N-4/A 1 filingbody-preeff1.htm PRE-EFF #1 IPVA (APPS SIGNED AFTER 08/01/2013) filingbody-preeff1.htm - Generated by SEC Publisher for SEC Filing
As filed with the Securities and Exchange Commission on May 6, 2013.
  Registration No. 333-188293

 

  SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N -4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre -Effective Amendment No. _1_
Post-Effective Amendment No. __
and/or
  REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 174
(Check appropriate box or boxes)
Principal Life Insurance Company Separate Account B
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(Exact Name of Registrant)
Principal Life Insurance Company
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(Name of Depositor)
The Principal Financial Group, Des Moines, Iowa 50392
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(Address of Depositor's Principal Executive Offices) (Zip Code)
(515) 362-2384
- ------------------------------------------------------------------------------
Depositor's Telephone Number, including Area Code
Doug Hodgson
The Principal Financial Group, Des Moines, Iowa 50392
- -------------------------------------------------------------------------------
(Name and Address of Agent for Service)
 
  Title of Securities Being Registered: PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM
  (for applications signed on or after August 1, 2013)

 

Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the Registration Statement.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration shall become effective on such date as the Commission, acting pursuant to Section 8(a), shall determine.


PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM
(FOR APPLICATIONS SIGNED ON OR AFTER AUGUST 1, 2013)

Prospectus dated August 1, 2013

This prospectus describes Principal Investment Plus Variable Annuity, an individual, flexible premium, deferred variable annuity (the “Contract”), issued by Principal Life Insurance Company (“the Company”, “we”, “our” or “us”) through Principal Life Insurance Company Separate Account B (“Separate Account”).

This prospectus provides information about the Contract and the Separate Account that you, as owner, should know before investing. The prospectus should be read and retained for future reference. Additional information about the Contract and the Separate Account is included in the Statement of Additional Information (“SAI”), dated August 1, 2013, which has been filed with the Securities and Exchange Commission (the “SEC”) and is considered a part of this prospectus. The table of contents of the SAI is at the end of this prospectus. You may obtain a free copy of the SAI and all additional information by writing or calling: Principal Investment Plus Variable AnnuitySM, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450. You can also visit the SEC’s website at www.sec.gov, which contains the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC.

These securities have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

You generally may allocate your investment in the Contract among the following investment options: dollar cost averaging fixed accounts (“DCA Plus accounts”), a Fixed Account and the Separate Account divisions. The DCA Plus accounts and the Fixed Account are a part of our General Account. Each division of the Separate Account invests in shares of a corresponding mutual fund (the “underlying mutual funds”). A list of the underlying mutual funds available under the Contract is shown below.

Your accumulated value will vary according to the investment performance of the underlying mutual funds in which your selected division(s) are invested. We do not guarantee the investment performance of the underlying mutual funds.

For any administrative questions, you may contact us by writing or calling: Principal Investment Plus Variable AnnuitySM, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450

The Contract is available with or without the Premium Payment Credit Rider. This rider applies credits to the
accumulated value for premium payments made in contract year one. The amount of the credit may be more than
offset by the additional charges associated with it (higher surrender charges, a longer surrender charge
period and increased annual expenses). A Contract without this rider will cost less. You should review your
own circumstances to determine whether this rider is suitable for you. To assist you in making that determination, we
have highlighted in grey boxes those portions of this prospectus pertaining to the rider.
 
NOTE: We recapture the premium payment credit if you return the Contract during the examination offer period or
request full annuitization of the Contract prior to the third Contract anniversary. You take the risk that the
recaptured amount may exceed the then current value of the credit(s). This risk occurs when your investment
options have experienced negative investment performance (i.e., have lost value) since the credit was
applied. In that situation, you would be worse off than if you had not purchased the Premium Payment Credit
Rider.

 

The Contract is available with or without a Guaranteed Minimum Withdrawal Benefit rider (GMWB). The GMWB riders currently available are Principal Income Builder 3 (“PIB 3”) and Principal Income Builder 10 (“PIB 10”). You may only elect one GMWB rider.


 

The following underlying mutual funds are available under the Contract(1) :
AllianceBernstein Variable Products Series Fund — Class A Principal Variable Contracts Funds — Class 1
AllianceBernstein Small/Mid Cap Growth Portfolio Bond & Mortgage Securities Account
American Century Variable Portfolios, Inc. Diversified International Account
Inflation Protection Fund — Class II Equity Income Account
Mid Cap Value Fund - Class II Government & High Quality Bond Account
Ultra Fund — Class II International Emerging Markets Account
Delaware Variable Insurance Products— Service Class LargeCap Blend Account II
Small Cap Value LargeCap Growth Account
Dreyfus Investment Portfolios — Service Shares LargeCap Growth Account I
Technology Growth Portfolio LargeCap S&P 500 Index Account
DWS Variable Insurance Portfolio— Class B LargeCap Value Account
Small Mid Cap Value VIP MidCap Account
Fidelity Variable Insurance Products — Service Class 2 Money Market Account
Contrafund® Portfolio Principal Capital Appreciation Division
Equity-Income Portfolio Principal LifeTime 2010 Account(2)
Growth Portfolio Principal LifeTime 2020 Account(2)
Mid Cap Portfolio Principal LifeTime 2030 Account(2)
Overseas Portfolio Principal LifeTime 2040 Account(2)
Franklin Templeton Variable Insurance Products Trust Class 2 Principal LifeTime 2050 Account(2)
Small Cap Value Securities Fund Principal LifeTime Strategic Income Account(2)
Value Opportunities Fund Real Estate Securities Account
Goldman Sachs Variable Insurance Trust — Institutional Shares Short-Term Income Account
MidCap Value Fund SmallCap Blend Account
Structured Small Cap Equity Fund SmallCap Growth Account II
Invesco Variable Insurance Funds — Series I SmallCap Value Account I
International Growth Fund Strategic Asset Management Balanced Account Portfolio(2)
Small Cap Equity Fund Strategic Asset Management Conservative Balanced Portfolio(2)
MFS Variable Insurance Trust — Service Class Strategic Asset Management Conservative Growth Portfolio(2)
New Discovery Series Strategic Asset Management Flexible Income Portfolio(2)
Utilities Series Strategic Asset Management Strategic Growth Portfolio(2)
Value Series Principal Variable Contracts Funds — Class 2
Neuberger Berman Advisers Management Trust Diversified Balanced Account(2)
Socially Responsive Portfolio — I Class Diversified Growth Account(2)
PIMCO Variable Insurance Trust — Administrative Class Diversified Income Account(2)
All Asset Portfolio T. Rowe Price Equity Series, Inc. — II
Total Returns Portfolio T. Rowe Price Blue Chip Growth Portfolio
High Yield Portfolio T. Rowe Price Health Sciences Portfolio
Socially Responsive Portfolio — I Class Van Eck VIP Global Insurance Trust — Class S Shares
    Global Hard Assets Fund

 

(1 ) If you elect a GMWB rider, your investment options for premium payments and accumulated value will be restricted (for restrictions see
    APPENDIX B).
(2 ) This underlying mutual fund is a fund of funds. The fund of funds expenses may be higher than other fund types because the expenses of the
    selected fund include the expenses of the funds it holds.
 
An investment in the Contract is not a deposit or obligation of any bank and is not insured or guaranteed by
any bank, the Federal Deposit Insurance Corporation or any other government agency.
The Contract, certain Contract features and/or some of the investment options may not be available in all states or
through all broker dealers. In addition, some optional features may restrict your ability to elect certain other optional
features. For further details, please contact us at 1-800-852-4450.
This prospectus is valid only when accompanied by the current prospectuses for the underlying mutual funds. These
prospectuses should be kept for future reference. This prospectus is not an offer to sell, or solicitation of an offer to
buy, the Contract in states in which the offer or solicitation may not be lawfully made. No person is authorized to give
any information or to make any representation in connection with this Contract other than those contained in this
prospectus.

 

2


 

TABLE OF CONTENTS  
 
SEPARATE ACCOUNT INVESTMENT OPTIONS 2
GLOSSARY 6
SUMMARY OF EXPENSE INFORMATION 8
SUMMARY 13
 
1. THE CONTRACT 17
How To Buy a Contract 17
Premium Payments 17
Allocating Premium Payments 18
Principal Variable Annuity Exchange Offer (“exchange offer”) 18
Exchange Credit (for exchanges from our fixed deferred annuities) 18
Right to Examine the Contract (free look) 19
Accumulated Value 19
Telephone and Internet Services 20
 
2. CHARGES AND DEDUCTIONS 21
Surrender Charge 21
Free Surrender Amount 22
When Surrender Charges Do Not Apply 23
Waiver of Surrender Charge Rider 23
Transaction Fee 23
Premium Taxes 24
Annual Fee 24
Separate Account Annual Expenses 24
Mortality and Expense Risks Charge 24
Administration Charge 24
Charges for Rider Benefits Currently Available 25
Premium Payment Credit Rider 25
Principal Income Builder 3 (PIB 3) Rider 25
Principal Income Builder 10 Rider (PIB 10) Rider 26
Special Provisions for Group or Sponsored Arrangements 26
 
3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS 27
Fixed Account 27
Fixed Account Value 27
Dollar Cost Averaging Plus Program (DCA Plus Program) 27
 
4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) 28
Factors to Consider Before You Buy A GMWB Rider 29
Which GMWB Rider May Be Appropriate for You 30
GMWB Rider Restrictions/Limitations 30
Additional Premium Payments 30
GMWB Investment Options 31
Principal Income Builder 3  
Overview 31
Withdrawal Benefit Base 32
Withdrawal Benefit Payment 32
Covered Life Change 34
Effect of Withdrawals 35
Excess Withdrawals 36
Required Minimum Distribution (RMD) Program for GMWB Riders 36
GMWB Bonus 37
GMWB Step-Up 37
Effect of Reaching the Maximum Annuitization Date 38

 

3


 

Effect of the Contract Accumulated Value Reaching Zero 38
Termination and Reinstatement 39
Effect of Divorce 39
Principal Income Builder 10  
Overview 41
Withdrawal Options 42
Withdrawal Benefit Base 42
Remaining Withdrawal Benefit Base 43
Withdrawal Benefit Payments 43
Covered Life Change 45
Effect of Withdrawals 46
Excess Withdrawals 46
Required Minimum Distribution (RMD) Program for GMWB Riders 47
GMWB Bonus 48
GMWB Step-Up 48
Effect of Reaching the Maximum Annuitization Date 49
Effect of the Contract Accumulated Value Reaching Zero 50
Termination and Reinstatement 51
Effect of Divorce 51
 
5. PREMIUM PAYMENT CREDIT RIDER 53
 
6. TRANSFERS AND SURRENDERS 54
Division Transfers 54
Unscheduled Transfers 55
Scheduled Transfers (Dollar Cost Averaging) 55
Fixed Account Transfers, Total and Partial Surrenders 56
Automatic Portfolio Rebalancing (APR) 56
Surrenders 57
Total Surrender 57
Unscheduled Partial Surrender 57
Scheduled Partial Surrender 57
 
7. THE ANNUITIZATION PERIOD 58
Annuitization Date 58
Full Annuitization 58
Partial Annuitization 58
Annuity Benefit Payment Options 58
Tax Considerations Regarding Annuity Benefit Payment Options 59
Death of Annuitant (During the Annuitization Period) 60
 
8. DEATH BENEFIT 60
Payment of Death Benefit 61
Standard Death Benefit Formula 61
GMWB Death Benefit – Principal Income Builder 3 62
GMWB Death Benefit – Principal Income Builder 10 66
 
9. ADDITIONAL INFORMATION ABOUT THE CONTRACT 72
The Contract 72
Delay of Payments 72
Misstatement of Age or Gender 72
Assignment 72
Change of Owner or Annuitant 73
Beneficiary 73
Contract Termination 73
Reinstatement 73
Reports 74

 

4


 

Important Information About Customer Identification Procedures 74
Frequent Trading and Market-Timing (Abusive Trading Practices) 74
Distribution of the Contract 75
Performance Calculation 75
 
10. FEDERAL TAX MATTERS 76
Taxation of Non-Qualified Contracts 76
Taxation of Qualified Contracts 77
Withholding 79
 
11. GENERAL INFORMATION ABOUT THE COMPANY 79
Corporate Organization and Operation 79
Legal Opinions 81
Legal Proceedings 81
Other Variable Annuity Contracts 81
Payments to Financial Intermediaries 81
Service Arrangements and Compensation 82
Mutual Fund Diversification 82
State Regulation 82
Independent Registered Public Accounting Firm 82
Financial Statements 82
 
12. TABLE OF SEPARATE ACCOUNT DIVISIONS 83
13. REGISTRATION STATEMENT 93
14. TABLE OF CONTENTS OF THE SAI 93
APPENDIX A — PRINCIPAL VARIABLE ANNUITY EXCHANGE OFFER 94
APPENDIX B — GMWB INVESTMENT OPTIONS 99
APPENDIX C — PRINCIPAL INCOME BUILDER 3 EXAMPLES 100
APPENDIX D — PRINCIPAL INCOME BUILDER 10 EXAMPLES 105
APPENDIX E — PRINCIPAL INCOME BUILDER 3 (FOR STATES WHERE MOST RECENT  
VERSION OF THE RIDER NOT APPROVED) 115
APPENDIX F — PRINCIPAL INCOME BUILDER 10 (FOR STATES WHERE MOST RECENT  
VERSION OF THE RIDER NOT APPROVED) 132
APPENDIX G —GMWB DEATH BENEFIT EXAMPLES 158
APPENDIX H —CONDENSED FINANCIAL INFORMATION 161
 

 

5


 

GLOSSARY

accumulated value the sum of the values in the DCA Plus Account(s), the Fixed Account and the Separate Account divisions.

anniversary(ies) the same date and month of each year following the contract date .

annuitant – the person, including any joint annuitant, on whose life the annuity benefit payment is based. This person may or may not be the owner.

annuitization application of a portion or all of the accumulated value to an annuity benefit payment option to make income payments.

annuitization date the date all of the owner’s accumulated value is applied to an annuity benefit payment option.

Automatic Portfolio Rebalancing (APR) the transfer of money among your Separate Account divisions on a set schedule to maintain a specified percentage in each Separate Account division.

cash surrender value the accumulated value minus any applicable surrender charges and fee(s) (contract fee and/or prorated share of the charge(s) for optional rider(s)).

contract date the date that the Contract is issued and which is used to determine contract years.

contract year – the one-year period beginning on the contract date and ending one day before the contract anniversary and any subsequent one-year period beginning on a contract anniversary (for example, if the contract date is June 5, 2013, the first contract year ends on June 4, 2014, and the first contract anniversary falls on June 5, 2014).

data page – that portion of the Contract which contains the following: owner and annuitant data (names, gender, annuitant age); the Contract issue date; maximum annuitization date; Contract charges and limits; benefits; and a summary of any optional benefits chosen by the Contract owner.

Dollar Cost Averaging Plus (DCA Plus) account – an account which uses a guaranteed interest rate to calculate interest earned for a specific amount of time.

Dollar Cost Averaging Plus (DCA Plus) value – the amount invested in the DCA Plus Account(s) (plus interest earned and less any surrenders and/or transfers).

Dollar Cost Averaging Plus (DCA Plus) program a program through which your DCA Plus value is transferred from a DCA Plus Account to the investment options over a specified period of time.

Fixed Account an account which uses a guaranteed interest rate to calculate interest earned.

Fixed Account value the amount invested in the Fixed Account (plus interest earned and less any surrenders and/or transfers).

good order an instruction or request is in good order when it is received in our home office, or other place we may specify, and has such clarity and completeness that we do not have to exercise any discretion to carry out the instruction or request. We may require that the instruction or request be given in a certain form.

home office – Company’s corporate headquarters located at Principal Financial Group, Des Moines, Iowa 50392-1770.

investment options the DCA Plus Accounts, Fixed Account and Separate Account divisions.

joint annuitant an annuitant whose life determines the annuity benefit under this Contract. Any reference to the death of the annuitant means the death of the first annuitant to die.

6


 

joint owner an owner who has an undivided interest with the right of survivorship in this Contract with another owner. Any reference to the death of the owner means the death of the first owner to die.

non-qualified contract a Contract which does not qualify for favorable tax treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA, Simple-IRA or Tax Sheltered Annuity.

notice – any form of communication received by us, at the home office, either in writing or in another form approved by us in advance.

Your notices may be mailed to us at:
Principal Life Insurance Company
P O Box 9382
Des Moines, Iowa 50306-9382

owner – the person, including joint owner, who owns all the rights and privileges of this Contract. For the Principal Variable Annuity Exchange Offer, owner refers to the original owner.

premium payments – the gross amount you contributed to the Contract.

qualified plans – retirement plans which receive favorable tax treatment under Section 401 or 403(a) of the Internal Revenue Code.

Required Minimum Distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions.

Separate Account division (division(s)) – a part of the Separate Account which invests in shares of an underlying mutual fund. (Referred to in the marketing materials as “sub-accounts.”)

Separate Account division value – the sum of all divisions’ value; each division’s value is determined by multiplying the number of units in that division by the unit value of that division.

surrender charge – the charge deducted upon certain partial surrenders or total surrender of the Contract before the annuitization date.

surrender value accumulated value less any applicable surrender charge, rider fees, annual fee, transaction fees and any premium tax or other taxes.

transfer – moving all or a portion of your accumulated value to or from one investment option or among several investment options. All transfers initiated during the same valuation period are considered to be one transfer for purposes of calculating the transaction fee, if any.

underlying mutual fund – a registered open-end investment company, or a series or portfolio thereof, in which a division invests.

unit – the accounting measure used to determine your proportionate interest in a division.

unit value – a measure used to determine the value of an investment in a division.

valuation date (valuation days) – each day the New York Stock Exchange (“NYSE”) is open for trading and trading is not restricted.

valuation period – the period of time from one determination of the value of a unit of a division to the next. Each valuation period begins at the close of normal trading on the NYSE, generally 4:00 p.m. Eastern Time, on each valuation date and ends at the close of normal trading of the NYSE on the next valuation date.

we, our, us – Principal Life Insurance Company. We are also referred to throughout this prospectus as the Company.

you, your – the owner of this Contract, including any joint owner.

7


 

SUMMARY OF EXPENSE INFORMATION

The tables below describe the fees and expenses that you will pay when buying, owning and surrendering the Contract. The expenses for a Contract with the Premium Payment Credit Rider are higher than the expenses for the Contract without the Premium Payment Credit Rider.

The following table describes the fees and expenses you will pay at the time you buy the Contract, surrender the Contract or transfer cash value between investment options.

  Contract owner transaction expenses(1)        
 
      Maximum     Current  
 
Surrender charge - without the Premium            
Payment Credit Rider (as a percentage of            
amount surrendered)(2) · 6% · 6%
 
Surrender charge - with the Premium Payment            
Credit Rider (as a percentage of amount            
surrendered)(3) · 8% · 8%
 
Transaction Fees            
· for each unscheduled partial surrender · the lesser of $25 or 2% of each   · $ 0  
      unscheduled partial surrender after the        
      12th unscheduled partial surrender in a        
      contract year        
 
· for each unscheduled transfer(4) · the lesser of $30 or 2% of each   · $ 0  
      unscheduled transfer after the first        
      unscheduled transfer in a contract year        
 
 
 
 
State Premium Taxes (vary by state)(5) · 3.50% of premium payments made   · 0%

 

8


 

The following table describes the fees and expenses that are deducted periodically during the time that you own the Contract, not including underlying mutual fund fees and expenses.

  Periodic Expenses      
  Maximum Annual Charge   Current Annual Charge  
Annual Fee (waived for Contracts with The lesser of $30 or 2.00% of the   The lesser of $30 or 2.00% of  
accumulated value of $30,000 or more) accumulated value   the accumulated value  
 
Mortality and Expense Risks Charge (as a        
percentage of average daily Separate        
Account value) 1.25 % 1.25 %
 
Administration Charge (as a percentage of        
average daily Separate Account value) 0.15 % 0.15 %
 
Total Separate Account Annual Expense 1.40 % 1.40 %

 

 

    Optional Riders(6)      
 
    Maximum Annual Charge   Current Annual Charge  
 
Premium Payment Credit Rider        
· Separate Account – based on the average 0.60 % 0.60 %
  daily accumulated value in the divisions,        
  deducted daily        
· Fixed Account – maximum reduction in 0.60 % 0.00 %
  interest rate        
 
Principal Income Builder 3 rider (GMWB) (as        
a percentage of the average quarterly For Life        
withdrawal benefit base)(7)        
 
· for applications signed before August 1, 1.65 % 0.95 %
  2013, and for states that have not        
  approved the most recent version of the        
  rider        
· for applications signed on or after 1.65 % 1.05 %
  August 1, 2013, in states that have        
  approved the most recent version of the        
  rider        
 
Principal Income Builder 10 rider (GMWB) (as        
a percentage of the average quarterly        
Investment Back withdrawal benefit base)(8)        
 
· for applications signed before August 1, 2.00 % 1.10 %
  2013, and for states that have not        
  approved the most recent version of the        
  rider        
· for applications signed on or after 2.00 % 1.20 %
  August 1, 2013, in states that have        
  approved the most recent version of the        
  rider        

 

9


 

Total Separate Account Annual Expense plus        
Optional Riders Annual Expense        
 
· with Principal Income Builder 3(9) --for 3.65 % 2.95 %
applications signed before August 1, 2013,        
and for states that have not approved the        
most recent version of the rider        
· with Principal Income Builder 3(9) --for 3.65 % 3.05 %
applications signed on or after August 1,        
2013, in states that have approved the        
most recent version of the rider        
 
· with Principal Income Builder 10(10) --for 4.00 % 3.10 %
applications signed before August 1, 2013,        
and for states that have not approved the        
most recent version of the rider        
· with Principal Income Builder 10(10) --for 4.00 % 3.20 %
applications signed on or after August 1,        
2013, in states that have approved the        
most recent version of the rider        

 

This table shows the minimum and maximum total operating expenses charged by the underlying mutual funds that you may pay periodically during the time that you own the Contract. More detail concerning the fees and expenses of each underlying mutual fund is contained in its prospectus.

Minimum and Maximum Annual Underlying Mutual Fund Operating Expenses  
as of December 31, 2012
 
  Minimum   Maximum  
 
Total annual underlying mutual fund operating expenses 0.26% 2.24%
(expenses that are deducted from underlying mutual fund        
assets, including management fees, distribution and/or        
service (12b-1) fees and other expenses)*        

 

* Some of the funds available are structured as a “fund of funds”. A fund of funds is a mutual fund that invests primarily in a portfolio of other mutual funds. The expenses shown include all the fees and expenses of the funds that a fund of funds holds in its portfolio.

(1) For additional information about the fees and expenses described in the table, see 2. CHARGES AND DEDUCTIONS.

(2) Surrender charge without the Premium Payment Credit Rider (as a percentage of amounts surrendered):

Table of surrender charges without the Premium Payment Credit Rider  
Number of completed contract years Surrender charge applied to all premium  
since each premium payment was made payments received in that contract year  
0 (year of premium payment) 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and later 0%

 

10


 

(3) Surrender charge with the Premium Payment Credit Rider (as a percentage of amounts surrendered):  
    Table of surrender charges with the Premium Payment Credit Rider  
    Number of completed contract years Surrender charge applied to all premium  
    since each premium payment was made payments received in that contract year  
    0 (year of premium payment) 8%
    1 8%
    2 7%
    3 6%
    4 5%
    5 4%
    6 3%
    7 2%
    8 1%
    9 and later 0%

 

(4)      Note that in addition to the fees shown, the Separate Account and/or sponsors of the underlying mutual funds may adopt requirements pursuant to rules and/or regulations adopted by federal and/or state regulators which require us to collect additional transaction fees and/or impose restrictions on transfers.
(5)      We do not currently assess premium taxes for any Contract issued, but reserve the right in the future to assess up to 3.50% of premium payments made for Contract owners in those states where a premium tax is assessed.
(6)      Not all riders are available in all states or through all broker dealers and may be subject to additional restrictions. Some rider provisions may vary from state to state.
(7)      At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly For Life withdrawal benefit base. The average quarterly For Life withdrawal benefit base is equal to (1) the For Life withdrawal benefit base at the beginning of the calendar quarter plus (2) the For Life withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters. See 2. CHARGES
  AND DEDUCTIONS for more information on how the rider charge is calculated.
(8)      At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly Investment Back withdrawal benefit base. The average quarterly Investment Back withdrawal benefit base is equal to (1) the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus (2) the Investment Back withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually.
  For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters. See 2. CHARGES AND DEDUCTIONS for more information on how the rider charge is calculated.
(9)      This amount assumes the Principal Income Builder 3 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional rider and your Total Separate Account Annual Expense would be higher or lower.
(10)      This amount assumes the Principal Income Builder 10 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional rider and your Total Separate Account Annual Expense would be higher or lower.

11


 

EXAMPLE

These examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.

Example 1

The example figures are based on a Contract with the most expensive combination of optional features available under the Contract. This example reflects the maximum charges imposed if you were to purchase the Contract with the Principal Income Builder 10 rider (2.00%), as well as the Premium Payment Credit Rider (0.60%). The amounts below are calculated using the maximum rider fees and not the current rider fees.

The example assumes(1):

· a $10,000 premium payment to issue the Contract;
· a 5% return each year;
· an annual Contract fee of $30 (expressed as a percentage of the average accumulated value);
· the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2012
(without voluntary waivers of fees by the underlying funds, if any);
· no premium taxes are deducted;
· the Principal Income Builder 10 rider was added to the Contract at issue(2); and
· the Premium Payment Credit Rider is added to the Contract at issue and the Premium Payment Credit Rider
surrender charge schedule is applied. Because the premium payment credit is not added to the accumulated
value in the examples, the actual costs would be higher.

 

Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:

If you surrender your   If you fully annuitize your
Contract at the end of the If you do not Contract at the end of the
applicable time period surrender your Contract applicable time period

 

    1 Yr.   3 Yrs.   5 Yrs.   10 Yrs.   1 Yr.   3 Yrs.   5 Yrs.   10 Yrs.   1 Yr.   3 Yrs.   5 Yrs.   10 Yrs.
Maximum Total Underlying $1,325   $2,455   $3,522   $6,187   $615   $1,854   $3,108   $6,187   $615   $1,854   $3,108   $6,187  
Mutual Fund Operating                                                                        
Expenses (2.24%)                                                                        
Minimum Total Underlying $1,147   $1,940   $2,679   $4,578   $422   $1,296   $2,215   $4,578   $422   $1,296   $2,215   $4,578  
Mutual Fund Operating                                                                        
Expenses (0.26%)                                                                        

 

(1)This amount assumes the Principal Income Builder 10 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional rider and your Total Separate Account Annual Expense would be higher or lower.

(2)The Investment Back withdrawal benefit base is used to calculate the Principal Income Builder 10 rider charge. The withdrawal benefit base is equal to your premiums and increased for any applicable GMWB Bonus and any applicable GMWB Step-Up and decreased for any excess withdrawals. At the end of each calendar quarter, one-fourth of the annual Principal Income Builder 10 rider charge is multiplied by the average quarterly Investment Back withdrawal benefit base. The average quarterly Investment Back withdrawal benefit base is equal to the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus the Investment Back withdrawal benefit base at the end of the calendar quarter and the sum is divided by two.

For Condensed Financial Information, see Appendix H.

12


 

SUMMARY

This prospectus describes an individual flexible premium deferred variable annuity offered by the Company. The Contract is designed to provide individuals with retirement benefits, including:

  • non-qualified retirement programs; and
  • Individual Retirement Annuities (“IRA”), Simplified Employee Pension plans (“SEPs”) and Savings Incentive Match Plan for Employees (“SIMPLE”) IRAs adopted according to Section 408 of the Internal Revenue Code (see 10. FEDERAL TAX MATTERS). The Contract does not provide any additional tax deferral if you purchase it to fund an IRA or other investment vehicle that already provides tax deferral.

For information on how to purchase the Contract, see 1. THE CONTRACT.

This section is a brief summary of the Contract’s features. More detailed information follows later in this prospectus.

Investment Limitations

  • Initial premium payment must be at least $5,000 for non-qualified contracts.
  • Initial premium payment must be at least $2,000 for all other contracts.
  • Each subsequent premium payment must be at least $500.
  • If you are a member of a retirement plan covering three or more persons and premium payments are made through an automatic investment program, the initial and subsequent premium payments for the Contract must average at least $100 and not be less than $50.
  • The total sum of all premium payments may not be greater than $2,000,000 without prior home office approval.

You may allocate your net premium payments to the investment options.

  • A complete list of the divisions may be found in 12. TABLE OF SEPARATE ACCOUNT DIVISIONS. Each division invests in shares of an underlying mutual fund. More detailed information about the underlying mutual funds may be found in the current prospectus for each underlying mutual fund. These underlying mutual fund prospectuses are bound together with this prospectus.
  • The investment options also include the Fixed Account and the DCA Plus accounts.
  • The GMWB riders impose limitations on the investment options available by requiring you to allocate 100% of your Separate Account assets to one of the designated fund options for the life of the rider.

Transfers

During the accumulation period:

  • a dollar amount or percentage of transfer must be specified;
  • a transfer may occur on a scheduled or unscheduled basis;
  • transfers to the Fixed Account are not permitted if a transfer has been made from the Fixed Account to a division within six months; and
  • transfers into DCA Plus accounts are not permitted.

During the annuitization period, transfers are not permitted (no transfers once payments have begun).

See 1. THE CONTRACT, 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS, and 6. TRANSFERS AND SURRENDERS for additional restrictions.

This Transfers section does not apply to transfers under the DCA Plus program. See 3. FIXED ACCOUNT AND DCA

PLUS ACCOUNTS.

13


 

Surrenders

During the accumulation period:

· the gross dollar amount to be surrendered must be specified;
· surrendered amounts may be subject to surrender charges:
· for Contracts without the Premium Payment Credit Rider, the maximum surrender charge is 6% of the
  amount(s) surrendered; or
· for Contracts with the Premium Payment Credit Rider, the maximum surrender charge is 8% of the
  amount(s) surrendered;
· full surrender of your Contract may be subject to an annual Contract fee;
· during a contract year, each partial surrender that is less than the Free Surrender Amount is not subject to a
surrender charge; and
· surrenders before age 59½ may involve an income tax penalty (see 10. FEDERAL TAX MATTERS).

 

During the annuitization period, surrenders are not allowed.

See 6. TRANSFERS AND SURRENDERS for additional information.

Charges and Deductions

· No sales charge is deducted from premium payments at the time received. However, the Contract may impose a
surrender charge on surrenders greater than the Free Surrender Amount.
· A contingent deferred surrender charge is imposed on certain total or partial surrenders.
· An annual mortality and expense risks charge equal to 1.25% of amounts in the Separate Account divisions is
imposed daily.
· The optional riders are available at an additional cost
· Premium Payment Credit Rider – The current annual rider charge is 0.60% of the average daily accumulated
  value in the Separate Account divisions, deducted daily (with no reduction of the Fixed Account interest rate).
  The maximum annual rider charge is 0.60% of the average daily accumulated value in the Separate Account
  divisions, deducted daily (with a reduction of up to 0.60% of the Fixed Account interest rate).
· Principal Income Builder 3 – For applications signed on or after August 1, 2013, in states that have approved
  the most recent version, the current annual rider charge is 1.05% of the average For Life withdrawal benefit
  base, deducted quarterly. The maximum annual rider charge is 1.65%.
· Principal Income Builder 10 – For applications signed on or after August 1, 2013, in states that have
  approved the most recent version, the current annual rider charge is 1.20% of the average Investment Back
  withdrawal benefit base, deducted quarterly. The maximum annual rider charge is 2.00%.
· An annual Separate Account administration charge equal to 0.15% of amounts in the Separate Account divisions
is imposed daily.
· There are underlying mutual fund expenses. More detailed information about the underlying mutual fund
expenses may be found in the current prospectus for each underlying mutual fund.
· Contracts with an accumulated value of less than $30,000 are subject to an annual fee of the lesser of $30 or 2%
of the accumulated value. Currently we do not charge the annual fee if your accumulated value is $30,000 or
more. If you own more than one variable annuity contract with us, then all the contracts you own or jointly own
are aggregated on each contract’s anniversary to determine if the $30,000 minimum has been met and whether
that contract will be charged.
· Certain states and local governments impose a premium tax. We reserve the right to deduct the amount of the
tax from premium payments or the accumulated value.

 

See 2. CHARGES AND DEDUCTIONS for additional information.

Annuity Benefit Payments

  • You may choose from several fixed annuity benefit payment options which are described in 7.THE ANNUITIZATION PERIOD.
  • Payments are made to the owner (or beneficiary depending on the annuity benefit payment option selected). You should carefully consider the tax implications of each annuity benefit payment option. See 7.THE
    ANNUITIZATION PERIOD and 10. FEDERAL TAX MATTERS.

14


 

Death Benefit

  • The standard death benefit is only available for contracts without a GMWB rider and generally is the greatest of
     
  • accumulated value, the total of premium payments minus an adjustment for surrenders, or the highest
     
  • value on any Contract anniversary wholly divisible by seven. See 8. DEATH BENEFIT for more
     
  • details.
  • If the owner dies before the annuitization date, a death benefit is payable. The death benefit may be paid as
     
  • a single payment or under an annuity benefit payment option. If no election is made within the required
     
  • of time, the full amount will be paid in a lump sum to the applicable state. Once the money is paid to the
     
  • state, the beneficiary will have to contact the state to request additional assistance.
  • If the annuitant dies after the annuitization date, payments will continue only as provided by the annuity benefit
     
  • option in effect.
  • The sole death benefit provided when you have a GMWB rider is:
     
  • Principal Income Builder 3 – beneficiary receives the GMWB Death Benefit.
     
  • Principal Income Builder 10 - allows the beneficiary(ies) to elect a) the GMWB Death Benefit, or b) the Investment Back remaining withdrawal benefit base as a series of payments.
  • 8. DEATH BENEFIT and 7. THE ANNUITIZATION PERIOD.

    Examination Offer Period (free look)

    You may return the Contract during the examination offer period, which is generally 10 days from the date you receive the Contract. The examination offer period may be longer in certain states.

    · The amount refunded will be a full refund of your accumulated value plus any Contract charges and premium
    taxes you paid unless state law requires otherwise. The underlying mutual fund fees and charges are not
    refunded to you as they are already factored into the Separate Account division value.
    · The amount refunded may be more or less than the premium payments made.
    · We recapture the full amount of any premium payment credit or exchange credit.

     

    See 1.THE CONTRACT for additional information.

    Optional Riders

    Subject to certain conditions, you may elect to add one or more of the available optional riders to your Contract. Not all riders are available in all states or through all broker dealers and may be subject to additional restrictions. Some rider provisions may vary from state to state. We may withdraw or prospectively restrict the availability of any rider at any time. For information regarding availability of any rider, you may contact your registered representative or call us at 1-800-852-4450.

    The optional riders currently available are:

    · Premium Payment Credit Rider – This rider applies credits to the accumulated value for premium payments made
    in contract year one. The surrender charge period is nine years if this rider is elected.
    · Guaranteed Minimum Withdrawal Benefit riders (you may only elect one GMWB rider):
    · Principal Income Builder 3 – This rider allows you to take certain guaranteed annual withdrawals during the
      Contract accumulation phase, regardless of your Contract accumulated value. This rider includes an annual
      bonus in the first 3 contract years for not taking withdrawals. Election of this rider results in restriction of your
      Contract investment options to the more limited GMWB investment options.
    · Principal Income Builder 10 – This rider allows you to take certain guaranteed annual withdrawals during the
      Contract accumulation phase, regardless of your Contract accumulated value. This rider includes an annual
      bonus in the first 10 contract years for not taking withdrawals. Election of this rider results in restriction of your
      Contract investment options to the more limited GMWB investment options.

     

    15


     

    Termination

    The Contract will terminate:

    • If no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider.
    • If you fully annuitize and your accumulated value on the annuitization date is less than $2,000 or if the amount applied under an annuity benefit payment option is less than the minimum requirement.

    The GMWB rider will terminate:

  • The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective
     
  • .
  • The date you fully annuitize, fully surrender or otherwise terminate the Contract.
  • The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except when
     
  • change in owner is due to a spousal continuation of the rider or the removal/addition of a joint life.
  • The date your surviving spouse elects to continue the Contract without this rider (even if prior to the fifth Contract
     
  • following the rider effective date).
  • The date you make an impermissible change in a covered life.
  • If you have a PIB 10 rider:
     
  • If the Investment Back remaining withdrawal benefit base and the For Life withdrawal benefit base are both zero.
     
  • The date the Investment Back remaining withdrawal benefit base is zero and there are no eligible covered lives.
  • If you have the PIB 3 rider, the date the For Life withdrawal benefit base is zero or there are no eligible covered
     
  • The GMWB Death Benefit will terminate:

    • If you have the PIB 3 rider with an application signature date on or after August 1, 2013, and you terminate the PIB 3 rider (state variations may apply).
    • If you have the PIB 10 rider with an application signature date on or after August 1, 2013, and you terminate the PIB 10 rider (state variations may apply).

    16


     

    1. THE CONTRACT

    The Principal Investment Plus Variable Annuity is significantly different from a fixed annuity. As the owner of a variable annuity, you assume the risk of investment gain or loss (as to amounts in the Separate Account divisions) rather than the Company. The Separate Account division value under a variable annuity is not guaranteed and varies with the investment performance of the underlying mutual funds.

    Based on your investment objectives, you direct the allocation of premium payments and accumulated values. There can be no assurance that your investment objectives will be achieved.

    How to Buy a Contract

    If you want to buy a Contract, you must submit an application and make an initial premium payment. If you are buying the Contract to fund a SIMPLE-IRA or SEP, an initial premium payment is not required at the time you send in the application. If the application is complete and the Contract applied for is suitable, the Contract is issued. If the completed application is received in good order, the initial premium payment is credited within two valuation days after the later of receipt of the application or receipt of the initial premium payment at our home office. If the initial premium payment is not credited within five valuation days, it is refunded unless we have received your permission to retain the premium payment until we receive the information necessary to issue the Contract.

    The date the Contract is issued is the contract date. The contract date is the date used to determine contract years, regardless of when the Contract is delivered.

    Tax-qualified retirement arrangements, such as IRAs, SEPs, and SIMPLE-IRAs, are tax-deferred. You derive no additional benefit from the tax deferral feature of the annuity. Consequently, an annuity should be used to fund an IRA or other tax qualified retirement arrangement to benefit from the annuity’s features other than tax deferral. These features may include guaranteed lifetime income, death benefits without surrender charges, guaranteed caps on fees, and the ability to make scheduled transfers among investment options without transaction fees.

    Premium Payments

    · The initial premium payment must be at least $5,000 for non-qualified contracts.
    · The initial premium payment must be at least $2,000 for all other contracts.
    · If you are making premium payments through a payroll deduction plan or through a bank (or similar financial
    institution) account under an automated investment program, your initial and subsequent premium payments must
    be at least $100.
    · All premium payments are subject to a surrender charge period that begins in the contract year each premium
    payment is received.
    · Subsequent premium payments must be at least $500 and can be made until the annuitization date.
    · Premium payments are to be made by personal or financial institution check (for example, a cashier’s check). We
    reserve the right to refuse any premium payment that we feel presents a fraud or money laundering risk. Examples
    of the types of premium payments we will not accept are cash, money orders, starter checks, travelers checks,
    credit card checks, and foreign checks.
    · If you are a member of a retirement plan covering three or more persons, the initial and subsequent premium
    payments for the Contract must average at least $100 and cannot be less than $50.
    · The total sum of all premium payments for a Contract may not be greater than $2,000,000 (maximum premium
    limit) without our prior approval. For further information, please call 1-800-852-4450.
    · We reserve the right to treat all of your and/or your spouse’s Principal deferred variable annuity contracts, with a
    guaranteed minimum withdrawal benefit rider attached, as one contract for purposes of determining whether you
    have exceeded the maximum premium limit (without home office approval).
    · Additional premium restrictions may apply to Contracts with a guaranteed minimum withdrawal benefit rider. See 4.
    LIVING BENEFIT - GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
    · The Company reserves the right to increase the minimum amount for each premium payment with advance notice.
    · Premium payments are credited on the basis of the unit value next determined after we receive a premium payment.
    · The state of Washington does not allow premium payments to be made after the first contract year on Contracts
    issued with the Premium Payment Credit Rider. See 5. PREMIUM PAYMENT CREDIT RIDER for more
    information.
    · If no premium payments are made during two consecutive calendar years and the accumulated value is less than
    $2,000, we reserve the right to terminate the Contract. See 9. ADDITIONAL INFORMATION ABOUT THE
    CONTRACT.

     

    17


     

    Allocating Premium Payments

  • On your application, you direct how your premium payments will be allocated to the investment options.
  • Allocations must be in percentages.
  • Percentages must be in whole numbers and total 100%.
  • Subsequent premium payments are allocated according to your then current allocation instructions.
  • Changes to the allocation instructions are made without charge.
     
  • A change is effective on the next valuation period after we receive your new instructions in good order.
     
  • You can change the current allocations and future allocation instructions by:
      
  • mailing your instructions to us;
      
  • calling us at 1-800-852-4450 (if telephone privileges apply);
      
  • faxing your instructions to us at 1-866-894-2093; or
      
  • visiting www.principal.com.
  • Changes to premium payment allocations do not result in the transfer of any existing investment option
     
  • values. You must provide specific instructions to transfer existing accumulated values. We currently
     
  • not charge a transaction fee for these transfers but reserve the right to charge such a fee in the future.
  • Premium payments are credited on the basis of the unit value next determined after we receive a premium
     
  • Principal Variable Annuity Exchange Offer (“exchange offer”)

    Original owners of an eligible Principal variable annuity contract may elect to exchange their Principal variable annuity contract (“old contract”) for a new Principal Investment Plus Variable Annuity contract ("new contract") subject to the exchange offer terms and conditions. To determine if it is in your best interest to participate in the exchange offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the exchange offer.

    You are eligible to participate in the exchange offer when:

    • your old contract is not subject to any surrender charges; and
    • the exchange offer is available in your state.

    Currently, there is no closing date for the exchange offer. We reserve the right, however, to modify the exchange offer commencement date and to modify or terminate the exchange offer upon reasonable written notice to you.

    See APPENDIX A for further details about the exchange offer.

    Exchange Credit (for exchanges from our fixed deferred annuities)

    If you own a fixed deferred annuity issued by us and are no longer subject to surrender charges, you may transfer the accumulated value, without charge, to the Contract described in this prospectus. We will add 1% of the fixed annuity contract’s surrender value at the time of exchange to this Contract’s accumulated value. There is no charge or cost to you for this exchange credit.

    This exchange credit is allocated among the Contract’s investment options in the same ratio as your allocation of premium payments. The credit is treated as earnings.

    NOTE: The exchange may not be suitable for you if you do not want to accept market risk. Fixed deferred annuities provide a fixed rate of accumulation. This Contract provides Separate Account divisions. The value of this Contract will increase or decrease depending on the investment performance of the Separate Account divisions you select.

    NOTE: The charges and provisions of a fixed annuity contract and this Contract differ. The charges for this Contract are typically higher than charges for a fixed annuity and will increase further if you elect the Premium Payment Credit Rider, a GMWB rider or other optional rider. In some instances, your existing fixed annuity contract may have benefits that are not available under this Contract.

    NOTE: This exchange credit may not be available in all states. In addition, we reserve the right to change or discontinue the exchange credit. You may obtain more specific information regarding the exchange credit from your registered representative or by calling us at 1-800-852-4450.

    18


     

    Right to Examine the Contract (free look)

    It is important to us that you are satisfied with the purchase of your Contract. Under state law, you have the right to return the Contract for any reason during the examination offer period (a “free look”). The examination offer period is the later of 10 days after the Contract is delivered to you, or such later date as specified by applicable state law.

    Although we currently allocate your initial premium payments to the investment options you have selected, during times of economic uncertainty and with prior notice to you, we may exercise our right to allocate initial premium payments to the Money Market division during the examination offer period. If your initial premium payments are allocated to the Money Market division and the free look is exercised, you will receive the greater of premium payments or the accumulated value.

    In California, for owners age 60 or older, we allocate initial premium payments to the Money Market division during the examination offer period unless you elect to immediately invest in the allocations you selected. If your premium payments were allocated to the Money Market division, after the free look period ends, your accumulated value will be converted into units of the division(s) according to your allocation instructions. The units allocated will be based on the unit value next determined for each division.

    To exercise your free look, you must send the Contract and a written request to us postmarked before the close of business on the last day of the examination offer period.

    If you properly exercise your free look, we will cancel the Contract. In the states that require us to return your premium payments, we will return the greater of your premium payments or accumulated value. In all states we will return at least your accumulated value plus any premium tax charge deducted, and minus any applicable federal and state income tax withholding. The amount returned may be higher or lower than the premium payment(s) applied during the examination offer period.

    If you are purchasing this Contract to fund an IRA, SIMPLE-IRA, or SEP-IRA and you return it on or before the seventh day of the examination offer period, we will return the greater of:

    • the total premium payment(s) made; or
    • your accumulated value plus any premium tax charge deducted, less any applicable federal and state income tax withholding and depending upon the state in which the Contract was issued, any applicable fees and charges.

    You may obtain more specific information regarding the free look from your registered representative or by calling at 1-800-852-4450.

    Accumulated Value

    The accumulated value of your Contract is the total of the Separate Account division value plus the DCA Plus account(s) value plus the Fixed Account value. The DCA Plus accounts and Fixed Account are described in the section titled 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS.

    There is no guaranteed minimum Separate Account division value. The value reflects the investment experience of the divisions that you choose and also reflects your premium payments, partial surrenders, surrender charges, partial annuitizations and the Contract expenses deducted from the Separate Account.

    The Separate Account division value changes from day to day. To the extent the accumulated value is allocated to the Separate Account divisions, you bear the investment risk. At the end of any valuation period, your Contract’s value in a division is:· the number of units you have in a division multiplied by· the value of a unit in the division.

    The number of units is equal to the total units purchased by allocations to the division from:
    · your initial premium payment;
    · subsequent premium payments;
    · your exchange credit;
    · premium payment credits; and
    · transfers from another investment option
    minus units sold:
    · for partial surrenders and/or partial annuitizations from the division;
    · as part of a transfer to another division or the Fixed Account; and
    · to pay Contract charges and fees (not deducted as part of the daily unit value calculation).

     

    19


     

    Unit values are calculated each valuation date at the close of normal trading of the NYSE. To calculate the unit value
    of a division, the unit value from the previous valuation date 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 [(a plus b) divided by (c)] minus d where:
    a = the share price (net asset value) of the underlying mutual fund at the end of the valuation period;
    b = the per share amount of any dividend* (or other distribution) made by the mutual fund during the valuation period;
    c = the share price (net asset value) of the underlying mutual fund at the end of the previous valuation period; and
    d = the daily charge for Total Separate Account Annual Expenses and any Optional Riders, if applicable. The daily
    charge is calculated by dividing the annual amount of these expenses by 365 and multiplying by the number of days
    in the valuation period.

     

    *      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.

    The Company reserves the right to terminate a Contract and send you the accumulated value if no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider. The Company will first notify you of its intent to exercise this right and give you 60 days to increase the accumulated value to at least $2,000.

    Telephone and Internet Services

    If you elect telephone services or you elect internet services and satisfy our internet service requirements (which are designed to ensure compliance with federal UETA and E-SIGN laws), instructions for the following transactions may be given to us via the telephone or internet:

    • make premium payment allocation changes;
    • set up Dollar Cost Averaging (DCA) scheduled transfers;
    • make transfers; and
    • make changes to Automatic Portfolio Rebalancing (APR).

    Neither the Company nor the Separate Account is responsible for the authenticity of telephone service or internet transaction requests. We reserve the right to refuse telephone service or internet transaction requests. You are liable for a loss resulting from a fraudulent telephone or internet order that we reasonably believe is genuine. We follow procedures in an attempt to assure genuine telephone service or internet transactions. If these procedures are not followed, we may be liable for loss caused by unauthorized or fraudulent transactions. The procedures may include recording telephone service transactions, requesting personal identification (for example, name, address, security phrase, password, daytime telephone number, or birth date) and sending written confirmation to your address of record.

    Instructions received via our telephone services and/or the internet are binding on both owners if the Contract is jointly owned.

    If the Contract is owned by a business entity or a trust, an authorized individual (with the proper password) may use telephone and/or internet services. Instructions provided by the authorized individual are binding on the owner.

    We reserve the right to modify or terminate telephone service or internet transaction procedures at any time. Whenever reasonably feasible, we will provide you with prior notice (by mail or by email, if previously authorized by you) if we modify or terminate telephone service or internet transaction procedures. In some instances, it may not be reasonably feasible to provide prior notice if we modify or terminate telephone service or internet transaction procedures; however, any modification or termination will apply to all Contract owners in a non-discriminatory fashion.

    20


     

    Telephone Services

    Telephone services are available to you. Telephone services may be declined on the application or at any later date by providing us with written notice. You may also elect telephone authorization for your registered representative by providing us written notice.

    If you elect telephone privileges, instructions

    • may be given by calling us at 1-800-852-4450 while we are open for business (generally, between 8 a.m. and 6 p.m. Eastern Time on any day that the NYSE is open).
    • that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
    • that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
    • that are not in good order when received by us will be effective the next valuation date that we receive good order instructions.

    Internet

    Internet services are available to you if you register for a secure login on the Principal Financial Group web site, www.principal.com. You may also elect internet authorization for your registered representative by providing us written notice.

    If you register for internet privileges, instructions

    • that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
    • that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
    • that are not in good order when received by us will be effective the next valuation day that we receive good order instructions.

    2. CHARGES AND DEDUCTIONS

    Certain charges are deducted under the Contract. If the charge is not sufficient to cover our costs, we bear the loss. If the expense is more than our costs, the excess is profit to the Company. We expect a profit from all the fees and charges listed below, except the Annual Fee, Transaction Fee and Premium Tax. For a summary, see SUMMARY OF EXPENSE INFORMATION.

    In addition to the charges under the Contract, there are also deductions from and expenses paid out of the assets of the underlying mutual funds which are described in the underlying mutual funds’ prospectuses.

    Surrender Charge

    No sales charge is collected or deducted when premium payments are applied under the Contract. A surrender charge is assessed on certain total or partial surrenders. The amounts we receive from the surrender charge are used to cover some of the expenses of the sale of the Contract (primarily commissions, as well as other promotional or distribution expenses). If the surrender charge collected is not enough to cover the actual costs of distribution, the costs are paid from the Company’s General Account assets which include profit, if any, from the mortality and expense risks charge.

    NOTE: If you plan to make multiple premium payments, you need to be aware that each premium payment has its own surrender charge period (shown below). The surrender charge for any total or partial surrender is a percentage of all premium payments surrendered which were received by us during the contract years prior to the surrender. The applicable percentage which is applied to the premium payments surrendered is determined by the following tables.

    21


     

    Surrender charge for Contracts without the Premium Payment Credit Rider (as a percentage of amounts surrendered):

    Number of completed contract years Surrender charge applied to all  
    since each premium payment premium payments received in  
    was made that contract year  
    0 (year of premium payment) 6%
    1 6%
    2 6%
    3 5%
    4 4%
    5 3%
    6 2%
    7 and later 0%  
     
    Surrender Charge for Contracts with the Premium Payment Credit Rider (as a percentage of amounts surrendered):  

     

    Number of completed contract years Surrender charge applied to all  
    since each premium payment premium payments received in  
    was made that contract year  
    0 (year of premium payment) 8%
    1 8%
    2 7%
    3 6%
    4 5%
    5 4%
    6 3%
    7 2%
    8 1%
    9 and later 0%

     

    Each premium payment begins in year 0 for purposes of calculating the percentage applied to that premium payment. However, premium payments are added together by contract year for purposes of determining the applicable surrender charge. If your contract year begins April 1 and ends March 31 the following year, all premium payments received during that period are considered to have been made in that contract year.

    NOTE: Regarding Contracts written in the states of Alabama, Massachusetts, and Washington:
    · For Contracts without the Premium Payment Credit Rider, surrender charges are applicable only to
      premium payments made in the first three contract years.
    · For Contracts with the Premium Payment Credit Rider, surrender charges are applicable only to
      premium payments made in the first contract year.

     

    For purpose of calculating surrender charges, we assume that surrenders and transfers are made in the following order:

    • first from premium payments no longer subject to a surrender charge;
    • then from the free surrender privilege (first from the earnings, then from the oldest premium payments (i.e., on a first-in, first-out basis)) described below; and
    • then from premium payments subject to a surrender charge on a first-in, first-out basis.

    NOTE: Partial surrenders may be subject to both a surrender charge and a transaction fee. Free Surrender Amount The free surrender amount may be surrendered without a charge. This amount is the greater of:

    • earnings in the Contract (earnings equal accumulated value less unsurrendered premium payments as of the date of the surrender); or
    • 10% of the premium payments, decreased by any partial surrenders and partial annuitizations since the last Contract anniversary.

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    Any amount not taken under the free surrender amount in a contract year is not added to the amount available under the free surrender amount for any following contract year(s).

    Unscheduled partial surrenders of the free surrender amount may be subject to the transaction fee (see Transaction Fee).

    When Surrender Charges Do Not Apply

    The surrender charge does not apply to:

    • amounts applied under an annuity benefit payment option; or
    • payment of any death benefit, however, the surrender charge does apply to premium payments made by a surviving spouse after an owner’s death; or
    • amounts distributed to satisfy the minimum distribution requirement of Section 401(a)9 of the Internal Revenue Code, provided that the amount surrendered does not exceed the minimum distribution amount which would have been calculated based on the value of this Contract alone; or
    • an amount transferred from a Contract used to fund an IRA to another annuity contract issued by the Company to fund an IRA of the participant’s spouse when the distribution is made pursuant to a divorce decree.

    Waiver of Surrender Charge Rider

    This rider is automatically added to the Contract at issue (subject to state approval and state variations may apply). There is no charge for this benefit.

    This rider waives the surrender charge on surrenders made after the first Contract anniversary if the owner or annuitant has a critical need. A critical need includes confinement to a health care facility, terminal illness diagnosis, or total and permanent disability.

    The benefits are available for a critical need if the following conditions are met:

    • the owner or annuitant has a critical need; and
    • the critical need did not exist before the contract date.

    For the purposes of this rider, the following definitions apply:

    • health care facility — a licensed hospital or inpatient nursing facility providing daily medical treatment and keeping daily medical records for each patient (not primarily providing just residency or retirement care). This does not include a facility owned or operated by the owner, annuitant or a member of their immediate family. If the critical need is confinement to a health care facility, the confinement must continue for at least 60 consecutive days after the contract date and the surrender must occur within 90 days of the confinement’s end.
      Notice must be provided within 90 days after confinement ends.
    • terminal illness — sickness or injury that results in the owner’s or annuitant’s life expectancy being 12 months or less from the date notice to receive a distribution from the Contract is received by the Company.
    • total and permanent disability — the owner or annuitant is unable to engage in any occupation for pay or profit due to sickness or injury.

    Transaction Fee

    To assist in covering our administration costs, we reserve the right to charge a transaction fee of the lesser of $25 or 2% of each unscheduled partial surrender after the 12th unscheduled partial surrender in a contract year. The transaction fee would be deducted from the accumulated value remaining in the investment option(s) from which the amount is surrendered, on a pro rata basis.

    To assist in covering our administration costs or to discourage market timing, we also reserve the right to charge a transaction fee of the lesser of $30 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year. The transaction fee would be deducted from the investment option(s) from which the amount is transferred, on a pro rata basis.

    If we elect to begin charging for the transaction fees, we will provide you with advance written notice.

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    Premium Taxes

    We reserve the right to deduct an amount to cover any premium taxes imposed by states or other jurisdictions. If we elect to begin deducting any premium taxes, we will provide you with advance written notice. Any deduction is made from either a premium payment when we receive it, or the accumulated value when you request a surrender (total or partial) or you request application of the accumulated value (full or partial) to an annuity benefit payment option. Premium taxes range from 0% in most states to as high as 3.50%.

    Annual Fee

    Contracts with an accumulated value of less than $30,000 are subject to an annual Contract fee of the lesser of $30 or 2% of the accumulated value. Currently, we do not charge the annual fee if your accumulated value is $30,000 or more. If we elect to begin charging the annual fee if your accumulated value is $30,000 or more, we will provide you with advance written notice. If you own more than one variable annuity contract with us, all the Contracts you own or jointly own are aggregated, on each Contract’s anniversary, to determine if the $30,000 minimum has been met and whether that Contract will be charged. The fee is deducted from the investment option that has the greatest value. The fee is deducted on each Contract anniversary and upon total surrender of the Contract. The fee assists in covering administration costs, primarily costs to establish and maintain the records which relate to the Contract.

    Separate Account Annual Expenses

    Mortality and Expense Risks Charge

    We assess each division with a daily charge for mortality and expense risks. The annual rate of the charge is 1.25% of the average daily net assets of the Separate Account divisions. We agree not to increase this charge for the duration of the Contract. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated.

    This charge is intended to compensate us for the mortality risk on the Contract. We have a mortality risk in that we guarantee payment of a death benefit in a single payment or under an annuity benefit payment option. We do not impose a surrender charge on a death benefit payment, which is an additional mortality risk.

    This charge is also intended to cover our expenses, primarily related to operation of the Contract, including

    • furnishing periodic Contract statements, confirmations and other customer communications;
    • preparation and filing of regulatory documents (such as this prospectus);
    • preparing, distributing and tabulating proxy voting materials related to the underlying mutual funds; and
    • providing computer, actuarial and accounting services.

    If the mortality and expense risks charge is not enough to cover our costs, we bear the loss. If the mortality and expense risks charge is more than our costs, the excess is profit to the Company.

    Administration Charge

    We assess each division with a daily Separate Account administration charge. The annual rate of the charge is 0.15% of the average daily net assets of the Separate Account divisions. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated. The administration charge is intended to cover our costs for administration of the Contract that are not covered in the mortality and expense risk charge, above.

    If the administration charge is not enough to cover our costs, we bear the loss. If the administration charge is more than our costs, the excess is profit to the Company.

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    Charges for Rider Benefits Currently Available

    Subject to certain conditions, you may add one or more of the following optional riders to your Contract. Please contact your registered representative or call us at 1-800-852-4450 if you have any questions.

    Premium Payment Credit Rider
     
    The maximum annual charge for this rider is 0.60% of the average daily net assets of the Separate Account divisions
    and a reduction of 0.60% of the Fixed Account interest rate. We currently impose the maximum charge against the
    average daily net assets of the Separate Account divisions, but do not currently impose the Fixed Account interest
    rate reduction. We will provide prior written notice in the event that we decide to exercise our right to reduce the
    Fixed Account interest rate.
     
    If you elect the Premium Payment Credit Rider, the rider charge is assessed until completion of your 8th contract
    year (and only prior to the annuitization date) even if the credit(s) have been recovered. This charge is assessed
    daily against the Separate Account division values in the same manner as the mortality and expense risks charge,
    above. After the 8th Contract anniversary, your Contract accumulated value is moved to units in your chosen
    divisions that do not include this rider charge. This move of division units will not affect your accumulated value. It
    will, however, result in a smaller number of division units but those units will have a higher unit value. We will notify
    you when the division units move because of discontinuation of the rider charge.
     
    The rider charge is intended to cover our cost for the credit(s).

     

    Principal Income Builder 3 (PIB 3) Rider

    For applications signed on or after August 1, 2013, in states where the rider charge increase has been approved, the current annual charge for the rider is 1.05% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2625%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.

    For applications signed on or after August 1, 2013, in states where the rider charge has not been approved, the current annual charge for the rider is 0.95% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2375%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.

    The average quarterly For Life withdrawal benefit base is equal to (1) the For Life withdrawal benefit base at the beginning of the calendar quarter plus (2) the For Life withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.

    For existing contracts, advance notice will be sent if the rider charge will increase. Before the effective date of the rider charge increase, you have the following options:

    • Accept the increased rider charge and continue to be eligible to receive a GMWB Step-Up at each rider anniversary; or
    • Decline the increased rider charge by sending us notice that you are opting out of the GMWB Step-Up and electing to remain at your current rider charge. Once you opt out of the GMWB Step-Up, you will no longer be eligible for any future GMWB Step-Ups and the feature cannot be added back to this rider.

    At the end of each calendar quarter (or on the next valuation date, if the calendar quarter ends on a non-valuation date), the rider charge is deducted through the redemption of units from your accumulated value in the same proportion as the surrender allocation percentages. If this rider is purchased after the beginning of a calendar quarter, the rider charge is prorated according to the number of days this rider is in effect during the calendar quarter. Upon termination of this rider, the rider charge will be based on the number of days this rider is in effect during the calendar quarter.

    We reserve the right to increase the rider charge up to the maximum annual charge. The maximum annual charge is 1.65% (0.4125% quarterly) of the average quarterly For Life withdrawal benefit base.

    The rider charge is intended to reimburse us for the cost of the protection provided by this rider.

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    Principal Income Builder 10 (PIB 10) Rider

    For applications signed on or after August 1, 2013, in states where the rider charge increase has been approved, the current annual charge for the rider is 1.20% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.3000%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.

    For applications signed on or after August 1, 2013, in states where the rider charge has not been approved, the current annual charge for the rider is 1.10% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2750%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.

    The average quarterly Investment Back withdrawal benefit base is equal to (1) the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus (2) the Investment Back withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.

    For existing contracts, advance notice will be sent if the rider charge will increase. Before the effective date of the rider charge increase, you have the following options:

    • Accept the increased rider charge and continue to be eligible to receive a GMWB Step-Up at each rider anniversary; or
    • Decline the increased rider charge by sending us notice that you are opting out of the GMWB Step-Up and electing to remain at your current rider charge. Once you opt out of the GMWB Step-Up, you will no longer be eligible for any future GMWB Step-Ups and the feature cannot be added back to this rider.

    At the end of each calendar quarter (or on the next valuation date, if the calendar quarter ends on a non-valuation date), the rider charge is deducted through the redemption of units from your accumulated value in the same proportion as the surrender allocation percentages. If this rider is purchased after the beginning of a calendar quarter, the rider charge is prorated according to the number of days this rider is in effect during the calendar quarter. Upon termination of this rider, the rider charge will be based on the number of days this rider is in effect during the calendar quarter.

    We reserve the right to increase the rider charge up to the maximum annual charge. The maximum annual charge is 2.00% (0.5000% quarterly) of the average quarterly Investment Back withdrawal benefit base.

    The rider charge is intended to reimburse us for the cost of the protection provided by this rider.

    Special Provisions for Group or Sponsored Arrangements

    Where permitted by state law, Contracts may be purchased under group or sponsored arrangements as well as on an individual basis.

    Group Arrangement – program under which a trustee, employer or similar entity purchases Contracts covering a group of individuals on a group basis.

    Sponsored Arrangement – program under which an employer permits group solicitation of its employees or an association permits group solicitation of its members for the purchase of Contracts on an individual basis.

    The charges and deductions described above may be reduced or eliminated for Contracts issued in connection with group or sponsored arrangements. The rules in effect at the time the application is approved will determine if reductions apply. Reductions may include but are not limited to sales of Contracts without, or with reduced, mortality and expense risks charges, annual fees or surrender charges.

    Eligibility for and the amount of these reductions are determined by a number of factors, including the number of individuals in the group, the amount of expected premium payments, total assets under management for the owner, the relationship among the group’s members, the purpose for which the Contract is being purchased, the expected persistency of the Contract, and any other circumstances which, in our opinion, are rationally related to the expected reduction in expenses. Reductions reflect the reduced sales efforts and administration costs resulting from these arrangements. We may modify the criteria for and the amount of the reduction in the future. Modifications will not unfairly discriminate against any person, including affected owners and other owners with contracts funded by the Separate Account.

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    3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS

    This prospectus is intended to serve as a disclosure document only for the Contract as it relates to the Separate Account and contains only selected information regarding the Fixed Account and DCA Plus accounts. The Fixed Account and the DCA Plus accounts are a 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 DCA Plus accounts, 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 Account and the DCA Plus 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.

    Our obligations with respect to the Fixed Account and DCA Plus accounts are supported by our general account. The general account is the assets of the Company other than those assets allocated to any of our Separate Accounts. Subject to applicable law, we have sole discretion over the assets in the general account. Separate Account expenses are not assessed against any Fixed Account or DCA Plus account values. You can obtain more information concerning the Fixed Account and DCA Plus accounts from your registered representative or by calling us at 1-800-852-4450.

    We reserve the right to refuse premium payment allocations and transfers from the other investment options to the

    Fixed Account and premium payment allocations to the DCA Plus accounts. We will send you a written notice at least 30 days prior to the date we exercise this right. We will also notify you if we lift such restrictions.

    Fixed Account

    The Company guarantees that premium payments allocated and amounts transferred to the Fixed Account earn interest at the interest rate in effect on the date premium payments are received or amounts are transferred. This rate applies to each premium payment or amount transferred through the end of the contract year.

    Each Contract anniversary, we declare a renewal interest rate that applies to the Fixed Account value in existence at that time. This rate applies until the end of the contract year. Interest is earned daily and compounded annually at the end of each contract year. Once credited, the interest is guaranteed and becomes part of the Fixed Account value from which deductions for fees and charges may be made.

    NOTE: We reserve the right to reduce the Fixed Account interest rate by up to 0.60% if you elect the Premium
    Payment Credit Rider.
    NOTE: Transfers and surrenders from the Fixed Account are subject to certain limitations as to frequency and
    amount. See 6. TRANSFERS AND SURRENDERS.
     
    NOTE: We may defer payment of surrender proceeds payable out of the Fixed Account for up to six months. See 9.
    ADDITIONAL INFORMATION ABOUT THE CONTRACT.

     

    Fixed Account Value

    Your Fixed Account value on any valuation date is equal to:

    • premium payments or credits allocated to the Fixed Account;
    • plus any transfers to the Fixed Account from the other investment options;
    • plus interest credited to the Fixed Account;
    • minus any surrenders or applicable surrender charges or partial annuitizations from the Fixed Account;
    • minus any transfers to the Separate Account.

    Dollar Cost Averaging Plus Program (DCA Plus Program)

    Premium payments allocated to the DCA Plus accounts earn the interest rate in effect at the time each premium payment is received. A portion of your DCA Plus account value is periodically transferred (on the 28th of each month) to Separate Account divisions or to the Fixed Account. If the 28th is not a valuation date, the transfer occurs on the next valuation date. The transfers are allocated according to your DCA Plus allocation instructions. Transfers into a DCA Plus account are not permitted. There is no charge for participating in the DCA Plus program.

    NOTE: If you elect the Premium Payment Credit Rider, you may not participate in the DCA Plus program.

     

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    DCA Plus Premium Payments

    You may enroll in the DCA Plus program by allocating a minimum premium payment of $1,000 into a DCA Plus account and selecting investment options into which transfers will be made. Subsequent premium payments of at least $1,000 are permitted. You can change your DCA Plus allocation instructions during the transfer period.

    Automatic Portfolio Rebalancing does not apply to DCA Plus accounts.

    DCA Plus premium payments receive the fixed interest rate in effect on the date each premium payment is received by us. The fixed interest rate remains in effect for the remainder of the 6-month or 12-month DCA Plus program.

    Selecting a DCA Plus Account

    DCA Plus accounts are available in either a 6-month transfer program or a 12-month transfer program. The 6-month transfer program and the 12-month transfer program generally will have different credited interest rates. You may enroll in both a 6-month and 12-month DCA Plus program. However, you may only participate in one 6-month and one 12-month DCA Plus program at a time. Under the 6-month transfer program, all premium payments and accrued interest must be transferred from the DCA Plus account to the selected investment options in no more than 6 months. Under the 12-month transfer program, all premium payments and accrued interest must be transferred to the selected investment options in no more than 12 months.

    We will transfer an amount each month which is equal to your DCA Plus account value divided by the number of months remaining in your transfer program. For example, if four scheduled transfers remain in the six-month transfer program and the DCA Plus account value is $4,000, the transfer amount would be $1,000 ($4,000 / 4).

    DCA Plus Transfers

    Transfers are made from DCA Plus accounts to the investment options according to your allocation instructions. The transfers begin after we receive your premium payment and completed enrollment instructions. Transfers occur on the 28th of the month and continue until your entire DCA Plus account value is transferred.

    Unscheduled DCA Plus Transfers. You may make unscheduled transfers from DCA Plus accounts to the investment options. A transfer is made, and values determined, as of the end of the valuation period in which we receive your request.

    DCA Plus Surrenders. You may take scheduled or unscheduled surrenders from DCA Plus accounts. Premium payments earn interest according to the corresponding rate until the surrender date. Surrenders are subject to any applicable surrender charge.

    4. LIVING BENEFIT - GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)

    NOTE: Prior to August 1, 2013, earlier versions of the Principal Income Builder 3 (PIB 3) and Principal Income Builder 10 (PIB 10) GMWB riders were available. If you are purchasing one of these riders in a state that has not approved the most recent version, see Appendix E for PIB 3 or Appendix F for PIB 10. Consult with your registered representative to determine which states have not approved the most recent version.

    Guaranteed Minimum Withdrawal Benefit (GMWB) riders are designed to help protect you against the risk of a decrease in the Contract accumulated value due to market declines. The GMWB rider allows you to take certain guaranteed annual withdrawals during the Contract accumulation phase, regardless of your Contract accumulated value.

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    We currently make available two optional GMWB riders, the Principal Income Builder 3 rider and the Principal Income Builder 10 rider. We offer different GMWB riders so you can choose the level of benefits and charges that make the most sense for you. The availability and eligibility requirements of these riders are shown below.

    Name of Rider PIB 3 PIB 10
    Marketing Name Principal Income Builder 3 Principal Income Builder 10
    Eligibility The owner(s) (or the annuitant(s) if the owner is not a The owner(s) (or the annuitant(s) if the owner is
      natural person) must be at least age 45 and younger not a natural person) must be at least age 45 and
      than age 81 younger than age 81

     

    Previously we have made available other GMWB riders. However, no Contract may have more than one GMWB
    rider. For a description of these GMWB riders, see PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM (FOR
    APPLICATIONS SIGNED PRIOR TO AUGUST 1, 2013) Prospectus.
     
    You may elect a GMWB rider only when you purchase the Contract. We reserve the right, in our sole discretion, to
    allow Contract owners to add a rider after issue. If we exercise this right, we will give written notice and our offer will
    not be unfairly discriminatory.
     
    Factors to Consider Before You Buy A GMWB Rider
     
    A GMWB rider may be appropriate if you:
     
    · Want to protect against the risk that your Contract accumulated value could fall below your investment due to
      market decline.
    · Want to benefit from potential annual increases in your rider values that match the growth of your Contract
      accumulated value.
    · Want to protect against the risk of you or your spouse outliving your income.
     
    A GMWB rider generally will not be appropriate if you:
     
    · Do not intend to take any withdrawals from your Contract.
    · Intend to allocate a significant portion of your Contract accumulated value to the Fixed Account or DCA Plus
      Accounts.
    · Have an aggressive growth investment objective.
    · Plan on taking withdrawals that exceed the GMWB withdrawal limits.
     
     
    Before you purchase this rider, you should carefully consider the following:
     
    · The features of a GMWB rider may not be purchased separately. As a result, you may pay for rider features that
      you never use.
    · If you take withdrawals that exceed a GMWB rider’s withdrawal limits (excess withdrawals), you will shorten the
      life of the rider, lower the withdrawal benefit payment(s) and/or cause the rider to terminate for lack of value.
    · A GMWB rider does not guarantee that the withdrawal benefit payment(s) will be sufficient to meet your future
      income needs.
    · A GMWB rider is not a guarantee that you will receive any earnings on your premium payments.
    · A GMWB rider is not a guarantee that your investment is protected against loss of purchasing power due to
      inflation.
    · The fee for the GMWB rider may increase over time due to GMWB Step-Ups, but will not exceed the maximum
      fee.
    · A GMWB rider restricts your investment options to investment options that reflect a generally balanced
      investment objective. The Contract’s more aggressive growth investment options are not available if you elect a
      GMWB rider.
    · Once elected, you may not terminate the GMWB rider until the 5th Contract anniversary following the rider
      effective date.
     
    You should review the terms of each GMWB rider carefully and work with your registered representative to decide
    which GMWB rider, if any, is appropriate for you based on a thorough analysis of your particular needs, financial
    objectives, investment goals, time horizons and risk tolerance.

     

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    Which GMWB Rider May Be Appropriate for You

    The Principal Income Builder 3 rider may be appropriate if you:

    • Want to protect against the risk of you or your spouse outliving your income.
    • Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
    • Want our lowest-cost GMWB rider.
    • Want to defer taking withdrawals for a shorter period and receive an accelerated GMWB Bonus rate. The PIB 3 Bonus period is 3 years at 7%, 6%, and 5% of premium payments.

    The Principal Income Builder 10 rider may be appropriate if you:

    • Want to protect against the risk that your Contract accumulated value could fall below your original investment due to market decline. One of the withdrawal options is designed to permit you to recover at least your premium payments.
    • Want to protect against the risk of you or your spouse outliving your income.
    • Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
    • Do not plan to take withdrawals for at least 10 years after the rider effective date and want to take advantage of the 10-year GMWB Bonus. The PIB 10 Bonus period is 10 years at 5.00% annually of the premium payments.
    • Are willing to pay a higher cost for the flexibility provided by these features.

    GMWB Rider Restrictions/Limitations

    Once elected, the GMWB rider may not be terminated for 5 contract years following the rider effective date.

    The GMWB rider does not restrict or change your right to take — or not take — withdrawals under the Contract. All withdrawals reduce the Contract accumulated value by the amount withdrawn and are subject to the same conditions, limitations, fees, charges and deductions as withdrawals otherwise taken under the provisions of the Contract; for example, withdrawals will be subject to surrender charges if they exceed the free surrender amount (see 2. CHARGES AND DEDUCTIONS). However, any withdrawals may have an impact on the value of your rider’s benefits.

    If you take withdrawals in an amount that exceeds an available withdrawal benefit payment (excess withdrawal), you will shorten the life of the rider, lower the withdrawal benefit payment(s) and/or cause the rider to terminate for lack of value unless you make additional premium payments or a GMWB Step-Up is applied.

    There is a charge for the GMWB rider which can increase up to the guaranteed maximum charge for the rider (see SUMMARY OF EXPENSE INFORMATION).

    Election of a GMWB rider results in restriction of your Contract investment options to the more limited GMWB investment options (see GMWB Investment Options).

    Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life may result in termination of this rider (see Principal Income Builder 3 Covered Life Change or Principal Income Builder 10 Covered Life Change).

    Additional Premium Payments

    Before your Contract accumulated value is reduced to zero, you may make additional premium payments, subject to the limitations described below. We will not accept additional premium payments once the Contract accumulated value becomes zero.

    While this rider is in effect, we may limit or not accept additional premium payments if we determine that, as a result of the timing and amounts of your additional premium payments and withdrawals, a limitation is necessary for us to manage the financial risks incurred in providing the GMWB. We also reserve the right to limit or not accept additional premium payments if we are not then offering this benefit for new contracts, or if we are offering a modified version of this benefit for new contracts. We will exercise such reservation of right for all annuity owners in the same class, in a non-discriminatory manner.

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    GMWB Investment Options

    While a GMWB rider is in effect, the investment options you may select are restricted. The limited investment options available under a GMWB rider (the GMWB investment options) reflect a balanced investment objective and if your investment goal is aggressive growth, a GMWB rider may not support your investment objective. With GMWB investment options that reflect a balanced investment objective, there is potentially a reduced likelihood that we will have to make GMWB benefit payments when the Contract value goes to zero, reaches the maximum annuitization date, or if there is a death claim.

    When you purchase a GMWB rider, you must allocate 100% of your Separate Account division value to one of the available Separate Account GMWB investment options. Any future premium payments are allocated to the GMWB investment option your Separate Account division value is invested in at the time of the new premium payments.

    The available GMWB investment options are:

    • Diversified Growth Account; or
    • Diversified Balanced Account; or
    • Diversified Income Account.

    For more information about the Diversified Growth, Diversified Balanced Account, and Diversified Income Account, see the underlying fund’s prospectus provided with this prospectus.

    You may allocate premium payments and transfer Contract accumulated value to the Fixed Account. You may also allocate new premium payments to the DCA Plus accounts. Such allocations and transfers are subject to the provisions of your Contract. See 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS.

    We reserve the right to modify the list of available GMWB investment options, subject to compliance with applicable regulations. Changes or restrictions will apply only to new purchasers of the Contract or to you if you transfer out of a GMWB investment option and wish to transfer back to that GMWB investment option.

    You must stay invested in the GMWB investment options as long as the GMWB rider is in effect. Note, the rider may not be terminated for 5 contract years following the rider effective date.

    See APPENDIX B for information regarding GMWB investment options.

    Overview of Principal Income Builder 3

    For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.

    Bonus feature. This rider has a Bonus feature which rewards you annually for not taking a withdrawal within the first 3 years of the rider. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase your Contract accumulated value.

    Step-Up feature. This rider has an annual Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.

    Maximum annual rider charge. This rider has a maximum annual rider charge of 1.65% of the For Life withdrawal benefit base.

    Spousal continuation. This rider provides that the For Life withdrawal options may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.

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    Principal Income Builder 3 Terms

    We use the following definitions to describe the features of this rider:

    • Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment.
    • GMWB Bonus — a bonus credited to the withdrawal benefit base, provided certain conditions are met.
    • GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
    • GMWB Step-Up — an increase to the withdrawal benefit base to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
    • Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
    • Rider effective date — the date the rider is issued.
    • Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your
      Contract’s accumulated value.
    • Withdrawal benefit base (also referred to as For Life withdrawal benefit base) — the basis for determining the withdrawal benefit payment available each year
    • Withdrawal benefit payment (also referred to as For Life withdrawal benefit payment) — the amount that we guarantee you may withdraw each contract year.

    Principal Income Builder 3 - Withdrawal Benefit Base

    The withdrawal benefit base is used to calculate the annual withdrawal benefit payment. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary.

    The initial withdrawal benefit base is equal to the initial premium payment.

    On each Contract anniversary, the withdrawal benefit base is reset to the greater of 1 or 2, where:
     
    1. is the accumulated value on the Contract anniversary.
     
    2. is the result of (a + b + c - d), where:
    a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
    b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
    c = any GMWB Bonus credited since the previous Contract anniversary;
    d = any excess withdrawals taken since the previous Contract anniversary*.
     
    * NOTE: The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated
    value is less than the withdrawal benefit base at the time of the excess withdrawal. See Principal Income
    Builder 3 - Excess Withdrawals later in this section for information about the negative effect of excess
    withdrawals.
     
    If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit base will be
    reduced for excess withdrawals. If the adjustment for any withdrawals causes the For Life withdrawal benefit base to
    reduce to zero, the rider will terminate at the next Contract anniversary, unless you make additional premium
    payments or a GMWB Step-Up is applied.

     

    Principal Income Builder 3 - Withdrawal Benefit Payment

    For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.

    The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.

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    “Single Life” For Life withdrawal benefit payments. “Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:

    a.      Owner if there is only one owner;
    b.      Annuitant if the owner is not a natural person;
    c.      Youngest joint owner if there are joint owners; or
    d.      Youngest annuitant if there are joint annuitants and the owner is not a natural person.

    In addition, the covered life must satisfy this rider’s issue age requirements on the date the covered life is designated in accordance with the terms of this rider.

    As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.

    “Joint Life” For Life withdrawal benefit payments. “Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.

    To be eligible for “Joint Life” the covered lives must be:

    a.      The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
    b.      The joint owners, provided the joint owners are each other’s spouse.

    NOTE: Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to a person who is defined as a “spouse” under the Federal Defense of Marriage Act or other applicable Federal Law. All Contract provisions will be interpreted and administered in accordance with the requirements of the Code.

    NOTE: At the time a covered life is designated, that covered life must satisfy this rider’s issue age requirements.

    As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.

    Calculating the Principal Income Builder 3 For Life Withdrawal Benefit Payment

    The GMWB withdrawal benefit payment percentages applicable to the For Life Withdrawal Benefit Payment are disclosed in this prospectus, or in a prospectus supplement that updates the percentages (“GMWB Percentages Prospectus Supplement”). In order to receive the applicable GMWB withdrawal benefit payment percentages, your application must be signed within the stated time period during which such percentages will be applicable and received by us within 10 calendar days. The percentages applicable to your Contract will not change for the life of your Contract. After December 31, 2013, you should not purchase this annuity without first obtaining the applicable GMWB Percentages Prospectus Supplement containing the withdrawal benefit payment percentages applicable at the time.

    The percentages below apply for applications signed from August 1, 2013 through December 31, 2013.

    The For Life Withdrawal Benefit Payment percentages may be different than those listed below for applications signed after December 31, 2013.

    The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.

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    The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date:

    · “Single Life”:        
     
      Age of Covered Life at   For Life Withdrawal Benefit  
      First Withdrawal   Payment Percentage  
      45-54   3.00%
      55-59   4.00%
    60-64 4.25%
      65-74   5.00%
      75+ 5.25%

     

    · “Joint Life”:        
     
      Age of Younger Covered Life at   For Life Withdrawal Benefit  
      First Withdrawal   Payment Percentage  
      45-54   2.50%
      55-59   3.50%
    60-64 3.75%
      65-74   4.50%
      75+ 4.75%

     

    NOTE: All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Principal Income Builder 3 - Excess Withdrawals for additional information.

    Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be locked in at 2.50% for the remaining life of this rider and cannot be changed.

    Principal Income Builder 3 - Covered Life Change

    Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:

    1. Spousal continuation of this rider as described in 8. DEATH BENEFIT.

    2. If withdrawals have not been taken and you have not previously elected to continue this rider as provided in 8. DEATH BENEFIT, then:

    a.      You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
    b.      You may remove a joint owner or primary beneficiary as a covered life.
    c.      The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.

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    3. If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:

    a.      You may remove a joint owner as a covered life.
    b.      You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
    c.      The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.

    4. If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:

    a.      You may remove a joint owner or primary beneficiary as a covered life.
    b.      You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
    c.      The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.

    5. If you have previously elected to continue this rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.

    No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.

    An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.

    Principal Income Builder 3 - Effect of Withdrawals

    This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See Principal Income Builder 3 - GMWB Bonus below.

    If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.

    Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value.

    If you take excess withdrawals, the withdrawal benefit base will be reduced on the next Contract anniversary. See Principal Income Builder 3 - Excess Withdrawals for information about the negative effect of excess withdrawals.

    To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples in APPENDIX C.

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    Principal Income Builder 3 - Excess Withdrawals

    Any portion of a withdrawal that exceeds the available withdrawal benefit payment is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit base, which will reduce future withdrawal benefit payments. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal.

    All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.

    If you choose to take an excess withdrawal, the equation below shows how to calculate the excess withdrawal adjustment.

    Effect on withdrawal benefit base. Excess withdrawals will reduce the withdrawal benefit base in an amount
    equal to the greater of:
    · the excess withdrawal, or
    · the result of (a divided by b) multiplied by c, where:
      a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
      b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to
      deducting the amount of the excess withdrawal; and
      c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.

     

    NOTE: Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.

    Required Minimum Distribution (RMD) Program for GMWB Riders

    Tax-qualified contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.

    If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal.

    RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:

    • The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
    • You have elected scheduled withdrawal payments.

    NOTE: Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.

    We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.

    You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.

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    Principal Income Builder 3 - GMWB Bonus

    Under the GMWB Bonus, on each of the first three Contract anniversaries following the rider effective date, we will credit a bonus to the withdrawal benefit base provided you have not taken any withdrawals since the rider effective date.

    The GMWB Bonus percentages are disclosed in this prospectus, or in a prospectus supplement that updates the percentages (“GMWB Percentages Prospectus Supplement”). In order to receive the applicable GMWB Bonus percentages, your application must be signed within the stated time period during which such percentages will be applicable and received by us within 10 calendar days. The percentages applicable to your Contract will not change for the life of your Contract. After December 31, 2013, you should not purchase this annuity without first obtaining the applicable GMWB Percentages Prospectus Supplement containing the GMWB Bonus percentages applicable at the time.

    The percentages below apply for applications signed from August 1, 2013 through December 31, 2013.

    The GMWB Bonus Percentages may be different than those listed below for applications signed after December 31, 2013.

    The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below. If the contract date and the rider effective date are different (if we previously have allowed Contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable percentage shown in the chart below.

    Contract Anniversary    
    (following the rider effective date) GMWB Bonus Percentage  
    1 7.00%
    2 6.00%
    3 5.00%

     

    The GMWB Bonus is no longer available after the earlier of:
    · The 3rd Contract anniversary following the rider effective date; or
    · The date you take a withdrawal following the rider effective date.
     
    NOTE: The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit bases. The GMWB
      Bonus is not added to your Contract accumulated value.
     
    Principal Income Builder 3 - GMWB Step-Up
     
    The GMWB Step-Up is automatic and applies annually. Under this rider, unless an owner opts out of the automatic
    GMWB Step-Up, the rider charge will increase if our then current rider charge is higher than when the rider was
    purchased. The rider charge will never be greater than the maximum Principal Income Builder 3 rider charge. See
    SUMMARY OF EXPENSE INFORMATION section.
     
    If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater
    than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on
    that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a
    Contract anniversary is less than the withdrawal benefit base.
     
    If you are eligible for a GMWB Step-Up of a withdrawal benefit base, you will be charged the then current rider
    charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will
    send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the
    GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups.

     

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    On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the
    withdrawal benefit base if you satisfy all of the following requirements:
     
        1 . The Contract anniversary occurs before the later of:
            a. the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a
              natural person) attains age 80; or
            b. 10 years after the rider effective date;
        2 . You have not declined any increases in the rider charge; and
        3 . You have not fully annuitized the Contract.
     
     
     
    Principal Income Builder 3 - Effect of Reaching the Maximum Annuitization Date
     
    On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options
    described below.
     
    1 . Contract payment options:
        ·   Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
        ·   Payment of the Contract accumulated value as a single payment.
     
    2 . GMWB rider payment option:
        ·   Fixed scheduled payments each year in the amount of the For Life withdrawal benefit payment until the date
            of death of the last covered life.
     
    See Principal Income Builder 3 - Effect of Withdrawals for information on how withdrawals prior to the maximum
    annuitization date affect the GMWB values.
     
    We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to select one of
    the available payment options listed above. If we have not received your election as of the maximum annuitization
    date, we will automatically apply your Contract accumulated value to an annuity benefit payment option:
        ·   for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
        ·   for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of
            10 years.
     
     
     
    Principal Income Builder 3 - Effect of the Contract Accumulated Value Reaching Zero
     
    We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is
    approaching zero.
     
    In the event that the Contract accumulated value reduces to zero, we will pay the withdrawal benefit payments as
    follows:      
    ·   If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For
        Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first
        withdrawal.
    ·   If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you
        must elect either
        ·   the “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the
            amount of the “Single Life” For Life withdrawal benefit payment, until the date of your death (annuitant’s
            death if the owner is not a natural person); or the “Joint Life” For Life withdrawal option: you will receive fixed
            scheduled payments each year in the amount of the “Joint Life” For Life withdrawal benefit payment, until the
            date of the death of the last covered life.
     
    NOTE: In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected
        above will continue, but all other rights and benefits under this rider and the Contract (including the death
        benefits) will terminate, and no additional premium payments will be accepted.

     

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    Principal Income Builder 3 - Termination and Reinstatement

    You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.

    At any point in time, we will terminate this rider upon the earliest to occur:

    • The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
    • The date you fully annuitize, fully surrender or otherwise terminate the Contract.
    • The For Life withdrawal benefit base is zero.
    • The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 3 - Covered Life Change.
    • The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
    • The date you make an impermissible change in a covered life.

    If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.

    If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.

    Principal Income Builder 3 - Effect of Divorce

    Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of this rider while the former spouse will no longer have any such rights or be entitled to any benefits under this rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under this rider.

    Note: If this excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 3 – Excess Withdrawals.

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    Principal Income Builder 3 Rider Summary

    Name of Rider   PIB 3
    Marketing Name   Principal Income Builder 3
    Rider Issue Age   45 – 80
    Rider Charge           PIB 3 Charges (as a percentage of average quarterly For Life withdrawal
        benefit base)
      · Maximum annual charge is 1.65%.
      · Current annual charge is 1.05%.
    Guaranteed Minimum · For Life
    Withdrawal Benefits    
    Annual Withdrawal Limits · “Single Life” — tiered percentages based on age at first withdrawal,
        beginning at 3.00% and capping at a maximum of 5.25% of the For Life
        withdrawal benefit base
      · “Joint Life” — tiered percentages based on age at first withdrawal,
        beginning at 2.50% and capping at a maximum of 4.75% of the For Life
        withdrawal benefit base
    For Life Withdrawal Benefit · “Single Life” or “Joint Life” (your life and the lifetime of your eligible
    Payments   spouse)
      · For Life withdrawal benefit payments default to “Single Life” unless “Joint
        Life” is elected
      · Available the Contract anniversary following the date the oldest owner
        turns 59½ — all withdrawals prior to that Contract anniversary are
        excess withdrawals under the For Life withdrawal option
    Termination · You may terminate this rider anytime after the 5th Contract anniversary
    following the rider effective date

    GMWB Step-Up · Automatic annual GMWB Step-Up available until the later of (a) the
        Contract anniversary prior to age 80 or (b) 10 years after the rider
        effective date.
    GMWB Bonus · If no withdrawals are taken, a GMWB Bonus is applied to the benefit
        bases on each applicable Contract anniversary.
    Investment Restrictions · You must select one of the available GMWB investment options; there
        are no additional restrictions on allocations to the Fixed Account or DCA
        Plus accounts.
    Spousal Continuation · At the death of the first owner to die, a spouse who is a joint owner or
        primary beneficiary may have the option to continue the Contract with
        this rider.

     

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    Overview of Principal Income Builder 10

    Withdrawal options. This rider provides the flexibility of both a For Life withdrawal option and an Investment Back withdrawal option. You are not required to choose between these two withdrawal options unless your Contract accumulated value is zero or you reach the maximum annuitization date.

    The For Life withdrawal option helps to protect you against the risk of a decrease in the Contract accumulated value due to market declines as well as the risk of outliving your money. The Investment Back withdrawal option helps to protect you against the risk of a decrease in the Contract accumulated value due to market declines and is designed to permit you to recover at least your premium payments.

    For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.

    Bonus feature. This rider has a Bonus feature which rewards you annually for not taking a withdrawal in the first 10 years of the rider. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase the remaining withdrawal benefit base. The GMWB Bonus also does not increase your Contract accumulated value.

    Step-Up feature. This rider has an annual Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.

    Maximum annual rider charge. This rider has a maximum annual rider charge of 2.00% of the Investment Back withdrawal benefit base.

    Spousal continuation. This rider provides that the Investment Back and the For Life withdrawal options may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.

    Principal Income Builder 10 Terms

    We use the following definitions to describe the features of this rider:

    • Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment for a withdrawal option.
    • GMWB Bonus — a bonus credited to the withdrawal benefit base for each withdrawal option, provided certain conditions are met.
    • GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
    • GMWB Step-Up — an increase to the withdrawal benefit base and/or remaining withdrawal benefit base for each withdrawal option to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
    • Remaining withdrawal benefit base — the amount available for future withdrawal benefit payments under a withdrawal option. The remaining withdrawal benefit base for each withdrawal option is calculated separately. (not applicable to PIB3)
    • Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
    • Rider effective date — the date the rider is issued.
    • Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
    • Withdrawal benefit base — the basis for determining the withdrawal benefit payment available each year under a withdrawal option. The withdrawal benefit base for each withdrawal option is calculated separately.
    • Withdrawal benefit payment — the amount that we guarantee you may withdraw each contract year under a withdrawal option.

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    Principal Income Builder 10 - Withdrawal Options

    For Life Withdrawal Option. This option is intended to help you avoid the risk of out-living your money. You are eligible to take For Life withdrawal benefit payments beginning (i) on the rider effective date if the oldest owner (or the oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or the oldest annuitant, if applicable) attains age 59½. Once eligible, each year you may withdraw an amount up to the annual For Life withdrawal benefit payment until the earlier of the date of the death of the last covered life or the date the For Life withdrawal benefit base reduces to zero.

    Investment Back Withdrawal Option. This option is intended to allow a more rapid recovery of your premium payments (approximately 14 years). You are eligible to take Investment Back withdrawal benefit payments beginning on the rider effective date. You may withdraw an amount up to the annual Investment Back withdrawal benefit payment until the earlier of the date of your death (annuitant’s death if the owner is not a natural person) or the date the Investment Back remaining withdrawal benefit base equals zero. Under this option, you may take withdrawals prior to the oldest owner attaining age 59½. If you take withdrawals prior to the oldest owner attaining age 59½, the For Life benefit bases will be reduced for excess withdrawals. If the adjustment for the withdrawals causes the For Life withdrawal benefit base to reduce to zero, the For Life withdrawal option will no longer be available to you (unless you make additional premium payments).

    Principal Income Builder 10 - Withdrawal Benefit Base

    Each withdrawal option has its own withdrawal benefit base, which is used to calculate the annual withdrawal benefit payment for that option. We calculate the withdrawal benefit base for the Investment Back and the For Life withdrawal options separately on:

    • The rider effective date and
    • Each Contract anniversary.

    The initial withdrawal benefit base for both withdrawal options is equal to the initial premium payment.

    On each Contract anniversary, the withdrawal benefit base for each withdrawal option is reset to the greater of 1 or 2, where:

    1. is the accumulated value on the Contract anniversary.

    2. is the result of (a + b + c - d), where:

    a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);

    b = additional premiums since the previous Contract anniversary (dollar-for-dollar);

    c = any GMWB Bonus credited since the previous Contract anniversary;

    d = any excess withdrawals taken since the previous Contract anniversary*.

    * NOTE: The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Principal Income Builder 10 -Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.

    If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit bases will be reduced for excess withdrawals. If the adjustment for the withdrawals causes the For Life withdrawal benefit base to reduce to zero, the For Life withdrawal option will no longer be available to you at the next Contract anniversary, unless you make additional premium payments.

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    Principal Income Builder 10 - Remaining Withdrawal Benefit Base

    Each withdrawal option has its own remaining withdrawal benefit base. The remaining withdrawal benefit base is used to determine the amount available for future withdrawal benefit payments under each withdrawal option. We calculate the For Life and the Investment Back remaining withdrawal benefit bases separately on:

    • The rider effective date,
    • When a premium payment is made,
    • When a GMWB Step-Up is applied, and
    • When a withdrawal is taken.

    The initial remaining withdrawal benefit base for both withdrawal options is equal to the initial premium payment (and likewise equal to the initial withdrawal benefit base) on the rider effective date.

    After the rider effective date, the remaining withdrawal benefit base for each withdrawal option will be:

    • increased dollar-for-dollar by each additional premium payment made and any GMWB Step-Up; and
    • decreased dollar-for-dollar for each withdrawal benefit payment taken; and
    • decreased to reflect any excess withdrawals taken since the previous Contract anniversary (the reduction will be greater than dollar-for-dollar, as shown below, if the Contract accumulated value is less than the remaining withdrawal benefit base at the time of the excess withdrawal). See Principal Income Builder 10 - Excess Withdrawals, below, for information about the negative effect that excess withdrawals have on the riders.

    Principal Income Builder 10 - Withdrawal Benefit Payments

    The Investment Back withdrawal benefit payment is equal to 7% of the Investment Back withdrawal benefit base. The Investment Back withdrawal benefit payments are available as of the rider effective date.

    For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.

    The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.

    “Single Life” For Life withdrawal benefit payments. “Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:

    a.      Owner if there is only one owner;
    b.      Annuitant if the owner is not a natural person;
    c.      Youngest joint owner if there are joint owners; or
    d.      Youngest annuitant if there are joint annuitants and the owner is not a natural person.

    In addition, the covered life must satisfy this rider’s issue age requirements on the date the covered life is designated in accordance with the terms of this rider.

    As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.

    “Joint Life” For Life withdrawal benefit payments. “Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.

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    To be eligible for “Joint Life” the covered lives must be:

    a.      The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
    b.      The joint owners, provided the joint owners are each other’s spouse.

    NOTE: Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to a person who is defined as a “spouse” under the Federal Defense of Marriage Act or other applicable Federal Law. All Contract provisions will be interpreted and administered in accordance with the requirements of the Code.

    NOTE: At the time a covered life is designated, that covered life must satisfy this rider’s issue age requirements.

    As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.

    Calculating the Principal Income Builder 10 For Life Withdrawal Benefit Payment

    The GMWB withdrawal benefit payment percentages applicable to the For Life Withdrawal Benefit Payment are disclosed in this prospectus, or in a prospectus supplement that updates the percentages (“GMWB Percentages Prospectus Supplement”). In order to receive the applicable GMWB withdrawal benefit payment percentages, your application must be signed within the stated time period during which such percentages will be applicable and received by us within 10 calendar days. The percentages applicable to your Contract will not change for the life of your Contract. After December 31, 2013, you should not purchase this annuity without first obtaining the applicable GMWB Percentages Prospectus Supplement containing the withdrawal benefit payment percentages applicable at the time.

    The percentages below apply for applications signed from August 1, 2013 through December 31, 2013.

    The For Life Withdrawal Benefit Payment percentages may be different than those listed below for applications signed after December 31, 2013.

    The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.

    The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date:

    · “Single Life”:        
     
      Age of Covered Life at First   For Life Withdrawal Benefit  
      Withdrawal   Payment Percentage  
      45-54   3.00%
      55-64   4.00%
      65-74   5.00%
      75+ 5.25%

     

    · “Joint Life”:        
     
      Age of Younger Covered Life at   For Life Withdrawal Benefit  
      First Withdrawal   Payment Percentage  
      45-54   2.50%
      55-64   3.50%
      65-74   4.50%
      75+ 4.75%

     

    NOTE: All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Principal Income Builder 10 - Excess Withdrawals for additional information.

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    Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be locked in at 2.50% for the remaining life of this rider and cannot be changed.

    Principal Income Builder 10 - Covered Life Change

    Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:

    1. Spousal continuation of this rider as described below in 8. DEATH BENEFIT.

    2. If withdrawals have not been taken and you have not previously elected to continue this rider as provided in 8.DEATH BENEFIT, then:

    a.      You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
    b.      You may remove a joint owner or primary beneficiary as a covered life.
    c.      The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.

    3. If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:

    a.      You may remove a joint owner as a covered life.
    b.      You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
    c.      The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.

    4. If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:

    a.      You may remove a joint owner or primary beneficiary as a covered life.
    b.      You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
    c.      The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.

    5. If you have previously elected to continue this rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.

    No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.

    An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.

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    Principal Income Builder 10 - Effect of Withdrawals

    This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See

    Principal Income Builder 10 - GMWB Bonus.

    If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.

    Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value and in the remaining withdrawal benefit base for each withdrawal option.

    If you take excess withdrawals, the withdrawal benefit base for each withdrawal option will be reduced on the next Contract anniversary. See Principal Income Builder 10 - Excess Withdrawals for information about the negative effect of excess withdrawals.

    To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples in APPENDIX D.

    Principal Income Builder 10 - Excess Withdrawals

    Any portion of a withdrawal that exceeds the available withdrawal benefit payment for either withdrawal option is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit bases, which will reduce future withdrawal benefit payments.

    All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.

    The Investment Back withdrawal option permits larger payments to you than the For Life withdrawal option. As a result, if you take a withdrawal in an amount permitted under the Investment Back withdrawal option, that withdrawal will be an excess withdrawal to the extent that it exceeds the applicable For Life withdrawal benefit payment.

    Excess withdrawals reduce withdrawal benefit payments, the withdrawal benefit bases, and the remaining withdrawal benefit bases for the two withdrawal options. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the applicable rider withdrawal benefit base at the time of the excess withdrawal.

    The withdrawal benefit base is used to determine the withdrawal benefit payment whereas the remaining withdrawal benefit base is used to determine the amount available for future withdrawal benefit payments. These two values are calculated differently and have different purposes; therefore, the excess withdrawal adjustment for each will vary. If you choose to take an excess withdrawal, the equations below show how to calculate the excess withdrawal adjustment.

    Effect on withdrawal benefit base. Excess withdrawals will reduce each of the withdrawal benefit bases in an
    amount equal to the greater of:
    · the excess withdrawal, or
    · the result of (a divided by b) multiplied by c, where:
      a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
      b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to
      deducting the amount of the excess withdrawal; and
      c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.

     

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    Effect on remaining withdrawal benefit base. Excess withdrawals will reduce each of the remaining withdrawal
    benefit bases in an amount equal to the greater of:
    · the excess withdrawal, or
    · the result of (a divided by b) multiplied by c, where:
      a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
      b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to
      deducting the amount of the excess withdrawal; and
      c = the remaining withdrawal benefit base prior to the adjustment for the excess withdrawal.

     

    NOTE: All withdrawals taken prior to the date that the oldest owner (oldest annuitant, if applicable) has met the Life age eligibility requirement are excess withdrawals.

    NOTE: Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.

    Required Minimum Distribution (RMD) Program for GMWB Riders
     
    Tax-qualified contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis
    (i.e., compared to a contract year basis), usually beginning after age 70½.
     
    If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to
    satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will
    not be deemed an excess withdrawal.
     
    RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following
    requirements:
     
    · The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the
      Internal Revenue Code is based only on this Contract (the “RMD amount”); and
    · You have elected scheduled withdrawal payments.
     
    NOTE: Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an
      unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for
      the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during
      the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated
      as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-
      enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.
     
    We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to
    the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the
    issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination
    of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will
    take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any
    scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the
    program’s modification or elimination will be deemed an excess withdrawal.
     
    You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered
    representative or by calling us at 1-800-852-4450.

     

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    Principal Income Builder 10 - GMWB Bonus

    Under the GMWB Bonus, on each of the first 10 Contract anniversaries following the rider effective date, we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base for each withdrawal option, provided you have not taken any withdrawals since the rider effective date.

    The GMWB Bonus percentages are disclosed in this prospectus, or in a prospectus supplement that updates the percentages (“GMWB Percentages Prospectus Supplement”). In order to receive the applicable GMWB Bonus percentages, your application must be signed within the stated time period during which such percentages will be applicable and received by us within 10 calendar days. The percentages applicable to your Contract will not change for the life of your Contract. After December 31, 2013, you should not purchase this annuity without first obtaining the applicable GMWB Percentages Prospectus Supplement containing the GMWB Bonus percentages applicable at the time.

    The percentages below apply for applications signed from August 1, 2013 through December 31, 2013.

    The GMWB Bonus Percentages may be different than those listed below for applications signed after December 31, 2013.

    The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below. If the contract date and the rider effective date are different (if we previously have allowed Contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable percentage shown in the chart below.

    Contract Anniversary      
    (following the rider effective date)   GMWB Bonus Percentage  
    1-10   5.00%
    11+ 0.00%

     

    The GMWB Bonus is no longer available after the earlier of:

    • The 10th Contract anniversary following the rider effective date; or
    • The date you take a withdrawal following the rider effective date.

    NOTE: The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit bases for each withdrawal option. The GMWB Bonus is not added to your Contract accumulated value.

    Principal Income Builder 10 - GMWB Step-Up

    The GMWB Step-Up is automatic and applies annually. Under this rider, unless an owner opts out of the automatic GMWB Step-Up, the rider charge will increase if our then current rider charge is higher than when the rider was purchased. The rider charge will never be greater than the maximum Principal Income Builder 10 rider charge. See SUMMARY OF EXPENSE INFORMATION section.

    We determine eligibility for a GMWB Step-Up of the withdrawal benefit base and remaining withdrawal benefit base for each withdrawal option separately. If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the applicable withdrawal benefit base, we will Step-Up the applicable withdrawal benefit base and remaining withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base or remaining withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than a withdrawal benefit base.

    If you are eligible for a GMWB Step-Up of a withdrawal benefit base or remaining withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups.

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    The GMWB Step-Up operates as follows:

    On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of a withdrawal benefit base if you satisfy all of the following requirements:

    1.      The Contract anniversary occurs before the later of:
      a.      the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
      b.      10 years after the rider effective date;
    2.      You have not declined any increases in the rider charge; and
    3.      You have not fully annuitized the Contract.

    On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of a remaining withdrawal benefit base if you satisfy all of the following requirements:

    1.      The Contract anniversary occurs before the later of:
      a.      the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
      b.      10 years after the rider effective date;
    2.      You have not declined any increases in the rider charge;
    3.      You have not fully annuitized the Contract; and
    4.      The remaining withdrawal benefit base has not reduced to zero during the life of the rider.

    NOTE: If you take withdrawals in amounts that reduce the remaining withdrawal benefit base to zero, the remaining withdrawal benefit base is not eligible for a GMWB Step-Up (even if additional premium payments are made).

    Principal Income Builder 10 - Effect of Reaching the Maximum Annuitization Date
     
    On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options
    described below.
     
    1 . Contract payment options:
        · Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
        · Payment of the Contract accumulated value as a single payment.
     
    2 . GMWB rider payment options:
        · You may elect the Investment Back withdrawal option and receive fixed scheduled payments each year in
          the amount of the Investment Back withdrawal benefit payment, until the Investment Back remaining
          withdrawal benefit base is zero. If there is any Investment Back remaining withdrawal benefit base at the
          time of your death (death of the first annuitant to die if the owner is not a natural person), we will continue
          payments as described in 8. DEATH BENEFIT.
        · You may elect the For Life withdrawal option and receive fixed scheduled payments each year in the amount
          of the For Life withdrawal benefit payment, until the later of:
          · the date the For Life remaining withdrawal benefit base is zero; or
          · the date of death of the last covered life.
     
    If there is any For Life remaining withdrawal benefit base at the time of your death, we will continue payments as
    described in 8. DEATH BENEFIT.
     
    The For Life withdrawal option allows you to spread your withdrawal benefit payments over your lifetime. The
    Investment Back withdrawal option provides a faster pay out of rider withdrawal benefit payments.
     
    See Principal Income Builder 10 - Effect of Withdrawals for information on how withdrawals prior to the maximum
    annuitization date affect the GMWB values.
     
        · We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to
          select one of the available payment options listed above. If we have not received your election as of the
          maximum annuitization date, we will automatically apply your Contract accumulated value to an annuity
          benefit payment option:
        · for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
        · for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of
          10 years.

     

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    Principal Income Builder 10 - Effect of the Contract Accumulated Value Reaching Zero
     
    We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is
    approaching zero.
     
    In the event that the Contract accumulated value reduces to zero, you must elect either:
     
    · The Investment Back withdrawal option (only available if the Investment Back remaining withdrawal benefit base
      is greater than zero; see Principal Income Builder 10 - Effect of Withdrawals); or
    · The For Life withdrawal option (only available if the For Life withdrawal benefit base is greater than zero; see
      Principal Income Builder 10 - Effect of Withdrawals).
     
    If we have not received your election or if you are receiving Investment Back scheduled withdrawal benefit payments,
    we will automatically begin making withdrawal benefit payments to you under the Investment Back withdrawal option,
    unless:    
    · You have been receiving For Life scheduled withdrawal benefit payments. We will automatically continue to
      make payments to you under the For Life withdrawal option.
    · The Investment Back remaining withdrawal benefit base is zero. We will automatically begin making payments
      under the Single Life For Life withdrawal option.
     
    The For Life withdrawal option allows you to spread your withdrawal benefit payments over your lifetime. The
    Investment Back withdrawal option provides a faster pay out of withdrawal benefit payments.
     
    We will pay the withdrawal benefit payments under the withdrawal option you have elected as follows:
     
    · If you elect the Investment Back withdrawal option, you will receive fixed scheduled payments each year in the
      amount of the Investment Back withdrawal benefit payment until the Investment Back remaining withdrawal
      benefit base is zero. If there is any Investment Back remaining withdrawal benefit base at the time of your death,
      we will continue payments as described in 8. DEATH BENEFIT.
    · If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For
      Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first
      withdrawal.
    · If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you
      must elect either:
      · The “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the
        amount of the “Single Life” For Life withdrawal benefit payment, until the later of:
        · the date the For Life remaining withdrawal benefit base is zero; or
        · the date of your death (annuitant’s death if the owner is not a natural person).
      · The “Joint Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the
        amount of the “Joint Life” For Life withdrawal benefit payment, until the later of:
        · the date the For Life remaining withdrawal benefit base is zero; or
        · the date of the death of the last covered life.
     
    If there is any For Life remaining withdrawal benefit base at the time of your death, we will continue payments as
    described in 8. DEATH BENEFIT.
     
    NOTE: In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected
        above will continue, but all other rights and benefits under this rider and the Contract (including the death
        benefits) will terminate, and no additional premium payments will be accepted.

     

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    Principal Income Builder 10 - Termination and Reinstatement

    You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.

    At any point in time, we will terminate this rider upon the earliest to occur:

    • The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
    • The date you fully annuitize, fully surrender or otherwise terminate the Contract.
    • The date the Investment Back remaining withdrawal benefit base and the For Life withdrawal benefit base are both zero.
    • The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 10 - Covered Life Change.
    • The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
    • The date the Investment Back remaining withdrawal benefit base is zero and there are no eligible covered lives.
    • The date you make an impermissible change in a covered life.

    If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.

    If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.

    Principal Income Builder 10 - Effect of Divorce

    Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of this rider while the former spouse will no longer have any such rights or be entitled to any benefits under this rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under this rider.

    Note: If this excess withdrawal causes both the For Life withdrawal benefit base and the Investment Back remaining withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 10 - Excess Withdrawals.

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    Principal Income Builder 10 Rider Summary

    Name of Rider   PIB 10
    Marketing Name   Principal Income Builder 10
    Rider Issue Age   45 – 80
    Rider Charge PIB 10 Rider Charges (as a percentage of average quarterly Investment
    Back withdrawal benefit base)
      · Maximum annual charge is 2.00%.
      · Current annual charge is 1.20%.
    Guaranteed Minimum · Investment Back
    Withdrawal Benefits · For Life
    Annual Withdrawal Limits · Investment Back — 7.00% of the Investment Back withdrawal
        benefit base.
      · “Single Life” — tiered percentages based on age at first withdrawal,
        beginning at 3.00% and capping at a maximum of 5.25% of the For
    Life withdrawal benefit base
      · “Joint Life” — tiered percentages based on age at first withdrawal,
        beginning at 2.50% and capping at a maximum of 4.75% of the For
    Life withdrawal benefit base

    For Life Withdrawal Benefit · “Single Life” or “Joint Life” (your life and the lifetime of your eligible
    Payments   spouse)
      · For Life withdrawal benefit payments default to “Single Life” unless
        “Joint Life” is elected
      · Available the Contract anniversary following the date the oldest
        owner turns 59½ — all withdrawals prior to that Contract
        anniversary are excess withdrawals under the For Life withdrawal
        option
    Termination · You may terminate this rider anytime after the 5th Contract
        anniversary following the rider effective date
    GMWB Step-Up · Automatic annual GMWB Step-Up available until the later of (a) the
        Contract anniversary prior to age 80 or (b) 10 years after the rider
        effective date.
      · A remaining withdrawal benefit base under a withdrawal option is
        not eligible for a GMWB Step-Up after the remaining withdrawal
        benefit base reduces to zero, even if additional premium payments
        are made.
    GMWB Bonus · If no withdrawals are taken, a GMWB Bonus is applied to the
        benefit bases on each applicable Contract anniversary.
    Investment Restrictions · You must select one of the available GMWB investment options;
        there are no additional restrictions on allocations to the Fixed
        Account or DCA Plus accounts.
    Spousal Continuation · At the death of the first owner to die, a spouse who is a joint owner
        or primary beneficiary may continue the Contract with or without this
        rider.
      · The Investment Back withdrawal option continues; the For Life
        withdrawal option continues only for eligible spouses.

     

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    5. PREMIUM PAYMENT CREDIT RIDER
     
    The Premium Payment Credit Rider applies credits to the accumulated value for premium payments made in contract
    year one. This rider can only be elected at the time the Contract is issued. Once this rider is elected, it cannot be
    terminated. There is a charge for this rider (see 2. CHARGES AND DEDUCTIONS) as well as an increased
    surrender charge and longer surrender charge period.
     
    If you elect this rider, the following provisions apply to the Contract:
     
    · We will apply a credit of 5% of the premium payment to your accumulated value for each premium payment
      received during your first contract year. The credit is applied to the Contract on the same date the related
      premium payment is applied to the Contract. For example, if you make a premium payment of $10,000 in your
      first contract year, a credit amount of $500 will be added to your accumulated value (5% x $10,000).
    · No credit(s) are applied for premium payments made after the first contract year.
    · For Contracts issued in the state of Washington, no premium payments are allowed after the first contract year
      for Contracts issued with the Premium Payment Credit Rider.
    · The premium payment credit is allocated among the investment options according to your then current premium
      payment allocations.
    · We recapture the credit(s) if you exercise your right to return the Contract during the examination offer period or
      if you request full annuitization of the Contract prior to the third Contract anniversary.
    · The amount we recapture may be more than the current value of the credit(s). If your investment options have
      experienced negative investment performance (i.e., have lost value) you bear the loss for the difference between
      the original value of the credit(s) and the current (lower) value of the credit(s).
    · Partial annuitizations are restricted in each of contract years two and three to no more than 10% of the
      accumulated value as of the most recent Contract anniversary.
    · Credits are considered earnings under the Contract, not premium payments.
    · All premium payments are subject to the 9-year surrender charge period and higher surrender charge (see 2.
      CHARGES AND DEDUCTIONS).
    · The Premium Payment Credit Rider cannot be cancelled and the associated surrender charge period and
      percentages cannot be changed.
    · The DCA Plus program is not available to you if you elect this rider.
     
    If you elect the Premium Payment Credit Rider, your unit values will be lower than if you did not elect the rider. The
    difference reflects the annual charge for the Premium Payment Credit Rider. After the 8th Contract anniversary, your
    accumulated value is moved to units in your chosen divisions that do not include this rider charge. This move of
    division units will not affect your accumulated value. It will, however, result in a smaller number of division units but
    those units will have a higher unit value. We will notify you when the division units move because of discontinuation
    of the rider charge. The following example is provided to assist you in understanding this adjustment.

     

      Sample Division Number of Units in    
      Unit Value Sample Division   Accumulated Value
    Prior to the one time adjustment 25.560446 1,611.0709110 $41,179.69
    After the one time adjustment 26.659024 1,544.6811189 $41,179.69

     

    You should carefully examine the Premium Payment Credit Rider to decide if this rider is suitable for you. There are
    circumstances under which you would be worse off for having received the credit. In making this determination, you
    should consider the following factors:
    · this rider increases the amount and duration of the surrender charges, see 2. CHARGES AND DEDUCTIONS;
    · we recapture the credit(s) if you exercise your right to return the Contract during the examination offer period or if
      you request full annuitization of the Contract prior to the third Contract anniversary.
    · partial annuitizations are restricted in each of contract years two and three to no more than 10% of the
      accumulated value as of the most recent Contract anniversary.
    · any premium payments made after the first contract year do not have a credit applied even though they are
      subject to the rider’s higher Separate Account charges; and
    · the higher Separate Account charges reduce investment performance.
     
    The charges used to recoup our cost for the premium payment credit(s) include the surrender charge and the
    Premium Payment Credit Rider charge (see 2. CHARGES AND DEDUCTIONS). We expect to make a profit from
    these charges.

     

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    The following tables demonstrate hypothetical surrender values for Contracts with and without this rider but do not
    show the impact of partial surrenders or partial annuitizations. The tables are based on:
    · a $25,000 initial premium payment and no additional premium payments;
    · the deduction of maximum Separate Account annual expenses:
      · Contracts with the Premium Payment Credit Rider:
        · 2.00% annually for the first eight contract years
        · 1.40% annually after the first eight contract years
      · Contracts without the Premium Payment Credit Rider:
        · 1.40% annually for all contract years.
    · the deduction of the arithmetic average of the underlying mutual fund expenses as of December 31, 2012;
    · 0%, 5% and 10% annual rates of return before charges; and
    · payment of the $30 annual Contract fee (while the Contract’s value is less than $30,000).

     

        0% Annual Return   5% Annual Return   10% Annual Return
        Surrender   Surrender   Surrender   Surrender   Surrender   Surrender
        Value   Value   Value   Value   Value   Value
        Without   With   Without   With   Without   With
        Premium   Premium   Premium   Premium   Premium   Premium
    Contract   Payment   Payment   Payment   Payment   Payment   Payment
    Year   Credit Rider   Credit Rider   Credit Rider   Credit Rider   Credit Rider   Credit Rider
    1 $ 23,082.82 $ 23,623.62 $ 24,257.82 $ 24,831.12 $ 25,432.82 $ 26,085.45
    2 $ 22,528.66 $ 22,918.25 $ 24,882.10 $ 25,322.37 $ 27,439.40 $ 28,081.34
    3 $ 21,987.20 $ 22,447.79 $ 25,523.27 $ 26,102.14 $ 29,669.62 $ 30,469.07
    4 $ 21,659.84 $ 21,982.68 $ 26,443.40 $ 26,908.84 $ 32,321.70 $ 33,008.71
    5 $ 21,333.62 $ 21,522.99 $ 27,412.91 $ 27,727.26 $ 35,158.89 $ 35,711.07
    6 $ 21,008.63 $ 21,068.76 $ 28,401.90 $ 28,557.67 $ 38,195.47 $ 38,587.70
    7 $ 20,684.98 $ 20,620.03 $ 29,410.90 $ 29,430.29 $ 41,446.80 $ 41,650.99
    8 $ 20,543.18 $ 20,176.83 $ 30,720.43 $ 30,316.04 $ 45,179.43 $ 44,914.21
    9 $ 20,042.01 $ 19,861.19 $ 31,551.87 $ 31,400.07 $ 48,661.17 $ 48,664.05
    10 $ 19,552.35 $ 19,547.01 $ 32,405.82 $ 32,506.67 $ 52,411.24 $ 52,683.60
    15 $ 17,267.41 $ 17,262.66 $ 37,035.00 $ 37,150.26 $ 75,968.52 $ 76,363.31
    20 $ 15,232.75 $ 15,228.52 $ 42,325.46 $ 42,457.18 $ 110,114.09 $ 110,686.33

     

    The better your Contract’s investment performance, the more advantageous the Premium Payment Credit Rider
    becomes due to the effect of compounding. However, Contracts with the Premium Payment Credit Rider are subject
    to both a greater surrender charge and a longer surrender charge period than Contracts issued without this rider (see
    2. CHARGES AND DEDUCTIONS). If you surrender your Contract with the Premium Payment Credit Rider while
    subject to a surrender charge, your surrender value will be less than the surrender value of a Contract without this
    rider.  
     
     
    6. TRANSFERS AND SURRENDERS
     
    Division Transfers
     
    · You may request an unscheduled transfer or set up a scheduled transfer by
      · mailing your instructions to us;
      · calling us at 1-800-852-4450 (if telephone privileges apply);
      · faxing your instructions to us at 1-866-894-2093; or
      · visiting www.principal.com.
    · You must specify the dollar amount or percentage to transfer from each division.
    · The minimum transfer amount is the lesser of $100 or the value of your division.
    · In states where allowed, we reserve the right to reject transfer instructions from someone providing them for
      multiple contracts for which he or she is not the owner.
     
    You may not make a transfer to the Fixed Account if:
    · a transfer has been made from the Fixed Account to a division within six months; or
    · following the transfer, the Fixed Account value would be greater than $1,000,000.

     

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    Unscheduled Transfers

    You may make unscheduled division transfers from one division to another division or to the Fixed Account.

    • Transfers are not permitted into DCA Plus accounts.
    • Transfer values are calculated using the price next determined after we receive your request.
    • We reserve the right to impose a fee of the lesser of $30 or 2% of the amount transferred on each unscheduled transfer after the first unscheduled transfer in a contract year. If we elect to begin charging for the transaction fee, we will provide you with written notice at least 30 days in advance.

    Limitations on Unscheduled Transfers. We reserve the right to reject excessive exchanges or purchases if the trade would disrupt the management of the Separate Account, any division of the Separate Account or any underlying mutual fund. In addition, we may suspend or modify transfer privileges in our sole discretion at any time to prevent market timing efforts that could disadvantage other owners. These modifications could include, but not be limited to:

    • requiring a minimum time period between each transfer;
    • imposing the transaction fee;
    • limiting the dollar amount that an owner may transfer at any one time; or
    • not accepting transfer requests from someone providing requests for multiple Contracts for which he or she is not the owner.

    Scheduled Transfers (Dollar Cost Averaging)

    • You may elect to have transfers made on a scheduled basis.
    • There is no charge for scheduled transfers and no charge for participating in the scheduled transfer program.
    • You must specify the dollar amount of the transfer.
    • You select the transfer date (other than the 29th, 30th or 31st) and the transfer period (monthly, quarterly, semi- annually or annually).
    • If the selected date is not a valuation date, the transfer is completed on the next valuation date.
    • Transfers are not permitted into DCA Plus accounts.
    • If you want to stop a scheduled transfer, you must provide us notice prior to the date of the scheduled transfer.
    • Transfers continue until your value in the division is zero or we receive notice to stop the transfers.
    • The number of divisions available for simultaneous transfers will never be less than two. When we have more than two divisions available, we reserve the right to limit the number of divisions from which simultaneous transfers are made.

    Scheduled 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 results of this strategy depend on market trends and are 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 $ 25.00 4
      June $ 100 $ 20.00 5
      Total $ 600 $ 120.00 33

     

    In the example above, the average share price is $20.00 [total of share prices ($120.00) divided by number of purchases (6)]. The average share cost is $18.18 [amount invested ($600.00) divided by number of shares purchased (33)].

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    Fixed Account Transfers, Total and Partial Surrenders
     
    Transfers and surrenders from the Fixed Account are subject to certain limitations. In addition, surrenders from the
    Fixed Account may be subject to a surrender charge (see Section 2. CHARGES AND DEDUCTIONS).
     
    You may transfer amounts from the Fixed Account to the Separate Account divisions before the annuitization date
    and as provided below. The transfer is effective on the valuation date following our receipt of your instructions. You
    may transfer amounts on either a scheduled or unscheduled basis. You may not make both scheduled and
    unscheduled Fixed Account transfers in the same contract year.
     
    Unscheduled Fixed Account Transfers. The minimum transfer amount is $100 (or entire Fixed Account value if
    less than $100). Once per contract year, within the 30 days following the Contract anniversary date, you can:
    · transfer an amount not to exceed 25% of your Fixed Account value; or
    · transfer up to 100% of your Fixed Account value if:
    · your Fixed Account value is less than $1,000; or
    · a minus b is greater than 1% where:
      a = the weighted average of your Fixed Account interest rates for the preceding contract year; and
      b = the renewal interest rate for the Fixed Account.
     
    Scheduled Fixed Account Transfers (Fixed Account Dollar Cost Averaging). You may make scheduled
    transfers on a monthly basis from the Fixed Account to the Separate Account as follows:
     
    · You may establish scheduled transfers by sending a written request or by telephoning the home office at 1-
      800-852-4450.
    · Transfers occur on a date you specify (other than the 29th, 30th or 31st of any month).
    · If the selected date is not a valuation date, the transfer is completed on the next valuation date.
    · Scheduled transfers are only available if the Fixed Account value is $5,000 or more at the time the scheduled
      transfers begin.
    · Scheduled monthly transfers of a specified dollar amount will continue until the Fixed Account value is zero
      or until you notify us to discontinue the transfers. This specified dollar amount cannot exceed 2% of your
      Fixed Account value.
    · The minimum transfer amount is $100.
    · If the Fixed Account value is less than $100 at the time of transfer, the entire Fixed Account value will be
      transferred.
    · If you stop the transfers, you may not start transfers again without our prior approval.
     
    Automatic Portfolio Rebalancing (APR)
     
    · APR allows you to maintain a specific percentage of your Separate Account division value in specified divisions
    over time.
    · You may elect APR at any time after the examination offer period has expired.
    · APR is not available for values in the Fixed Account or the DCA Plus accounts.
    · APR is not available if you have arranged scheduled transfers from the same division.
    · There is no charge for APR transfers and no charge for participating in the APR program.
    · APR will be done on the frequency you specify:
    · quarterly (on a calendar year or contract year basis); or
    · semiannually or annually (on a contract year basis).
    · You may rebalance by
    · mailing your instructions to us;
    · calling us at 1-800-852-4450 (if telephone privileges apply);
    · faxing your instructions to us at 1-866-894-2093; or
    · visiting www.principal.com.
    · Divisions are rebalanced at the end of the next valuation period following your request.
     
    Example: You elect APR to maintain your Separate Account division value with 50% in the LargeCap Value
      division and 50% in the Bond & Mortgage Securities division. At the end of the specified period, 60%
      of the accumulated value is in the LargeCap Value division, with the remaining 40% in the Bond &
      Mortgage Securities division. By rebalancing, units from the LargeCap Value division are redeemed
      and applied to the Bond & Mortgage Securities division so that 50% of the Separate Account division
      value is once again in each division.

     

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    Surrenders
     
    You may surrender your Contract by providing us notice. Surrender requests may be sent to us at:
      Principal Life Insurance Company
      P O Box 9382
      Des Moines, Iowa 50306-9382
     
    Surrenders result in the redemption of units and your receipt of the value of the redeemed units minus any applicable
    surrender charge and fees. Surrender values are calculated using the price next determined after we receive your
    request. Surrenders from the Separate Account are generally paid within seven days of the effective date of the
    request for surrender (or earlier if required by law). However, certain delays in payment are permitted (see 9.
    ADDITIONAL INFORMATION ABOUT THE CONTRACT). Surrenders before age 59½ may involve an income tax
    penalty (see 10. FEDERAL TAX MATTERS).
     
    You may specify surrender allocation percentages with each partial surrender request. If you do not provide us with
    specific percentages, we will use your premium payment allocation percentages for the partial surrender. Surrenders
    may be subject to a surrender charge (see 2. CHARGES AND DEDUCTIONS).
     
    Total Surrender
     
    · You may surrender the Contract at any time before the annuitization date.
    · Surrender values are calculated using the price next determined after we receive your request.
    · The cash surrender value is your accumulated value minus any applicable surrender charges and fee(s)
      (Contract fee and/or prorated share of the charge(s) for optional rider(s)).
    · We reserve the right to require you to return the Contract.
    · The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
     
    Unscheduled Partial Surrender
     
    · You may surrender a part of your accumulated value at any time before the annuitization date.
    · You must specify the dollar amount of the surrender (which must be at least $100).
    · The surrender is effective at the end of the valuation period during which we receive your written request for
      surrender.
    · The surrender is deducted from your investment options according to your surrender allocation percentages.
    · If surrender allocation percentages are not specified, we use your premium payment allocation percentages.
    · We surrender units from your investment options to equal the dollar amount of the surrender request plus any
      applicable surrender charge and transaction fee, if any.
    · Your accumulated value after the unscheduled partial surrender must be equal to or greater than $5,000; we
      reserve the right to increase this amount up to and including $10,000.
    · The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
     
    Scheduled Partial Surrender
     
    · You may elect partial surrenders from any of your investment options on a scheduled basis.
    · Your accumulated value must be at least $5,000 when the scheduled partial surrenders begin.
    · You may specify monthly, quarterly, semi-annually or annually and choose a surrender date (other than the 29th,
      30th or 31st).
    · If the selected date is not a valuation date, the partial surrender is completed on the next valuation date.
    · We surrender units from your investment options to equal the dollar amount of the partial surrender request plus
      any applicable partial surrender charge.
    · The partial surrenders continue until your value in the investment option is zero or we receive written notice to
      stop the partial surrenders.
    · The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to partial
      surrender.

     

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    7. THE ANNUITIZATION PERIOD
     
    Annuitization Date
     
    You may specify an annuitization date in your application. You may change the annuitization date with our prior
    approval. The request must be in writing. You may not select an annuitization date prior to the first Contract
    anniversary or after the maximum annuitization date (the later of age 85 or ten years after Contract issue; state
    variations may apply) found on the data pages. If you do not specify an annuitization date, the annuitization date is
    the maximum annuitization date shown on the data pages.
     
    Full Annuitization
     
    Any time after the first contract year, you may annuitize your Contract by electing to receive payments under an
    annuity benefit payment option. If the accumulated value on the annuitization date is less than $2,000 or if the
    amount applied under an annuity benefit payment option is less than the minimum requirement, we may pay out the
    entire amount in a single payment. The Contract would then be canceled. You may select when you want the
    payments to begin (within the period that begins the business day following our receipt of your instruction and ends
    one year after our receipt of your instructions).
     
    Once payments begin under the annuity benefit payment option you choose, the option may not be changed. In
    addition, once payments begin, you may not surrender or otherwise liquidate or commute any of the portion of your
    accumulated value that has been annuitized.
     
    Depending on the type of annuity benefit payment option selected, payments that are initiated either before or after
    the annuitization date may be subject to penalty taxes (see 10. FEDERAL TAX MATTERS). You should consider this
    carefully when you select or change the annuity benefit payment commencement date.
     
    Partial Annuitization
     
    You have the right to partially annuitize a portion of your accumulated value. After the first contract year and prior to
    the annuitization date, you may annuitize a portion of your accumulated value by sending us a notice.
     
    If you have elected the Premium Payment Credit Rider, the amount of the partial annuitization during each of
    contract years two and three is limited to no more than 10% of the accumulated value as of the most recent Contract
    anniversary.
     
    The minimum partial annuitization amount is $2,000. Any partial annuitization request that reduces the accumulated
    value to less than $5,000 will be treated as a request for full annuitization.
     
    You may select one of the annuity benefit payment options listed below. Once payments begin under the option you
    selected, the option may not be changed. In addition, once payments begin you may not surrender or otherwise
    liquidate or commute any portion of your accumulated value that has been annuitized.
     
    Annuity Benefit Payment Options
     
    We offer fixed annuity benefit payments only. No surrender charge is imposed on any portion of your accumulated
    value that has been annuitized.
     
    You may choose from several fixed annuity benefit payment options. Payments will be made on the frequency you
    choose. You may elect to have your annuity benefit payments made on a monthly, quarterly, semiannual or annual
    basis. The dollar amount of the payments is specified for the entire payment period according to the option selected.
    There is no right to take any total or partial surrenders after the annuitization date. The fixed annuity benefit payment
    must begin within one year of the annuity benefit election.
     
    The amount of the fixed annuity benefit payment depends on the:
    · amount of accumulated value applied to the annuity benefit payment option;
    · annuity benefit payment option selected; and
    · age and gender of the annuitant (unless fixed income option is selected).

     

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    The amount of the initial payment is determined by applying all or a portion of the accumulated value as of the date of the application to the annuity table for the annuitant’s annuity benefit payment option, gender, and age. The annuity benefit payment tables contained in the Contract are based on the Annuity 2000 Mortality Table. These tables are guaranteed for the life of the Contract.

    Annuity benefit payments generally are higher for male annuitants than for female annuitants with an otherwise identical Contract. This is because statistically females have longer life expectancies than males. In certain states, this difference may not be taken into consideration in determining the payment amount. Additionally, Contracts with no gender distinctions are made available for certain employer-sponsored plans because, under most such plans, gender discrimination is prohibited by law.

    You may select an annuity benefit payment option by written request only. Your selection of an annuity benefit payment option for a partial annuitization must be in writing and may not be changed after payments begin. Your selection of an annuity benefit payment option for any portion not previously annuitized may be changed by written request prior to the annuitization date.

    If an annuity benefit payment option is not selected, we will automatically apply:

    • for Contracts with one annuitant — Life Income with payments guaranteed for a period of 10 years.
    • for Contracts with joint annuitants — Joint and Full Survivor Life Income with payments guaranteed for a period of 10 years.

    The available annuity benefit payment options for both full and partial annuitizations include:

    • Fixed Period Income – Level payments continue for a fixed period. You may select a range from 5 to 30 years (state variations may apply). If the annuitant dies before the selected period expires, payments continue to you or the person(s) you designate until the end of the fixed period. Payments stop after all guaranteed payments are received.
    • Life Income – Level payments continue for the annuitant’s lifetime. If you defer the first payment date, it is possible that you would receive no payments if the annuitant dies before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments when the annuitant dies.
    • Life Income with Period Certain – Level payments continue during the annuitant’s lifetime with a guaranteed payment period of 5 to 30 years. If the annuitant dies before all of the guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.
    • Joint and Survivor – Payments continue as long as either the annuitant or the joint annuitant is alive. You may also choose an option that lowers the amount of income after the death of a joint annuitant. It is possible that you would only receive one payment under this option if both annuitants die before the second payment is due. If you defer the first payment date, it is possible that you would receive no payments if both the annuitants die before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments after both annuitants die.
    • Joint and Survivor with Period Certain – Payments continue as long as either the annuitant or the joint annuitant is alive with a guaranteed payment period of 5 to 30 years. You may choose an option that lowers the amount of income after the death of a joint annuitant. If both annuitants die before all guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.

    Other annuity benefit payment options may be available.

    Tax Considerations Regarding Annuity Benefit Payment Options

    If you own one or more tax qualified annuity contracts, you may avoid tax penalties if payments from at least one of your tax qualified contracts begin no later than April 1 following the calendar year in which you turn age 70½. The required minimum distribution payment must be in equal (or substantially equal) amounts over your life or over the joint lives of you and your designated beneficiary. These required minimum distribution payments must be made at least once a year. Tax penalties may apply at your death on certain excess accumulations. You should confer with your tax advisor about any potential tax penalties before you select an annuity benefit payment option or take other distributions from the Contract. Additional rules apply to distributions under non-qualified contracts (see 10. FEDERAL TAX MATTERS).

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    Death of Annuitant (During the Annuitization Period)

    If the annuitant dies during the annuity benefit payment period, remaining payments are made to the owner throughout the guaranteed payment period, if any, or for the life of any joint annuitant, if any. If the owner is the annuitant, remaining payments are made to the contingent owner. In all cases the person entitled to receive payments also receives any rights and privileges under the annuity benefit payment option.

    8. DEATH BENEFIT

    This Contract provides a death benefit upon the death of the owner. The Contract will not provide death benefits upon the death of an annuitant unless the annuitant is also an owner or the owner is not a natural person.

    The following tables illustrate the various situations and the resulting death benefit payment if death occurs before the annuitization date and while the accumulated value is greater than zero.

    If you die and And Then
    You are the sole Your spouse is The beneficiary(ies) receives the death benefit under the Contract
    owner not named as a or the GMWB Death Benefit, whichever is applicable.
      primary  
      beneficiary If a beneficiary dies before you, upon your death we will make equal
        payments to the surviving beneficiaries unless you provided us with
        other written instructions. If no beneficiary(ies) survives you, the
        death benefit is paid to your estate in a single payment.
     
        Upon your death, only your beneficiary’s(ies’) right to the death
        benefit or the GMWB Death Benefit will continue; all other rights
        and benefits under the Contract will terminate.
    You are the sole Your spouse is Your spouse may either
    owner named as a a. continue the Contract; or
      primary b. receive the death benefit under the Contract or the GMWB Death
      beneficiary Benefit, whichever is applicable.
     
        All other beneficiaries receive the death benefit under the Contract
        or the GMWB Death Benefit, whichever is applicable.
     
        If a beneficiary dies before you, upon your death we will make equal
        payments to the surviving beneficiaries unless you provided us with
        other written instructions. If no beneficiary(ies) survives you, the
        death benefit is paid to your estate in a single payment.
     
        Unless your spouse elects to continue the Contract, only your
        spouse’s and any other beneficiary’s(ies’) right to the death benefit
        or the GMWB Death Benefit will continue; all other rights and
        benefits under the Contract will terminate.
    You are a joint The surviving The surviving owner receives the death benefit under the Contract
    owner joint owner is not or the GMWB Death Benefit, whichever is applicable.
      your spouse  
        Upon your death, only the surviving owner’s right to the death
        benefit or the GMWB Death Benefit will continue; all other rights
        and benefits under the Contract will terminate.
    You are a joint The surviving Your spouse may either
    owner joint owner is a. continue the Contract; or
      your spouse b. receive the death benefit under the Contract or the GMWB Death
        Benefit, whichever is applicable.
     
        Unless your surviving spouse owner elects to continue the Contract,
        upon your death, only your spouse’s right to the death benefit or the
        GMWB Death Benefit will continue; all other rights and benefits
        under the rider and the Contract will terminate.

     

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    If you die and And Then
    The annuitant dies The owner is not The beneficiary(ies) receives the death benefit under the Contract
      a natural person or the GMWB Death Benefit, whichever is applicable.
     
        If a beneficiary dies before the annuitant, upon the annuitant’s
        death we will make equal payments to the surviving beneficiaries
        unless the owner provided us with other written instructions.
     
        Upon the annuitant’s death, only the beneficiary’s(ies’) right to the
        death benefit or the GMWB Death Benefit will continue; all other
        rights and benefits under the Contract will terminate.

     

    Before the annuitization date, you may give us written instructions for payment under a death benefit option. If we do not receive your instructions, a death benefit is paid according to instructions from the beneficiary(ies). The beneficiary(ies) may elect to apply a death benefit under an annuity benefit payment option or receive a death benefit as a single payment. Generally, unless the beneficiary(ies) elects otherwise, we pay a death benefit in a single payment, subject to proof of your death.

    No surrender charge applies when a death benefit is paid.

    Payment of Death Benefit

    The death benefit is usually paid within five business days of our receiving all required documents (including proof of death) to process the claim. Payment is made according to benefit instructions provided by you. Some states require this payment to be made in less than five business days. Under certain circumstances, this payment may be delayed (see 9. ADDITIONAL INFORMATION ABOUT THE CONTRACT). Unless otherwise required by law, We pay interest on the death benefit from the date the Contract is terminated (after receipt of all required documents), until payment is made.

    NOTE: Proof of death includes: a certified copy of a death certificate; a certified copy of a court order; a written statement by a medical doctor; or other proof satisfactory to us.

    The accumulated value remains invested in the divisions  until the valuation period during which we  receive the required documents. If more than one beneficiary is named, each beneficiary’s portion of the death benefit remains invested in the divisions  until the valuation period during which we  receive the required documents for that beneficiary. Unless otherwise required by law, we  pay interest on the death benefit from the first day the accumulated value is no longer invested in the divisions  until payment is made.  After payment of all of the death benefit (including any applicable interest), the Contract is terminated.

    Standard Death Benefit Formula
     
    The amount of the standard death benefit is the greatest of a, b or c, where:
    a = the accumulated value on the date we receive proof of death and all required documents;
    b = the total of premium payments minus an adjustment for each partial surrender (and any applicable surrender
    charges and fees) and minus an adjustment for each partial annuitization made prior to the date we receive proof
    of death and all required documents; and
    c = the highest accumulated value on any Contract anniversary that is wholly divisible by seven (for example,
    Contract anniversaries 7, 14, 21, 28, etc.) plus any premium payments since that Contract anniversary and
    minus an adjustment for each partial surrender (and any applicable surrender charges and fees) and minus an
    adjustment for each partial annuitization made after that Contract anniversary.
     
    The adjustment for each partial surrender (and any applicable surrender charges and fees) and for each partial
    annuitization made prior to the date we receive proof of death and all required documents is equal to (x divided by y)
    multiplied by z, where:
    x = the amount of the partial surrender (and any applicable surrender charges and fees) or the amount of the
    partial annuitization; and
    y = the accumulated value immediately prior to the partial surrender or partial annuitization; and
    z = the amounts determined in b or c above immediately prior to the partial surrender or partial annuitization.
     
                Example:    Your accumulated value is $10,000 and you take a partial surrender of $2,000 (20% of your
    accumulated value). For purposes of calculating the death benefit, we reduce the amounts
    determined in b or c above by 20%.

     

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    GMWB Death Benefit - Principal Income Builder 3
     
    NOTE: The GMWB Death Benefit is available for applications signed on or after August 1, 2013, with a GMWB
    rider. If you are purchasing one of these riders in a state that has not approved the most recent version of
    the rider, the GMWB Death Benefit is not available.
     
    While a GMWB rider is active, the GMWB Death Benefit replaces any other death benefit under the Contract.
    The GMWB Death Benefit terminates when the GMWB rider terminates.
     
    1 . If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
        a. receive the GMWB Death Benefit as set forth below; or
        b. if the primary beneficiary is your spouse, your spouse may continue the Contract with or without this rider
          as set forth later in this section.
     
    2 . If there are joint owners, upon the death of the first joint owner to die, the surviving joint owner may elect one of
        the following:
        a. receive the GMWB Death Benefit as set forth below; or
        b. if the surviving joint owner is your spouse, your spouse may continue the Contract with or without this rider
          as set forth later in this section.
     
    The GMWB Death Benefit is equal to the greatest of:
     
    1 . the Contract accumulated value as of the valuation date on which we receive the proof of death and all
        required documents;
     
    2 . the total premium payments minus each withdrawal taken on or before the valuation date on which we receive
        the proof of death and all required documents;
     
    3 . the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by
        7, plus any premium payments made after that Contract anniversary minus each withdrawal taken after that
        Contract anniversary.
     
    NOTE: For 2. and 3. above, a withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death
        Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce
        the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated
        value immediately prior to the "For Life" Excess Withdrawal.
     
    NOTE: For 2. and 3. above, withdrawals up to the RMD amount under the RMD Program for GMWB Riders are not
        considered excess withdrawals and reduce the GMWB Death Benefit by the amount of the withdrawal.
     
    For details of the GMWB Death Benefit calculations, see APPENDIX G- GMWB DEATH BENEFIT EXAMPLES.
     
    If the Contract Accumulated Value is Greater than Zero. The following table illustrates the various situations and
    the resulting outcomes if your Contract accumulated value is greater than zero at your death.

     

    If you die and And Then
    You are the sole owner Your spouse is not The primary beneficiary(ies) will receive the GMWB Death
      named as a primary Benefit.
      beneficiary    
        All other rights and benefits under the rider and Contract will
    terminate.

    You are the sole owner Your spouse is Your spouse may:
      named as a primary    
      beneficiary a. Continue the Contract with or without this rider as set
          forth later in this section; or
        b. Receive the GMWB Death Benefit.
     
        All other primary beneficiaries will receive the GMWB Death
    Benefit.
     
        Unless your spouse elects to continue the Contract with this

     

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    If you die and And Then
        rider, only your spouse’s and beneficiary(ies)’s right to the
        above-selected payments will continue; all other rights and
        benefits under the rider and Contract will terminate.
    You are a joint owner The surviving joint Your surviving owner will receive the GMWB Death Benefit.
      owner is not your    
      spouse All other rights and benefits under the rider and Contract will
    terminate.

    You are a joint owner The surviving joint Your spouse may:
      owner is your spouse    
        a. Continue the Contract with or without this rider as set
          forth later in this section; or
        b. Receive the GMWB Death Benefit.

     

    Unless the surviving spouse owner elects to continue the Contract with this rider, upon your death, only your spouse’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.

    NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.

    If And Then
    The annuitant dies The owner is not a The beneficiary(ies) receive the GMWB Death Benefit.
      natural person  
        If a beneficiary dies before the annuitant, on the annuitant’s
        death we will make equal payments to the surviving
        beneficiaries unless the owner provided us with other written
        instructions. If no beneficiary(ies) survive the annuitant, the
        GMWB Death Benefit is paid to the owner.
     
        Upon the annuitant’s death, only the beneficiary(ies) right to
        the GMWB Death Benefit will continue; all other rights and
        benefits under the Contract will terminate.

     

    If the Contract Accumulated Value is Zero. The following table illustrates the various situations and the resulting outcomes if the Contract accumulated value is zero at your death.

    If you die and… And… Then…
    You are the sole owner You elected the All payments stop and all rights and benefits under the
      “Single Life” For Life Contract terminate.
      withdrawal option*  
    You are the sole owner You elected the “Joint We will continue payments to the surviving covered life
      Life” withdrawal according to the schedule established when you made your
      option* election until the date of the surviving covered life’s death.
     
        Upon the surviving covered life’s death, all payments stop and
        all rights and benefits under the Contract terminate.
    You are a joint owner You elected the All payments stop and all rights and benefits under the
      “Single Life” For Life Contract terminate.
      withdrawal option*  
    You are a joint owner You elected the “Joint We will continue payments to the surviving covered life
      Life” withdrawal according to the schedule established when you made your
      option* election until the date of the surviving covered life’s death.
     
        Upon the surviving joint owners death, all payments stop and
        all rights and benefits under the Contract terminate.

     

    *      See Principal Income Builder 3 - Effect of the Contract Accumulated Value Reaching Zero for details regarding election of the For Life withdrawal option.

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    NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.
     
     
    Spousal Continuation of the Principal Income Builder 3 Rider
     
    This rider provides that the For Life withdrawal benefit payment may be available in certain situations to an eligible
    spouse who continues the Contract with the rider.
     
    If you die while this rider is in effect and if your surviving spouse elects to continue the Contract in accordance with its
    terms, the surviving spouse may also elect to continue this rider if:
     
    1 . The Contract accumulated value is greater than zero;
    2 . There has not been a previous spousal continuation of the Contract and this rider; and
    3 . Your spouse is either:
        a. your primary beneficiary, if you were the sole owner; or
        b. the surviving joint owner, if there were joint owners.
     
    If your spouse elects to continue the Contract without this rider, this rider and all rights, benefits and charges under
    this rider will terminate and cannot be reinstated.
     
    NOTE: Although spousal continuation may be available under federal tax laws for a subsequent spouse, this rider
        may be continued one time only.
     
    The following table illustrates the various changes and the resulting outcomes associated with continuation of this
    rider by an eligible surviving spouse.

     

    If you die and… And… Then if your spouse continues this rider…
    No withdrawals Your spouse Your spouse may continue the rider and take withdrawals until the
    have been taken meets the earlier of their death or the For Life withdrawal benefit base reduces
    since the rider minimum issue to zero.
    effective date age requirement  
        For Life withdrawal benefits will automatically be calculated as
        “Single Life” and your spouse will be the sole covered life. Your
        spouse may not add a new covered life or elect “Joint Life”.
     
        The For Life withdrawal benefit percentage will be based on your
        spouse’s age and will lock in at the “Single Life” percentage
        applicable on the date of your spouse’s first withdrawal.
     
        All other provisions of this rider will continue as in effect on the date
        of your death.
    No withdrawals Your spouse does The Principal Income Builder 3 rider terminates upon your death.
    have been taken not meet the  
    since the rider minimum issue All other provisions of this Contract will continue as in effect on the
    effective date age requirement date of your death.