made under our rules in effect on the date a Policy
application is approved and are based on certain criteria (size of group,
expected number of participants, anticipated premium payments, total assets
under management for the Policy owner).
We may modify, on a uniform basis, both the amounts of reductions and the
criteria for qualification. Reductions in these charges will not discriminate
unfairly against any person, including the affected owners and all other policy
owners with policies funded with the separate account.
In addition, groups may apply for flexible underwriting. If flexible
underwriting is granted, the cost of insurance charge may increase because of
higher anticipated mortality experience. Flexible underwriting programs
currently available include: batch underwriting, simplified issue underwriting
and guaranteed issue underwriting.
POLICY TERMINATION AND REINSTATEMENT
POLICY TERMINATION
If the net policy value on any monthly date is less than the monthly policy
charge, a 61-day grace period begins. The grace period begins when we send a
notice of pending lapse. The notice:
.. is mailed to your last known post office address;
.. shows the minimum payment required to keep the Policy in force; and
.. shows the 61-day period during which we will accept the required payment.
The minimum required payment is (a) plus ((b) divided by (c)) where:
(a) is the amount by which the net policy value is less than zero before
deducting the month policy charge on the monthly date preceding the grace
period;
(b) is three monthly policy charges; and
(c) is 1 minus the maximum premium expense charge.
The maximum premium expense charge is shown in CHARGES AND DEDUCTIONS - Premium
Expense Charge.
Example:
Policy Value - $5,000
Loan Balance - $4,000
Net Policy Value - $1,000 (Policy Value - Loan Balance)
Monthly Policy Charge - $1,500
Maximum Premium Expense Charge - 9.95%
Minimum required payment is $0 + ((3 x $1,500)/(1 - .0995)) = $4,997.22
This payment is intended to reimburse us for the monthly policy charges during
the grace period. To cover past due monthly policy charges, if the grace period
ends before we receive the minimum payment, we keep any remaining value in the
Policy.
The Policy is in force during a grace period. If we do not receive the required
payment, the Policy terminates as of the end of the grace period. If the insured
dies during a grace period, policy proceeds are reduced by:
.. all monthly policy charges due and unpaid at the death of the insured; and
.. any outstanding policy loans and unpaid loan interest.
The Policy also terminates when:
.. the Policy is surrendered;
.. death proceeds are paid; or
.. maturity proceeds are paid.
When the Policy terminates, all of the owner's Policy rights and privileges end.
Neither partial surrenders nor policy loans may be made during a grace period.
REINSTATEMENT
Subject to certain conditions, a Policy that terminated because of insufficient
policy value may be reinstated. The Policy may only be reinstated:
.. prior to the maturity date and while the insured is alive;
.. upon our receipt of satisfactory evidence of insurability (according to our
underwriting guidelines then in effect);
.. if payment of a reinstatement premium is made; and
.. if the application for reinstatement is mailed to us within three years of the
Policy termination (in some states, we must provide a longer period of time
for Policy reinstatement).
The reinstatement premium is calculated using the formulas found above in POLICY
TERMINATION AND REINSTATEMENT - Policy Termination. If a policy loan or loan
interest was unpaid when the Policy terminated, the policy loan must be
reinstated or repaid (loan interest is not collected for the period the Policy
was terminated).
We do not require payment of monthly policy charges during the period the Policy
was terminated. Reinstatement is effective on the next monthly date following
our approval of the reinstatement application. Premiums received with the
reinstatement application are held in our general account without interest until
the reinstatement date. They are allocated to the selected division(s) on the
reinstatement date. We will use the premium allocation percentages in effect at
the time of termination of the Policy unless you provide new allocation
instructions. The reinstated Policy has the same policy date as the original
Policy. Your rights and privileges as owner are restored upon reinstatement.
OTHER MATTERS
VOTING RIGHTS
We vote division shares at shareholder meetings of the underlying mutual funds.
We follow the voting instructions received from people having the voting
interest in the division shares.
You have a voting interest under a Policy. You have one vote for each $100 of
policy value in the division. Fractional votes are allocated for amounts less
than $100. The number of votes on which you have the right to instruct us is
determined as of a date established by the mutual fund for setting the
shareholders eligible to vote.
According to procedures adopted by the mutual fund, voting instructions may be
solicited by a written proxy statement before a shareholder meeting. We vote
other underlying mutual fund shares, for which no voting instructions are
received, in the same proportion as the shares for which we receive voting
instructions. Underlying mutual fund shares held in our general account are
voted in proportion to instructions that are received with respect to the
participating policies.
If we determine, under applicable law, that underlying mutual fund shares need
not be voted according to the instructions received, we may vote underlying
mutual fund shares held in the separate account in our own right.
We may, when required by state insurance regulatory authorities, disregard
voting instructions. This may be done if the instructions would require shares
to be voted to:
.. change a subclassification or investment objective of the underlying mutual
fund;
.. disapprove an investment advisory contract of the underlying mutual fund; or
.. approve changes initiated by an owner in the investment policy or investment
advisor of the underlying mutual fund if we reasonably disapprove of the
changes.
The change would be disapproved only if:
.. the proposed change is contrary to state law;
.. prohibited by state regulatory authorities; or
.. we determine the change is inconsistent with the investment objectives of the
division.
STATEMENT OF VALUES
An annual statement is sent each year. The statement will show:
.. current death benefit amount;
.. current policy value and net surrender value;
.. all premiums paid since the last statement;
.. all charges since the last statement;
.. any outstanding policy loans and unpaid loan interest;
.. any partial surrenders since the last statement;
.. the number of units and unit value;
.. total value of each of the divisions;
.. designated beneficiary(ies); and
.. all riders included in the Policy.
You will also receive a statement with the same information as of the end of
each calendar quarter. At any time, you may request a current statement by
telephoning 1-888-737-3855.
We also send the reports required by the Investment Company Act of 1940 (as
amended).
SERVICES AVAILABLE VIA THE TELEPHONE
If you elect telephone privileges, instructions for the following transactions
may be given to us via the telephone:
.. change in allocations of future premium payments;
.. change in allocation of the monthly policy charge;
.. change to APR instructions;
.. change to DCA instructions;
.. unscheduled division transfers; and
.. requesting a policy loan (of $100,000 or less).
Instructions:
.. may be given by calling us at 1-888-737-3855 between 8a.m. and 5 p.m. Eastern
Time on any day that the NYSE is open;
.. must be received by us before the close of the NYSE (generally 4:00 p.m.
Eastern Time) to be effective the day they are given; and
.. are effective the next business day if not received until after the close of
the NYSE.
Although neither the separate account nor the Company is responsible for the
authenticity of telephone transaction instructions, the separate account and the
Company reserve the right to refuse telephone instructions. YOU ARE LIABLE FOR A
LOSS RESULTING FROM A FRAUDULENT TELEPHONE INSTRUCTION THAT WE REASONABLY
BELIEVE IS GENUINE. We use reasonable procedures to assure instructions are
genuine. If the procedures are not followed, we may be liable for loss due to
unauthorized or fraudulent transactions. The procedures for telephone
instructions include: recording all telephone instructions and requesting
personal identification information (name, phone number, social security number,
birth date, etc.).
GENERAL PROVISIONS
THE CONTRACT
The entire contract is made up of the Policy and all applications, amendments,
riders and endorsements attached to the Policy, current data pages, copies of
any supplemental applications, amendments, endorsements and revised Policy or
data pages which are mailed to you. No statement, unless made in an application,
is used to void a Policy (or void an adjustment in the case of an adjustment
application). Only our corporate officers can agree to change or waive any
provisions of a Policy. Any change or waiver must be in writing and signed by an
officer of the Company.
OPTIONAL INSURANCE BENEFITS
Subject to certain conditions, one or more optional insurance benefits may be
added to the Policy. These include but are not limited to:
.. supplemental benefit rider (yearly renewable term)
.. extended coverage rider
.. death benefit guarantee rider (only available at the time the Policy is issued
and is not available in conjunction with the supplemental benefit rider)
.. change of insured rider
.. accounting benefit rider
Detailed information concerning optional insurance benefits may be obtained from
an authorized agent or our home office. NOT ALL OPTIONAL INSURANCE BENEFITS ARE
AVAILABLE IN ALL STATES. The cost, if any, of an optional insurance benefit is
deducted as part of the monthly policy charge.
Supplemental Benefit Rider
- --------------------------
This rider is intended to allow for flexibility in funding design. For an
additional charge, this rider provides an additional face amount and an
additional death benefit. The use of this rider disqualifies the use of the
Death Benefit Guarantee Rider.
Death Benefit Guarantee Rider
- -----------------------------
This rider guarantees the Policy will not lapse before the insured's attained
age 85 provided that the cumulative death benefit guarantee premium requirement
is met. This rider is automatically made a part of the Policy unless the
Supplemental Benefit Rider is used.
There are no policy charges for the death benefit guarantee rider. Rather, a
required minimum premium level is defined for the rider benefit to be provided.
The death benefit guarantee premium requirement is met if (a) is greater than or
equal to (b) where:
(a) is the sum of all premiums paid less any partial surrenders and any
outstanding policy loans and loan interest; and
(b) is the sum of the death benefit guarantee monthly premiums from the
policy date to the most recent monthly date.
The most recent death benefit guarantee premium is shown on the current data
page.
The death benefit guarantee premium is based on the issue age, gender (where
permitted by law), smoking status and risk classification of the insured. This
premium may change if:
.. the total face amount is changed;
.. a rider is added or deleted; or
.. an adjustment is made to the Policy.
As a result of a change, an additional premium may be required to satisfy the
new death benefit guarantee premium requirement.
Payment of this premium will keep your policy in force to the insured's age 85
provided that the cumulative death benefit guarantee premium requirement is met.
However, payment of this minimum premium does not allow you to take advantage of
the potential for building up a significant account value. When your death
benefit guarantee rider terminates, it may be necessary for you to pay
significantly higher premiums in order to maintain your contract.
Accounting Benefit Rider
- ------------------------
For an additional charge, this rider provides if the Policy is surrendered, any
surrender charge which would otherwise apply will be waived. This waiver of
surrender charge does not apply to a Policy which is surrendered for the purpose
of replacing it with a policy from another company, including Code Section 1035
exchanges. Our approval, under our then current underwriting guidelines, is
required to add this rider.
Extended Coverage Rider
- -----------------------
This rider, which is automatically included on each Policy, allows the Policy to
remain in force beyond the maturity date. Under the rider, at maturity of the
Policy, the maturity date is automatically extended to the date of the insured's
death. There is no charge for this rider and at maturity the Policy
automatically changes to Death Benefit Option 1 and no future adjustments are
allowed.
MISSTATEMENT OF AGE OR GENDER
If the age or, where applicable, gender of the insured has been misstated, we
adjust the death benefit payable under the Policy to reflect the amount that
would have been payable at the correct age and gender.
ASSIGNMENT
You may assign the Policy. Each assignment is subject to any payments made or
action taken by the Company prior to our notification of the assignment. We
assume no responsibility for the validity of any assignment.
An assignment must be made in writing and filed with us at our service office.
The irrevocable beneficiary(ies), if any, must authorize any assignment in
writing. Your rights, as well as those of the beneficiary(ies), are subject to
any assignment on file with us.
OWNERSHIP
You may change the ownership designation at any time. 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 the
Policy be sent to us so that we can record the change.
Unless changed, the owner is as named in the application. The owner may exercise
every right and privilege of the Policy, subject to the rights of any
irrevocable beneficiary(ies) and any assignee(s).
All rights and privileges of ownership of a Policy end if the Policy is
surrendered, death or maturity proceeds are paid, or if the grace period ends
without our receiving the payment required to keep the Policy in force.
If an owner dies before the Policy terminates, the surviving owner(s), if any,
succeeds to that person's ownership interest, unless otherwise specified. If all
owners die before the Policy terminates, the Policy passes to the estate of the
last surviving owner. If the owner is not a natural person and is no longer in
existence, the insured becomes the owner unless otherwise required by law. With
our consent, you may specify a different arrangement for contingent ownership.
BENEFICIARY
You have the right to name a beneficiary(ies) and contingent beneficiary(ies).
This may be done as part of the application process or by sending us a written
request. Unless an irrevocable beneficiary has been named, the beneficiary
designation may be changed by sending us a written request. After approval, the
change is effective as of the date the request for change was signed. We reserve
the right to require that the Policy be sent to us so that we can record the
change.
If no beneficiary(ies) survives the insured, the death proceeds are paid to the
owner or the estate of the owner.
BENEFIT INSTRUCTIONS
While the insured is alive, you may give us instructions for payment of death
proceeds under one of the benefit options of the Policy. The instructions or
changes to the instructions must be in writing. If you change the
beneficiary(ies), prior benefit instructions are revoked.
BENEFIT PAYMENT OPTIONS
While the insured is alive, you may arrange for death proceeds to be paid in a
lump sum or under one of several fixed benefit payment options. These choices
are also available if the Policy is surrendered or matures.
.. Special Benefit Arrangement - A specially designed benefit payment option may
be arranged with our approval.
.. Life Income - We pay income during a person's lifetime. A minimum guaranteed
period may be used. If the payee dies after payments begin but before the end
of any guaranteed period, the remaining payments are paid to a payee named
under the benefit option.
.. Joint and Survivor Life Income - We pay income during the lifetime of two
people and continue until the death of the survivor. If both persons die after
payments begin but before the end of any guaranteed period, the remaining
payments are paid to a payee named under the benefit option.
Interest at a rate set by us, but never less than required by state law, will be
applied to calculate the amount of the payment.
RIGHT TO EXCHANGE POLICY
The Policy may be exchanged for a new universal life insurance policy on the
life of the insured which is made available by the Company for this purpose. The
new policy will not be a term insurance policy or a variable life insurance
policy. Evidence of insurability will not be required.
The exchange must be made during the first 24 months from the policy date while
the Policy is in force and not in a grace period. The exchange is effective upon
our receipt of written notice. This Policy then terminates. The new policy has
the same policy date as this Policy.
The new policy has the same death benefit as this Policy unless required to be
higher in order to qualify as "life insurance" as defined in Section 7702 of the
Code, as amended. The new policy is based on the same issue age, gender (if
applicable) and risk classification as this Policy.
No additional charge is made for this exchange privilege. Any outstanding policy
loan and unpaid loan interest must be repaid or transferred to the new policy.
NON-PARTICIPATING POLICY
The Policies do not share in any divisible surplus of the Company.
INCONTESTABILITY
After a period of two years from the policy date, we will not contest the
insurance coverage provided by the Policy. Any total face amount increase has
its own two-year contestability period that begins on the effective date of the
adjustment. In many states, the time limit in the incontestability period does
not apply to fraudulent misrepresentations.
SUICIDE
Death proceeds are not paid if the insured dies by suicide, while sane or
insane, within two years of the policy date (or two years from the date of total
face amount increase with respect to such increase). In the event of the suicide
of the insured within two years of the policy date, our only liability is a
refund of premiums paid, without interest, minus any outstanding policy loans
and unpaid loan interest and partial surrenders. In the event of suicide within
two years of a total face amount increase, our only liability with respect to
that increase is a refund of the cost of insurance for the increase. This amount
will be paid to the beneficiary(ies).
DELAY OF PAYMENTS
Payment upon return of the Policy, full or partial surrender, policy loan,
death, maturity or the transfer to or from a division are generally made within
five days after we receive instructions in a form acceptable to us. This period
may be shorter where required by law. However, the payments may be deferred
during any period when the right to sell mutual 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:
.. trading on the NYSE is restricted as determined by the SEC or when the NYSE is
closed for other than weekends and holidays, or
.. an emergency exists, as determined by the SEC, as a result of which:
. disposal by a fund of securities owned by it is not reasonably practicable;
. it is not reasonably practicable for a fund to fairly determine the value of
its net assets; or
. the SEC permits suspension.
If payments are delayed and your instruction is not canceled by written
instruction, the amount of the transaction is determined the first business day
following the expiration of the permitted delay. The transaction is made within
five days thereafter.
In addition, payments on surrenders attributable to a premium payment made by
check may be delayed up to 15 days. This permits payment to be collected on the
check.
MARKET TIMING DISCLOSURE
The Policy does not permit excessive trading or market timing. Market timing
activity can disrupt management strategy of the underlying mutual funds and
increase expenses, which are borne by all Policy owners. We reserve the right to
reject excessive exchanges or purchases if we deem that the trade would disrupt
the management of the separate account, any division or any underlying mutual
fund. In addition, we may suspend or modify transfer privileges at any time to
prevent transactions that could disadvantage other Policy owners. These
modifications could include, but not be limited to:
.. requiring a minimum time period between each transfer;
.. not accepting transfer requests from someone providing them for multiple
Policies for which he or she is not the owner; or
.. limiting the dollar amount that a Policy owner may transfer at any one time.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
We reserve the right to make certain changes if, in our judgement, they best
serve your interests or are appropriate in carrying out the purpose of the
Policy. Any changes are 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 we may make include:
.. transfer assets in any division to another division;
.. add, combine or eliminate divisions; or
.. substitute the shares of a division for shares in another division:
. if shares of a division are no longer available for investment; or
. if in our judgement, investment in a division becomes inappropriate
considering the purposes of the division.
If we eliminate or combine existing divisions or transfer assets from one
division to another, you may change allocation percentages and transfer any
value in an affected division to another division(s) without charge. You may
exercise this exchange privilege until the later of 60 days after a) the
effective date of the change, or b) the date you receive notice of the options
available. You may only exercise this right if you have an interest in the
affected division(s).
OFFICERS AND DIRECTORS OF PRINCIPAL MANAGEMENT CORPORATION
The officers and directors of the investment advisor, Principal Management
Corporation, are shown below. This list includes some of the same people
(designated by *), who are serving in the same capacities as officers and
directors of the underwriter, Princor Financial Services Corporation
("Princor"). The principal business address for each officer and director is:
Principal Financial Group, Des Moines, Iowa 50392.
*JOHN EDWARD ASCHENBRENNER Director
*PATRICIA ANN BARRY Assistant Corporate Secretary
*CRAIG LAWRENCE BASSETT Treasurer
*MICHAEL JON BEER Executive Vice President
*MICHAEL THOMAS DALEY Director
*RALPH CRAIG EUCHER Director and President
*ARTHUR SIGLIN FILEAN Senior Vice President
*DENNIS PAUL FRANCIS Director
*PAUL NORMAN GERMAIN Vice President - Mutual Fund Operations
*ERNEST HAROLD GILLUM Vice President - Product Development
Senior Vice President and Corporate
*JOYCE NIXSON HOFFMAN Secretary
Senior Vice President - Marketing and
*JOHN RANDALL LEPLEY Distribution
LAYNE ALLAN RASMUSSEN Controller - Mutual Funds
*MICHAEL DENNIS ROUGHTON Counsel
*JAMES FRANKLIN SAGER Vice President
Assistant Vice President - Registered
*JEAN BETSY SCHUSTEK Products
*KAREN ELIZABETH SHAFF Director
Senior Vice President and Chief Financial
*KIRK LLOYD TIBBETTS Officer
*LARRY DONALD ZIMPLEMAN Director
PRINCIPAL LIFE INSURANCE COMPANY:
EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
JOHN EDWARD ASCHENBRENNER Executive Vice President
PAUL FRANCIS BOGNANNO Senior Vice President
GARY MERLYN CAIN Senior Vice President
MICHAEL THOMAS DALEY Executive Vice President
CHARLES ROBERT DUNCAN Senior Vice President
DENNIS PAUL FRANCIS Senior Vice President
Executive Vice President and Chief Financial
MICHAEL HARRY GERSIE Officer
THOMAS JOHN GRAF Senior Vice President
ROBB BRYAN HILL Senior Vice President
JOYCE NIXSON HOFFMAN Senior Vice President and Corporate Secretary
DANIEL JOSEPH HOUSTON Senior Vice President
ELLEN ZISLIN LAMALE Senior Vice President and Chief Actuary
Senior Vice President and Chief Investment
JULIA MARIE LAWLER Officer
JAMES PATRICK MCCAUGHAN Executive Vice President
MARY AGNES O'KEEFE Senior Vice President
KAREN ELIZABETH SHAFF Senior Vice President and General Counsel
ROBERT ALLEN SLEPICKA Senior Vice President
NORMAN RAUL SORENSEN Senior Vice President
Senior Vice President and Chief Information
CARL CHANSON WILLIAMS Officer
LARRY DONALD ZIMPLEMAN Executive Vice President
DIRECTORS
Principal Life Insurance Company is managed by a Board of Directors. The
directors of the Company, their positions with the Company, including Board
Committee memberships, and their principal occupation during the last five
years, are as follows:
NAME, POSITIONS AND PRINCIPAL OCCUPATION DURING LAST 5 YEARS
------OFFICES------ ----------------------------------------
-------
President and Chief Executive Officer of AT&T
Consumer since April 2001. Executive Vice
BETSY JANE BERNARD President - National Mass Markets of Qwest
Director Communications, formerly US West, 2000-2001;
Chair, Nominating Executive Vice President - Retail Markets, US
Committee West, 1998-2000; President and Chief Executive
Officer, US WEST Long Distance, 1997-1998;
President and Chief Operating Officer, Avirnex,
July 1997 - December 1997; President and Chief
Executive Officer, Pacific Bell Communications,
Pacific Telesis, 1995-1997.
Executive Vice President and Chief Marketing
Officer of Office Depot, Inc. since 2002.
JOCELYN CARTER-MILLER Corporate Vice President and Chief Marketing
Director Officer, Motorola, Inc., 1999-2002; Vice
Member, Audit Committee President, 1998-1999; Vice President and General
Manager, 1997-1998.
GARY EDWARD COSTLEY Chairman and Chief Executive Officer of
Director International Multifoods Corporation since 2001.
Member, Human Resources Chairman, President and Chief Executive Officer,
Committee 1997-2001.
DAVID JAMES DRURY Retired. Chairman, Principal Life Insurance
Director Company 2000-2002. Chairman and Chief Executive
Member, Executive Officer, 1995-2000.
Committee
CHARLES DANIEL GELATT,
JR.
Director
Member, Executive President, NMT Corporation since 1986.
Committee
Member, Human Resources
Committee
JOHN BARRY GRISWELL
Director, Chairman of Chairman of the Board, President and Chief
the Board Executive Officer of Principal Life Insurance
Chair, Executive Company since 2002. President and Chief Executive
Committee Officer, 2000-2002; President, 1998-2000;
Executive Vice President, 1996-1998.
Executive Vice President and Chief Financial
SANDRA LYNN HELTON Officer of Telephone & Data Systems, Inc. since
Director 1998. Vice President and Corporate Controller,
Member, Audit Committee Compaq Computer Corporation, 1997-1998. Prior
thereto, Senior Vice President and Treasurer of
Corning Incorporated, 1994-1997.
CHARLES SAMUEL JOHNSON Retired. Executive Vice President, DuPont,
Director 1999-2000; Chairman, President and Chief
Member, Human Resources Executive Officer, Pioneer Hi-Bred International,
Committee Inc., 1996-1999.
WILLIAM TURNBALL KERR
Director Chairman, President & Chief Executive Officer of
Member, Executive Meredith Corporation since 1998. President and
Committee Chief Executive Officer, 1997-1998; President and
Chair, Human Resources Chief Operating Officer, 1994-1997.
Committee
Chairman of the Board of W.W. Grainger, Inc.
RICHARD LEE KEYSER since 1997. Chief Executive Officer, 1995 to
Director present.
Member, Audit Committee
VICTOR HENDRIK
LOEWENSTEIN Senior Director, Egon Zehnder International since
Director 2001. Partner, 1999-2001; Managing Partner,
Member, Nominating 1979-1999.
Committee
FEDERICO FABIAN PENA Managing Director of Vestar Capital Partners
Director since 2000. Senior Advisor of Vestar Capital
Member, Nominating Partners, 1998-2000. Prior thereto, Secretary,
Committee U.S. Department of Energy, 1996-1998.
President and Chief Executive Officer of The
DONALD MITCHELL STEWART Chicago Community Trust since 2000. Senior
Director Program Officer and Special Advisor to the
Member, Nominating President at the Carnegie Corporation of New
Committee York, 1999-2000. Prior thereto, President, The
College Board, 1986-1999.
ELIZABETH EDITH TALLETT President and Chief Executive Officer of Marshall
Director Pharmaceuticals, Inc. since 2001. President and
Chair, Audit Committee Chief Executive Officer, Galenor Inc. 1999-2001
Member, Executive and also President & Chief Executive Officer of
Committee Dioscor, Inc. since 1996.
DISTRIBUTION OF THE POLICY
We intend to sell the Policies in all jurisdictions where we are licensed. The
Policies will be sold by licensed insurance agents who are also registered
representatives of broker-dealers, registered with the SEC under the Securities
Exchange Act of 1934, who are members of the National Association of Securities
Dealers, Inc. (NASD).
The Policies will be distributed by the general distributor, Princor, which is
an affiliate of ours. Princor was incorporated under the laws of Iowa on May 1,
1968. The distribution contract (which was executed on August 6, 2002) may
be terminated by either party upon 60 day notice. Princor was incorporated in
the State of Iowa in 1968, and is also a securities broker-dealer registered
with the SEC as well as a member of the NASD. The Policies may also be sold
through other broker-dealers authorized by Princor and applicable law to do so.
Registered representatives of such broker-dealers may be paid on a different
basis than described below.
For Policies sold through Princor, commissions generally will be no more than
50% of premium received in the first policy year (or the first year following an
adjustment) up to the target premium. Commissions range from 0% to 3% of
premiums received after the first policy year. In addition, a service fee of up
to 2% is paid on premiums received after the first policy year. Expense
allowances may be paid to agents and brokers based on premiums received.
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 the Commissioner's
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.
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 that are subject
to change at any time. This summary is not comprehensive and is not intended as
tax advice. While we reserve the right to change the Policy to assure it
continues to qualify as life insurance for tax purposes, we cannot make any
guarantee regarding the future tax treatment of any Policy. You should consult a
qualified tax adviser about the tax implications of taking action under a
Policy.
TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
We are taxed as an insurance company under subchapter L of the Code. The
separate account is not a separate taxable entity. Its operations are taken into
account by us in determining our tax liability.
CHARGES FOR TAXES
We impose a federal tax charge equal to 1.25% of premiums received under the
Policy to compensate us for the federal income tax liability we incur by reason
of receiving those premiums. We believe that this charge is reasonable in
relation to the increased tax burden the Company incurs as a result of Section
848 of the Code. No other charge is currently made to the separate account for
federal income taxes of the Company that may be attributable to the separate
account. Periodically, we review the appropriateness of charges to the separate
account for federal income taxes. In the future, a charge may be made for
federal income taxes incurred by us and attributable to the separate account
increasing the charges paid by policy owners.
Under current law, we may incur state or local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant. If there
is a material change attributable to state or local taxes, we reserve the right
to charge the separate account for the portion of taxes, if any, attributable to
the separate account. An increase in separate account expenses would adversely
impact investment performance.
DIVERSIFICATION STANDARDS
The Policy should qualify as a life insurance contract as long as the underlying
investments for the Policy satisfy diversification requirements of Section
817(h) of the Code.
IRS DEFINITION OF LIFE INSURANCE
The Policy should qualify as a life insurance contract as long as it satisfies
either the guideline premium/cash value corridor test or the cash value
accumulation test as defined under Section 7702 of the Code. One of these tests
is chosen on the application. If a test is not chosen, the Policy will comply
with the guideline premium/cash value corridor test. Once a test is chosen, it
cannot be changed on the Policy.
The guideline premium/cash value corridor test places limitations on the amount
of premium payments that may be made and on policy values that can accumulate
relative to the death benefit. Guideline premium limits are determined when the
Policy is issued and can vary by the death benefit option chosen. Guideline
premium limits will likely change due to any adjustment to the Policy.
If at any time a premium is paid which would result in total premiums exceeding
the current guideline premium limits, we accept only that portion of the premium
which would make the total premiums equal the guideline premium limits.
The cash value accumulation test does not place limitations on the amount of
premium payments, however limits the amount of policy values that can accumulate
relative to the death benefit.
To satisfy either test, the ratio of the policy value to the death benefit must
be at least as great as the applicable percentage shown in Appendix D. As the
policy value increases, the minimum death benefit may be required to increase.
Because the cost of insurance you pay is based in part on the amount of the
death benefit, an increase in the death benefit increases the cost of insurance.
As compared to the cash value accumulation test, the guideline premium/cash
value corridor test generally:
.. has smaller applicable percentages
.. lower minimum death benefit
.. lower cost of insurance charges
.. better policy value growth.
The smaller applicable percentages lead to a lower minimum death benefit and
thus lower cost of insurance charges. Lower charges result in better policy
value growth.
This may not be the result in all cases. The specifics of each policy determine
which test is more suitable. Illustrations using each of the tests will help you
determine which test meets your objectives. An illustration may be obtained from
your registered representative or by calling 1-800- 247-9988.
The table below demonstrates the minimum death benefit based on the test chosen.
Policy value assumptions may not be realistic. Net amount at risk is the
difference between the death benefit that would payable if the person insured by
the Policy died (discounted by 1.0024663) and the policy value of your Policy.
The example below is based on the following:
.. The person, a male, insured by the policy is age 45 at the time the policy was
issued and dies at the beginning of the sixth policy year (attained age 50)
.. Face amount is $100,000
.. Death Benefit Option 1
.. Policy value at the date of death is $25,000
.. The minimum death benefit under the guideline premium/cash value corridor test
is $46,250 (assuming an applicable percentage of 185% x policy value)
.. The minimum death benefit under the cash value accumulation test is $61,820
(assuming an applicable percentage of 247.28%)
THE DEATH BENEFIT PAYABLE IS THE
LARGER OF THESE TWO AMOUNTS
---------------------------------
NET AMOUNT AT
DEATH MINIMUM RISK USED IN
BENEFIT DEATH CALCULATING THE COST
CHOSEN BENEFIT OF INSURANCE CHARGE
------- ------- --------------------
Guideline
Premium/Cash Value
Corridor Test $100,000 $46,250 $74,753.98
Cash Value
Accumulation Test $100,000 $61,820 $74,753.98
Here's the same example, but with a policy value of $75,000. Because the policy
value has increased, the minimum death benefit is now:
.. $138,750 for the guideline premium/cash value corridor test
.. $185,460 for the cash value accumulation test.
THE DEATH BENEFIT PAYABLE IS THE
LARGER OF THESE TWO AMOUNTS
---------------------------------
NET AMOUNT AT
DEATH MINIMUM RISK USED IN
BENEFIT DEATH CALCULATING THE COST
CHOSEN BENEFIT OF INSURANCE CHARGE
------- ------- --------------------
Guideline
Premium/Cash Value
Corridor Test $100,000 $138,750 $ 63,408.64
Cash Value
Accumulation Test $100,000 $185,460 $110,003.73
Keep in mind that cost of insurance charges, which affect your Policy's value,
increase with the amount of the death benefit, as well as over time. The cost of
insurance is charged at a rate per $1,000 of the discounted net amount at risk.
As the net amount at risk increases, the cost of insurance increases. Policy
value also varies depending on the performance of the investment options in your
Policy.
All transactions will be subject to the limits as defined under Section 7702 of
the Code. A transaction may not be allowed, or an increase in face amount may be
required, if the transaction would cause a refund of premium and/or distribution
of the policy value in order to maintain compliance with the Section 7702
limits.
MODIFIED ENDOWMENT CONTRACT STATUS
Section 7702A of the Code sets forth a classification of life insurance policies
known as "Modified Endowment Contracts." Policy loans and partial surrenders
from a policy that is classified as a modified endowment contract are taxable as
ordinary income to the owner in an amount equal to the lesser of the amount of
the loan/partial surrender or the excess of policy value over the owner's
investment in the Policy. Additionally, taxable distributions may be subject to
a federal income tax penalty of 10%.
Modified endowment contract classification may be avoided by limiting the amount
of premiums paid under the Policy. In the absence of your instructions, we will
refund all or part of the premium payment that would make the Policy a modified
endowment contract.
POLICY SURRENDERS AND PARTIAL SURRENDERS
A surrender or lapse of the Policy may have income tax consequences. Upon
surrender, the owner is not taxed on the surrender value except for the amount,
if any, that exceeds the gross premiums paid less the untaxed portion of any
prior surrenders. The amount of any policy loan, upon surrender or lapse, is
added to the net surrender value and treated, for this purpose, as if it had
been received. A loss incurred upon surrender is generally not deductible. The
tax consequences of a surrender may differ if the proceeds are received under
any benefit payment option.
A full surrender of the Policy will, and a partial surrender may, be included in
your gross income to the extent that the distribution exceeds the investment in
the Policy. Partial surrenders generally are not taxable unless the total of
such surrenders exceeds total premiums paid to the date of partial surrender
less the untaxed portion of any prior partial surrenders. During the first 15
policy years, an amount may be taxable prior to your tax-free recovery of your
investment in the Policy if the partial surrender results in or is necessitated
by a reduction in death benefits. A qualified tax advisor should be consulted
regarding the tax consequences of any partial surrender during the first 15
policy years.
The increase in policy value of the Policy is not included in gross income
unless and until there is a full surrender or partial surrender under the
Policy. Transfers between the division(s) are not considered as distributions
from the Policy and would not be considered taxable income.
POLICY LOANS AND LOAN INTEREST
Loans received under the Policy are generally recognized as loans for tax
purposes and are not considered to be distributions subject to tax. Interest
paid to us as a result of a policy loan may or may not be deductible depending
on a number of factors. Due to the complexity of these factors, you should
consult a qualified tax advisor as to the deductibility of interest paid on
policy loans. If the Policy is a modified endowment contract, a policy loan
and/or capitalized loan interest is taxable to an amount equal to the lesser of
the amount of the loan or the excess of policy value over the owner's investment
in the Policy.
If the Policy lapses with an outstanding loan balance, there may be tax
consequences. Please consult a qualified tax advisor.
CORPORATE ALTERNATIVE MINIMUM TAX
Ownership of a Policy by certain corporations may affect the owner's exposure to
the corporate alternative minimum tax. In determining whether it is subject to
alternative minimum tax, the corporate owner must make two computations. First,
the corporation must take into account a portion of the current year's increase
in the built-in gain in its corporate owned policies. Second, the corporation
must take into account a portion of the amount by which the death benefits
received under any Policy exceed the sum of a) the premiums paid on that Policy
in the year of death, and b) the corporation's basis in the Policy (as measured
for alternative minimum tax purposes) as of the end of the corporation's tax
year immediately preceding the year of death. The corporate alternative minimum
tax does not apply to S Corporations. Such tax also does not apply to "Small
Corporations" as defined by Section 55(c) of the Code. Corporations with gross
receipts of $5,000,000 or less for their first taxable year after 1996, with
gross receipts not exceeding $7,500,000 after the first taxable year, will meet
this definition.
EXCHANGE OR ASSIGNMENT OF POLICIES
A change of Policy, or an exchange or assignment of a Policy may have tax
consequences. An assignment or exchange may result in taxable income to the
transferring owner. For complete information with respect to Policy assignments
and exchanges, a qualified tax advisor should be consulted.
WITHHOLDING
Withholding is generally required on certain taxable distributions under
insurance contracts. In the case of periodic payments, the withholding is at
graduated rates. With respect to non-periodic distributions, withholding is a
flat rate of 10%. You may elect to have either non-periodic or periodic payments
made without withholding unless your tax identification number has not been
furnished to us or if the IRS has notified us that the number you furnished is
incorrect.
OTHER TAX ISSUES
Federal estate taxes and state and local estate, inheritance and other taxes may
become due depending on applicable law and your circumstances or the
circumstances of the Policy beneficiary(ies) if you or the insured dies. Any
person concerned about the estate implications of the Policy should consult a
qualified tax advisor.
GENERAL INFORMATION
EMPLOYEE BENEFIT PLANS
The United States Supreme Court has held that optional annuity benefits under a
qualified deferred compensation plan cannot vary on the basis of gender. Polices
are available for use in connection with employment related insurance or benefit
plans which do not vary between male and female insured of a particular age and
underwriting classification. A qualified tax advisor should be consulted on
these matters.
LEGAL OPINIONS
Legal matters, including our right to issue Policies under Iowa law, have been
passed on by Karen E. Shaff, Senior Vice President and General Counsel.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the separate account is a party
or which would materially affect the separate account.
OTHER VARIABLE INSURANCE CONTRACTS
The Company currently offers other variable life policies that participate in
the separate account. In the future, we may designate additional group or
individual variable life policies as participating in the separate account.
RESERVATION OF RIGHTS
The Company reserves the right to amend or terminate the special plans described
in this prospectus. Such plans include preauthorized premium payments, DCA and
APR. You would be notified of any such action to the extent required by law.
CUSTOMER INQUIRIES
Questions should be directed to:
Principal Financial Group Service Center
P.O.Box 724447
Atlanta GA 31139
Phone: 1-888-737-3855
Fax: 1-770-690-1900
INDEPENDENT AUDITORS
The financial statements of the Principal Life Insurance Company Variable Life
Separate Account and the consolidated financial statements of the Principal Life
Insurance Company are included in this prospectus. Those statements have been
audited by Ernst & Young LLP, independent auditors, 801 Grand Avenue, Des
Moines, Iowa 50309, for the periods indicated in their reports.
FINANCIAL STATEMENTS
The consolidated financial statements of Principal Life Insurance Company which
are included in this prospectus should be considered only as it relates to our
ability to meet our obligations under the Policy. They do not relate to
investment performance of the assets held in the separate account.
Principal Benefit Variable Universal Life Insurance Investment Company Act File
Number 333-89446
APPENDIX A - INVESTMENT DIVISIONS
AIM V.I. AGGRESSIVE GROWTH DIVISION
INVESTS IN: AIM V.I. Aggressive Growth Fund
INVESTMENT ADVISOR: A I M Advisors, Inc.
INVESTMENT OBJECTIVE: seeks long-term capital growth from
securities of companies expected to achieve accelerated earnings
growth.
AIM V.I. INTERNATIONAL GROWTH DIVISION
INVESTS IN: AIM V.I. International Growth Fund
INVESTMENT ADVISOR: A I M Advisors, Inc.
INVESTMENT OBJECTIVE: pursues long-term capital growth from
international equities considered to have strong earnings
momentum.
AIM V.I. PREMIER EQUITY DIVISION
INVESTS IN: AIM V.I. Premier Equity Fund
INVESTMENT ADVISOR: A I M Advisors, Inc.
INVESTMENT OBJECTIVE: seeks long-term growth of capital. Income is
a secondary objective. The Fund invests primarily in equity
securities.
AMERICAN CENTURY VP INCOME & GROWTH DIVISION
INVESTS IN: American Century Variable Portfolios, Inc. VP Income &
Growth
INVESTMENT ADVISOR: American Century Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks dividend growth, current income and
appreciation. The account will seek to achieve its investment
objective by investing in common stocks.
AMERICAN CENTURY VP INTERNATIONAL DIVISION
INVESTS IN: American Century Variable Portfolios, Inc. VP
International
INVESTMENT ADVISOR: American Century Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks long-term capital growth around the
world by investing in stocks of foreign companies.
AMERICAN CENTURY VP VALUE DIVISION
INVESTS IN: American Century Variable Portfolios, Inc. VP Value
INVESTMENT ADVISOR: American Century Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks capital growth over time and,
secondarily, income by investing primarily in equity securities.
AMERICAN CENTURY VP ULTRA DIVISION
INVESTS IN: American Century Variable Portfolios, Inc. VP Ultra
INVESTMENT ADVISOR: American Century Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks long-term capital growth by investing
primarily in stocks of U.S. companies.
BERGER IPT MIDCAP VALUE DIVISION
INVESTS IN: Berger Investment Product Trust MidCap Value Fund
INVESTMENT ADVISOR: Berger Financial Group LLC
INVESTMENT OBJECTIVE: seeks long-term capital appreciation by
investing in mid-sized companies whose stock prices have been
beaten down to low levels but still offer significant upside
potential.
DIP CORE VALUE DIVISION
INVESTS IN: Dreyfus Investment Portfolios Core Value Portfolio
INVESTMENT ADVISOR: The Boston Company through a sub-advisory
agreement
INVESTMENT OBJECTIVE: seeks long-term capital growth as a primary
objective, with current income as a secondary objective. Invests
primarily in equity securities of large-cap value companies.
DREYFUS VIF APPRECIATION DIVISION
INVESTS IN: Dreyfus Investment Portfolios Appreciation Portfolio
INVESTMENT ADVISOR: Fayez Sarofim & Co. through a sub-advisory
agreement
INVESTMENT OBJECTIVE: seeks long-term capital growth by investing
in common stocks.
DREYFUS VIF SMALL CAP DIVISION
INVESTS IN: Dreyfus Investment Portfolios SmallCap Portfolio
INVESTMENT ADVISOR: The Dreyfus Corporation
INVESTMENT OBJECTIVE: seeks capital appreciation by investing in
the stocks of companies with small market capitalizations.
DREYFUS SOCIALLY RESPONSIBLE GROWTH DIVISION
INVESTS IN: Dreyfus Socially Responsible Growth Portfolio
INVESTMENT ADVISOR: The Dreyfus Corporation
INVESTMENT OBJECTIVE: seeks capital growth by investing primarily
in large-cap stocks that meet certain financial as well as
social criteria.
DIP FOUNDERS DISCOVERY DIVISION
INVESTS IN: Dreyfus Investment Portfolios Founders Discovery
Portfolio
INVESTMENT ADVISOR: Founders Asset Management LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: seeks capital appreciation. To pursue this
goal, the portfolio invests primarily in equity securities of
small, U.S. based companies which are characterized as "growth"
companies.
DIP FOUNDERS GROWTH DIVISION
INVESTS IN: Dreyfus Investment Portfolios Founders Growth
Portfolio
INVESTMENT ADVISOR: Founders Asset Management LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: seeks capital appreciation by investing in
stocks of small-cap growth companies.
DREYFUS VIF QUALITY BOND DIVISION
INVESTS IN: Dreyfus Investment Portfolios Quality Bond Portfolio
INVESTMENT ADVISOR: The Dreyfus Corporation
INVESTMENT OBJECTIVE: seeks to maximize current income consistent
with the preservation of capital and maintenance of liquidity by
investing in fixed-income securities.
FIDELITY VIP ASSET MANAGER DIVISION
INVESTS IN: Fidelity VIP II Asset Manager Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks high total return with reduced risk
over the long-term by allocating its assets among stocks, bonds
and short-term instruments.
FIDELITY VIP CONTRAFUND DIVISION
INVESTS IN: Fidelity VIP II Contrafund Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks long-term capital appreciation by
investing primarily in common stocks.
FIDELITY VIP EQUITY-INCOME DIVISION
INVESTS IN: Fidelity VIP Equity-Income Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks reasonable income by investing
primarily in income-producing equity securities.
FIDELITY VIP GROWTH DIVISION
INVESTS IN: Fidelity VIP Growth Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks long-term capital appreciation by
investing primarily in common stocks.
FIDELITY VIP HIGH INCOME DIVISION
INVESTS IN: Fidelity VIP High Income Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks a high level of current income by
investing primarily in high yielding, lower quality,
fixed-income securities, while also considering growth of
capital.
FIDELITY VIP MIDCAP DIVISION
INVESTS IN: Fidelity VIP MidCap Portfolio
INVESTMENT ADVISOR: Fidelity Management and Research Company
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
investing in equity securities of companies with medium market
capitalizations.
FRANKLIN INCOME SECURITIES DIVISION
INVESTS IN: Franklin Income Securities Portfolio
INVESTMENT ADVISOR: Franklin Templeton Investments
INVESTMENT OBJECTIVE: Seeks to maximize income, while maintaining
prospects for capital appreciation. The portfolio invests in
debit and equity securities, including lower-rated "junk bonds."
May also invest in foreign securities, including emerging
markets.
FRANKLIN MUTUAL DISCOVERY DIVISION
INVESTS IN: Franklin Mutual Discovery Portfolio
INVESTMENT ADVISOR: Franklin Templeton Investments
INVESTMENT OBJECTIVE: seeks long-term capital appreciation. The
Fund invests primarily in common stocks of U.S. and foreign
companies the manager believes are undervalued.
FRANKLIN MUTUAL SHARES DIVISION
INVESTS IN: Franklin Mutual Shares Portfolio
INVESTMENT ADVISOR: Franklin Templeton Investments
INVESTMENT OBJECTIVE: seeks capital appreciation with income as a
secondary goal by emphasizing investments in equity securities
of larger and medium-sized companies
FRANKLIN RISING DIVIDENDS DIVISION
INVESTS IN: Franklin Rising Dividends Portfolio
INVESTMENT ADVISOR: Franklin Templeton Investments
INVESTMENT OBJECTIVE: seeks long-term capital appreciation by
investing primarily in financially sound companies that have
paid rising dividends.
FRANKLIN SMALL CAP VALUE SECURITIES DIVISION
INVESTS IN: Franklin Small Cap Value Securities Portfolio
INVESTMENT ADVISOR: Franklin Templeton Investments
INVESTMENT OBJECTIVE: Seeks long term total return. The portfolio
invests primarily in securities of companies which the manager
believes are selling substantially below the underlying value of
the assets or private market value.
INVESCO VIF - CORE EQUITY DIVISION
INVESTS IN: INVESCO VIF - Core Equity Fund
INVESTMENT ADVISOR: INVESCO Funds Group
INVESTMENT OBJECTIVE: seeks high current income, with a secondary
goal of long-term capital growth. The Fund invests in a mix of
equity securities and debt securities.
INVESCO VIF - DYNAMICS DIVISION
INVESTS IN: INVESCO VIF - Dynamics Fund
INVESTMENT ADVISOR: INVESCO Funds Group
INVESTMENT OBJECTIVE: seeks long-term capital growth by investing
primarily in equity securities.
INVESCO VIF - HEALTH SCIENCES DIVISION
INVESTS IN: INVESCO VIF - Health Sciences Fund
INVESTMENT ADVISOR: INVESCO Funds Group
INVESTMENT OBJECTIVE: seeks long-term capital growth. The Fund
invests primarily in equity securities.
INVESCO VIF - SMALL COMPANY GROWTH DIVISION
INVESTS IN: INVESCO VIF - Small Company Growth Fund
INVESTMENT ADVISOR: INVESCO Funds Group
INVESTMENT OBJECTIVE: seeks long-term capital growth by investing
primarily in small-capitalization companies.
INVESCO VIF - TECHNOLOGY DIVISION
INVESTS IN: INVESCO VIF - Technology Fund
INVESTMENT ADVISOR: INVESCO Funds Group
INVESTMENT OBJECTIVE: seeks long-term capital growth by investing
primarily in equity securities and equity related instruments of
companies engaged in technology related industries.
JANUS ASPEN AGGRESSIVE GROWTH DIVISION
INVESTS IN: Janus Aspen Series Aggressive Growth Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital. It
pursues its objective by investing primarily in common stocks
selected for their growth potential, and normally invests at
least 50% of its equity assets in medium-sized companies.
JANUS ASPEN BALANCED DIVISION
INVESTS IN: Janus Aspen Series Balanced Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital,
consistent with preservation of capital and balanced by current
income.
JANUS ASPEN CORE EQUITY DIVISION
INVESTS IN: Janus Aspen Series Core Equity Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
normally investing at least 80% of its assets in equity
securities selected for their growth potential.
JANUS ASPEN FLEXIBLE INCOME DIVISION
INVESTS IN: Janus Aspen Series Flexible Income Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks to obtain maximum total return,
consistent with preservation of capital by primarily investing
in a wide variety of income producing securities such as
corporate bonds and notes, government securities and preferred
stock.
JANUS ASPEN INTERNATIONAL GROWTH DIVISION
INVESTS IN: Janus Aspen Series International Growth Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
investing at least 65% of total assets in securities of issuers
from at least five different countries, excluding the United
States.
JANUS ASPEN STRATEGIC VALUE DIVISION
INVESTS IN: Janus Aspen Series Strategic Value Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
investing primarily in common stocks with the potential for
long-term growth of capital using a "value" approach.
JANUS ASPEN WORLDWIDE GROWTH DIVISION
INVESTS IN: Janus Aspen Series Worldwide Growth Portfolio
INVESTMENT ADVISOR: Janus Capital Management LLC
INVESTMENT OBJECTIVE: seeks long-term growth of capital in a
manner consistent with the preservation of capital by investing
primarily in common stocks of companies of any size throughout
the world.
JP MORGAN BOND DIVISION
INVESTS IN: JP Morgan Bond
INVESTMENT ADVISOR: JP Morgan Fleming Asset Management
INVESTMENT OBJECTIVE: seeks to provide a steady stream of current
income and to maintain liquidity.
JP MORGAN SMALLCAP DIVISION
INVESTS IN: JP Morgan Small Company
INVESTMENT ADVISOR: JP Morgan Fleming Asset Management
INVESTMENT OBJECTIVE: seeks long-term growth of capital from small
company stocks
MFS VIT EMERGING GROWTH DIVISION
INVESTS IN: MFS VIT Emerging Growth
INVESTMENT ADVISOR: Massachusetts Financial Services Company
INVESTMENT OBJECTIVE: seeks emerging growth companies for
long-term growth of capital.
MFS VIT MIDCAP GROWTH DIVISION
INVESTS IN: MFS VIT MidCap Growth
INVESTMENT ADVISOR: Massachusetts Financial Services Company
INVESTMENT OBJECTIVE: seeks long-term growth of capital from
mid-capitalization company stocks.
MFS VIT NEW DISCOVERY DIVISION
INVESTS IN: MFS VIT New Discovery
INVESTMENT ADVISOR: Massachusetts Financial Services Company
INVESTMENT OBJECTIVE: seeks long-term growth potential from small
company stocks.
MFS VIT VALUE DIVISION
INVESTS IN: MFS VIT Value
INVESTMENT ADVISOR: Massachusetts Financial Services Company
INVESTMENT OBJECTIVE: seeks undervalued income producing stocks
with capital appreciation potential.
NEUBERGER BERMAN AMT GUARDIAN DIVISION
INVESTS IN: Neuberger Berman AMT Guardian
INVESTMENT ADVISOR: Neuberger Berman Management Inc.
INVESTMENT OBJECTIVE: seeks long-term growth of capital and,
secondarily, current income by primarily investing in stocks of
long-established companies considered to be undervalued in
comparison to stocks of similar companies.
BOND DIVISION
INVESTS IN: Principal Variable Contracts Fund - Bond Account
INVESTMENT ADVISOR: Principal Management Corporation
INVESTMENT OBJECTIVE: to provide as high a level of income as is
consistent with preservation of capital and prudent investment
risk.
CAPITAL VALUE DIVISION
INVESTS IN: Principal Variable Contracts Fund - Capital Value
Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to provide long-term capital appreciation
and secondarily growth 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.
EQUITY GROWTH DIVISION
INVESTS IN: Principal Variable Contracts Fund - Equity Growth
Account
INVESTMENT ADVISOR: Morgan Stanley Asset Management through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to provide long-term capital appreciation by
investing primarily in growth-oriented common stocks of medium
and large capitalization U.S. corporations and, to a limited
extent, foreign corporations.
GOVERNMENT SECURITIES DIVISION
INVESTS IN: Principal Variable Contracts Fund - Government
Securities Account
INVESTMENT ADVISOR: Principal Capital Income Investors, LLC
through a sub-advisory agreement
INVESTMENT OBJECTIVE: to seek a high level of current income,
liquidity and safety of principal.
GROWTH DIVISION
INVESTS IN: Principal Variable Contracts Fund - Growth Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek growth of capital. The Account seeks
to achieve its objective through the purchase primarily of
common stocks, but the Account may invest in other securities.
INTERNATIONAL DIVISION
INVESTS IN: Principal Variable Contracts Fund - International
Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital by
investing in a portfolio of equity securities domiciled in any
of the nations of the world.
INTERNATIONAL SMALLCAP DIVISION
INVESTS IN: Principal Variable Contracts Fund - International
SmallCap Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital. The
Account will attempt to achieve its objective by investing
primarily in equity securities of non-U.S. companies with
comparatively smaller market capitalizations.
LARGECAP BLEND DIVISION
INVESTS IN: Principal Variable Contracts Fund - LargeCap Blend
Account
INVESTMENT ADVISOR: Federated Investment Management Company
through a sub-advisory agreement
INVESTMENT OBJECTIVE: seeks long-term growth of capital.
LARGECAP GROWTH DIVISION
INVESTS IN: Principal Variable Contracts Fund - LargeCap Growth
Account
INVESTMENT ADVISOR: Janus Capital Management LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
investing primarily in equity securities of growth companies.
LARGECAP VALUE DIVISION
INVESTS IN: Principal Variable Contracts Fund - LargeCap Value
Account
INVESTMENT ADVISOR: Alliance Capital Management LP through its
Bernstein Investment Research and Management unit through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital.
MIDCAP DIVISION
INVESTS IN: Principal Variable Contracts Fund - MidCap Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to achieve capital appreciation by investing
primarily in securities of emerging and other growth-oriented
companies.
MIDCAP GROWTH DIVISION
INVESTS IN: Principal Variable Contracts Fund - MidCap Growth
Account
INVESTMENT ADVISOR: The Dreyfus Corporation through a sub-advisory
agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital. The
Account will attempt to achieve its objective by investing
primarily in growth stocks of medium market capitalization
companies.
MIDCAP GROWTH EQUITY DIVISION
INVESTS IN: Principal Variable Contracts Fund - MidCap Growth
Equity Account
INVESTMENT ADVISOR: Turner Investment Partners, Inc. through a
sub-advisory agreement
INVESTMENT OBJECTIVE: seeks to achieve long-term growth of capital
by investing primarily in medium capitalization U.S. companies
with strong earnings growth potential.
MIDCAP VALUE DIVISION
INVESTS IN: Principal Variable Contracts Fund - MidCap Value
Account
INVESTMENT ADVISOR: Neuberger Berman Management, Inc. through a
sub-advisory agreement.
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
investing primarily in equity securities of companies with value
characteristics and medium market capitalizations.
MONEY MARKET DIVISION
INVESTS IN: Principal Variable Contracts Fund - Money Market
Account
INVESTMENT ADVISOR: Principal Management Corporation
INVESTMENT OBJECTIVE: to seek 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.
REAL ESTATE DIVISION
INVESTS IN: Principal Variable Contracts Fund - Real Estate
Account
INVESTMENT ADVISOR: Principal Management Corporation
INVESTMENT OBJECTIVE: to seek to generate a high total return. The
Account will attempt to achieve its objective by investing
primarily in equity securities of companies principally engaged
in the real estate industry.
SMALLCAP DIVISION
INVESTS IN: Principal Variable Contracts Fund - SmallCap Account
INVESTMENT ADVISOR: Invista Capital Management, LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital. The
Account will attempt to achieve its objective by investing
primarily in equity securities of both growth and value oriented
companies with comparatively smaller market capitalizations.
SMALLCAP GROWTH DIVISION
INVESTS IN: Principal Variable Contracts Fund - SmallCap Growth
Account
INVESTMENT ADVISOR: Berger Financial Group LLC through a
sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital. The
Account will attempt to achieve its objective by investing
primarily in equity securities of growth companies with
comparatively smaller market capitalizations.
SMALLCAP VALUE DIVISION
INVESTS IN: Principal Variable Contracts Fund - SmallCap Value
Account
INVESTMENT ADVISOR: J.P. Morgan Investment Management, Inc.
through a sub-advisory agreement
INVESTMENT OBJECTIVE: to seek long-term growth of capital by
investing primarily in equity securities of small companies with
value characteristics and comparatively smaller market
capitalizations.
PUTNAM VT GROWTH & INCOME DIVISION
INVESTS IN: Putnam VT Growth & Income Fund
INVESTMENT ADVISOR: Putnam Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks capital growth and current income by
investing mainly in common stocks of U.S. companies.
PUTNAM VT INTERNATIONAL GROWTH DIVISION
INVESTS IN: Putnam VT International Growth Fund
INVESTMENT ADVISOR: Putnam Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks capital appreciation by investing
mainly in common stocks of companies outside the U.S.
PUTNAM VT VOYAGER DIVISION
INVESTS IN: Putnam VT Voyager Fund
INVESTMENT ADVISOR: Putnam Investment Management, Inc.
INVESTMENT OBJECTIVE: seeks capital appreciation by investing
primarily in common stocks of U.S. companies.
VANGUARD VIF BALANCED DIVISION
INVESTS IN: Vanguard VIF Balanced Portfolio
INVESTMENT ADVISOR: Wellington Management Company
INVESTMENT OBJECTIVE: seeks a reasonable level of income with
conservation of capital. The Portfolio invests primarily in
common stocks of large and medium size companies.
VANGUARD VIF EQUITY INDEX DIVISION
INVESTS IN: Vanguard VIF Equity Index Portfolio
INVESTMENT ADVISOR: Vanguard Quantitative Equity Group
INVESTMENT OBJECTIVE: seeks long-term growth of capital and income
to match the performance of a broad-based market index of stocks
of large U.S. companies.
VANGUARD VIF MIDCAP INDEX DIVISION
INVESTS IN: Vanguard VIF MidCap Index Portfolio
INVESTMENT ADVISOR: Vanguard Quantitative Equity Group
INVESTMENT OBJECTIVE: seeks long-term growth of capital by
attempting to match the performance of a broad-based market
index of medium size U.S. Companies.
WELLS FARGO VT ASSET ALLOCATION DIVISION
INVESTS IN: Wells Fargo VT Asset Allocation Fund
INVESTMENT ADVISOR: Wells Capital Management Incorporated through
a sub-advisory agreement
INVESTMENT OBJECTIVE: seeks to earn long-term total return
consistent with reasonable risk. The Fund invests in equity and
fixed-income securities in varying proportions, with an emphasis
on equity securities.
WELLS FARGO VT EQUITY INCOME DIVISION
INVESTS IN: Wells Fargo VT Equity Income Fund
INVESTMENT ADVISOR: Wells Capital Management Incorporated through
a sub-advisory agreement
INVESTMENT OBJECTIVE: seeks to provide long-term capital
appreciation and above average dividend income. The Fund invests
in common stocks of large U.S. companies.
WELLS FARGO VT LARGE COMPANY GROWTH DIVISION
INVESTS IN: Wells Fargo VT Large Company Growth Fund
INVESTMENT ADVISOR: Peregrine Capital Management, Inc. through a
sub-advisory agreement
INVESTMENT OBJECTIVE: seeks to provide long-term capital
appreciation. The Fund invests in common stocks of large U.S.
companies.
APPENDIX B - ILLUSTRATIONS
Illustration 1 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING CURRENT CHARGES Death Benefit Option 1
(All States)
- ------------------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ------------------ ----------------- -----------------
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
11 298,343 1,000,000 1,000,000 1,000,000
12 334,260 1,000,000 1,000,000 1,000,000
13 371,973 1,000,000 1,000,000 1,000,000
14 411,571 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,000,000
20 694,385 1,000,000 1,000,000 1,359,488
25 1,002,269 1,000,000 1,000,000 2,274,815
30 1,395,216 1,000,000 1,118,145 3,594,114
- ----------------------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
-------------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ------------------
1 21,000 17,043 18,099 19,156
2 43,050 33,501 36,670 39,968
3 66,203 49,355 55,712 62,591
4 90,513 64,728 75,367 87,345
5 116,038 79,672 95,714 114,515
6 142,840 94,143 116,735 144,310
7 170,982 108,254 138,581 177,142
8 200,531 121,989 161,276 213,329
9 231,558 135,318 184,831 253,218
10 264,136 148,202 209,254 297,191
11 298,343 160,690 234,723 345,970
12 334,260 172,570 261,033 399,779
13 371,973 183,739 288,150 459,162
14 411,571 196,906 318,542 526,630
15 453,150 209,652 350,204 601,347
20 694,385 266,105 529,684 1,114,334
25 1,002,269 310,170 755,008 1,961,048
30 1,395,216 337,986 1,044,996 3,358,985
- --------------------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
--------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- --------------- --------------- ------------------
1 21,000 6,311 7,367 8,423
2 43,050 22,768 25,938 29,235
3 66,203 38,623 44,980 51,858
4 90,513 54,711 65,350 77,328
5 116,038 71,086 87,128 105,929
6 142,840 86,988 109,580 137,155
7 170,982 102,530 132,857 171,418
8 200,531 117,696 156,983 209,036
9 231,558 132,456 181,969 250,356
10 264,136 146,771 207,823 295,760
11 298,343 160,690 234,723 345,970
12 334,260 172,570 261,033 399,779
13 371,973 183,739 288,150 459,162
14 411,571 196,906 318,542 526,630
15 453,150 209,652 350,204 601,347
20 694,385 266,105 529,684 1,114,334
25 1,002,269 310,170 755,008 1,961,048
30 1,395,216 337,986 1,044,996 3,358,985
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
Illustration 3 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING CURRENT CHARGES Death Benefit Option 2
(All States)
- -----------------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ------------------ ----------------- -----------------
1 21,000 1,017,029 1,018,084 1,019,139
2 43,050 1,033,445 1,036,609 1,039,901
3 66,203 1,049,219 1,055,556 1,062,413
4 90,513 1,064,467 1,075,056 1,086,978
5 116,038 1,079,236 1,095,175 1,113,855
6 142,840 1,093,480 1,115,883 1,143,224
7 170,982 1,107,308 1,137,318 1,175,465
8 200,531 1,120,697 1,159,481 1,210,850
9 231,558 1,133,604 1,182,355 1,249,659
10 264,136 1,145,976 1,205,911 1,292,189
11 298,343 1,157,830 1,230,258 1,339,016
12 334,260 1,168,927 1,255,125 1,390,016
13 371,973 1,179,129 1,280,383 1,446,049
14 411,571 1,191,794 1,309,505 1,510,622
15 453,150 1,203,930 1,339,617 1,581,701
20 694,385 1,255,033 1,504,607 2,059,378
25 1,002,269 1,288,648 1,695,722 2,833,850
30 1,395,216 1,297,829 1,910,446 4,090,690
- ---------------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
-------------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ------------------
1 21,000 17,029 18,084 19,139
2 43,050 33,445 36,609 39,901
3 66,203 49,219 55,556 62,416
4 90,513 64,467 75,056 86,978
5 116,038 79,236 95,175 113,855
6 142,840 93,480 115,883 143,224
7 170,982 107,308 137,318 175,465
8 200,531 120,697 159,481 210,850
9 231,558 133,604 182,355 249,659
10 264,136 145,976 205,911 292,189
11 298,343 157,830 230,258 339,016
12 334,260 168,927 255,125 390,200
13 371,973 179,129 280,383 446,049
14 411,571 191,794 309,505 510,622
15 453,150 203,930 339,617 581,701
20 694,385 255,033 504,607 1,059,378
25 1,002,269 288,648 695,722 1,833,850
30 1,395,216 297,829 910,446 3,090,690
- --------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
--------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- --------------- --------------- ------------------
1 21,000 6,296 7,351 8,407
2 43,050 22,713 25,877 29,168
3 66,203 38,486 44,824 51,681
4 90,513 54,450 65,039 76,961
5 116,038 70,650 86,589 105,269
6 142,840 86,325 108,728 136,069
7 170,982 101,584 131,594 169,741
8 200,531 116,404 15,518 206,557
9 231,558 130,742 179,493 246,797
10 264,136 144,545 204,480 290,758
11 298,343 157,830 230,258 339,016
12 334,260 168,927 255,125 390,200
13 371,973 179,129 280,383 446,049
14 411,571 191,794 309,505 510,622
15 453,150 203,930 339,617 581,701
20 694,385 255,033 504,607 1,059,378
25 1,002,269 288,648 695,722 1,833,850
30 1,395,216 297,829 910,446 3,090,690
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
Illustration 5 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING CURRENT CHARGES Death Benefit Option 3
(All States)
- -----------------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ------------------ ----------------- -----------------
1 21,000 1,020,000 1,020,000 1,020,000
2 43,050 1,040,000 1,040,000 1,040,000
3 66,203 1,060,000 1,060,000 1,060,000
4 90,513 1,080,000 1,080,000 1,080,000
5 116,038 1,100,000 1,100,000 1,100,000
6 142,840 1,120,000 1,120,000 1,120,000
7 170,982 1,140,000 1,140,000 1,140,000
8 200,531 1,160,000 1,160,000 1,160,000
9 231,558 1,180,000 1,180,000 1,180,000
10 264,136 1,200,000 1,200,000 1,200,000
11 298,343 1,220,000 1,220,000 1,220,000
12 334,260 1,240,000 1,240,000 1,240,000
13 371,973 1,260,000 1,260,000 1,260,000
14 411,571 1,280,000 1,280,000 1,280,000
15 453,150 1,300,000 1,300,000 1,300,000
20 694,385 1,400,000 1,400,000 1,400,000
25 1,002,269 1,500,000 1,500,000 2,213,983
30 1,395,216 1,600,000 1,600,000 3,501,519
- ---------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
-------------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ------------------
1 21,000 17,027 18,082 19,138
2 43,050 33,437 36,603 39,897
3 66,203 49,195 55,541 62,409
4 90,513 64,416 75,029 86,981
5 116,038 79,145 95,133 113,878
6 142,840 93,330 115,826 143,294
7 170,982 107,079 137,245 175,620
8 200,531 120,364 159,396 211,149
9 231,558 133,136 182,265 250,188
10 264,136 145,331 205,827 293,073
11 298,343 156,952 230,199 340,443
12 334,260 167,742 255,117 392,441
13 371,973 177,537 280,466 449,495
14 411,571 189,978 309,661 515,060
15 453,150 201,836 339,889 587,483
20 694,385 250,209 506,802 1,082,792
25 1,002,269 277,160 705,015 1,908,606
30 1,395,216 270,574 940,569 3,272,448
- ----------------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
--------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- --------------- --------------- ------------------
1 21,000 6,294 7,350 8,406
2 43,050 22,704 25,871 29,165
3 66,203 38,462 44,809 51,677
4 90,513 54,399 65,012 76,964
5 116,038 70,559 86,547 105,292
6 142,840 86,175 108,671 136,139
7 170,982 101,355 131,521 169,896
8 200,531 116,071 155,103 206,856
9 231,558 130,274 179,403 247,326
10 264,136 143,900 204,396 291,642
11 298,343 156,952 230,199 340,443
12 334,260 167,742 255,117 392,441
13 371,973 177,537 280,466 449,495
14 411,571 189,978 309,661 515,060
15 453,150 201,836 339,889 587,483
20 694,385 250,209 506,802 1,082,792
25 1,002,269 277,160 705,015 1,908,606
30 1,395,216 270,574 940,569 3,272,448
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No
Illustration 2 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING GUARANTEED CHARGES Death Benefit Option 1
(All States)
- -------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
-------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ---------------- ----------------- ---------------
1 21,000 1,000,000 1,000,000 1,000,000
2 43,050 1,000,000 1,000,000 1,000,000
3 66,203 1,000,000 1,000,000 1,000,000
4 90,513 1,000,000 1,000,000 1,000,000
5 116,038 1,000,000 1,000,000 1,000,000
6 142,840 1,000,000 1,000,000 1,000,000
7 170,982 1,000,000 1,000,000 1,000,000
8 200,531 1,000,000 1,000,000 1,000,000
9 231,558 1,000,000 1,000,000 1,000,000
10 264,136 1,000,000 1,000,000 1,000,000
11 298,343 1,000,000 1,000,000 1,000,000
12 334,260 1,000,000 1,000,000 1,000,000
13 371,973 1,000,000 1,000,000 1,000,000
14 411,571 1,000,000 1,000,000 1,000,000
15 453,150 1,000,000 1,000,000 1,000,000
20 694,385 1,000,000 1,000,000 1,151,926
25 1,002,269 1,000,000 1,000,000 1,918,882
30 1,395,216 1,000,000 1,000,000 3,004,797
- --------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- ---------------- ---------------
1 21,000 14,617 15,595 16,576
2 43,050 28,820 31,694 34,689
3 66,203 42,602 48,309 54,498
4 90,513 55,957 65,459 76,183
5 116,038 68,859 83,142 99,926
6 142,840 81,220 101,291 125,860
7 170,982 93,075 119,970 154,279
8 200,531 104,377 139,162 185,428
9 231,558 115,090 158,860 219,595
10 264,136 125,152 179,040 257,091
11 298,343 134,658 199,897 298,592
12 334,260 143,430 221,257 344,311
13 371,973 151,443 243,144 394,783
14 411,571 158,655 265,573 450,616
15 453,150 164,983 288,531 512,489
20 694,385 179,694 410,952 944,202
25 1,002,269 151,564 546,536 1,654,208
30 1,395,216 42,678 703,418 2,808,222
- ----------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ---------------
1 21,000 3,885 4,863 5,843
2 43,050 18,088 20,961 23,956
3 66,203 31,870 37,577 43,766
4 90,513 45,940 55,442 66,166
5 116,038 60,273 74,556 91,340
6 142,840 74,065 94,136 118,705
7 170,982 87,351 114,246 148,555
8 200,531 100,084 134,869 181,135
9 231,558 112,228 155,998 216,733
10 264,136 123,721 177,609 255,660
11 298,343 134,658 199,897 298,592
12 334,260 143,430 221,257 344,311
13 371,973 151,443 243,144 394,783
14 411,571 158,655 265,573 450,616
15 453,150 164,983 288,531 512,489
20 694,385 179,694 410,952 944,202
25 1,002,269 151,564 546,536 1,654,208
30 1,395,216 42,678 703,418 2,808,222
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
Illustration 4 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING GUARANTEED CHARGES Death Benefit Option 2
(All States)
- ---------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
--------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ---------------- ----------------- ----------------
1 21,000 1,014,563 1,015,538 1,016,515
2 43,050 1,028,657 1,031,513 1,034,490
3 66,203 1,042,268 1,047,925 1,054,059
4 90,513 1,055,384 1,064,774 1,075,370
5 116,038 1,067,973 1,082,040 1,098,564
6 142,840 1,079,936 1,099,630 1,123,725
7 170,982 1,091,298 1,117,578 1,151,082
8 200,531 1,101,998 1,135,830 1,180,793
9 231,558 1,111,986 1,154,337 1,213,043
10 264,136 1,121,182 1,173,019 1,248,006
11 298,343 1,129,660 1,192,007 1,286,183
12 334,260 1,137,227 1,211,059 1,327,584
13 371,973 1,143,844 1,230,127 1,372,500
14 411,571 1,149,456 1,249,140 1,421,234
15 453,150 1,153,956 1,267,973 1,474,066
20 694,385 1,155,344 1,353,755 1,810,939
25 1,002,269 1,106,188 1,403,641 2,303,886
30 1,395,216 - 1,370,644 3,013,285
- ---------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- ---------------- ---------------
1 21,000 14,563 15,538 16,515
2 43,050 28,657 31,513 34,490
3 66,203 42,268 47,925 54,059
4 90,513 55,384 64,774 75,370
5 116,038 67,973 82,040 98,564
6 142,840 79,936 99,630 123,725
7 170,982 91,298 117,578 151,082
8 200,531 101,998 135,830 180,793
9 231,558 111,986 154,337 213,043
10 264,136 121,182 173,019 248,006
11 298,343 129,660 192,007 286,183
12 334,260 137,227 211,059 327,584
13 371,973 143,844 230,127 372,500
14 411,571 149,456 249,140 421,234
15 453,150 153,956 267,973 474,066
20 694,385 155,344 353,755 810,939
25 1,002,269 106,188 403,641 1,303,886
30 1,395,216 - 370,644 2,013,285
- ---------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ---------------
1 21,000 3,830 4,805 2,782
2 43,050 17,924 20,781 23,757
3 66,203 31,536 37,193 43,327
4 90,513 45,367 54,757 65,353
5 116,038 59,387 73,454 89,978
6 142,840 72,781 92,475 116,570
7 170,982 85,574 111,854 145,358
8 200,531 97,705 131,537 176,500
9 231,558 109,124 151,475 210,181
10 264,136 119,751 171,588 246,575
11 298,343 129,660 192,007 286,183
12 334,260 137,227 211,059 327,584
13 371,973 143,844 230,127 372,500
14 411,571 149,456 249,140 421,234
15 453,150 153,956 267,973 474,066
20 694,385 155,344 353,755 810,939
25 1,002,269 106,188 403,641 1,303,886
30 1,395,216 - 370,644 2,013,285
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
Illustration 6 PRINCIPAL LIFE INSURANCE COMPANY
EXECUTIVE VARIABLE UNIVERSAL LIFE
PLANNED PREMIUM $20,000 MALE AGE 45 PREFERRED NON-SMOKER Initial Face Amount $1,000,000
ASSUMING GUARANTEED CHARGES Death Benefit Option 3
(All States)
- ---------------------------------------------------------------------------------------------------------
Death Benefit (2)
Assuming Hypothetical Gross
Annual Investment Return of
--------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- ---------------- ----------------- ----------------
1 21,000 1,020,000 1,020,000 1,020,000
2 43,050 1,040,000 1,040,000 1,040,000
3 66,203 1,060,000 1,060,000 1,060,000
4 90,513 1,080,000 1,080,000 1,080,000
5 116,038 1,100,000 1,100,000 1,100,000
6 142,840 1,120,000 1,120,000 1,120,000
7 170,982 1,140,000 1,140,000 1,140,000
8 200,531 1,160,000 1,160,000 1,160,000
9 231,558 1,180,000 1,180,000 1,180,000
10 264,136 1,200,000 1,200,000 1,200,000
11 298,343 1,220,000 1,220,000 1,220,000
12 334,260 1,240,000 1,240,000 1,240,000
13 371,973 1,260,000 1,260,000 1,260,000
14 411,571 1,280,000 1,280,000 1,280,000
15 453,150 1,300,000 1,300,000 1,300,000
20 694,385 1,400,000 1,400,000 1,400,000
25 1,002,269 1,500,000 1,500,000 1,718,525
30 1,395,216 - 1,600,000 2,704,655
- --------------------------------------------------------------------------------------------------------------
Policy Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
---------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- ---------------- ---------------
1 21,000 14,551 15,527 16,506
2 43,050 28,612 31,475 34,459
3 66,203 42,166 47,841 53,998
4 90,513 55,192 64,624 75,273
5 116,038 67,651 81,800 98,436
6 142,840 79,438 99,277 123,582
7 170,982 90,564 117,084 150,955
8 200,531 100,545 135,164 180,740
9 231,558 110,545 153,465 213,155
10 264,136 119,229 171,902 248,420
11 298,343 127,054 190,599 287,099
12 334,260 133,798 209,311 329,287
13 371,973 139,389 227,982 375,383
14 411,571 143,727 246,534 425,827
15 453,150 146,651 264,830 481,089
20 694,385 132,510 345,977 852,372
25 1,002,269 38,886 381,913 1,481,487
30 1,395,216 - 295,278 2,527,715
- ---------------------------------------------------------------------------------------------------------------
Surrender Value (2)
Assuming Hypothetical Gross
Annual Investment Return of
------------------------------------------------------------------
End of Accumulated 0% 6% 12%
Year Premiums (1) (-.99% Net) (5.01% Net) (11.01% Net)
- -------------- ----------------- -------------- --------------- ---------------
1 21,000 3,819 4,795 5,773
2 43,050 17,880 20,743 23,727
3 66,203 31,433 37,109 43,265
4 90,513 45,175 54,607 65,256
5 116,038 59,065 73,214 89,850
6 142,840 72,283 92,122 116,427
7 170,982 84,840 111,360 145,231
8 200,531 96,663 130,871 176,447
9 231,558 107,683 150,603 210,293
10 264,136 117,798 170,471 246,989
11 298,343 127,054 190,599 287,099
12 334,260 133,798 209,311 329,287
13 371,973 139,389 227,982 375,383
14 411,571 143,727 246,534 425,827
15 453,150 146,651 264,830 481,089
20 694,385 132,510 345,977 852,372
25 1,002,269 38,886 381,913 1,481,487
30 1,395,216 - 295,278 2,527,715
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loans have been made.
The death benefit, policy value and surrender value will differ if premiums are
paid in different amounts or frequencies. It is emphasized that the hypothetical
investment results are illustrative only and should not be deemed to be a
representation of past or future investment results. Actual investment results
may be more or less than those shown. The death benefit, policy value and
surrender value for a policy would be different from those shown if actual rates
of investment return applicable to the policy averaged 0%, 6%, or 12% over a
period of years, but also fluctuated above or below that average for individual
policy years. The death benefit, policy value and surrender value for a policy
would also be different from those shown, depending on the investment
allocations made to the investment divisions of the separate account and the
different rates or return of the Fund portfolios, if the actual rates of
investment return applicable to the policy averaged 0%, 6%, or 12%, but varied
above or below that average for individual divisions. No representations can be
made that these hypothetical rates of return can be achieved for any one year or
sustained over any period of time.
APPENDIX C - TARGET PREMIUM
TABLE 1:
STANDARD/PREFERRED
TARGET PREMIUMS
ANNUAL PER $1000 POLICY FACE AMOUNT
NONSMOKER AND SMOKER
AGE MALE FEMALE UNISEX AGE MALE FEMALE UNISEX
0 3.50 2.83 3.41 45 14.31 11.93 14.00
1 3.50 2.83 3.41 46 15.08 12.53 14.75
2 3.50 2.83 3.41 47 15.90 13.16 15.54
3 3.50 2.83 3.41 48 16.77 13.83 16.39
4 3.50 2.83 3.41 49 17.70 14.54 17.29
5 3.50 2.83 3.41 50 18.68 15.30 18.24
6 3.50 2.83 3.41 51 19.74 16.10 19.27
7 3.50 2.83 3.41 52 20.86 16.94 20.35
8 3.50 2.83 3.41 53 22.05 17.85 21.50
9 3.50 2.83 3.41 54 23.32 18.80 22.73
10 3.50 2.83 3.41 55 24.67 19.82 24.04
11 3.65 2.91 3.55 56 26.11 20.90 25.43
12 3.80 3.00 3.70 57 27.65 22.05 26.92
13 3.95 3.08 3.84 58 29.30 23.29 28.52
14 4.10 3.17 3.98 59 31.05 24.62 30.21
15 4.25 3.25 4.12 60 32.93 26.06 32.04
16 4.62 3.63 4.49 61 34.94 27.60 33.99
17 4.99 4.00 4.86 62 37.10 29.26 36.08
18 5.36 4.38 5.23 63 39.40 31.06 38.32
19 5.73 4.75 5.60 64 41.86 32.97 40.70
20 6.10 5.13 5.97 65 44.48 35.02 43.25
21 6.11 5.16 5.99 66 47.29 37.21 45.98
22 6.12 5.20 6.00 67 50.30 39.58 48.91
23 6.13 5.23 6.01 68 53.52 42.14 52.04
24 6.14 5.27 6.03 69 56.98 44.93 55.41
25 6.15 5.30 6.04 70 60.71 47.98 59.06
26 6.29 5.42 6.18 71 64.73 51.30 62.98
27 6.43 5.54 6.31 72 69.02 54.93 67.19
28 6.57 5.65 6.45 73 73.62 58.86 71.70
29 6.71 5.77 6.59 74 78.48 63.12 76.48
30 6.85 5.89 6.73 75 83.65 67.71 81.58
31 7.17 6.16 7.04 76 87.77 71.45 85.65
32 7.51 6.44 7.37 77 91.89 75.20 89.72
33 7.87 6.74 7.72 78 96.00 78.94 93.78
34 8.25 7.06 8.10 79 100.12 82.69 97.85
35 8.66 7.40 8.50 80 104.24 86.43 101.92
36 9.10 7.76 8.93 81 113.32 95.74 111.03
37 9.55 8.13 9.37 82 122.40 105.05 120.14
38 10.03 8.53 9.84 83 131.48 114.36 129.25
39 10.54 8.94 10.33 84 140.56 123.67 138.36
40 11.09 9.38 10.87 85 149.64 132.98 147.47
41 11.66 9.83 11.42
42 12.26 10.32 12.01
43 12.91 10.82 12.64
44 13.59 11.36 13.30
APPENDIX D - APPLICABLE PERCENTAGES (FOR LIFE INSURANCE DEFINITION TEST)
GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
INSURED'S PERCENTAGE OF INSURED'S PERCENTAGE OF INSURED'S PERCENTAGE OF
ATTAINED AGE POLICY VALUE ATTAINED AGE POLICY VALUE ATTAINED AGE POLICY VALUE
20 250.00 47 203.00 74 107.00
21 250.00 48 197.00 75 105.00
22 250.00 49 191.00 76 105.00
23 250.00 50 185.00 77 105.00
24 250.00 51 178.00 78 105.00
25 250.00 52 171.00 79 105.00
26 250.00 53 164.00 80 105.00
27 250.00 54 157.00 81 105.00
28 250.00 55 150.00 82 105.00
29 250.00 56 146.00 83 105.00
30 250.00 57 142.00 84 105.00
31 250.00 58 138.00 85 105.00
32 250.00 59 134.00 86 105.00
33 250.00 60 130.00 87 105.00
34 250.00 61 128.00 88 105.00
35 250.00 62 126.00 89 105.00
36 250.00 63 124.00 90 105.00
37 250.00 64 122.00 91 104.00
38 250.00 65 120.00 92 103.00
39 250.00 66 119.00 93 102.00
40 250.00 67 118.00 94 101.00
41 243.00 68 117.00 95 101.00
42 236.00 69 116.00 96 101.00
43 229.00 70 115.00 97 101.00
44 222.00 71 113.00 98 101.00
45 215.00 72 111.00 99 101.00
46 209.00 73 109.00
CASH VALUE ACCUMULATION TEST (PERCENTAGE OF POLICY VALUE) - MALE
RISK PREFERRED OR
CLASS: STANDARD A B C D E F G H
ATTAINED AGE:
20 639.37% 534.87% 499.92% 471.57% 427.89% 395.39% 369.97% 349.40% 317.80%
21 621.01% 520.61% 487.03% 459.79% 417.81% 386.56% 362.12% 342.32% 311.91%
22 603.00% 506.56% 474.31% 448.14% 407.80% 377.76% 354.27% 335.24% 305.99%
23 585.25% 492.64% 461.66% 436.52% 397.78% 368.92% 346.35% 328.06% 299.94%
24 567.76% 478.82% 449.08% 424.94% 387.73% 360.02% 338.34% 320.77% 293.76%
25 550.50% 465.11% 436.55% 413.38% 377.66% 351.05% 330.24% 313.37% 287.43%
26 533.49% 451.50% 424.08% 401.84% 367.55% 342.01% 322.03% 305.84% 280.93%
27 516.76% 438.04% 411.72% 390.37% 357.45% 332.95% 313.77% 298.23% 274.33%
28 500.37% 424.80% 399.53% 379.03% 347.44% 323.92% 305.52% 290.61% 267.68%
29 484.35% 411.79% 387.54% 367.86% 337.55% 314.98% 297.32% 283.02% 261.02%
30 468.73% 399.07% 375.79% 356.91% 327.82% 306.16% 289.22% 275.50% 254.40%
31 453.53% 386.65% 364.31% 346.19% 318.27% 297.49% 281.25% 268.08% 247.85%
32 438.79% 374.58% 353.14% 335.74% 308.96% 289.03% 273.44% 260.82% 241.42%
33 424.48% 362.84% 342.26% 325.57% 299.87% 280.75% 265.81% 253.70% 235.10%
34 410.64% 351.47% 331.72% 315.71% 291.05% 272.71% 258.38% 246.77% 228.94%
35 397.25% 340.46% 321.50% 306.14% 282.49% 264.90% 251.15% 240.03% 222.94%
36 384.33% 329.81% 311.63% 296.88% 274.20% 257.33% 244.15% 233.49% 217.11%
37 371.86% 319.54% 302.08% 287.94% 266.18% 250.01% 237.38% 227.15% 211.47%
38 359.85% 309.63% 292.89% 279.32% 258.46% 242.95% 230.84% 221.05% 206.02%
39 348.28% 300.10% 284.04% 271.03% 251.02% 236.15% 224.55% 215.17% 200.77%
40 337.17% 290.93% 275.53% 263.05% 243.87% 229.62% 218.50% 209.51% 195.73%
41 326.48% 282.12% 267.35% 255.38% 237.00% 223.35% 212.70% 204.09% 190.90%
42 316.22% 273.67% 259.50% 248.03% 230.41% 217.33% 207.14% 198.89% 186.27%
43 306.36% 265.54% 251.96% 240.97% 224.08% 211.56% 201.79% 193.91% 181.83%
44 296.89% 257.74% 244.72% 234.19% 218.01% 206.02% 196.68% 189.13% 177.58%
45 287.78% 250.25% 237.77% 227.68% 212.19% 200.71% 191.76% 184.54% 173.50%
46 279.04% 243.05% 231.09% 221.43% 206.59% 195.61% 187.05% 180.15% 169.60%
47 270.63% 236.13% 224.68% 215.42% 201.22% 190.71% 182.53% 175.93% 165.85%
48 262.54% 229.48% 218.51% 209.64% 196.05% 186.00% 178.18% 171.87% 162.25%
49 254.76% 223.07% 212.57% 204.08% 191.08% 181.46% 173.99% 167.97% 158.78%
50 247.28% 216.92% 206.86% 198.73% 186.30% 177.11% 169.96% 164.22% 155.45%
51 240.08% 210.99% 201.36% 193.59% 181.69% 172.91% 166.09% 160.60% 152.24%
52 233.17% 205.31% 196.09% 188.65% 177.28% 168.89% 162.38% 157.14% 149.17%
53 226.54% 199.86% 191.04% 183.93% 173.06% 165.04% 158.83% 153.84% 146.24%
54 220.19% 194.64% 186.21% 179.41% 169.02% 161.37% 155.45% 150.69% 143.45%
55 214.12% 189.67% 181.60% 175.10% 165.18% 157.88% 152.23% 147.70% 140.81%
56 208.30% 184.91% 177.20% 170.99% 161.52% 154.56% 149.17% 144.85% 138.30%
57 202.74% 180.36% 172.99% 167.06% 158.03% 151.39% 146.26% 142.15% 135.93%
58 197.41% 176.01% 168.97% 163.31% 154.69% 148.37% 143.49% 139.58% 133.66%
59 192.30% 171.83% 165.11% 159.71% 151.50% 145.48% 140.83% 137.12% 131.50%
60 187.39% 167.83% 161.41% 156.26% 148.43% 142.70% 138.29% 134.76% 129.43%
61 182.68% 163.99% 157.87% 152.96% 145.50% 140.05% 135.86% 132.51% 127.46%
62 178.18% 160.32% 154.48% 149.80% 142.70% 137.52% 133.53% 130.35% 125.57%
63 173.87% 156.81% 151.24% 146.78% 140.03% 135.10% 131.32% 128.31% 123.78%
64 169.75% 153.47% 148.17% 143.92% 137.50% 132.82% 129.23% 126.38% 122.09%
65 165.83% 150.30% 145.24% 141.20% 135.10% 130.66% 127.26% 124.56% 120.51%
66 162.10% 147.29% 142.47% 138.63% 132.83% 128.62% 125.40% 122.85% 119.02%
67 158.55% 144.42% 139.84% 136.18% 130.68% 126.69% 123.65% 121.23% 117.62%
68 155.15% 141.69% 137.33% 133.86% 128.64% 124.86% 121.98% 119.70% 116.30%
69 151.90% 139.08% 134.93% 131.64% 126.68% 123.11% 120.39% 118.25% 115.05%
70 148.80% 136.58% 132.64% 129.51% 124.82% 121.44% 118.88% 116.85% 113.85%
71 145.83% 134.19% 130.45% 127.48% 123.04% 119.85% 117.43% 115.52% 112.70%
72 143.00% 131.93% 128.37% 125.56% 121.35% 118.33% 116.05% 114.26% 111.61%
73 140.33% 129.79% 126.41% 123.74% 119.76% 116.91% 114.76% 113.07% 110.58%
74 137.81% 127.78% 124.58% 122.05% 118.28% 115.59% 113.56% 111.97% 109.63%
75 135.45% 125.92% 122.88% 120.48% 116.91% 114.37% 112.46% 110.97% 108.77%
76 133.24% 124.18% 121.30% 119.03% 115.66% 113.26% 111.46% 110.05% 107.99%
77 131.17% 122.56% 119.83% 117.68% 114.50% 112.24% 110.54% 109.22% 107.28%
78 129.21% 121.05% 118.46% 116.43% 113.42% 111.29% 109.70% 108.45% 106.64%
79 127.36% 119.61% 117.16% 115.24% 112.41% 110.40% 108.90% 107.74% 106.04%
80 125.59% 118.24% 115.93% 114.11% 111.44% 109.56% 108.15% 107.06% 105.47%
81 123.91% 116.94% 114.75% 113.04% 110.52% 108.76% 107.44% 106.42% 104.93%
82 122.31% 115.71% 113.64% 112.02% 109.65% 107.99% 106.76% 105.80% 104.42%
83 120.81% 114.55% 112.60% 111.07% 108.83% 107.27% 106.11% 105.22% 103.93%
84 119.41% 113.48% 111.63% 110.19% 108.08% 106.61% 105.52% 104.69% 103.48%
85 118.11% 112.50% 110.75% 109.38% 107.39% 106.01% 104.99% 104.20% 103.07%
86 116.91% 111.61% 109.95% 108.65% 106.77% 105.47% 104.51% 103.77% 102.71%
87 115.79% 110.79% 109.21% 107.99% 106.21% 104.98% 104.08% 103.38% 102.39%
88 114.74% 110.03% 108.55% 107.39% 105.71% 104.55% 103.69% 103.04% 102.11%
89 113.74% 109.32% 107.93% 106.84% 105.25% 104.15% 103.34% 102.73% 101.97%
90 112.77% 108.65% 107.34% 106.32% 104.82% 103.78% 103.02% 102.44% 101.00%
91 111.80% 108.00% 106.78% 105.82% 104.42% 103.44% 102.72% 102.18% 101.00%
92 110.82% 107.34% 106.22% 105.33% 104.02% 103.11% 102.44% 101.97% 101.00%
93 109.79% 106.66% 105.64% 104.82% 103.62% 102.78% 102.16% 101.00% 101.00%
94 108.68% 105.91% 105.00% 104.27% 103.19% 102.42% 101.97% 101.00% 101.00%
95 107.47% 105.07% 104.28% 103.64% 102.69% 102.01% 101.00% 101.00% 101.00%
96 106.16% 104.13% 103.48% 102.92% 102.13% 101.97% 101.00% 101.00% 101.00%
97 104.76% 103.10% 102.60% 102.13% 101.97% 101.00% 101.00% 101.00% 101.00%
98 103.33% 102.02% 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00%
99 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
100+ 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
CASH VALUE ACCUMULATION TEST (PERCENTAGE OF POLICY VALUE) - FEMALE
RISK PREFERRED OR
CLASS: STANDARD A B C D E F G H
ATTAINED AGE:
20 762.99% 637.79% 595.38% 560.82% 507.35% 467.43% 436.19% 410.90% 372.11%
21 738.68% 618.38% 577.63% 544.40% 492.99% 454.60% 424.55% 400.21% 362.87%
22 715.05% 599.48% 560.31% 528.38% 478.96% 442.04% 413.13% 389.71% 353.78%
23 692.09% 581.06% 543.43% 512.74% 465.23% 429.74% 401.94% 379.41% 344.84%
24 669.78% 563.13% 526.97% 497.48% 451.82% 417.70% 390.96% 369.30% 336.05%
25 648.14% 545.70% 510.96% 482.63% 438.74% 405.94% 380.24% 359.41% 327.43%
26 627.11% 528.72% 495.35% 468.13% 425.96% 394.44% 369.73% 349.71% 318.95%
27 606.71% 512.22% 480.16% 454.01% 413.50% 383.20% 359.46% 340.21% 310.64%
28 586.92% 496.17% 465.39% 440.27% 401.34% 372.24% 349.42% 330.92% 302.49%
29 567.76% 480.61% 451.04% 426.91% 389.52% 361.56% 339.63% 321.85% 294.53%
30 549.18% 465.50% 437.10% 413.93% 378.02% 351.15% 330.08% 313.00% 286.74%
31 531.21% 450.86% 423.59% 401.33% 366.84% 341.03% 320.79% 304.38% 279.15%
32 513.81% 436.66% 410.48% 389.10% 355.98% 331.19% 311.75% 295.98% 271.74%
33 496.96% 422.89% 397.75% 377.23% 345.42% 321.61% 302.94% 287.79% 264.51%
34 480.65% 409.53% 385.39% 365.69% 335.14% 312.28% 294.35% 279.80% 257.43%
35 464.89% 396.62% 373.45% 354.53% 325.20% 303.25% 286.03% 272.05% 250.57%
36 449.66% 384.12% 361.87% 343.71% 315.55% 294.48% 277.94% 264.52% 243.89%
37 434.98% 372.07% 350.72% 333.29% 306.25% 286.02% 270.14% 257.26% 237.45%
38 420.85% 360.48% 339.98% 323.25% 297.30% 277.88% 262.63% 250.26% 231.25%
39 407.27% 349.33% 329.66% 313.60% 288.70% 270.06% 255.43% 243.55% 225.29%
40 394.23% 338.64% 319.77% 304.36% 280.46% 262.57% 248.53% 237.14% 219.61%
41 381.72% 328.39% 310.29% 295.51% 272.58% 255.41% 241.94% 231.01% 214.19%
42 369.72% 318.57% 301.21% 287.03% 265.04% 248.58% 235.65% 225.16% 209.03%
43 358.21% 309.16% 292.51% 278.91% 257.83% 242.04% 229.64% 219.58% 204.11%
44 347.14% 300.11% 284.14% 271.11% 250.90% 235.76% 223.88% 214.23% 199.39%
45 336.48% 291.40% 276.10% 263.61% 244.23% 229.72% 218.33% 209.09% 194.87%
46 326.22% 283.02% 268.35% 256.38% 237.82% 223.92% 213.00% 204.14% 190.52%
47 316.33% 274.93% 260.88% 249.41% 231.63% 218.31% 207.86% 199.38% 186.32%
48 306.78% 267.12% 253.67% 242.69% 225.66% 212.91% 202.90% 194.77% 182.27%
49 297.58% 259.60% 246.71% 236.20% 219.90% 207.69% 198.11% 190.33% 178.37%
50 288.71% 252.34% 240.01% 229.94% 214.34% 202.66% 193.49% 186.05% 174.61%
51 280.16% 245.35% 233.54% 223.92% 208.99% 197.82% 189.05% 181.93% 170.99%
52 271.93% 238.60% 227.31% 218.10% 203.83% 193.15% 184.77% 177.97% 167.51%
53 263.99% 232.11% 221.31% 212.50% 198.86% 188.65% 180.65% 174.15% 164.16%
54 256.36% 225.87% 215.54% 207.13% 194.09% 184.34% 176.70% 170.49% 160.96%
55 249.00% 219.85% 209.99% 201.95% 189.50% 180.20% 172.90% 166.98% 157.89%
56 241.92% 214.06% 204.64% 196.96% 185.08% 176.20% 169.25% 163.61% 154.94%
57 235.07% 208.46% 199.46% 192.14% 180.81% 172.34% 165.71% 160.34% 152.09%
58 228.45% 203.02% 194.44% 187.45% 176.65% 168.59% 162.27% 157.16% 149.31%
59 222.01% 197.74% 189.55% 182.88% 172.59% 164.91% 158.90% 154.04% 146.57%
60 215.77% 192.59% 184.78% 178.43% 168.62% 161.31% 155.60% 150.97% 143.88%
61 209.70% 187.58% 180.14% 174.08% 164.75% 157.79% 152.36% 147.96% 141.23%
62 203.84% 182.74% 175.64% 169.87% 160.98% 154.37% 149.21% 145.03% 138.65%
63 198.20% 178.06% 171.30% 165.81% 157.36% 151.07% 146.17% 142.21% 136.15%
64 192.79% 173.59% 167.16% 161.93% 153.90% 147.93% 143.27% 139.52% 133.78%
65 187.61% 169.33% 163.20% 158.24% 150.60% 144.94% 140.53% 136.98% 131.55%
66 182.67% 165.26% 159.43% 154.72% 147.47% 142.11% 137.93% 134.57% 129.45%
67 177.93% 161.37% 155.83% 151.36% 144.49% 139.41% 135.46% 132.29% 127.45%
68 173.38% 157.62% 152.37% 148.12% 141.62% 136.82% 133.09% 130.10% 125.55%
69 168.99% 154.01% 149.02% 145.00% 138.84% 134.30% 130.79% 127.97% 123.69%
70 164.74% 150.50% 145.77% 141.96% 136.14% 131.86% 128.55% 125.89% 121.87%
71 160.64% 147.11% 142.63% 139.02% 133.52% 129.48% 126.36% 123.87% 120.10%
72 156.70% 143.86% 139.61% 136.20% 131.00% 127.19% 124.26% 121.91% 118.38%
73 152.93% 140.75% 136.73% 133.50% 128.60% 125.01% 122.25% 120.05% 116.74%
74 149.37% 137.82% 134.02% 130.96% 126.34% 122.96% 120.37% 118.31% 115.21%
75 146.01% 135.06% 131.47% 128.59% 124.23% 121.05% 118.62% 116.69% 113.80%
76 142.84% 132.48% 129.09% 126.37% 122.27% 119.29% 117.01% 115.21% 112.51%
77 139.87% 130.07% 126.87% 124.31% 120.45% 117.66% 115.53% 113.84% 111.33%
78 137.06% 127.80% 124.78% 122.38% 118.76% 116.14% 114.15% 112.58% 110.24%
79 134.40% 125.66% 122.82% 120.56% 117.16% 114.72% 112.86% 111.40% 109.23%
80 131.87% 123.63% 120.96% 118.84% 115.66% 113.38% 111.65% 110.29% 108.28%
81 129.49% 121.72% 119.21% 117.22% 114.24% 112.11% 110.51% 109.24% 107.38%
82 127.23% 119.92% 117.56% 115.69% 112.91% 110.93% 109.43% 108.26% 106.54%
83 125.12% 118.24% 116.03% 114.28% 111.67% 109.82% 108.44% 107.35% 105.76%
84 123.16% 116.70% 114.62% 112.98% 110.54% 108.82% 107.53% 106.53% 105.06%
85 121.34% 115.28% 113.33% 111.79% 109.52% 107.91% 106.71% 105.78% 104.42%
86 119.66% 113.98% 112.15% 110.72% 108.59% 107.09% 105.98% 105.11% 103.86%
87 118.10% 112.79% 111.08% 109.74% 107.75% 106.36% 105.32% 104.52% 103.36%
88 116.64% 111.69% 110.10% 108.85% 107.00% 105.70% 104.73% 103.99% 102.91%
89 115.27% 110.68% 109.20% 108.03% 106.31% 105.10% 104.20% 103.51% 102.51%
90 113.97% 109.73% 108.36% 107.27% 105.67% 104.55% 103.72% 103.07% 102.16%
91 112.71% 108.83% 107.56% 106.56% 105.08% 104.04% 103.27% 102.68% 101.97%
92 111.48% 107.95% 106.80% 105.88% 104.52% 103.57% 102.85% 102.31% 101.00%
93 110.24% 107.08% 106.04% 105.21% 103.98% 103.11% 102.46% 101.97% 101.00%
94 108.97% 106.19% 105.27% 104.53% 103.43% 102.64% 102.06% 101.00% 101.00%
95 107.64% 105.23% 104.44% 103.80% 102.84% 102.16% 101.97% 101.00% 101.00%
96 106.24% 104.21% 103.56% 103.01% 102.21% 101.97% 101.00% 101.00% 101.00%
97 104.79% 103.13% 102.64% 102.17% 101.97% 101.00% 101.00% 101.00% 101.00%
98 103.34% 102.04% 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00%
99 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
100+ 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
CASH VALUE ACCUMULATION TEST (PERCENTAGE OF POLICY VALUE) - UNISEX
PREFERRED OR
RISK CLASS: STANDARD A B C D E F G H
ATTAINED AGE:
20 660.51% 551.81% 515.46% 485.97% 440.56% 406.80% 380.43% 359.09% 326.35%
21 641.23% 536.78% 501.85% 473.50% 429.86% 397.39% 372.02% 351.49% 319.98%
22 622.33% 522.00% 488.43% 461.19% 419.25% 388.04% 363.65% 343.90% 313.59%
23 603.74% 507.36% 475.11% 448.95% 408.64% 378.66% 355.21% 336.24% 307.09%
24 585.45% 492.88% 461.91% 436.78% 398.07% 369.26% 346.74% 328.50% 300.49%
25 567.49% 478.59% 448.84% 424.71% 387.53% 359.86% 338.23% 320.72% 293.81%
26 549.81% 464.44% 435.87% 412.70% 377.00% 350.43% 329.66% 312.84% 287.00%
27 532.48% 450.50% 423.07% 400.82% 366.54% 341.04% 321.09% 304.94% 280.14%
28 515.51% 436.78% 410.45% 389.09% 356.18% 331.69% 312.55% 297.05% 273.24%
29 498.95% 423.35% 398.07% 377.56% 345.97% 322.46% 304.09% 289.21% 266.36%
30 482.82% 410.24% 385.96% 366.27% 335.95% 313.39% 295.75% 281.48% 259.55%
31 467.14% 397.44% 374.14% 355.23% 326.13% 304.48% 287.55% 273.85% 252.82%
32 451.93% 385.01% 362.63% 344.49% 316.55% 295.78% 279.54% 266.40% 246.22%
33 437.18% 372.92% 351.45% 334.03% 307.22% 287.28% 271.70% 259.09% 239.74%
34 422.91% 361.22% 340.61% 323.89% 298.16% 279.03% 264.09% 251.99% 233.43%
35 409.11% 349.88% 330.10% 314.06% 289.36% 271.01% 256.67% 245.08% 227.28%
36 395.79% 338.93% 319.94% 304.55% 280.85% 263.25% 249.50% 238.38% 221.31%
37 382.93% 328.35% 310.13% 295.35% 272.62% 255.74% 242.55% 231.89% 215.53%
38 370.55% 318.17% 300.68% 286.50% 264.70% 248.50% 235.86% 225.64% 209.96%
39 358.64% 308.36% 291.58% 277.98% 257.07% 241.54% 229.41% 219.61% 204.59%
40 347.20% 298.94% 282.84% 269.80% 249.74% 234.85% 223.23% 213.84% 199.45%
41 336.19% 289.89% 274.45% 261.94% 242.71% 228.43% 217.30% 208.30% 194.51%
42 325.63% 281.21% 266.40% 254.40% 235.97% 222.28% 211.62% 203.00% 189.80%
43 315.48% 272.87% 258.66% 247.16% 229.49% 216.38% 206.16% 197.91% 185.27%
44 305.74% 264.86% 251.24% 240.22% 223.28% 210.73% 200.94% 193.04% 180.95%
45 296.37% 257.16% 244.11% 233.54% 217.31% 205.29% 195.92% 188.36% 176.79%
46 287.36% 249.77% 237.25% 227.13% 211.59% 200.07% 191.11% 183.87% 172.81%
47 278.70% 242.66% 230.67% 220.97% 206.08% 195.06% 186.48% 179.56% 168.99%
48 270.37% 235.82% 224.33% 215.04% 200.79% 190.24% 182.03% 175.42% 165.32%
49 262.34% 229.23% 218.22% 209.33% 195.69% 185.59% 177.75% 171.42% 161.77%
50 254.63% 222.89% 212.35% 203.83% 190.78% 181.13% 173.63% 167.58% 158.37%
51 247.20% 216.79% 206.70% 198.55% 186.06% 176.83% 169.66% 163.89% 155.09%
52 240.07% 210.94% 201.28% 193.48% 181.53% 172.71% 165.86% 160.35% 151.96%
53 233.22% 205.32% 196.08% 188.61% 177.19% 168.76% 162.22% 156.96% 148.96%
54 226.66% 199.95% 191.10% 183.96% 173.04% 164.99% 158.75% 153.73% 146.10%
55 220.38% 194.81% 186.34% 179.52% 169.09% 161.40% 155.45% 150.66% 143.39%
56 214.36% 189.89% 181.80% 175.27% 165.31% 157.98% 152.30% 147.74% 140.82%
57 208.60% 185.18% 177.45% 171.22% 161.71% 154.71% 149.30% 144.96% 138.37%
58 203.06% 180.66% 173.27% 167.32% 158.25% 151.58% 146.43% 142.30% 136.04%
59 197.74% 176.32% 169.26% 163.59% 154.93% 148.58% 143.67% 139.74% 133.79%
60 192.62% 172.15% 165.41% 159.99% 151.74% 145.69% 141.02% 137.29% 131.64%
61 187.71% 168.14% 161.71% 156.54% 148.68% 142.92% 138.48% 134.93% 129.57%
62 182.99% 164.30% 158.16% 153.23% 145.74% 140.26% 136.04% 132.67% 127.59%
63 178.47% 160.62% 154.76% 150.07% 142.93% 137.72% 133.72% 130.52% 125.70%
64 174.16% 157.12% 151.53% 147.06% 140.27% 135.32% 131.52% 128.48% 123.92%
65 170.05% 153.78% 148.46% 144.20% 137.75% 133.05% 129.44% 126.57% 122.25%
66 166.14% 150.62% 145.55% 141.50% 135.36% 130.90% 127.48% 124.76% 120.69%
67 162.40% 147.60% 142.78% 138.92% 133.10% 128.87% 125.63% 123.06% 119.21%
68 158.82% 144.72% 140.13% 136.47% 130.94% 126.94% 123.87% 121.45% 117.82%
69 155.40% 141.96% 137.60% 134.12% 128.88% 125.09% 122.19% 119.90% 116.48%
70 152.11% 139.32% 135.17% 131.87% 126.90% 123.31% 120.58% 118.42% 115.20%
71 148.96% 136.78% 132.84% 129.71% 125.00% 121.61% 119.03% 117.00% 113.97%
72 145.96% 134.37% 130.63% 127.65% 123.20% 119.99% 117.56% 115.64% 112.80%
73 143.11% 132.08% 128.53% 125.71% 121.49% 118.46% 116.17% 114.36% 111.69%
74 140.42% 129.93% 126.56% 123.89% 119.90% 117.03% 114.87% 113.17% 110.66%
75 137.89% 127.93% 124.73% 122.20% 118.42% 115.72% 113.68% 112.08% 109.72%
76 135.52% 126.05% 123.02% 120.63% 117.06% 114.51% 112.59% 111.08% 108.87%
77 133.28% 124.30% 121.43% 119.17% 115.80% 113.39% 111.59% 110.17% 108.10%
78 131.18% 122.66% 119.94% 117.80% 114.62% 112.36% 110.66% 109.34% 107.39%
79 129.17% 121.10% 118.53% 116.51% 113.51% 111.39% 109.79% 108.55% 106.73%
80 127.26% 119.61% 117.18% 115.28% 112.46% 110.46% 108.97% 107.80% 106.10%
81 125.43% 118.19% 115.90% 114.10% 111.45% 109.57% 108.18% 107.09% 105.50%
82 123.70% 116.85% 114.68% 112.99% 110.49% 108.73% 107.42% 106.41% 104.93%
83 122.06% 115.59% 113.54% 111.94% 109.59% 107.94% 106.71% 105.77% 104.39%
84 120.53% 114.41% 112.48% 110.97% 108.76% 107.21% 106.06% 105.18% 103.89%
85 119.11% 113.33% 111.51% 110.09% 108.00% 106.55% 105.47% 104.64% 103.44%
86 117.79% 112.34% 110.62% 109.28% 107.31% 105.95% 104.93% 104.16% 103.04%
87 116.55% 111.43% 109.81% 108.54% 106.69% 105.40% 104.45% 103.72% 102.67%
88 115.39% 110.58% 109.06% 107.87% 106.12% 104.91% 104.02% 103.33% 102.35%
89 114.28% 109.79% 108.36% 107.24% 105.60% 104.46% 103.62% 102.98% 102.06%
90 113.20% 109.03% 107.70% 106.65% 105.12% 104.05% 103.26% 102.65% 101.97%
91 112.14% 108.30% 107.06% 106.09% 104.66% 103.65% 102.92% 102.35% 101.00%
92 111.07% 107.57% 106.43% 105.53% 104.21% 103.28% 102.59% 102.07% 101.00%
93 109.96% 106.82% 105.79% 104.97% 103.76% 102.90% 102.27% 101.97% 101.00%
94 108.79% 106.02% 105.10% 104.37% 103.28% 102.51% 101.97% 101.00% 101.00%
95 107.54% 105.14% 104.35% 103.70% 102.75% 102.07% 101.00% 101.00% 101.00%
96 106.19% 104.16% 103.51% 102.96% 102.16% 101.97% 101.00% 101.00% 101.00%
97 104.77% 103.11% 102.62% 102.15% 101.97% 101.00% 101.00% 101.00% 101.00%
98 103.34% 102.03% 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00%
99 101.97% 101.97% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
100+ 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00% 101.00%
PART II. OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter adopted under the authority conferred in that
section.
UNDERTAKING PURSUANT TO RULE 484
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter had been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATION PURSUANT TO SECTION 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.
REPRESENTATIONS PURSUANT TO RULE 6e-3(T) This filing is made
pursuant to Rules 6c-3 and 6e-3(T) under the Investment Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940, with respect to the Policies described in the
prospectus. Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risks charge is within
the range of industry practice for comparable contracts.
(3) The Registrant has concluded that there is a reasonable
likelihood that the distribution financing arrangement for the
Variable Life Separate Account will benefit the separate account
and policyowners, and it will keep and make available to the
Commission on request a memorandum setting forth the basis for
this representation.
(4) The Variable Life Separate Account will invest only in
management investment companies which have undertaken to have a
board of directors, a majority of whom are not interested
persons of the Company, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
The methodology used to support the representation made in paragraph (2) above
is based upon an analysis of the mortality and expense risks charges contained
in other variable life insurance policies, including scheduled and flexible
premium products. Registrant undertakes to keep and make available to the
Commission on request the documents used to support the representation in
paragraph (2) above.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The prospectus, consisting of 57 pages;
The undertaking to file reports;
The undertaking pursuant to Rule 484;
Representations pursuant to Rule 6e-3(T);
The signatures;
Written consents of the following persons:
Ernst & Young LLP
The following exhibits
1. Copies of all exhibits required by paragraph A of the
instructions as to exhibits in Form N-8B-2 are set forth
below under designations based on such instructions
1.A1 Resolution of Executive Committee of Board of Directors of
Principal Mutual Life Insurance Company establishing the
Variable Life Separate Account (filed 5/31/02)
1.A3A.a Distribution Agreement between Princor Financial Services
Corporation and Principal Life Insurance Company*
1.A3B.a Form of Selling Agreement (filed 5/31/02)
1.A3B.b Registered Representative Agreement (filed 5/31/02)
1.A3C Schedule of sales commissions*
1.A5.a Form of Policy (filed 5/31/02)
1.A5.a.iii Accounting Benefit Rider (filed 5/31/02)
1.A5.a.iv Aviation Exclusion Rider (filed 5/31/02)
1.A5.a.v Change of Insured (filed 5/31/02)
1.A5.a.viii Death Benefit Guarantee Rider (filed 5/31/02)
1.A5.a.ix Extended Coverage Rider (filed 5/31/02)
1.A5.a.x Hazardous Sports Rider (filed 5/31/02)
1.A5.a.xiii Supplemental Benefit Rider (filed 5/31/02)
1.A6.a Articles of Incorporation, as Amended of Principal
Life Insurance Company (filed 5/31/02)
1.A6.b By-laws of Principal Life Insurance Company (filed 5/31/02)
1.A10.a Form of Application (filed 5/31/02)
1.A10.c Form of Supplemental Application (filed 5/31/02)
2. Opinion and consent of Karen E. Shaff, Senior Vice President
and General Counsel*
3. No financial statements will be omitted from the prospectus
pursuant to Instruction 1(b) or (c) or Part I
4. Not applicable
5. Not applicable
6. Consent of Ernst & Young LLP**
7. Description of Issuance, Transfer and Redemption Procedures
Pursuant to Rule 6e-3(T)(b)(12)(iii)**
8. Powers of Attorney of Directors of Principal Life
Insurance Company (filed 5/31/02)
9. Opinion and Consent of Tom Phillips*
- ---------------------------------
* Included in this Filing.
** To be filed by Amendment.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the city of Des Moines, and the state of Iowa, on
the 6th day of August, 2002.
PRINCIPAL LIFE INSURANCE COMPANY
VARIABLE LIFE SEPARATE ACCOUNT
(Registrant)
By: PRINCIPAL LIFE INSURANCE COMPANY
(Depositor)
/s/J. B. Griswell
By _________________________________________________
Chairman, President and Chief Executive Officer
Attest:
/s/ Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Senior 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/ J. B. Griswell President, Chairman and 08/06/2002
- -------------------- Chief Executive Officer
J. B. Griswell
/s/ D. C. Cunningham Vice President and 08/06/2002
- -------------------- Controller (Principal
D. C. Cunningham Accounting Officer)
/s/ M. H. Gersie Executive Vice President 08/06/2002
- -------------------- and Chief Financial Officers
M. H. Gersie (Principal Financial
Officer)
(B. J. Bernard)* Director 08/06/2002
- --------------------
B. J. Bernard
(J. Carter-Miller)* Director 08/06/2002
- --------------------
J. Carter-Miller
(G. E. Costley)* Director 08/06/2002
- --------------------
G. E. Costley
(D. J. Drury)* Director 08/06/2002
- --------------------
D. J. Drury
(C. D. Gelatt, Jr.)* Director 08/06/2002
- --------------------
C. D. Gelatt, Jr.
(S. L. Helton)* Director 08/06/2002
- --------------------
S. L. Helton
(C. S. Johnson)* Director 08/06/2002
- --------------------
C. S. Johnson
(W. T. Kerr)* Director 08/06/2002
- --------------------
W. T. Kerr
(R. L. Keyser)* Director 08/06/2002
- --------------------
R. L. Keyser
(V. H. Loewenstein)* Director 08/06/2002
- --------------------
V. H. Loewenstein
(F. F. Pena)* Director 08/06/2002
- --------------------
F. F. Pena
(D. M. Stewart)* Director 08/06/2002
- --------------------
D. M. Stewart
(E. E. Tallett)* Director 08/06/2002
- --------------------
E. E. Tallett
*By /s/ J. Barry Griswell
------------------------------------
J. Barry Griswell
Chairman, President and
Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein