N-6 1 vulacc2n-6.txt ACCUMULATOR 2 INITIAL N-6 FILING Registration No. ________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. _____ _____ Post-Effective Amendment No. _____ _____ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. __________ (Check appropriate box or boxes) Principal Life Insurance Company Variable Life Separate Account -------------------------------------------------------------------------------- (Exact Name of Registrant) Principal Life Insurance Company -------------------------------------------------------------------------------- (Name of Depositor) The Principal Financial Group, Des Moines, Iowa 50392 -------------------------------------------------------------------------------- (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code (515) 248-3842 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the Registration M. D. Roughton, The Principal Financial Group, Des Moines, Iowa 50392 -------------------------------------------------------------------------------- (Name and Address of Agent for Service) Title of Securities Being Registered: Principal Variable Universal Life Accumulator II. PRINCIPAL VARIABLE UNIVERSAL LIFE ACCUMULATOR II FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY Issued by Principal Life Insurance Company (the "Company") through its Principal Life Insurance Company Variable Life Separate Account This prospectus is dated__________________. 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 current prospectuses 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 or disapproved this security or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Not all the benefits, programs, features and investment options described in this prospectus are available or approved for use in every state. This prospectus offers a Policy which may not be available in all states and 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. TABLE OF CONTENTS GLOSSARY SUMMARY: BENEFITS AND RISKS Policy Benefits Death Benefits and Proceeds ............................................ Premium Payment Flexibility ............................................ Policy Values Adjustment Options Maturity Proceeds Policy Risks Risks of Poor Investment Performance Policy Termination (Lapse) Limitations on Access to Surrender Value Adverse Tax Consequences Risks of Underlying Mutual Funds SUMMARY:FEE TABLES CORPORATE ORGANIZATION AND OPERATION The Company Principal Life Insurance Company Variable Life Separate Account The Funds The Fixed Account and Fixed DCA Account CHARGES AND DEDUCTIONS Premium Expense Charge Surrender Charge Monthly Policy Charge Underlying Mutual Fund Charges Special Provisions for Group or Sponsored Arrangements GENERAL DESCRIPTION OF THE POLICY The Contract Rights Under the Policy Policy Limitations Optional Insurance Benefits Reservation of Rights Right to Exchange Policy Suicide Delay of Payments PREMIUMS Payment of Premiums Premiums Affecting Guarantee Provisions Premium Limitations Allocation of Premiums DEATH BENEFITS AND POLICY VALUES Death Proceeds Death Benefit Option Change in Death Benefit Option IRS Definition of Life Insurance Maturity Proceeds Adjustment Options Policy Values SURRENDERS AND PARTIAL SURRENDERS Surrenders Examination Offer (Free-Look Provision) LOANS Policy Loans Loan Account Loan Payments POLICY TERMINATION AND REINSTATEMENT Policy Termination (Lapse) Reinstatement TAX ISSUES RELATED TO THE POLICY GENERAL PROVISIONS Purchase Procedures Statement of Values Services Available via the Internet and Telephone Misstatement of Age or Gender Non-Participating Policy Incontestability Independent Auditors LEGAL PROCEEDINGS FINANCIAL STATEMENTS APPENDIX A - INVESTMENT DIVISIONS APPENDIX B - SURRENDER TARGET PREMIUMS APPENDIX C - APPLICABLE PERCENTAGES (FOR LIFE INSURANCE DEFINITION TEST) GLOSSARY ADJUSTMENT - change to your Policy resulting from an increase or decrease in policy 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 mutual fund. DOLLAR COST AVERAGING DURATION (DCA DURATION) - the length of time over which the entire fixed DCA account value is transferred to the fixed account and/or divisions. EFFECTIVE DATE - the date on which all requirements for issuance of a Policy have been satisfied. FIXED ACCOUNT - that part of the Policy that is not in the divisions, fixed DCA account or loan account. FIXED DCA ACCOUNT - an account to which net premiums may be allocated and from which a portion of the policy value is transferred on a monthly basis over the DCA duration. 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. LOAN ACCOUNT - that part of the dollar amount in the Policy that reflects the value transferred from the division(s), fixed DCA account and/or fixed account as collateral for a policy loan. LOAN INDEBTEDNESS - the amount of any policy loan and unpaid loan interest. MATURITY DATE - the policy anniversary nearest the insured's 100th birthday. MONTHLY DATE - the day of the month which is the same day as the policy date. Example: If the policy date is September 5, 2003, the first monthly date is October 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 monthly administration charge and asset based charge in effect on the monthly date. NET AMOUNT AT RISK - the result of: . the death benefit (as described in the Policy) at the beginning of the policy month, divided by 1.0024663; minus . the policy value at the beginning of the policy month calculated as if the monthly policy charge was zero. NET POLICY VALUE - the policy value minus any loan indebtedness. NET PREMIUM - the gross premium less the deductions for the premium expense charge. It is the amount of premium allocated to the divisions, fixed account and/or fixed DCA account. NET SURRENDER VALUE - surrender value minus any loan indebtedness. NOTICE - any form of communication received in our home office which provides the information we need which may be in writing sent to us by mail or facsimile or by calling us. OWNER - the person, including joint owner, who 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 VALUE - the sum of the values in the divisions, the fixed account, the fixed DCA account and the loan account. 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 September 5, 2003, the first policy year ends on September 4, 2004. The first policy anniversary falls on September 5, 2004. PREMIUM EXPENSE CHARGE - the charge deducted from premium payments to cover a sales charge and state, local and federal taxes. PRORATED BASIS - in the proportion that the value of a particular division, the fixed account or the fixed DCA account bears to the total value of all divisions, the fixed account and the fixed DCA account. SURRENDER VALUE - policy value minus any surrender charge. SURRENDER TARGET PREMIUM - a premium amount which is used to determine any applicable premium expense charge and surrender charge under a Policy. Surrender target premiums are provided in Appendix B. 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 investment account or portfolio thereof, in which a division invests. UNIT - the accounting measure used to calculate the value of each division. 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 at our office of a written notice or request, signed and dated, on a form we supply or approve. Your notices may be mailed to us at: Principal Life Insurance Company P O Box 9296 Des Moines, Iowa 50306-9296 Phone: 1-800-247-9988 SUMMARY: BENEFITS AND RISKS This prospectus describes a flexible variable universal life insurance policy offered by the Company. This is a brief summary of the Policy's features. More detailed information follows later in this prospectus. POLICY BENEFITS DEATH BENEFITS AND PROCEEDS The Company guarantees to pay a death benefit for as long as the Policy is in force. The death benefit 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 BENEFITS AND POLICY VALUES - Death Proceeds); . minus loan indebtedness; . minus any overdue monthly policy charges (Overdue monthly policy charges arise when a Policy is in a grace period and the net surrender value is insufficient to cover the sum of the cost of insurance and of additional benefits provided by any rider plus other policy charges). Death proceeds are paid in cash or applied under a benefit payment option. 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. PREMIUM PAYMENT FLEXIBILITY You may choose the amount and frequency of premium payments (subject to certain limitations). POLICY VALUES The policy value reflects your premium payments, partial surrenders, policy loans, policy expenses, intererst credited and/or the investment experience of the divisions. There is no guaranteed minimum division value. Policy Loans ------------ A loan may be taken using the Policy as collateral. The minimum loan amount is $500. The maximum loan amount is 90% of the net surrender value. Full Surrender -------------- The Policy may be surrendered and any net surrender value paid to the owner. If the full surrender is within ten years of the policy date or a policy face amount increase, a surrender charge is imposed. Partial Surrender ----------------- On or after the first policy anniversary, a Policy may be partially surrendered and the proceeds paid to the owner. The surrender charge does not apply to partial surrenders. ADJUSTMENT OPTIONS The total face amount may be increased or decreased unless the Policy is in a grace period or if monthly policy charges are being waived under a rider. Total Face Amount Increase -------------------------- The minimum amount of an increase is $50,000 and is subject to our underwriting guidelines in effect at the time the increase is requested. Total Face Amount Decrease -------------------------- On or after the first policy anniversary, a decrease in total face amount may be requested if the request does not decrease the policy face amount below $100,000. MATURITY PROCEEDS If the insured is living on the maturity date, we will pay the owner an amount equal to the net surrender value. Maturity proceeds are paid in cash lump sum or applied under a benefit payment option. The Policy terminates on the maturity date. POLICY RISKS RISKS OF POOR INVESTMENT PERFORMANCE The Policy is not intended to be a short-term savings vehicle. It is possible that investment performance could cause a loss of the entire amount allocated to the divisions. Without additional premium payments, investments in the fixed account, the fixed DCA account or a death benefit guarantee rider, it is possible that no death benefit would be paid upon the insured's death. NOTE: Each division invests in a corresponding underlying mutual fund. The underlying mutual funds are NOT available to the general public directly but 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. POLICY TERMINATION (LAPSE) On an ongoing basis, the Policy's net surrender value must be sufficient to cover the monthly policy charges and any loan indebtedness. It is possible that poor investment performance could cause the Policy to lapse unless an additional premium is paid. During the first five policy years, if the no-lapse premium requirement is met, the Policy will not terminate even if the Policy's net surrender value is insufficient to cover the monthly policy charge. LIMITATIONS ON ACCESS TO SURRENDER VALUE Partial Surrenders ------------------ . The minimum amount of partial surrender is $500. . Two partial surrenders may be made in a policy year. The total of the amount(s) surrendered may not be greater than 75% of the net surrender value (as of the date of the request for the first partial surrender in that policy year). . The death benefit will be reduced by the amount of the partial surrender. Full Surrenders --------------- If the full surrender is within ten years of the policy date or a policy face amount increase, a surrender charge is imposed. If you reinstate your Policy and then it is fully surrendered, a surrender charge may be imposed. ADVERSE TAX CONSEQUENCES A full surrender or cancellation of the Policy by lapse or the maturity of the Policy on its maturity date may have adverse tax consequences. If the amount received by the policyowner plus any loan indebtedness exceeds the premiums paid into the Policy, then the excess generally will be treated as taxable income. In certain employer-sponsored life insurance arrangements, including equity split dollar arrangements, participants may be required to report for income tax purposes, one or more of the following: . the value each year of the life insurance protection provided; . an amount equal to any employer-paid premiums; or . some or all of the amount by which the current value exceeds the employer's interest in the Policy. Participants should consult with the sponsor or the administrator of the plan, and/or with their personal tax or legal adviser, to determine the tax consequences, if any, of their employer-sponsored life insurance arrangements. RISKS OF UNDERLYING MUTUAL FUNDS A comprehensive discussion of the risks of each underlying mutual fund may be found in the underlying mutual fund's prospectus. As with all mutual funds, as the value of an underlying mutual fund's assets rise or fall, the fund's share price changes. If you sell your units in a division (each of which invests in an underlying mutual fund) when their value is less than the price you paid, you will lose money. Equity Funds ------------ The biggest risk is that the fund's returns may vary, and you could lose money. The equity funds are each designed for long-term investors who can accept the risks of investing in a portfolio with significant common stock holdings. Common stocks tend to be more volatile than other investment choices. The value of an underlying mutual fund's portfolio may decrease if the value of an individual company in the portfolio decreases. The value of an underlying mutual fund's portfolio could also decrease if the stock market goes down. Income Funds ------------ A fundamental risk of fixed-income securities is that their value will fall if interest rates rise. Since the value of a fixed-income portfolio will generally decrease when interest rates rise, the underlying mutual fund's share price return may likewise decrease. Another fundamental risk associated with fixed-income securities is credit risk, which is the risk that an issuer will be unable to make principal and interest payments when due. International Funds ------------------- The international underlying mutual funds have significant exposure to foreign markets. As a result, their returns and price per share may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. SUMMARY: FEE TABLES 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 or surrender the Policy.
TRANSACTION FEES ------------------------------------------------------------------------------ CHARGE CHARGE IS DEDUCTED: AMOUNT DEDUCTED ------------------------------------------------------------------------------ Maximum Sales Charge Imposed: 3.00% of premium paid years 1-5 (after issue (up to surrender or adjustment) target premium) from each premium paid 1.25% of premium paid in excess of surrender target years 6 and later premium (after issue or from each premium paid none adjustment) ------------------------------------------------------------------------------ Taxes (federal, state from each premium paid 3.25% of premium paid and local) ------------------------------------------------------------------------------ Maximum Deferred Sales $44.77 per $1,000 of Charge* from surrender proceeds policy face amount (full surrender of Policy) ------------------------------------------------------------------------------ upon each unscheduled currently zero but we transfer after the first reserve the right to Transfer Fees twelve unscheduled impose a transfer fee transfers in a policy of no more than $25 year ------------------------------------------------------------------------------
* Deferred sales charges (surrender fees) decline over time. 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*: Minimum and Maximum Charge monthly $0.06 increasing to $83.33 per $1,000 of net amount at risk Charge for a representative policy owner (45-year old male $0.23 increasing to $83.33 per with a risk monthly $1,000 of net amount at risk classification of preferred non-smoker) ------------------------------------------------------------------------------ policy years 1-10: 0.70% of the Asset Based Charge monthly policy value after policy year 10: 0.20% of the policy value ------------------------------------------------------------------------------ Administration Charge during the first $25.00 per month policy year monthly $10.00 (guaranteed not to exceed after the first monthly $25.00 per month) policy year ------------------------------------------------------------------------------ Policy loan interest policy years 1-10: 5.5% of loan (applies only if a annually balance per year policy loan is (accrued daily) after policy year 10: 3.8% of outstanding) loan balance per year ------------------------------------------------------------------------------ Optional Insurance Benefits** Accidental Death monthly $0.03 increasing to $00.14 per Benefit Rider $1,000 of rider benefit Life Paid-Up Rider rider exercise date 3.5% of policy value Salary Increase Rider monthly $0.00 increasing to $0.13 per $1,000 of rider benefit Supplemental Benefit monthly $0.04 increasing to $83.33 per Rider $1,000 of net amount at risk Waiver of Monthly monthly $0.01 increasing to $0.51 per Policy Charges Rider $1,000 of net amount at risk Waiver of Specified monthly $0.15 increasing to $0.89 per Premium Rider 1,000 of planned periodic premium ---------------------------------------------- --------------------------------
* 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. The charge shown in the table may not be representative of the charge that a particular policy owner will pay. Typically, cost of insurance rates are lower for insureds who: are non-smokers; have a risk classification of preferred; are younger; and are fully underwritten. 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. ** Rates shown assume that the insured's risk classification is standard or better. 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, 2002.
MINIMUM MAXIMUM ---------------------------------------------------------------------------------------- Management Fees ---------------------------------------------------------------------------------------- Distribution and/or Service (12b-1) Fees ---------------------------------------------------------------------------------------- Other Expenses ---------------------------------------------------------------------------------------- Total Annual Underlying Mutual Fund Operating Expenses ----------------------------------------------------------------------------------------
The following table shows the fees and expensese (after waiver or reimbursement) charged by each underlying mutual fund for the fiscal year ended December 31, 2002. Annual Underlying Mutual Fund Operating Expenses (expenses that are deducted from underlying mutual fund assets)
MANAGEMENT FEES 12B-1 OTHER EXPENSES TOTAL EXPENSES UNDERLYING MUTUAL FUNDS AFTER REIMBURSEMENT FEES AFTER REIMBURSEMENT AFTER REIMBURSEMENT// /(1)/ ----------------------- ------------------- ----- ------------------- --------------------------- AIM V.I. Core Equity / AIM V.I. Growth / AIM V.I. Premier Equity / American Century VP Income & Growth Class II / American Century VP Ultra Class II American Century VP Value Class II DIP SmallCap Portfolio Fidelity VIP II Contrafund Service Class 2 Fidelity VIP Equity-Income Service Class 2 Fidelity VIP High Income Service Class 2 Fidelity VIP Growth Service Class 2 Fidelity VIP MidCap Service Class 2 INVESCO VIF - Health Sciences Fund / MFS VIT New Discovery Principal VCF Asset Allocation / Principal VCF Balanced Principal VCF Bond Principal VCF Capital Value / Principal VCF Equity Growth Principal VCF Government Securities Principal VCF Growth Principal VCF International Principal VCF International Emerging Markets Principal VCF International SmallCap Principal VCF LargeCap Blend Principal VCF LargeCap Growth Equity Principal VCF LargeCap Stock Index Principal VCF LargeCap Value Principal VCF MidCap Principal VCF MidCap Growth Principal VCF MidCap Value / Principal VCF Money Market Principal VCF Real Estate / Principal VCF SmallCap Principal VCF SmallCap Growth Principal VCF SmallCap Value Principal VCF Utilities Wells Fargo VT Asset Allocation Wells Fargo VT Equity Income Wells Fargo VT Large Company Growth
/ //(1)/ The Company and Princor Financial Services Corporation may receive a portion of the underlying fund expenses for recordkeeping, marketing and distribution services. For certain underlying mutual funds, certain expenses were voluntarily reimbursed and/or certain fees were voluntarily waived in 2002. It is anticipated that these expense reimbursements and fee wiaver arrangements will continue although they may be terminated at any time. Before taking into account these voluntary arrangements, the annual expenses would have been:
MANAGEMENT FEES 12B-1 OTHER EXPENSES TOTAL EXPENSES UNDERLYING MUTUAL FUNDS BEFORE REIMBURSEMENT FEES BEFORE REIMBURSEMENT BEFORE REIMBURSEMENT/(1)/ ----------------------- -------------------- ----- -------------------- ------------------------- / / / / / / / /
/ //(1)/ The Company and Princor Financial Services Corporation may receive a portion of the underlying fund expenses for recordkeeping, marketing and distribution services. / //(2) / CORPORATE ORGANIZATION AND OPERATION 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 July 1, 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, credited to or charged against the Separate Account reflect the Separate Account's own investment experience and not the investment experience of the Company's other assets. Assets of the Separate Account may not be used to pay any liabilities of the Company other than those arising from the policies funded by the Separate Account. The Company is obligated to pay all amounts promised to Policy owners under the Policy. THE FUNDS The assets of each division of the Separate Account invest in a corresponding underlying mutual fund. The Company purchases and sells fund shares for the Separate Account at their net asset value without any sales or redemption charge. 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 funds are mutual funds registered under the Investment Company Act of 1940 as open-end management investment companies. 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, and sub-advisor for, each division. New divisions may be added and made available. Divisions may also be eliminated from the Separate Account following SEC approval. 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 or to the fixed account; . 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) and/or the fixed account 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). 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(s). 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 are 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 contracts. 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 mutual fund. THE FIXED ACCOUNT AND FIXED DCA ACCOUNT The fixed account and the fixed DCA account are part of our general account. Because of exemptions and exclusions contained in the Securities Act of 1933 and the Investment Company Act of 1940, the fixed account, the fixed DCA account and any interest in them are not subject to the provisions of these acts. As a result the SEC has not reviewed the disclosures in this prospectus relating to the fixed accounts. However, disclosures relating to them are subject to generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. You may obtain more information regarding the fixed accounts from our home office or from a sales representative. Our obligations with respect to the fixed accounts are supported by our general account. Subject to applicable law, we have sole discretion over the investment of assets in the general account. We guarantee that net premiums allocated to the fixed accounts accrue interest daily at an effective annual rate of 3% compounded annually. We may, in our sole discretion, credit interest at a higher rate. We may defer payment of proceeds payable out of the fixed accounts for a period of up to six months. The Fixed Account ----------------- The value of your fixed account on any business day is: . net premiums allocated to the fixed account . plus transfers from the division(s) and/or fixed DCA account . plus interest credited to the fixed account . minus surrenders, surrender charges and monthly policy charges . minus transfers to the loan account . minus transfers to the division(s). The Fixed Dollar Cost Averaging (DCA) Account --------------------------------------------- You may elect to have net premiums allocated to a fixed DCA account. The fixed DCA account must be selected at the time of application and requires an initial minimum net premium of $1,000. You may select either a 6-month or a 12-month DCA duration. During the DCA duration, subsequent net premiums may be allocated to the fixed DCA account. After the examination offer period, a portion of the value in the fixed DCA account is transferred each monthly date during the DCA duration. If the monthly date is not a business day, the transfer occurs on the next business day. The transfers are allocated to the divisions and/or to the fixed account according to your Fixed DCA allocation instructions. On each monthly date, the amount of the transfer is (a) divided by (b) where (a) is the value of your fixed DCA account (which includes net premiums and interest credited); and (b) is the number of months remaining in the DCA duration. For example, if your fixed DCA account has a value of $4,000 and four months remain in the DCA duration, the transfer amount would be $1,000 ($4,000 / 4). The credited interest rate on the fixed DCA account is generally higher than the rate on the fixed account. Net premiums are credited at the interest rate in effect on the date the net premium is allocated to the fixed DCA account. The 6-month DCA duration and the 12-month DCA duration generally have different credited interest rates. You may make unscheduled transfers from the fixed DCA account to divisions and/or the fixed account. Transfers into the fixed DCA account are not permitted. After the DCA duration, net premiums may not be allocated to the fixed DCA account. If at the end of the DCA duration your premium allocation percentages include allocating a portion of net premiums to the fixed DCA account, that portion will be allocated to the Money Market Division until you give us instructions otherwise. 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 others are deducted at the time a Policy is surrendered or terminated. These charges are intended to cover distribution expenses (commissions paid to registered representatives, printing of prospectuses and advertising), administrative expenses (processing applications; conducting medical examinations; determining insurability; establishing and maintaining records; processing death benefit claims and policy changes, reporting and overhead), mortality expenses and profit. PREMIUM EXPENSE CHARGE When we receive your premium payment, we deduct a premium expense charge. The amount of the charge is based in part on expense assumptions relative to the class or classes of contracts of which this Policy is a part, and such assumptions may not reflect the actual costs applicable to any particular Policy. Deductions from premiums during each of the first five years and with respect to premiums made because of a policy face amount increase, during the first five years after the increase, equal: . sales load of 3.00% of premiums paid up to surrender target premium (1.25% of premiums in excess of surrender target premium) . plus 2.00% (of premiums paid) for state and local taxes . plus 1.25% (of premiums paid) for federal taxes. Deductions from premiums after the fifth policy year (and five years after a policy face amount increase) are: . 2.00% (of premiums paid) for state and local taxes . plus 1.25% (of premiums paid) for federal taxes. Surrender Target Premium ------------------------ The surrender target premium is based on the gender, if applicable, age and risk classification of the insured (see APPENDIX B - SURRENDER TARGET PREMIUM). The surrender target premium is a calculated premium amount used to determine the premium expense change and the surrender charge. The surrender target premium is not required to be paid. SURRENDER CHARGE A surrender charge is imposed upon full surrender of the Policy within ten years of the policy date or of a policy face amount increase. In addition, if you reinstate your Policy and then it is fully surrendered, a surrender charge may be imposed. Surrender charges vary based on the surrender target premium of the Policy, age at issue or adjustment, state of issue and 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 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) multiplied by (c) where: (a) is the surrender target premium calculated using the rates in Appendix B; (b) is the percentage shown below:
AGE AT ISSUE OR FACE POLICY WRITTEN IN POLICY WRITTEN IN OTHER ---AMOUNT INCREASE-- -----NEW YORK---- -----THAN NEW YORK----- --------------- -------- ------------- 0-60 100% 100% 61-65 94 100 66-70 89 100 71-75 84 100 76-80 65 80 81-85 53 65
(c) is the applicable surrender charge percentage shown below:
SURRENDER CHARGE PERCENTAGE TABLE --------------------------------- NUMBER OF YEARS SINCE POLICY THE FOLLOWING PERCENTAGE OF DATE AND/OR FACE AMOUNT INCREASE SURRENDER CHARGE IS PAYABLE -------------------------------- --------------------------- 1 through 5 100.00% 6 95.24 7 85.71 8 71.43 9 52.38 10 28.57 11 and later 00.00
MONTHLY POLICY CHARGE The monthly policy charge is made up of: . a charge for the cost of insurance; . a monthly administration charge; . an asset based charge; and . any charge for an optional insurance benefit added by rider(s). On the policy date and each monthly date thereafter, we deduct the charge from your policy value in the divisions, fixed account and/or fixed DCA account (but not your loan account). The deduction is made using your current monthly policy charge allocation percentages. Your 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. For each division, the fixed account and/or fixed DCA account, the allocation percentage must be zero or a whole number. 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 date we receive the request. If we cannot follow your instructions because of insufficient value in any fixed account, fixed DCA account and/or the 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) where: (a) is the cost of insurance rate (described below) divided by 1,000; and (b) is the net amount at risk. Different cost of insurance rates may apply to policy face amount increases and to supplemental benefit riders. The cost of insurance for the increase is based on the insured's gender*, issue age, duration since issue, smoking status, and risk classification at the time of the increase. The guaranteed maximum cost of insurance rate for the increase is based on the insured's gender*, attained age and risk classification at the time of the increase. * The cost of insurance rate for Policies issued in states which require unisex pricing or in connection with employment related insurance and benefit plans is not based on the gender of the insured. Groups and persons buying Policies under a sponsored arrangement 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. Monthly Administration Charge ----------------------------- CURRENT CHARGES . The current monthly administrative charge is $25.00 per month during the first policy year. After the first policy year, the administrative charge is $10.00 per month. GUARANTEED ADMINISTRATION CHARGES . In all policy years, the guaranteed maximum monthly administration charge is $25.00 per month. Asset Based Charge ------------------ Each month during the first ten policy years, we deduct an asset based charge at an annual rate of 0.70% of the policy value. Each month thereafter, we deduct a charge at an annual rate of 0.20% of the policy value. We reserve the right to increase the annual rate but guarantee that the maximum annual rate will not exceed 0.70%. If we increase the annual rate, the increase will only apply to policies issued on or after the date of the increase. UNDERLYING MUTUAL FUND 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 a mutual fund are shown in the prospectus for the underlying mutual fund. GENERAL DESCRIPTION OF THE POLICY THE CONTRACT The entire contract is made up of applications, amendments, riders and endorsements attached to the Policy, current data pages, copies of any supplemental applications, amendments, endorsements and revised 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. The descriptions that follow are based on provisions of the Policy offered by this prospectus. RIGHTS UNDER THE POLICY Ownership --------- Unless changed, the owner(s) is as named in the application. The owner(s) 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 death proceeds are paid, upon the maturity date, if the Policy is surrendered 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. With our consent, you may specify a different arrangement for contingent ownership. You may change your 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 you send us the Policy so that we can record the change. Beneficiary ----------- If the insured dies before the maturity date, we pay death proceeds to your named beneficiary(ies). 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 you have named an irrevocable beneficiary, you may change your beneficiary designation by sending us a written request. After approval, the change is effective as of the date you signed the request for change. We reserve the right to require that you send us the Policy so that we can record the change. If no beneficiary(ies) survives the insured, the death proceeds are paid to the owner(s) or the estate of the owner(s) in equal percentages unless otherwise specified. Assignment ---------- You may assign your 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 home 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. POLICY LIMITATIONS Division Transfers ------------------ You may transfer amounts between the divisions and/or the fixed account. You must specify the dollar amount or whole percentage to transfer from each division. The transfer is made, and the values determined as of the end of the valuation period in which we receive your 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. You may request an unscheduled transfer or set up a periodic transfer by: . sending us a written request; . calling us if telephone privileges apply (1-800-247-9988); or . visiting www.principal.com (if internet privileges apply). You may not make a transfer to the fixed account if: . a transfer has been made from the fixed account to a division within six months; or . immediately after the transfer, the fixed account value would be more than $1,000,000 (without our prior approval). UNSCHEDULED TRANSFERS . You may make unscheduled transfers from a division to another division or to the fixed account. The minimum transfer amount is the lesser of $100 or the value of your division. We reserve the right to impose a transfer fee of up to $25 on each unscheduled transfer after the first twelve unscheduled transfers in a policy year. SCHEDULED TRANSFERS . You may elect to have automatic transfers made out of one division into one or more of the other divisions and/or the fixed account. You choose the investment options, the dollar amount and timing of the transfers. Automatic transfers are designed to reduce the risks that result from market fluctuations. They do 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. 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 $110.00 35
In the example above, the average share price is $18.33 (total of share prices ($110.00) divided by number of purchases (6)) and the average share cost is $17.14 (amount invested ($600.00) divided by number of shares purchased (35)). Automatic transfers are made on a periodic basis without an additional charge. . The amount of the transfer is: . the dollar amount you select (the minimum is the lesser of $100 or the value of the division); or . a percentage of the division value as of the date you specify (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. . The value of the division must be equal to or more than $2,500 when your scheduled transfers begin. . Transfers continue until your interest in the division has a zero balance or we receive notice to stop them. . 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. 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 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 market timing efforts 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. Fixed Account Transfers ----------------------- Transfers from your investment in the fixed account to your division(s) are subject to certain limitations. You may transfer amounts by making either a scheduled or unscheduled fixed account transfer. You may not make both a scheduled and an unscheduled fixed account transfer in the same policy year. UNSCHEDULED TRANSFERS . You may make one unscheduled fixed account to division(s) transfer within the 30-day period following each policy anniversary. . You must specify the dollar amount or percentage to be transferred (not to exceed 25% of the fixed account value as of the most recent policy anniversary). . The minimum transfer amount must be at least $100 (or the entire value of your fixed account if less). . If your fixed account value is less than $1,000, you may transfer up to 100% of your fixed account. SCHEDULED TRANSFERS . You may make scheduled transfers on a monthly basis from the fixed account to your division(s) without an additional charge as follows: . The value of your fixed account must be equal to or more than $2,500 when your scheduled transfers begin. We reserve the right to change this amount but it will never be more than $10,000. . The amount of the transfer is: . the dollar amount you select (minimum of $100); or . a percentage of the fixed account value (the maximum amount of the transfer is 2% of the fixed account value as of the specified date) as of the date you specify which may be: . the later of the policy date or most recent policy anniversary date; or . the date the Company receives your request. . Transfers occur on a date you specify (other than the 29th, 30th or 31st of any month). . If the specified date is not a business day, the transfer is completed on the next business day. Scheduled transfers continue until your value in the fixed account has a zero balance or we receive your notice to stop them. You may change the amount of the transfer once each policy year by: . sending us a written request; . calling us if telephone privileges apply (1-800-247-9988); or . visiting www.principal.com (if internet privileges apply). If you stop the transfers, you may not start them again until six months after the last scheduled transfer. Automatic Portfolio Rebalancing (APR) ------------------------------------- APR allows you to maintain a specific percentage of your 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 your 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. You may elect APR at the time of application or after the Policy has been issued. The APR transfers: . do not begin until the later of expiration of the examination offer period or the DCA duration, if applicable; . are done without charge; . may be done on the frequency you specify: . quarterly APR transfers may be done on a calendar year or policy year basis; . semiannual or annual APR transfers may only be done on a policy year basis. . may be done by: . calling us (if telephone privileges apply (1-800-247-9988)); . mailing us your written request; . faxing your request to us; or . visiting www.principal.com (if internet privileges apply). . are made at the end of the next valuation period after we receive your instruction; . are not available for values in the fixed account; and . are not available if you have scheduled transfers from the same divisions. OPTIONAL INSURANCE BENEFITS Subject to certain conditions, you may add one or more optional insurance benefits to your Policy. 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. SOME PROVISIONS MAY VARY FROM STATE TO STATE. The cost, if any, of an optional insurance benefit is deducted from your policy value. Accidental Death Benefit Rider ------------------------------ This rider provides an additional death benefit if the insured's death is caused by accidental means. There is a charge for this rider. Accounting Benefit Rider ------------------------ This rider is available on business cases only and provides if the Policy is surrendered in the first ten years, 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 Internal Revenue Code (the "Code") Section 1035 exchanges. Our approval, under our then current underwriting guidelines, is required to add this rider. There is no charge for this rider. Benefit Advance Rider --------------------- This rider provides the option of receiving the death proceeds before death if the insured becomes terminally ill. Up to 75 percent of the total face amount may be requested, up to a maximum of $1,000,000, provided that the insured has been diagnosed as terminally ill and has a life expectancy of less than 12 months. This rider is added automatically to all Policies. There is no charge for this rider other than loan interest charged during the time period death proceeds are advanced. Change of Insured Rider ----------------------- This rider is available on business cases only and allows the business to change the insured when an employee leaves employment or ownership of the business changes. There is no charge for this rider. Cost of Living Rider -------------------- This rider provides increases in the face amount every three years without requiring evidence of insurability. This rider is added automatically to all Polices with a risk classification of standard or better and where the insured's issue age is 52 or younger. There is no charge for this rider. Death Benefit Guarantee Rider ----------------------------- This rider extends the no-lapse guarantee provision if premiums paid equal or exceed the death benefit guarantee premium requirement. This rider is automatically made a part of the Policy if the Supplemental Benefit Rider is not part of the Policy and if the planned periodic premium is equal to or greater than the death benefit guarantee premium or if the first year paid premium is large enough to satisfy the death benefit guarantee premium requirement for one year. The level of planned periodic premium determines whether the no-lapse guarantee is extended to the insured's attained age 65 or attained age 85. There is no charge for this rider. If on any monthly date, the death benefit guarantee premium is not met, we send you a notice stating the premium required to keep the rider in effect. If the premium required to maintain the rider is not received in our home office before the expiration of the 61 days (which begins when the notice is mailed), the death benefit guarantee is no longer in effect and the rider is terminated. If the rider terminates, it may not be reinstated. Extended Coverage Rider ----------------------- This rider extends the Policy beyond the maturity date as long as the Policy is still in-force and the insured is living on the maturity date. No further monthly policy charges are deducted. This rider is added automatically to all Policies. There is no charge for this rider. Life Paid-Up Rider ------------------ Under certain circumstances, this rider can prevent the Policy from lapsing when there is a large loan outstanding. If certain conditions are met, the Policy will become paid-up on the monthly date when the loan balance is at least 96% of the surrender value. The paid-up face amount will be 105% of the policy value. Adjustments or changes to the Policy are not allowed once the Policy becomes paid-up. There is a one-time policy charge taken from the policy value on the date the rider is exercised. Salary Increase Rider --------------------- This rider is available on business cases only and provides increases in the face amount based on salary adjustments without requiring evidence of insurability. There is a charge for this rider. Supplemental Benefit Rider -------------------------- This rider provides additional insurance (face amount) at a reduced cost. The use of this rider disqualifies the use of the Death Benefit Guarantee Rider. Our approval, under our then current underwriting guidelines, is required to add this rider. There is a charge for this rider. Waiver of Monthly Policy Charges Rider -------------------------------------- This rider pays the monthly policy charges of the Policy if you become disabled and lose your ability to earn an income. Our approval, under our then current underwriting guidelines, is required to add this rider. There is a charge for this rider. Waiver of Specified Premium Rider --------------------------------- This rider pays the planned scheduled premium on the Policy if you become disabled and lose your ability to earn an income. Our approval, under our then current underwriting guidelines, is required to add this rider. There is a charge for this rider. RESERVATION OF RIGHTS We reserve the right to change the Policy to assure it continues to qualify as life insurance for tax purposes. However, we cannot make any guarantee regarding the future tax treatment of any Policy. We also reserve the right to amend or terminate the special plans described in this prospectus, for example preauthorized premium payments. You would be notified of any such action to the extent required by law. RIGHT TO EXCHANGE During the first 24 months after the effective date (except during a grace period), you have the right to make an irrevocable, one-time election to transfer all of your division and fixed DCA account values to the fixed account. No charge is imposed on this transfer. Your request must be in writing and be signed by the owner(s). The request must be postmarked or delivered to our home office before the end of the 24-month period. The transfer is effective when we receive your written request. 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 policy 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 loan indebtedness and partial surrenders. In the event of suicide within two years of a policy 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 due to exercise of your rights under the examination offer provision, surrenders, policy loans, death or maturity proceeds, and transfers to or from a division are generally made within five days after we receive your instructions in a form acceptable to us. This period may be shorter where required by law. However, payment of any amount upon return of the Policy, full or partial surrender, policy loan, death, maturity or the transfer to or from a division 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. 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 for the protection of security holders. If payments are delayed and your instruction is not canceled by your 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. We may defer payment of proceeds payable out of the fixed account and/or fixed DCA account for a period of up to six months. PREMIUMS PAYMENT OF PREMIUMS The amount and frequency of your premium payments affects the policy value, the net surrender value and how long the Policy remains in force. You must pay premiums to us at our home office, Principal Life Insurance Company, 801 Grand (IDPC), Des Moines, Iowa 50392. You may set up monthly preauthorized withdrawals to allow us to automatically deduct premium payments from your checking or other financial institution account. You may make unscheduled payments and/or establish a payment schedule (we send premium reminder notices if you establish an annual, semiannual or quarterly planned payment schedule). Premium payments may also be made through payroll deduction where permitted by state law and approved by us. PREMIUMS AFFECTING GUARANTEE PROVISIONS Your initial premium must be at least the no-lapse guarantee premium. After the initial premium, you may determine the amount and timing of subsequent premium payments (with certain restrictions): however, we recommend you continue to pay at least the no-lapse guarantee premium. By meeting the no-lapse guarantee premium requirement, your Policy is guaranteed not to lapse during the first five policy years even if the net surrender value is insufficient to cover the monthly policy charge. The no-lapse guarantee premium requirement is met if ((a) minus (b)) is greater than or equal to (c) where: (a) is the sum of premiums paid; (b) is the sum of all loan indebtedness and partial surrenders; and (c) is the sum of the no-lapse guarantee monthly premiums since the policy date to the most recent monthly date. If the no-lapse premium requirement is not met and the net surrender value is insufficient to cover the monthly policy charge, the Policy may lapse in the first five policy years. If the Death Benefit Guarantee rider is made a part of your Policy and you pay at least the death benefit guarantee premium requirement, the death benefit guarantee period will last longer than the five year period provided by the no-lapse guarantee provision. You choose whether you want the no-lapse guarantee period to extend to the insured's attained age 65 or attained age 85. The longer the death benefit guarantee period, the higher the premium requirement. Example: If the policy face amount is $250,000 and the insured is a male with an attained age of 45 who is a nonsmoker: No-lapse guarantee premium requirement $2,332.50 Death benefit guarantee to attained age 65 premium requirement $3,755.00 Death benefit guarantee to attained age 85 premium requirement $6,337.50 You choose the death benefit guarantee period based on your scheduled premium payments. The death benefit guarantee premium requirement is met if ((a) minus (b)) is greater than or equal to (c) where: (a) is the sum of premiums paid; (b) is the sum of all loan indebtedness and partial surrenders; and (c) is the sum of the death benefit guarantee monthly premiums since the policy date to the most recent monthly date. If the death benefit guarantee premium requirement is not met, the Death Benefit Guarantee Rider will lapse. Both the no-lapse guarantee premium and the death benefit guarantee premium are per $1000 of face amount and vary by issue age, gender* and smoking status. The no-lapse guarantee premium and the death benefit guarantee premium are shown on the current data pages. * For Policies issued in states which require unisex pricing or in connection with employment related insurance and benefit plans, the premiums are not based on the gender of the insured. PREMIUM LIMITATIONS In no event may the total of all premiums paid, both scheduled and unscheduled, be more than the maximum premium payments allowed for life insurance under the Code. If you make a premium payment that would result in total premiums exceeding the 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 are accepted until allowed by the current maximum premium limitations. ALLOCATION OF PREMIUMS Your initial net premium (and other net premiums we receive prior to the effective date and twenty days after the effective date) is allocated to the Money Market division at the end of the business day we receive the premium. Twenty-one days after the effective date, the money is reallocated to the divisions, fixed account and/or fixed DCA account according to your instructions. If the twenty-first day is not a business day, the transfer will occur on the first business day following the twenty-first day from the effective date. Example: The effective date of your Policy is February 1st. Your net premium is allocated to the Money Market division at the end of the valuation period we receive the premium. At the close of business on February 21st, the net premium is reallocated to the divisions, fixed account and/or fixed DCA account that you selected. Net premium payments received after the twenty-day period are allocated to the divisions, the fixed account and/or fixed DCA account according to your instructions. For each division, fixed account and fixed DCA account, the allocation percentage must be zero or a whole number. The total of all allocation percentages must equal 100. At any time, you may change the percentage allocation for future premium payments by: . sending a written request to us; . calling us at 1-800-247-9988 (if telephone privileges apply); or . visiting www.principal.com (if internet privileges apply). The allocation changes are effective at the end of the valuation period in which your new instructions are received. NOTE: We reserve the right to keep the initial premium payment in the Money Market division longer than 20 days to correspond to the examination offer periods of a particular state's replacement requirements. Division Valuation ------------------ 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 premiums payments or a Death Benefit Guarantee rider, it is possible that no death benefit would be paid upon the insured's death. At the end of any valuation period, your value in a division is: . the number of units you have in the division . 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: . your initial premium payment (less premium expense charges); . plus subsequent premium payments (less premium expense charges); . plus transfers from another division, the fixed account or the fixed DCA account minus units sold: . for partial surrenders from the division; . as part of a transfer to another division, the fixed account 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 you own in the division. DEATH BENEFITS AND POLICY VALUES DEATH PROCEEDS If coverage is in effect and 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)*; and . 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 office and a current Board resolution providing the name of the officer 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 your named beneficiary(ies) under your designated benefit payment option (see GENERAL DESCRIPTION OF THE POLICY - Rights Under the Policy). The payments are made in cash lump sum or under a benefit payment option. Death proceeds are calculated as of the date of the insured's death and include: . the death benefit described below; . minus loan indebtedness; . 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. Benefit Instructions -------------------- While the insured is alive, you may give us instructions for payment of death proceeds under one of the benefit payment options of the Policy. If at the insured's death, you have not provided benefit payment option instructions, the beneficiary(ies) select the benefit payment option to be used. These choices are also available if the Policy matures or is surrendered. The instructions or changes to the instructions must be in writing. If you change the beneficiary(ies), prior benefit payment option instructions are revoked. The benefit payment options include: . Custom Benefit Arrangement A customized 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. . Joint and Survivor Life Income We pay income during the lifetime of two people and continue until the death of the survivor. This option includes a minimum guaranteed period of 10 years. If no beneficiary(ies) survive the insured, the death proceeds will be paid to the owner or the owner's estate unless otherwise specified. Interest at a rate set by us, but never less than required by state law, will be applied to calculate the above benefit payment options. 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 the 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 the applicable percentage*. * The applicable percentage tables are in Appendix ____________ and are based on our interpretation of Section 7702 of the Code as set forth below. The table which applies to your Policy is determined by your choice of either the guideline premium/cash value corridor test or the cash value accumulation test. Example: The following assumptions are made to demonstrate the use of the Tables found in Appendix _________. 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 You may change the death benefit option on or after the first policy anniversary. Up to two changes are allowed per policy year. Your 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. 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 immediately after the change equals the death benefit 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 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 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 ------------------------------------------------------------------------------------- $970,000 $1,020,000 $50,000 ($1,000,000 + ($30,000 - ($970,000+$50,000) $10,000) - $50,000) -------------------------------------------------------------------------------------
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 but 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 C. 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. The example below is based on the following: . The insured is a male with an attained age of 45 at the time the Policy was issued. He 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. 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, the Policy is in force and if the Extended Coverage Rider is not attached to the Policy, maturity proceeds equal to the net surrender value are paid. If the Extended Coverage Rider is attached but you wish to receive the maturity proceeds at the Policy's maturity and avoid conversion to Death Benefit Option 1, you must send instructions to our office. The maturity proceeds are paid either as a cash lump sum on the maturity date or under the benefit payment option you have selected. Only if the Extended Coverage Rider is present on the Policy will the maturity date automatically be extended to the date of the insured's death (as explained in GENERAL DESCRIPTION OF THE POLICY - Optional Insurance Benefits). ADJUSTMENT OPTIONS Increase in policy face amount ------------------------------ You may request an increase at any time provided that the Policy is not in a grace period and monthly policy charges are not being waived under a rider. The minimum increase in policy face amount is $50,000. A policy face amount increase request made in the first 60 policy months will increase the no-lapse guarantee premium for the remainder of the 60 months. The request must be made on an adjustment application. The application must be signed by the owner(s) and the insured. If your request is not approved, no changes are made to your Policy. We will approve your request if: . the insured is alive at the time of your request; and . the attained age of the insured is 85 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 your request. The increase in policy 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 your request. No examination offer period applies to an increase in policy face amount. We calculate an "adjustment conditional receipt premium deposit" (payment that accompanies request) based on your request for an increase. If you make a payment with your adjustment application of at least as much as the adjustment conditional receipt premium deposit, we issue a conditional receipt. The conditional receipt shows receipt of the payment and outlines any interim insurance coverage. Any payment made with the adjustment application is held in our general account without interest. If we approve the adjustment, on the effective date of the adjustment, the amount of the premium payment being held minus the premium expense charge is moved to the divisions, fixed account and/or fixed DCA account. Your current premium allocation percentages are used to make this allocation. The cost of insurance charge will increase in the event of an increase in a Policy's face amount. If there is insufficient value to pay the higher charges after an increase in face amount, the Policy will lapse, unless the no-lapse or death benefit guarantees are in effect. The entire Policy would be at risk of lapsing, not just the incremental increase in face amount. Decrease in policy face amount ------------------------------ On or after the first policy anniversary, you may request a decrease in the policy face amount. No transaction fee is imposed on decreases in the policy face amount. A decrease in face amount lowers the cost of insurance charges but does not reduce surrender 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); . the Policy is not in a grace period; . monthly policy charges are not being waived under a waiver rider; . the decrease is at least the minimum amount as determined by our underwriting guidelines in place at the time of your request; and . the decrease may not reduce the policy 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. POLICY VALUES Your policy value is equal to the sum of the values in your divisions, fixed account, fixed DCA account and loan account. The policy value also reflects your premium payments, partial surrenders, policy loans and the policy expenses deducted. SURRENDERS AND PARTIAL SURRENDERS SURRENDERS You must send us a written request for any surrender. The request must be signed by all owners, irrevocable beneficiary(ies), if any, and any assignees. The surrender is effective and the surrender value calculated 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 DESCRIPTION OF THE POLICY - Delay of Payments). Full surrender -------------- You may surrender the Policy while the Policy is in effect. 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 you to return the Policy to us prior to making any payment though this does not affect the amount of the surrender value. Partial surrender ----------------- On or after the first policy anniversary, you may surrender a part of the net surrender value. The minimum amount of a partial surrender is $500. Up to two partial surrenders may be made during a policy year. The total of your two partial surrenders during a policy year may not be greater than 75% of the net surrender value (as of the date of the request for the first partial surrender in that policy year). The partial surrender may not decrease the policy face amount to less than $100,000. Partial surrenders may negatively affect your no-lapse guarantee provision and your Death Benefit Guarantee rider, if applicable. Your policy value is reduced by the amount of the surrender. We surrender units from the division and/or values from the fixed account to equal the dollar amount of the surrender request. The surrender is deducted from your division(s) and/or fixed account according to the surrender allocation percentages you specify. If surrender allocation percentages are not specified, we use your monthly policy charge allocation percentages. No surrender charge is imposed on a partial surrender. . 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 (PERTAINS ONLY IF DEATH BENEFIT OPTION 1 IS IN EFFECT) . During policy years two through fifteen, 10% 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 10% causes a reduction in the total face amount. The 10% 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; (b) is the amount of any preferred partial surrenders in the same policy year; and (c) is 10% 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. EXAMINATION OFFER (FREE-LOOK PROVISION) Under state law, you have the right to return the Policy for any reason during the examination offer period. If you return the Policy, we will refund your premium in states where required. In states where permitted, we will refund the net policy value plus any fees or charges taken (which may be more or less than premiums paid). Your request to return the Policy must be in writing. 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 offer period as shown below. The examination offer period is the later of: . 10 days after the Policy is delivered to you; or . such later date as specified by applicable state law. NOTE: See GENERAL DESCRIPTION OF THE POLICY - Delay of Payments. LOANS POLICY LOANS While your Policy is in effect (but after the examination offer period) 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 telephone privileges apply, you may request a policy loan of $5,000 or less by calling us at 1-800-247-9988. If you do not have telephone privileges or are requesting a policy loan of more than $5,000, your request must be made in writing. . Generally, policy loan proceeds are sent within five business days from the date we receive your request (see GENERAL DESCRIPTION OF THE POLICY - Delay of Payments). . Requests for policy loans from any joint owner are binding on all joint owners. . Policy loans may negatively affect your no-lapse guarantee provision and your Death Benefit Guarantee rider, if applicable (see POLICY TERMINATION AND REINSTATEMENT - Policy Termination (Lapse)). You are charged interest on your policy loan. During the first ten policy years, the interest rate is 5.50% per year. After policy year ten, the interest rate is 3.80% 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 policy loan amount causes additional amounts to be withdrawn from your fixed account, fixed DCA account and/or division(s) and transferred to the loan account. Withdrawals are made in the same proportion as the allocation used for the most recent monthly policy charge. 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) and the interest credited to the fixed account and fixed DCA account. In addition, loan indebtedness is subtracted from: . death proceeds at the death of the insured; . surrender value upon full surrender or termination of a Policy; and . maturity proceeds paid. Policy loans and unpaid loan interest reduce your net surrender value. If the net surrender value is less than the monthly policy charges on a monthly date, the 61-day grace period provision applies (see POLICY TERMINATION AND REINSTATEMENT - Policy Termination (Lapse)). If the Policy lapses with an outstanding loan balance, there may be tax consequences. LOAN ACCOUNT When a policy loan is taken, a loan account is established. An amount equal to the loan is transferred from your division(s), fixed account and fixed DCA account to your loan account. Loan accounts are part of our general account. You may instruct us on the proportions to be taken from your accounts. If you do not provide such instruction, the loan amount is withdrawn in the same proportion as the allocation used for the most recent monthly policy charge. Any loan interest due and unpaid is transferred in the same manner. Your loan account earns interest from the date of transfer. The loan account interest rate is 4.00% per year. Interest accrues daily and is paid at the end of the policy year. LOAN PAYMENTS While the Policy is in force and before the insured dies, you may pay the loan indebtedness as follows: . policy loans may be repaid totally or in part; . repayments are allocated to the division(s), fixed account and fixed DCA account 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. POLICY TERMINATION AND REINSTATEMENT POLICY TERMINATION (LAPSE) If the net surrender value on any monthly date is less than the monthly policy charge, a 61-day grace period begins. However, during the first 60 policy months, the Policy will not enter a grace period if ((a) minus (b)) is greater than or equal to (c) where: (a) is the sum of the premiums paid; (b) is the sum of all existing policy loans, unpaid loan interest and partial surrenders; and (c) is the sum of the no-lapse guarantee premiums since the policy date to the most recent monthly date. After the first 60 policy months, making premium payments under your planned periodic premium schedule does not guarantee that your Policy will stay in force unless: . your Policy's net surrender value is at least equal to the monthly policy charge on the current monthly date; or . the death benefit guarantee rider is in effect. Grace Period ------------ If the net surrender value on a monthly date is less than the current monthly charge, and neither the no-lapse guarantee provision nor the death benefit guarantee rider is in effect, we will send you a notice of pending lapse and a grace period begins. We will send you a notice at the start of the grace period (to your last known post office address) stating the required premium to avoid policy lapse. The grace period will end 61 days after the day the notice is mailed. If the required premium is not received by us by the end of the grace period, the Policy will lapse without value. During the first 60 policy months, the required premium is the greater of (a) or (b) where: (a) is three monthly policy charges divided by (1 minus the maximum premium expense charge); and (b) is three no-lapse guarantee monthly premiums. After the first 60 policy months, the required premium is (a) plus (b) where: (a) is the amount by which the surrender charge is more than the Policy value on the monthly date on or immediately preceding the start of the grace period; and (b) is three monthly policy charges divided by (1 minus the maximum premium expense charge). The determination of three monthly policy charges is made by taking three times the "failed" monthly deduction that could not be made due to insufficient policy value. The maximum premium expense charge is the guaranteed maximum percent of premium expense charge which is 6.25% in all policy years (3.0% sales charge, 2.0% state and local taxes, 1.25% federal taxes). The required premium is intended to a) reimburse us for the monthly policy charges during the grace period, and b) provide enough policy value to pay the monthly policy charge on the first monthly date after the grace period. If the grace period ends before we receive the required premium, we keep any remaining value in the Policy to cover past due policy charges. Adverse market fluctuations may cause the Policy to enter into subsequent grace periods. The Policy is in force during a grace period. If we do not receive the required premium, the Policy terminates as of the monthly date on or immediately preceding the start of the grace period. If the insured dies during a grace period, the death benefit is paid and the amount is reduced by: . all monthly policy charges due and unpaid at the death of the insured; and . any loan indebtedness. The Policy also terminates: . when you make a full Policy surrender; . when death proceeds are paid; and . on the maturity date. When the Policy terminates, all of the owners' Policy rights and privileges end. Neither partial surrenders nor policy loans may be made during a grace period. REINSTATEMENT Subject to certain conditions, you may reinstate a Policy that terminated because of insufficient value. 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 you make a payment of a reinstatement premium; 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 required premium formulas found above in the Grace Period section. If a policy loan or loan interest was unpaid when the Policy terminated, the policy loan must be reinstated or repaid (loan interest does not accrue over 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 your reinstatement application are held without interest until the reinstatement date. They are allocated to your selected division(s), fixed account and/or fixed DCA account 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(s) are restored upon reinstatement. If you reinstate your Policy and then it is fully surrendered, a surrender charge may be imposed. The surrender charge, if any, and premium expense charge are calculated based on the number of years the Policy was in force. The period of time during which the Policy was terminated is not included in these calculations. TAX ISSUES RELATED TO THE POLICY The following description is a general summary of the tax rules pertaining to life insurance policies. This section relates primarily to federal income taxes rules, regulations and interpretations, which in our opinion are currently in effect but which 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. NOTE: DUE TO THE COMPLEXITY OF THESE RULES AND BECAUSE THEY ARE AFFECTED BY THE FACTS AND CIRCUMSTANCES OF EACH POLICY, YOU SHOULD CONSULT WITH LEGAL AND TAX COUNSEL AND OTHER COMPETENT ADVISORS REGARDING THESE MATTERS. TAXATION OF DEATH PROCEEDS The death proceeds payable under a Policy are generally excludable from the gross income of the beneficiary(ies) under the Code. However, if the Policy is transferred for valuable consideration, then a portion of the death proceeds may be includable in the beneficiary's gross income. TAXATION OF GROWTH IN POLICY VALUE Any increase in policy value is not included in gross income while the Policy is in-force and continues to meet the definition of life insurance as defined under Section 7702 of the Code TAXATION OF POLICY SURRENDERS AND PARTIAL SURRENDERS A surrender or lapse of the Policy may have income tax consequences. Upon surrender, the owner(s) 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 loan indebtedness, 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 your 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. 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. A full surrender of the Policy will, and a partial surrender may, be included in your gross income to the extent the distribution exceeds your investment in the Policy. Transfers between the division(s) fixed account and/or fixed DCA account are not considered as distributions from the Policy and would not be considered taxable income. TAXATION OF 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. If the Policy is a modified endowment contract, a policy loan 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. MODIFIED ENDOWMENT CONTRACT STATUS A Policy becomes a Modified Endowment Contract when premiums paid exceed certain premium limits as defined by Section 7702A of the Code. There is no change regarding the tax-deferred internal build-up of policy value or the income tax-free death benefit to your beneficiary(ies), however, distributions from a Modified Endowment Contract are taxed as if the Policy is a deferred annuity. Thus, taxation on partial surrenders, policy loans and other defined distributions will occur if your policy value is greater than your premiums paid. In addition, taxable distributions are subject to a federal income tax penalty of 10% unless the distribution is . made after the owner attains age 591/2; or . attributable to the taxpayer becoming disabled; or . part of a series of substantially equal periodic payments (made not less frequently than annually) made for the life or life expectancy of the taxpayer or the joint lives or joint life expectancy of the taxpayer and beneficiary. Once a Policy is classified as a Modified Endowment Contract, the classification cannot be changed. 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. TAXATION OF 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. 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 Internal Revenue. 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. SPECIAL CONSIDERATIONS FOR CORPORATIONS Section 264 of the Code imposes numerous limitations on the interest and other business deductions that may otherwise be available to businesses that own life insurance policies. In addition, the premium paid by a business for a life insurance policy is not deductible as a business expense or otherwise if the business is directly or indirectly a beneficiary of the policy. For purposes of the alternative minimum tax ("AMT") that may be imposed on corporations, the death benefit from a life insurance policy, even though excluded from gross income for normal tax purposes, is included in "adjusted current earnings" for AMT purposes. In addition, although increases to the cash surrender value of a life insurance policy are generally excluded from gross income for normal income tax purposes, such increases are included in adjusted current earnings for income tax purposes. 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. 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 except if your tax identification number has not been furnished to us or if the IRS has notified us that the number you furnished is incorrect. GENERAL PROVISIONS PURCHASE PROCEDURES A completed application and required supplements must be submitted to us through an agent or broker selling the Policy. The minimum policy face amount when the Policy is originally issued is $100,000. We reserve the right to increase or decrease the minimum policy face amount. The increased minimum face amount would apply only to Policies issued after the effective date of the increase. To issue a Policy, we require that the attained age of the insured be 85 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, you must send a payment with your completed application. The amount is based on the face amount of the Policy, the death benefit option and the charges and expenses of the Policy. This amount is shown on the policy illustration provided to you by us or 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 cash on delivery (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. Your 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, your 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 receive at least one monthly policy charge); 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 the owner actually receives the Policy, there is no coverage under the Policy (coverage is determined solely under the terms of conditional receipt, if any). STATEMENT OF VALUES You receive an annual statement at the end of each policy year. The statement will show: . current death benefit; . current policy value and surrender value; . all premiums paid since the last statement; . all charges since the last statement; . any loan indebtedness; . any partial surrenders since the last statement; . the number of units and unit value; . total value of each of your divisions, the fixed DCA account and the fixed account; . designated beneficiary(ies); and . all riders included in the Policy. You will also receive a statement as of the end of each calendar quarter. At any time, you may request a current statement by telephoning 1-800-247-9988. We also send you the reports required by the Investment Company Act of 1940 (as amended). SERVICES AVAILABLE VIA THE INTERNET AND TELEPHONE If you elect internet and/or telephone privileges, instructions for the following transactions may be given to us via the internet or telephone: . change in allocations of future premium payments; . change in allocation of the monthly policy charge; . change to your APR instructions; . change to your scheduled transfer instructions; . unscheduled transfers; and . policy loan (not available via the internet) (loan proceeds are mailed to the owner's address of record). If the Policy is owned by a trust, an authorized individual (with the proper PIN) may use these services and provide us with instructions. Your instructions: . may be given by calling us at 1-800-247-9988 between 7 a.m. and 9 p.m. Central Time on any day that the NYSE is open; . may be given by accessing us at www.principal.com (for security purposes, you need a personal identification number (PIN) to use any of the internet services, including viewing your Policy information on-line. If you don't have a PIN, you can obtain one at www.principal.com); . must be received by us before the close of the NYSE (generally 3:00 p.m. Central Time) to be effective the day you call; . are effective the next business day if not received until after the close of the NYSE; and . from one joint owner are binding on all joint owners. Direct Dial ----------- You may receive information about your Policy from our Direct Dial system between 7 a.m. and 9 p.m. Central Time, Monday through Saturday. The Direct Dial number is 1-800-247-9988. Through this automated system, you can: . obtain information about unit values and policy values; . initiate certain changes to your Policy; and . change your personal identification number. Instructions from one joint owner are binding on all joint owners. If the Policy is owned by a trust, an authorized individual (with the proper PIN) may use these services and provide us with instructions. Although neither the Separate Account nor the Company is responsible for the authenticity of telephone transaction or internet requests, the Separate Account and the Company reserve the right to refuse telephone and/or internet orders. You are liable for a loss resulting from a fraudulent telephone or internet order 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, requesting personal identification information (name, phone number, social security number, birth date, etc.) and sending written confirmation to the owner's address of record. The procedures for internet and Direct Dial include requesting the same personal identification information as well as your PIN, logging all internet and Direct Dial activity and sending written transaction confirmations to the owner's address of record. 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 your Policy to reflect the amount that would have been payable at the correct age and gender. NON-PARTICIPATING POLICY The Policies do not share in any divisible surplus of the Company. INCONTESTABILITY We will not contest the insurance coverage provided by the Policy, except for any increases in face amount, after the Policy has been in force during the lifetime of the insured for a period of two years from the policy date. Any policy 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. 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 the Statement of Additional Information. 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. LEGAL PROCEEDINGS There are no legal proceedings pending to which the Separate Account is a party or which would materially affect the Separate Account. FINANCIAL STATEMENTS Additional information about the Policy is available in the Statement of Additional Information dated _____________ and which is part of this prospectus. Your questions and/or requests for a free copy of the Statement of Additional Information or a personalized illustration should be directed to: Principal Variable Universal Life Accumulator II, Principal Financial Group, P.O. Box 9296, Des Moines, Iowa 50306-9296, 1-800-247-9988. You may also contact us through our internet site: www.principal.com Information about the Policy (including the Statement of Additional Information) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the Commission at 202-942-8090. Reports and other information about the Policy are available on the Commission's internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, 450 Fifth Street NW, Washington, D.C. 20549-0102. Principal Variable Universal Life Insurance Accumulator II Investment Company Act File No.______________________ APPENDIX A - INVESTMENT DIVISIONS The following is a brief summary of the investment objectives of each division. THERE IS NO GUARANTEE THAT THE OBJECTIVES WILL BE MET. AIM V.I. CORE EQUITY DIVISION INVESTS IN: AIM V.I. Core Equity Fund INVESTMENT ADVISOR: A I M Advisors, Inc. INVESTMENT OBJECTIVE: seeks growth of capital with a secondary objective of current income. The Fund invests primarily in equity securities. AIM V.I. GROWTH DIVISION INVESTS IN: AIM V.I. Growth Fund INVESTMENT ADVISOR: A I M Advisors, Inc. INVESTMENT OBJECTIVE: seeks growth of capital while investing principally in seasoned and better capitalized companies. 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, Class II 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 ULTRA DIVISION INVESTS IN: American Century Variable Portfolios, Inc. VP Ultra, Class II INVESTMENT ADVISOR: American Century Investment Management, Inc. INVESTMENT OBJECTIVE: seeks long-term capital growth by investing primarily in common stocks of large U.S. companies. AMERICAN CENTURY VP VALUE DIVISION INVESTS IN: American Century Variable Portfolios, Inc. VP Value, Class II INVESTMENT ADVISOR: American Century Investment Management, Inc. INVESTMENT OBJECTIVE: seeks capital growth over time and, secondarily, income by investing primarily in equity securities. DREYFUS SMALL CAP DIVISION INVESTS IN: Dreyfus Investment Portfolios Small Cap Portfolio INVESTMENT ADVISOR: The Dreyfus Corporation INVESTMENT OBJECTIVE: seeks capital appreciation by investing in the stocks of companies with small market capitalizations. FIDELITY VIP CONTRAFUND DIVISION INVESTS IN: Fidelity VIP II Contrafund Portfolio, Service Class 2 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, Service Class 2 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, Service Class 2 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, Service Class 2 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, Service Class 2 INVESTMENT ADVISOR: Fidelity Management and Research Companhy INVESTMENT OBJECTIVE: seeks long-term growth of capital by investing in equity securities of companies with medium market capitalizations. 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. 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. PRINCIPAL VCF ASSET ALLOCATION DIVISION INVESTS IN: Principal Variable Contracts Fund - Asset Allocation Account INVESTMENT ADVISOR: Morgan Stanley Asset Management through a sub-advisory agreement INVESTMENT OBJECTIVE: to generate a total investment return consistent with the preservation of capital. The Account intends to pursue a flexible investment policy in seeking to achieve this investment objective by investing primarily in equity and fixed-income securities. PRINCIPAL VCF BALANCED DIVISION INVESTS IN: Principal Variable Contracts Fund - Balanced Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to generate a total return consisting of current income and capital appreciation while assuming reasonable risks in furtherance of this objective by investing primarily in equity and fixed-income securities. PRINCIPAL VCF 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. PRINCIPAL VCF CAPITAL VALUE DIVISION INVESTS IN: Principal Variable Contracts Fund - Capital Value Account INVESTMENT ADVISOR: Principal Global Investors, 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. PRINCIPAL VCF 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. PRINCIPAL VCF GOVERNMENT SECURITIES DIVISION INVESTS IN: Principal Variable Contracts Fund - Government Securities Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to seek a high level of current income, liquidity and safety of principal. PRINCIPAL VCF GROWTH DIVISION INVESTS IN: Principal Variable Contracts Fund - Growth Account INVESTMENT ADVISOR: Principal Global Investors, 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. PRINCIPAL VCF INTERNATIONAL DIVISION INVESTS IN: Principal Variable Contracts Fund - International Account INVESTMENT ADVISOR: Principal Global Investors, 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. PRINCIPAL VCF INTERNATIONAL EMERGING MARKETS DIVISION INVESTS IN: Principal Variable Contracts Fund - International Emerging Markets Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: seeks long-term growth of capital by investing in equity securities of issuers in emerging market countries. PRINCIPAL VCF INTERNATIONAL SMALLCAP DIVISION INVESTS IN: Principal Variable Contracts Fund - International SmallCap Account INVESTMENT ADVISOR: Principal Global Investors, 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. PRINCIPAL VCF 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. PRINCIPAL VCF LARGECAP GROWTH EQUITY INVESTS IN: Principal Variable Contracts Fund - LargeCap Growth Equity Account INVESTMENT ADVISOR: Putnam Investment Management, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to seek long-term growth of capital investing primarily in common stocks of large capitalization domestic companies. PRINCIPAL VCF LARGECAP STOCK INDEX DIVISION INVESTS IN: Principal Variable Contracts Fund - LargeCap Stock Index Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to seek long-term growth of capital by investing in stocks of large U.S. companies. The Account attempts to mirror the investment results of the Standard & Poor's 500 Index. PRINCIPAL VCF LARGECAP VALUE DIVISION INVESTS IN: Principal Variable Contracts Fund - LargeCap Value Account INVESTMENT ADVISOR: Bernstein Investment Research and Management through a sub-advisory agreement INVESTMENT OBJECTIVE: to seek long-term growth of capital. PRINCIPAL VCF MIDCAP DIVISION INVESTS IN: Principal Variable Contracts Fund - MidCap Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to achieve capital appreciation by investing primarily in securities of emerging and other growth-oriented companies. PRINCIPAL VCF 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. PRINCIPAL VCF 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. PRINCIPAL VCF 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. PRINCIPAL VCF 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. PRINCIPAL VCF SMALLCAP DIVISION INVESTS IN: Principal Variable Contracts Fund - SmallCap Account INVESTMENT ADVISOR: Principal Global Investors, 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. PRINCIPAL VCF SMALLCAP GROWTH DIVISION INVESTS IN: Principal Variable Contracts Fund - SmallCap Growth Account INVESTMENT ADVISOR: UBS Global Asset Management (New York) Inc. 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. PRINCIPAL VCF 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. PRINCIPAL VCF UTILITIES DIVISION INVESTS IN: Principal Variable Contracts Fund - Utilities Account INVESTMENT ADVISOR: Principal Global Investors, LLC through a sub-advisory agreement INVESTMENT OBJECTIVE: to seek to provide current income and long-term growth of income and capital by investing primarily in equity and fixed- income securities of companies in the public utilities industry. WELLS FARGO VT ASSET ALLOCATION DIVISION INVESTS IN: Wells Fargo VT Asset Allocation INVESTMENT ADVISOR: Barclays Global Fund Advisers 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 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 INVESTMENT ADVISOR: Peregrine Capital Management, Inc. through a sub-advisory agreement INVESTMENT OBJECTIVE: seeks to provide long-term capital appreciation by investing primarily in large, high quality domestic companies.
APPENDIX B SURRENDER TARGET PREMIUMS (PER $1,000 TOTAL FACE AMOUNT) ISSUE AGE MALE FEMALE UNISEX ISSUE AGE MALE FEMALE UNISEX --------- ---- ------ ------ --------- ---- ------- ------ 0 $ 2.18 $1.74 $ 2.09 43 $13.66 $10.40 $13.01 1 2.18 1.74 2.09 44 14.29 10.88 13.61 2 2.18 1.74 2.09 45 14.91 11.37 14.20 3 2.18 1.74 2.09 46 15.89 11.86 15.08 4 2.18 1.74 2.09 47 16.86 12.35 15.96 5 2.18 1.74 2.09 48 17.84 12.85 16.84 6 2.18 1.74 2.09 49 18.81 13.34 17.72 7 2.18 1.74 2.09 50 19.79 13.83 18.60 8 2.18 1.74 2.09 51 20.77 14.32 19.48 9 2.18 1.74 2.09 52 21.74 14.81 20.35 10 2.18 1.74 2.09 53 22.72 15.30 21.24 11 2.29 1.83 2.20 54 23.69 15.79 22.11 12 2.40 1.91 2.30 55 24.67 16.28 22.99 13 2.51 2.00 2.41 56 25.91 17.56 24.24 14 2.62 2.08 2.51 57 27.16 18.85 25.50 15 2.73 2.17 2.62 58 28.40 20.13 26.75 16 2.96 2.36 2.84 59 29.65 21.42 28.00 17 3.20 2.54 3.07 60 30.89 22.70 29.25 18 3.43 2.73 3.29 61 32.13 23.98 30.50 19 3.67 2.91 3.52 62 33.38 25.27 31.76 20 3.90 3.10 3.74 63 34.62 26.55 33.01 21 3.92 3.11 3.76 64 35.87 27.84 34.26 22 3.94 3.13 3.78 65 37.11 29.12 35.51 23 3.95 3.14 3.79 66 37.47 29.68 35.91 24 3.97 3.16 3.81 67 37.83 30.25 36.31 25 3.99 3.17 3.83 68 38.19 30.81 36.71 26 4.46 3.50 4.27 69 38.55 31.37 37.11 27 4.93 3.84 4.71 70 38.91 31.94 37.52 28 5.39 4.17 5.15 71 39.46 32.50 38.07 29 5.86 4.51 5.59 72 40.02 33.06 38.63 30 6.33 4.84 6.03 73 40.58 33.62 39.19 31 6.80 5.17 6.47 74 41.14 34.19 39.75 32 7.26 5.51 6.91 75 41.70 34.75 40.31 33 7.73 5.84 7.35 76 43.93 36.61 42.47 34 8.19 6.18 7.79 77 46.15 38.46 44.61 35 8.66 6.51 8.23 78 48.38 40.32 46.77 36 9.29 7.00 8.83 79 50.60 42.18 48.92 37 9.91 7.48 9.42 80 52.83 44.04 51.07 38 10.54 7.97 10.03 81 55.05 45.89 53.22 39 11.16 8.45 10.62 82 57.28 47.75 55.37 40 11.79 8.94 11.22 83 59.50 49.61 57.52 41 12.41 9.43 11.81 84 61.73 51.46 59.68 42 13.04 9.91 12.41 85 63.95 53.32 61.82
APPENDIX C - 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 0-40 250.00 53 164.00 66 119.00 41 243.00 54 157.00 67 118.00 42 236.00 55 150.00 68 117.00 43 229.00 56 146.00 69 116.00 44 222.00 57 142.00 70 115.00 45 215.00 58 138.00 71 113.00 46 209.00 59 134.00 72 111.00 47 203.00 60 130.00 73 109.00 48 197.00 61 128.00 74 107.00 49 191.00 62 126.00 75-90 105.00 50 185.00 63 124.00 91 104.00 51 178.00 64 122.00 92 103.00 52 171.00 65 120.00 93 102.00 94-99 101.00
CASH VALUE ACCUMULATION TEST (PERCENTAGE OF POLICY VALUE) - MALE PREFERRED OR CLASS: STANDARD A B C D E F G H AGE: 100% 150% 175% 200% 250% 300% 350% 400% 500% 0 1149.84% 925.16% 850.84% 790.94% 699.51% 632.30% 580.34% 538.72% 475.69% 1 1155.45% 937.32% 864.92% 806.45% 716.98% 650.98% 599.80% 558.69% 496.21% 2 1123.44% 913.30% 843.49% 787.10% 700.74% 636.98% 587.51% 547.74% 487.26% 3 1091.06% 888.69% 821.42% 767.05% 683.75% 622.21% 574.43% 535.99% 477.49% 4 1059.18% 864.32% 799.51% 747.12% 666.79% 607.41% 561.28% 524.16% 467.61% 5 1027.61% 840.04% 777.62% 727.14% 649.71% 592.44% 547.93% 512.08% 457.45% 6 996.23% 815.71% 755.61% 706.99% 632.38% 577.17% 534.24% 499.65% 446.90% 7 965.20% 791.49% 733.64% 686.82% 614.95% 561.75% 520.35% 486.99% 436.08% 8 934.41% 767.29% 711.60% 666.53% 597.32% 546.06% 506.17% 474.00% 424.90% 9 904.09% 743.31% 689.72% 646.34% 579.71% 530.34% 491.90% 460.90% 413.55% 10 874.41% 719.75% 668.19% 626.43% 562.29% 514.75% 477.72% 447.85% 402.21% 11 845.46% 696.70% 647.08% 606.91% 545.17% 499.39% 463.73% 434.95% 390.96% 12 817.53% 674.45% 626.72% 588.05% 528.63% 484.56% 450.21% 422.48% 380.08% 13 790.81% 653.19% 607.27% 570.06% 512.87% 470.43% 437.35% 410.63% 369.77% 14 765.52% 633.16% 588.97% 553.18% 498.12% 457.26% 425.39% 399.65% 360.25% 15 741.63% 614.33% 571.83% 537.38% 484.39% 445.04% 414.34% 389.53% 351.55% 16 719.11% 596.70% 555.81% 522.66% 471.66% 433.77% 404.19% 380.29% 343.66% 17 697.84% 580.14% 540.81% 508.92% 459.84% 423.35% 394.87% 371.83% 336.51% 18 677.63% 564.47% 526.65% 495.98% 448.75% 413.64% 386.20% 364.00% 329.95% 19 658.19% 549.43% 513.07% 483.58% 438.15% 404.36% 377.95% 356.57% 323.76% 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 PREFERRED OR CLASS: STANDARD A B C D E F G H AGE: 100% 150% 175% 200% 250% 300% 350% 400% 500% 0 1395.60% 1124.36% 1033.71% 960.39% 848.10% 765.33% 701.27% 649.92% 572.16% 1 1393.15% 1130.47% 1042.37% 970.97% 861.35% 780.29% 717.38% 666.83% 590.05% 2 1354.50% 1101.50% 1016.57% 947.70% 841.88% 763.57% 702.74% 653.83% 579.47% 3 1315.50% 1071.92% 990.08% 923.68% 821.60% 745.99% 687.23% 639.94% 568.00% 4 1276.92% 1042.45% 963.62% 899.63% 801.19% 728.23% 671.48% 625.80% 556.23% 5 1238.81% 1013.17% 937.24% 875.59% 780.70% 710.32% 655.55% 611.43% 544.21% 6 1201.35% 984.24% 911.13% 851.75% 760.31% 692.44% 639.59% 597.01% 532.08% 7 1164.31% 955.44% 885.07% 827.89% 739.79% 674.38% 623.41% 582.33% 519.64% 8 1128.00% 927.08% 859.36% 804.31% 719.46% 656.42% 607.28% 567.65% 507.16% 9 1092.31% 899.07% 833.90% 780.91% 699.21% 638.47% 591.12% 552.91% 494.56% 10 1057.39% 871.55% 808.85% 757.85% 679.19% 620.69% 575.06% 538.23% 481.96% 11 1023.24% 844.54% 784.21% 735.14% 659.42% 603.09% 559.13% 523.64% 469.39% 12 990.07% 818.23% 760.20% 712.98% 640.11% 585.87% 543.52% 509.33% 457.04% 13 958.00% 792.78% 736.96% 691.54% 621.40% 569.18% 528.40% 495.45% 445.06% 14 926.99% 768.15% 714.46% 670.77% 603.27% 553.00% 513.73% 482.00% 433.43% 15 897.15% 744.45% 692.82% 650.78% 585.84% 537.45% 499.64% 469.07% 422.27% 16 868.40% 721.62% 671.97% 631.54% 569.06% 522.48% 486.08% 456.64% 411.55% 17 840.70% 699.61% 651.87% 612.99% 552.88% 508.06% 473.01% 444.66% 401.23% 18 813.97% 678.38% 632.48% 595.09% 537.27% 494.14% 460.41% 433.11% 391.27% 19 788.06% 657.76% 613.64% 577.69% 522.08% 480.59% 448.12% 421.84% 381.55% 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 CLASS: STANDARD A B C D E F G H AGE: 100% 150% 175% 200% 250% 300% 350% 400% 500% 0 1191.15% 957.67% 880.43% 818.20% 723.24% 653.47% 599.55% 556.37% 491.01% 1 1195.60% 968.93% 893.69% 832.96% 740.05% 671.55% 618.47% 575.85% 511.10% 2 1162.59% 944.21% 871.66% 813.07% 723.38% 657.21% 605.89% 564.66% 501.97% 3 1129.04% 918.72% 848.80% 792.32% 705.80% 641.92% 592.36% 552.50% 491.87% 4 1096.00% 893.49% 826.13% 771.68% 688.25% 626.62% 578.76% 540.26% 481.65% 5 1063.29% 868.33% 803.45% 750.99% 670.57% 611.12% 564.94% 527.77% 471.14% 6 1030.86% 843.22% 780.74% 730.21% 652.72% 595.40% 550.85% 514.98% 460.30% 7 998.77% 818.20% 758.05% 709.39% 634.74% 579.50% 536.54% 501.95% 449.18% 8 967.08% 793.34% 735.45% 688.60% 616.70% 563.48% 522.08% 488.72% 437.81% 9 935.84% 768.70% 712.98% 667.89% 598.66% 547.39% 507.50% 475.34% 426.26% 10 905.25% 744.47% 690.85% 647.45% 580.81% 531.43% 493.00% 462.02% 414.70% 11 875.40% 720.75% 669.16% 627.39% 563.24% 515.70% 478.68% 448.82% 403.21% 12 846.55% 697.79% 648.16% 607.97% 546.21% 500.44% 464.79% 436.02% 392.06% 13 818.96% 675.88% 628.12% 589.45% 530.01% 485.93% 451.59% 423.88% 381.51% 14 792.71% 655.09% 609.14% 571.92% 514.71% 472.27% 439.19% 412.49% 371.65% 15 767.84% 635.49% 591.28% 555.47% 500.40% 459.53% 427.67% 401.93% 362.56% 16 744.34% 617.06% 574.54% 540.08% 487.07% 447.72% 417.02% 392.23% 354.26% 17 722.05% 599.66% 558.75% 525.60% 474.59% 436.70% 407.13% 383.24% 346.64% 18 700.81% 583.14% 543.80% 511.91% 462.83% 426.36% 397.89% 374.87% 339.59% 19 680.33% 567.23% 529.41% 498.74% 451.52% 416.43% 389.02% 366.85% 332.86% 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 B STATEMENT OF ADDITIONAL INFORMATION PRINCIPAL VARIABLE UNIVERSAL LIFE ACCUMULATOR II DATED _______________ The Statement of Additional Information provides information about the Principal Variable Universal Life Accumulator II Insurance Policy sponsored by Principal Life Insurance Company through its Principal Life Insurance Company Variable Life Separate Account. This Statement of Additional Information is not a prospectus but does provide information that supplements the Policy's Prospectus dated __________. It should be read with that Prospectus which is available without charge. To request a copy of the Prospectus, please contact us at: Principal Variable Universal Life Accumulator II Principal Financial Group P.O. Box 9296 Telephone:1-800-247-9988 TABLE OF CONTENTS Page GENERAL INFORMATION AND HISTORY THE COMPANY PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT SERVICE PROVIDER - INDEPENDENT AUDITORS UNDERWRITERS ADDITIONAL INFORMATION ABOUT CHARGES SPECIAL PURCHASE PLANS UNDERWRITING PROCEDURES FINANCIAL STATEMENTS PERFORMANCE DATA GENERAL INFORMATION AND HISTORY THE COMPANY Principal Life Insurance Company (the "Company") is the issuer of the Principal Variable Universal Life Accumulator II Insurance Policy (the "Policy"). The Company is a stock life insurance company with its home office at: Principal Financial Group, Des Moines, Iowa 50392. It is authorized to transact life and annuity business in all states of the United States and the District of Columbia. The Company is a wholly owned indirect subsidiary of Principal Financial Group, Inc., a publicly-traded company. In 1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. It became a legal reserve life insurance company and 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 insurance holding company structure took place in 1988, when the Company became a stock life insurance company. In 2001, the mutual insurance holding company converted to a stock company through a process called demutualization, resulting in the current organizational structure. 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. All of the units of the Separate Account are owned by the Company. SERVICE PROVIDER - INDEPENDENT AUDITORS Ernst & Young LLP, 801 Grand, Des Moines, Iowa, serves as independent auditors for Principal Life Insurance Company Variable Life Separate Account and the Company. The firm performs audit and accounting services for the Variable Life Separate Account and the Company. UNDERWRITERS The principal underwriter of the Policy is Princor Financial Services Corporation ("Princor") which is a wholly-owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. The address of Princor is the Principal Financial Group, Des Moines, IA 50392-0200. Princor was incorporated in Iowa in 1968, and is 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. The Policy's offering to the public is continuous. As the principal underwriter, Princor is paid for the distribution of the Policy. Princor has not received any underwriting commissions with regard to the Policy as it is new. COMMISSIONS PAID TO DEALERS 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 surrender target premium. In addition, a commission of up to 2.5% of premium above the surrender target premium received in the first policy year (or first year following an adjustment) may be paid. In the second through fifth years following the policy date (or adjustment date), commissions are 2.5% of premiums received. A service fee of 0.25% of net policy value is paid in the sixth through tenth policy years and of 0.15% of net policy value in years eleven and beyond. Expense allowances may be paid to agents and brokers based on premiums received. ADDITIONAL INFORMATION ABOUT CHARGES SPECIAL PURCHASE PLANS Where permitted by state law, Policies may be purchased under group or sponsored arrangements as well as on an individual basis. A group arrangement is a program under which a trustee, employer or similar entity purchases Policies covering a group of individuals on a group basis. A sponsored arrangement is a program under which an employer permits group solicitation of its employees or an association permits group solicitation of its members for the purchase of Policies on an individual basis. Charges and deductions may be reduced for Policies purchased under a group or sponsored arrangement including waiver of premium sales load and waiver of surrender charge. Reductions may be available to: . employees, officers, directors, agents and immediate family members of the group or sponsored arrangement; and . employees of agents of the Company and its subsidiaries. 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 group or sponsored arrangement). Generally, the sales contacts and effort, administrative costs and mortality cost per Policy vary based on the size of the arrangement, the purpose for which the Policies are purchased and certain characteristics of the members. The amount of the reduction and the criteria for reducing the charges and deductions reflect: a) our reduced sales effort and administrative costs; and b) the different mortality experience expected from sales to arrangements. 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. UNDERWRITING PROCEDURES Guaranteed maximum cost of insurance rates are based on 1980 CSO Mortality Table, age nearest birthday, with distinction for the insured's gender and smoking status. The rates will reflect the insured's risk class(es). FINANCIAL STATEMENTS TO BE ADDED BY AMENDMENT PERFORMANCE DATA The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the performance of one or more of its divisions. The Policy was not offered prior to ____________________, 2003. The Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Policy as if the Policy had been issued on or after the date the underlying mutual fund in which such division invests was first offered. The hypothetical performance from the date of the inception of the underlying mutual fund is derived by reducing the actual performance of the underlying mutual fund by the fees and charges of the Policy as if it had been in existence. The yield and total return figures described below vary depending upon market conditions, the composition of the underlying mutual fund's portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other products. The Separate Account may also quote rankings, yields or returns published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents historical performance and is not intended to indicate future performance. From time to time the Principal Variable Contracts Fund, Inc. advertises its Money Market division's "yield" and "effective yield". Both yield figures are based on historical earnings and are not intended to indicate future performance. The "yield" of the division refers to the income generated in the division over a seven day period (the period will be stated in the advertisement). This income is then "annualized." That is, the amount of income generated during that week is assumed to be generated each week over a 52-week period and is shown as a percentage. The "effective yield" is calculated similarly but, when annualized, the income earned in the division is assumed to be reinvested. The "effective yield" is slightly higher than the "yield" because of the compounding effect of this assumed reinvestment. Neither yield quotation reflects a sales load deducted from purchase payments which, if included, would reduce the "yield" and "effective yield." For the period ended December 31, 2002, the 7-day annualized and effective yields were _________________% and ______________%, respectively. In addition, the Separate Account advertises the "yield" for certain other divisions. The "yield" of a division is determined by annualizing the net investment income per unit for a specific, historical 30-day period and dividing the result by the ending maximum offering price of the unit for the same period. This yield quotation does not reflect a contingent deferred sales charge which, if included, would reduce the "yield." No contingent deferred sales charge is assessed on investments in the Separate Account divisions of the Policy. The Separate Account also advertises the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial premium of $1,000 to the ending redeemable policy value. Following are the hypothetical average annual total returns for the periods ended December 31, 2002 assuming the Policy had been offered as of the effective dates of the underlying mutual funds in which the divisions invest: DATA TO BE ADDED BY AMENDMENT
DIVISION ONE YEAR FIVE YEARS TEN YEARS -------- -------- ---------- --------- AIM V.I. Core Equity AIM V.I. Growth AIM V.I. Premier Equity American Century VP Income & Growth Class II American Century VP Ultra Class II American Century VP Value Class II DIP SmallCap Portfolio Fidelity VIP II Contrafund Service Class 2 Fidelity VIP Equity-Income Service Class 2 Fidelity VIP High Income Service Class 2 Fidelity VIP Growth Service Class 2 Fidelity VIP MidCap Service Class 2 INVESCO VIF - Health Sciences Fund MFS VIT New Discovery Principal VCF Asset Allocation Principal VCF Balanced Principal VCF Bond Principal VCF Capital Value Principal VCF Equity Growth Principal VCF Government Securities Principal VCF Growth Principal VCF International Principal VCF International Emerging Markets Principal VCF International SmallCap Principal VCF LargeCap Blend Principal VCF LargeCap Growth Equity Principal VCF LargeCap Stock Index Principal VCF LargeCap Value Principal VCF MidCap Principal VCF MidCap Growth Principal VCF MidCap Value Principal VCF Money Market Principal VCF Real Estate Principal VCF SmallCap Principal VCF SmallCap Growth Principal VCF SmallCap Value Principal VCF Utilities Wells Fargo VT Asset Allocation Wells Fargo VT Equity Income Wells Fargo VT Large Company Growth
PART C OTHER INFORMATION Item 24. Financial Statements Financial Statements included in the Registration Statement (1) Part A: None (2) Part B: None 3) Part C None Item 27. Exhibits (a) Board Resolution of Registrant* (b) N/A (c1) Distribution Agreement* (c2) Selling Agreement** (d1) Form of Variable Life Contract* (d2) Accelerated Benefits Rider* (d3) Accidental Death Benefit Rider* (d4) Change of Insured Rider* (d5) Cost of Living Increase Rider* (d6) Life Paid-up Rider* (d7) Salary Increase Rider* (d8) Supplemental Benefit Rider* (d9) Waiver of Monthly Policy Charge Rider* (d10) Waiver of Specified Premium Rider* (d11) Accounting Benefit Rider* (d12) Death Benefit Guarantee Rider* (d13) Extended Coverage Rider* (d14) Hazardous Sports Exclusion Rider* (d15) Aviation Exclusion Rider* (e1) Form of Application* (e2) Supplemental Application* (f1) Articles of Incorporation of the Depositor* (f2) Bylaws of Depositor* (g) Reinsurance Contracts** (h) Participation Agreements (h1) AIM Variable Insurance Funds* (h2) American Century Investment Management, Inc.* (h3) Dreyfus Investment Portfolios* (h4) Variable Insurance Products Fund, Fidelity Distributors, Inc.* (h5) INVESCO Funds Group, Inc.* (h6) MFS VARIABLE INSURANCE TRUST* (h7) Wells Fargo Fund Management, LLC* (i) N/A (j) N/A (k) Opinion of Counsel** (l) N/A (m) N/A (n1) Consent of Ernst & Young LLP** (n2) Powers of Attorney* (o) Financial Statement Schedules** (p) N/A (q) Redeemability Exemption (6e-2(b)(12)(ii) or 6e-3(T)** * Filed herein ** to be Filed by Amendment Item 28. Officers and Directors of the Depositor Principal Life Insurance Company is managed by a Board of Directors which is elected by its policyowners. The directors and executive officers of the Company, their positions with the Company, including Board Committee memberships, and their principal business address, are as follows: DIRECTORS: Principal Name, Positions and Offices Business Address BETSY J. BERNARD AT&T Consumer Director 295 North Maple Avenue Chair, Nominating Committee Room 4345L1 Basking Ridge, NJ 07920 JOCELYN CARTER-MILLER Office Depot, Inc. Director 2200 Old Germantown Road Member, Audit Committee Delray Beach, FL 33445 GARY E. COSTLEY Multifoods Director 110 Cheshire Lane, Suite 300 Member, Human Resources Minnetonka, MN 55305 Committee DAVID J. DRURY 4633 156th Street Director Waukee, IA 50263 Member, Executive Committee C. DANIEL GELATT, JR. NMT Corporation Director 2004 Kramer Street Member, Executive Committee La Crosse, WI 54603 Member, Human Resources Committee J. BARRY GRISWELL The Principal Financial Group Director, Des Moines, IA 50392 Chairman of the Board Chair, Executive Committee SANDRA L. HELTON Telephone and Data Systems, Inc. Director 30 North LaSalle Street, Suite 4000 Member, Audit Committee Chicago, IL 60602 CHARLES S. JOHNSON 4935 Mesa Capella Drive Director Las Vegas, NV 89113-1441 Member, Human Resources Committee WILLIAM T. KERR Meredith Corporation Director 1716 Locust St. Member, Executive Committee Des Moines, IA 50309-3023 and Chair, Human Resources Committee RICHARD L. KEYSER W.W. Grainger, Inc. Director 100 Grainger Parkway Member, Audit Committee Lake Forest, IL 60045-5201 VICTOR. H. LOEWENSTEIN Egon Zehnder International Director 10 Cours de Rive Member, Nominating CH-1204 Geneva, Switzerland Committee Federico F. Pena Vestar Capital Partners Member, Nominating 1225 17th Street, Ste 1660 Committee Denver, CO 80202 DONALD M. STEWART The Chicago Community Trust Director 222 North LaSalle Street, Ste 1400 Member, Nominating Chicago, IL 60601-1009 Committee ELIZABETH E. TALLETT Dioscor, Inc. Director 48 Federal Twist Road Chair, Audit Committee Stockton, NJ 08559 Member, Executive Committee 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 RALPH CRAIG EUCHER Senior Vice President DENNIS PAUL FRANCIS Senior Vice President MICHAEL HARRY GERSIE Executive Vice President and Chief Financial 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 JULIA MARIE LAWLER Senior Vice President and Chief Investment 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 CARL CHANSON WILLIAMS Senior Vice President and Chief Information Officer LARRY DONALD ZIMPLEMAN Executive Vice President
Item 29. Persons Controlled by or Under Common Control with Registrant Principal Financial Services, Inc. (an Iowa corporation) an intermediate holding company organized pursuant to Section 512A.14 of the Iowa Code. Subsidiaries wholly-owned by Principal Financial Services, Inc. a. Princor Financial Services Corporation (an Iowa Corporation) a registered broker-dealer. b. PFG DO Brasil LTDA (Brazil) a Brazilian holding company. c. Principal International, Inc. (an Iowa Corporation) a company engaged in international business development. d. Principal Life Insurance Company (an Iowa corporation) a stock life insurance company engaged in the business of insurance and retirement services. e. Principal International Holding Company, LLC f. Principal Financial Group (Mauritius) Ltd. a Mauritius holding company. g. ING/Principal Pensions Co., Ltd. (Japan) a Japan company who engages in the management, investment and administration of financial assets and any services incident thereto. h. Principal Financial Services (Australia), Inc. (an Iowa holding company) formed to facilitate the acquisition of the Australian business of BT Australia. i. Principal Capital Management (Singapore) Limited (a Singapore corporation) a company engaging in funds management. j. Principal Financial Services (NZ), Inc. (an Iowa holding company) formed to facilitate the acquisition of the New Zealand business of BT Australia. k. Principal Capital Management (Europe) Limited a United Kingdom company that engages in European representation and distributor of the Principal Investments Funds. l. Principal Capital Management (Ireland) Limited an Ireland company that engages in fund management. m. Principal International de Chile, S.A. (Chile) a holding company. n. Principal Financial Group Investments (Australia) Pty Limited an Australia holding company. Subsidiary wholly-owned by Princor Financial Services Corporation: a. Principal Management Corporation (an Iowa Corporation) a registered investment advisor. Subsidiary 42% owned by PFG DO Brasil LTDA a. Brasilprev Seguros E Previdencia S.A. (Brazil) a pension fund company. Subsidiaries wholly-owned by Principal International, Inc.: a. Zao Principal International (a Russia Corporation) inactive. b. Principal International Argentina, S.A. (an Argentina corporation) a holding company that owns Argentina corporations offering annuities, group and individual insurance policies. c. Principal Asset Management Company (Asia) Ltd. (Hong Kong) an asset management company. d. Principal International (Asia) Limited (Hong Kong) a corporation operating as a regional headquarters for Asia. e. Principal Trust Company (Asia) Limited (Hong Kong) (an Asia trust company). f. Principal Mexico Compania de Seguros, S.A. de C.V. (Mexico) a life insurance company. g. Principal Pensiones, S.A. de C.V. (Mexico) a pension company. h. Principal Afore, S.A. de C.V. (Mexico), a pension company. i. Principal Consulting (India) Private Limited (an India corporation) an India consulting company. Subsidiaries 88% owned by Principal International, Inc.: a. Principal Insurance Company (Hong Kong) Limited (a Hong Kong Corporation) a company that sells insurance and pension products. Subsidiaries wholly-owned by Principal International Argentina, S.A. (Argentina): a. Principal Retiro Compania de Seguros de Retiro, S.A. (Argentina) an annuity company. b. Principal Life Compania de Seguros, S.A. (Argentina) a life insurance company. Subsidiary wholly-owned by Principal International (Asia) Limited (Hong Kong): a. Principal Capital Management (Asia) Limited (Hong Kong) Asian representative and distributor for the Principal Investment Funds. Subsidiary wholly-owned by Principal Afore, S.A. de C.V. (Mexico): a. Siefore Principal, S.A. de C.V. (Mexico) an investment fund company. Subsidiaries organized and wholly-owned by Principal Life Insurance Company: a. InSource Group,LLC (Delaware) a limited liability company engaged in marketing products for companies of the Principal Financial Group, Inc. b. Principal Capital Management, LLC (a Delaware Corporation) a limited liability company that provides private mortgage, real estate & fixed-income securities services to institutional clients. c. Principal Development Investors, LLC (a Delaware Corporation) a limited liability company engaged in acquiring and improving real property through development and redevelopment. d. Principal Net Lease Investors, LLC (a Delaware Corporation) a limited liability company which operates as a buyer and seller of net leased investments. e. Principal Holding Company (an Iowa Corporation) a downstream holding company for Principal Life Insurance Company. f. Executive Benefit Services, Inc. (North Carolina) marketing, sales and administration of executive employee benefit services. Principal Life Insurance Company sponsored the organization of the following mutual funds, some of which it controls by virtue of owning voting securities Principal Balanced Fund, Inc.(a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Bond Fund, Inc.(a Maryland Corporation) 0.69% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Capital Value Fund, Inc. (a Maryland Corporation) 30.58% of outstanding shares owned by Principal Life Insurance Company (including subsidiaries and affiliates)on September 27, 2002. Principal Cash Management Fund, Inc. (a Maryland Corporation) 6.93% of outstanding shares owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal European Equity Fund, Inc. (a Maryland Corporation) 59.50% of outstanding shares owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Government Securities Income Fund, Inc. (a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Growth Fund, Inc. (a Maryland Corporation) 0.00% of outstanding shares owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal International Emerging Markets Fund, Inc. (a Maryland Corporation) 28.44% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal International Fund, Inc. (a Maryland Corporation) 24.22% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal International SmallCap Fund, Inc. (a Maryland Corporation) 4.33% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Limited Term Bond Fund, Inc. (a Maryland Corporation) 6.06% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal LargeCap Stock Index Fund, Inc. (a Maryland Corporation) 3.45% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal MidCap Fund, Inc. (a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Pacific Basin Fund, Inc. (a Maryland Corporation) 60.08% of outstanding shares owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Partners Blue Chip Fund, Inc.(a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Partners Equity Growth Fund, Inc.(a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Partners LargeCap Blend Fund, Inc.(a Maryland Corporation) 16.50% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Partners LargeCap Growth Fund, Inc.(a Maryland Corporation) 13.62% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Partners LargeCap Value Fund, Inc.(a Maryland Corporation) 15.87% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Partners MidCap Growth Fund, Inc.(a Maryland Corporation) 8.50% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Partners SmallCap Growth Fund, Inc.(a Maryland Corporation) 31.70% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal Real Estate Fund, Inc. (a Maryland Corporation) 26.71% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002 Principal SmallCap Fund, Inc.(a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Investors Fund, Inc.(a Maryland Corporation), 20.14% of shares outstanding of the Balanced Fund, 0.55% of shares outstanding of the Bond & Mortgage Securitites Fund, 50.12% of shares outstanding of the Capital Preservation Fund, 79.30% of shares outstanding of the European Fund, 0.90% of shares outstanding of the Governement Securities Fund, 31.01% of shares outstanding of the High Quality Intermediate-Term Bond Fund, 65.74% of shares outstanding of the High Quality Long-Term Bond Fund, 5.96% of shares outstanding of the High Quality Short-Term Bond Fund, 48.87% of shares outstanding of the International Emerging Markets Fund, 24.07% of shares outstanding of the International Fund I, 0.68% of shares outstanding of the International Fund II, 42.31% of shares outstanding of the International SmallCap Fund, 42.54% of shares outstanding of the LargeCap Growth Fund, 2.67% of shares outstanding of the LargeCap S&P 500 Index Fund, 40.48% of shares outstanding of the LargeCap Value Fund, 0.37% of shares outstanding of the LifeTime 2010 Fund, 0.28% of shares outstanding of the LifeTime 2020 Fund, 0.38% of shares outstanding of the LifeTime 2030 Fund, 0.76% of shares outstanding of the LifeTime 2040 Fund, 1.94% of shares outstanding of the LifeTime 2050 Fund, 1.00% of shares outstanding of the LifeTime Strategic Income Fund, 27.14% of shares outstanding of the MidCap Blend Fund, 32.28% of shares outstanding of the MidCap Growth Fund, 25.92% of shares outstanding of the MidCap S&P 400 Index Fund, 16.47% of shares outstanding of the MidCap Value Fund, 2.76% of shares outstanding of the Money Market Fund, 93.48% of shares outstanding of the Pacific Basin Fund, 2.02% of shares outstanding of the Partners LargeCap Blend Fund, 24.97% of shares outstanding of the Partners LargeCap Blend Fund I 0.65% of shares outstanding of the Partners LargeCap Growth Fund I, 43.24% of shares outstanding of the Partners LargeCap Growth Fund II, 0.64% of shares outstanding of the Partners LargeCap Value Fund, 31.45% of shares outstanding of the Partners MidCap Blend Fund, 45.20% of shares outstanding of the Partners MidCap Growth Fund, 18.32% of shares outstanding of the Partners MidCap Value Fund, 2.26% of shares outstanding of the Partners SmallCap Growth Fund I, 51.27% of shares outstanding of the Partners SmallCap Growth Fund II, 2.90% of shares outstanding of the Partners SmallCap Value Fund, 0.92% of shares outstanding of the Preferred Securities Fund, 11.75% of shares outstanding of the Real Estate Fund, 22.58% of shares outstanding of the SmallCap Blend Fund, 24.05% of shares outstanding of the SmallCap Growth Fund, 20.95% of shares outstanding of the SmallCap S&P 600 Index Fund, 29.10% of shares outstanding of the SmallCap Value Fund, 21.55% of shares outstanding of the Technology Fund, were owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Tax-Exempt Bond Fund, Inc. (a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Utilities Fund, Inc. (a Maryland Corporation) 0.00% of shares outstanding owned by Principal Life Insurance Company (including subsidiaries and affiliates) on September 27, 2002. Principal Variable Contracts Fund, Inc. (a Maryland Corporation) 100% of shares outstanding of the following Accounts owned by Principal Life Insurance Company and its Separate Accounts on September 27, 2002: Asset Allocation, Balanced, Blue Chip, Bond, Capital Value, Equity Growth, Government Securities, Growth, High Yield, International, International Emerging Markets, International SmallCap, LargeCap Blend, LargeCap Growth, LargeCap Growth Equity, LargeCap Stock Index, LargeCap Value, MicroCap, MidCap, MidCap Growth, MidCap Growth Equity, MidCap Value, Money Market, Real Estate, SmallCap, SmallCap Growth, SmallCap Value, and Utilities. Subsidiaries wholly-owned by Principal Capital Management, LLC: a. Principal Enterprise Capital, LLC (a Delaware Corporation) a company engaged in portfolio management on behalf of institutional clients for structuring, underwriting and management of entity-level investments in real estate operating companies (REOCs). b. Principal Commercial Acceptance, LLC (a Delaware Corporation) a limited liability company that provides private market bridge financing and other secondary market opportunities. c. Principal Capital Real Estate Investors, LLC (a Delaware Corporation) a registered investment advisor. d. Principal Commercial Funding, LLC (a Delaware Corporation) a limited liability company engaged in the structuring, warehousing, securitization and sale of commercial mortgage-backed securities. e. Principal Capital Income Investors, LLC a Delaware limited liability company which provides investment and financial services. f. Principal Capital Futures Trading Advisor, LLC a Delaware funds management limited liability company. g. Invista Capital Management, LLC (an Delaware Corporation) a limited liability company which is a registered investment adviser. h. Spectrum Asset Management, Inc. (Connecticut) A corporation specializing in all aspects of the preferred market including portfolio management, risk management and trading. Subsidiary wholly-owned by Invista Capital Management, LLC: a. Principal Capital Trust. (a Delaware Corporation) a business trust and private investment company offering non-registered units, initially, to tax-exempt entities. Subsidiaries wholly-owned by Principal Holding Company: a. Principal Generation Plant, LLC an inactive Delaware limited liability company. b. Principal Bank (a Federal Corporation) a Federally chartered direct delivery savings bank. c. Patrician Associates, Inc. (a California Corporation) a real estate development company. d. Petula Associates, Ltd. (an Iowa Corporation) a real estate development company. e. Principal Development Associates, Inc. (a California Corporation) a real estate development company. f. Principal Spectrum Associates, Inc. (California) a corporation which engages in real estate joint venture transactions with developers. g. Principal FC, Ltd. (an Iowa Corporation) a limited purpose investment corporation. h. Equity FC, Ltd. (an Iowa Corporation) engaged in investment transactions, including limited partnerships and limited liability companies. i. Principal Delaware Name Holding Company, Inc.(Delaware) a corporation which is currently inactive. j. Principal Asset Markets, Inc. (an Iowa Corporation) a corporation which is currently inactive. k. Principal Residential Mortgage, Inc. (an Iowa Corporation) a full service mortgage banking company that makes and services a wide variety of loan types on a nationwide basis. l. Principal Portfolio Services, Inc. (an Iowa Corporation) a corporation which is currently inactive. m. HealthRisk Resource Group, Inc. (an Iowa Corporation) a general business corporation that engages in investment transactions, including limited partnerships and limited liability companies n. Preferred Product Network, Inc. (a Delaware corporation) an insurance broker. o. Principal Health Care, Inc. (an Iowa Corporation) a managed care company. p. Dental-Net, Inc. (an Arizona Corporation) a managed dental care services organization. HMO and dental group practice. q. Principal Financial Advisors, Inc. (an Iowa Corporation) a registered investment advisor. r. Delaware Charter Guarantee & Trust Company, d/b/a Trustar Retirement Services (a Delaware Corporation) a corporation that administers individual and group retirement plans for stock brokerage firm clients and mutual fund distributors. s. Professional Pensions, Inc. (a Connecticut Corporation) a corporation engaged in sales, marketing and administration of group insurance plans and third-party administrator for defined contribution plans. t. Principal Investors Corporation (a New Jersey Corporation) a corporation which is currently inactive. Subsidiary wholly-owned by Petula Associates, Ltd. a. Petula Prolix Development Company (Iowa) a general business corporation involved in joint real estate ventures. Subsidiary wholly-owned by Principal Residential Mortgage, Inc.: a. Principal Wholesale Mortgage, Inc. (an Iowa Corporation) a brokerage and servicer of residential mortgages. b. Principal Mortgage Reinsurance Company (a Vermont corporation) a mortgage reinsurance company. c. Principal Residential Mortgage Funding, LLC (Iowa) a full service mortgage banking company that makes and services a wide variety of loan types on a nationwide basis. Subsidiaries wholly-owned by Dental-Net, Inc. a. Employers Dental Services, Inc. (an Arizona corporation) a prepaid dental plan organization. Subsidiaries wholly-owned by Professional Pensions, Inc.: a. Benefit Fiduciary Corporation (a Rhode Island corporation) serves as a corporate trustee for retirement trusts. b. PPI Employee Benefits Corporation (a Connecticut corporation) a registered broker-dealer limited to the sale of open-end mutual funds and variable insurance products. c. Boston Insurance Trust, Inc. (a Massachusetts corporation) a corporation which serves as a trustee and administrator of insurance trusts and arrangements. Subsidiary wholly-owned by Executive Benefit Services, Inc.: a. Executive Broker Dealers Services, LLC Subsidiary wholly-owned by Principal Financial Group (Mauritius) Ltd. a. IDBI Principal Asset Management Company (India) a India asset management company. b. IDBI-Principal Trustee Company Limited (India) a trustee for mutual funds. Subsidiary wholly-owned by Principal Financial Services (Australia), Inc.: a. Principal Financial Group (Australia) Holdings Pty Ltd. an Australian holding company organized in connection with the contemplated acquisition of BT Australia Funds Management. Subsidiary wholly-owned by Principal Financial Group (Australia) Holdings Pty Ltd. a. BT Financial Group Pty Ltd. (Australia) a holding company. Subsidiary wholly-owned by BT Financial Group PTY Ltd.: a. BT Investments (Australia) Limited a company engaged in institutional and retail money management. Subsidiary wholly-owned by BT Investments (Australia) Limited: a. BT Australia (Holdings) Pty Ltd (Australia) a commercial and investment banking and asset management company. Subsidiary wholly-owned by BT Australia (Holdings) Pty Ltd: a. BT Australia Pty Ltd. (Australia) a company engaged in asset management and trustee/administrative activities. Subsidiaries wholly-owned by BT Australia PTY Ltd.: a. BT Australia Corporate Services Pty Limited an Australia holding company for internal service companies. b. BT Life Limited an Australia company engaged in commercial and investment linked life insurance policies. c. BT Funds Management Limited an Australia company engaged in institutional and retail money management. d. Principal Capital Global Investors Limited dba BT Fund Management (Australia) a company who manages international funds (New Zealand, Singapore, Asia, North America and and United Kingdom). e. BT Securities Limited an Australia company that engages in loan finance secured against share and managed fund portfolios. f. QV1 Pty Limited an Australia company. g. BT Portfolio Services Limited an Australia company that engages in processing and transaction services for financial planners and financial intermediaries. h. BT Wealth Management Pty Ltd (Australia) A company which is a financial advisory service provider. Subsidiaries organized and wholly-owned by BT Australia Corporate Services Pty Limited: a. BT Finance Pty Limited an Australia provider of finance by loans and leases. b. BT Nominees Pty Limited an Australia company that operates as a trustee of staff superannuation fund (pension plan). c. Chifley Services Pty Limited an Australia company that engages in staff car leasing management. Subsidiaries wholly-owned by BT Funds Management Limited a. BT Tactical Asset Management Pty Limited an Australia company that engages in management of futures positions. b. Oniston Pty Ltd an Australia company that is a financial services investment vehicle. c. BT Finance & Investments Pty Ltd an Australia trustee of wholesale cash management trust. Subsidiary organized and wholly-owned by BT Securities Limited: a. BT (Queensland) Pty Limited an Australia trustee company. Subsidiary organized and wholly-owned by Principal Financial Services (NZ), Inc. a. BT Financial Group (NZ) Limited a New Zealand holding company. Subsidiary organized and wholly-owned by BT Financial Group (NZ) Limited: a. BT Funds Management (NZ) Limited a New Zealand funds manager. Subsidiary wholly-owned by Principal International de Chile, S.A.: a. Principal Tanner Administradora De Fondos Mutuos S.A. (Chile) a corporation organized for the administration of various funds. b. Principal Compania de Seguros de Vida Chile S.A. (Chile) life insurance company. Subsidiary 60% owned by Principal Compania de Seguros de Vida Chile S.A. (Chile): a. Andueza & Principal Creditos Hipotecarios S.A. (Chile) a residential mortgage company. Subsidiary organized and wholly-owned by Principal Financial Group Investments (Australia) Pty Limited: a. Principal Hotels Holdings Pty Ltd. a holding company. Subsidiary organized and wholly-owned by Principal Hotels Holdings Pty Ltd.: a. Principal Hotels Australia Pty Ltd. a holding company. Subsidiary organized and wholly-owned by Principal Hotels Australia Pty Ltd.: a. BT Hotel Limited an Australia corporation, which is the hotel operating/managing company of the BT Hotel Group. Item 30. Indemnification None Item 31. Principal Underwriters (a) Princor Financial Services Corporation, principal underwriter for Registrant, acts as principal underwriter for, Principal Balanced Fund, Inc., Principal Bond Fund, Inc., Principal Capital Value Fund, Inc., Principal Cash Management Fund, Inc., Principal European Equity Fund, Inc., Principal Government Securities Income Fund, Inc., Principal Growth Fund, Inc., Principal International Emerging Markets Fund, Inc., Principal International Fund, Inc., Principal International SmallCap Fund, Inc., Principal Investors Fund, Inc., Principal LargeCap Stock Index Fund, Inc., Principal Limited Term Bond Fund, Inc., Principal MidCap Fund, Inc., Principal Pacific Basin Fund Inc., Principal Partners Blue Chip Fund, Inc., Principal Partners Equity Growth Fund, Inc., Principal Partners LargeCap Blend Fund, Inc., Principal Partners LargeCap Value Fund, Inc., Principal Partners MidCap Growth Fund, Inc., Principal Partners SmallCap Growth Fund, Inc., Principal Real Estate Fund, Inc., Principal SmallCap Fund, Inc., Principal Tax-Exempt Bond Fund, Inc., Principal Utilities Fund, Inc., Principal Variable Contracts Fund, Inc. and for variable annuity contracts participating in Principal Life Insurance Company Separate Account B, a registered unit investment trust, and for variable life insurance contracts issued by Principal Life Insurance Company Variable Life Separate Account, a registered unit investment trust. (b) (1) (2) Positions and offices Name and principal with principal business address underwriter Lindsay L. Amadeo Assistant Director - The Principal Marketing Services Financial Group Des Moines, IA 50392 John E. Aschenbrenner Director The Principal Financial Group Des Moines, IA 50392 Robert W. Baehr Marketing Services The Principal Officer Financial Group Des Moines, IA 50392 Patricia A. Barry Assistant Corporate Secretary The Principal Financial Group Des Moines, IA 50392 Craig L. Bassett Treasurer The Principal Financial Group Des Moines, IA 50392 Michael J. Beer Executive Vice President The Principal Financial Group Des Moines, IA 50392 David J. Brown Vice President The Principal Financial Group Des Moines, IA 50392 P. Scott Cawley Product Marketing Officer The Principal Financial Group Des Moines, IA 50392 Michael T. Daley Director The Principal Financial Group Des Moines, IA 50392 Ralph C. Eucher Director and The Principal President Financial Group Des Moines, IA 50392 Arthur S. Filean Senior Vice President The Principal Financial Group Des Moines, IA 50392 Dennis P. Francis Director The Principal Financial Group Des Moines, IA 50392 Paul N. Germain Vice President - The Principal Mutual Fund Operations Financial Group Des Moines, IA 50392 Ernest H. Gillum Vice President - The Principal Product Development Financial Group Des Moines, IA 50392 Susan R. Haupts Marketing Officer The Principal Financial Group Des Moines, IA 50392 Joyce N. Hoffman Sr. Vice President and The Principal Corporate Secretary Financial Group Des Moines, IA 50392 Peter R. Kornweiss Vice President The Principal Financial Group Des Moines, IA 50392 John R. Lepley Senior Vice The Principal President - Marketing Financial Group and Distribution Des Moines, IA 50392 Elise M. Pilkington Assistant Director - The Principal Retirement Consulting Financial Group Des Moines, IA 50392 Martin R. Richardson Operations Officer - The Principal Broker/Dealer Services Financial Group Des Moines, IA 50392 Michael D. Roughton Counsel The Principal Financial Group Des Moines, IA 50392 James F. Sager Vice President The Principal Financial Group Des Moines, IA 50392 Jean B. Schustek Assistant Vice President - The Principal Registered Products Financial Group Des Moines, IA 5092 Kyle R. Selberg Vice President-Marketing The Principal Financial Group Des Moines, IA 50392 Karen E. Shaff Director The Principal Financial Group Des Moines, IA 50392 Minoo Spellerberg Assistant Vice President and The Principal Compliance Officer Financial Group Des Moines, IA 50392 Paul D. Steingreaber Director of Investment Products The Principal Financial Group Des Moines, IA 50392 Jamie K. Stenger Assistant Director - Compliance The Principal Financial Group Kirk L. Tibbetts Senior Vice President and The Principal Chief Financial Officer Financial Group Des Moines, IA 50392 Larry D. Zimpleman Chairman of the Board and The Principal Director Financial Group Des Moines, IA 50392 (c) (1) (2) Net Underwriting Name of Principal Discounts and Underwriter Commissions Princor Financial $21,219,114 Services Corporation (3) (4) (5) Compensation on Brokerage Events Occasioning Commissions Compensation the Deduction of a Deferred Sales Load 0 0 0 Item 32. Location of Accounts and Records All accounts, books or other documents of the Registrant are located at the offices of the Depositor, The Principal Financial Group, Des Moines, Iowa 50392. Item 33. Management Services Inapplicable Item 34. Fee Representation 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. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Principal Life Insurance Company Variable Life Separate Account, has duly caused this Registration Statement to be signed on its behalf by the undersigned thereto duly authorized, and its seal to be hereunto affixed and attested, in the City of Des Moines and State of Iowa, on the 30th day of October, 2002 PRINCIPAL LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT (Registrant) /s/ J. Barry Griswell By ______________________________________________ J. Barry Griswell Chairman, President and Chief Executive Officer By PRINCIPAL LIFE INSURANCE COMPANY (Depositor) /s/ J. Barry Griswell By ______________________________________________ J. Barry Griswell 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 10/30/2002 -------------------- Chief Executive Officer J. B. Griswell /s/ G. B. Elming Vice President and 10/30/2002 -------------------- Controller (Principal G. B. Elming Accounting Officer) /s/ M. H. Gersie Executive Vice President 10/30/2002 -------------------- and Chief Financial Officers M. H. Gersie (Principal Financial Officer) (B. J. Bernard)* Director 10/30/2002 -------------------- B. J. Bernard (J. Carter-Miller)* Director 10/30/2002 -------------------- J. Carter-Miller (G. E. Costley)* Director 10/30/2002 -------------------- G. E. Costley (D. J. Drury)* Director 10/30/2002 -------------------- D. J. Drury (C. D. Gelatt, Jr.)* Director 10/30/2002 -------------------- C. D. Gelatt, Jr. (S. L. Helton)* Director 10/30/2002 -------------------- S. L. Helton (C. S. Johnson)* Director 10/30/2002 -------------------- C. S. Johnson (W. T. Kerr)* Director 10/30/2002 -------------------- W. T. Kerr (R. L. Keyser)* Director 10/30/2002 -------------------- R. L. Keyser (V. H. Loewenstein)* Director 10/30/2002 -------------------- V. H. Loewenstein (F. F. Pena)* Director 10/30/2002 -------------------- F. F. Pena (D. M. Stewart)* Director 10/30/2002 -------------------- D. M. Stewart (E. E. Tallett)* Director 10/30/2002 -------------------- 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