Ameriprise 2011 Annual Report Download - page 30

investment income on owned assets supporting insurance reserves and capital supporting the business. We also receive
fees based on the level of assets supporting variable universal life separate account balances. This segment earns
intersegment revenues from fees paid by our Asset Management segment for marketing support and other services
provided in connection with the availability of VIT Funds under the variable universal life contracts. Intersegment expenses
for this segment include distribution expenses for services provided by our Advice & Wealth Management segment, as well
as expenses for investment management services provided by our Asset Management segment. All intersegment activity is
eliminated in consolidation. In 2011, 19% of our revenues from external clients were attributable to our Protection
business.
RiverSource Insurance Products
Through the RiverSource Life companies, we issue both variable and fixed universal life insurance, traditional life insurance
and disability income insurance. These solutions are designed to help clients protect their income, grow assets and give to
those individuals or causes that they care most about. Universal life insurance is a form of permanent life insurance
characterized by flexible premiums, flexible death benefits and unbundled pricing factors (i.e., mortality, interest and
expenses). Variable universal life insurance combines the premium and death benefit flexibility of universal life with
underlying fund investment flexibility and the risks associated therewith. Traditional life insurance refers to whole and term
life insurance policies. While traditional life insurance typically pays a specified sum to a beneficiary upon death of the
insured for a fixed premium, we also offer a term life insurance product that will generally pay the death benefit in the
form of a monthly income stream to a date specified at issue. We also offer a chronic care rider, AdvanceSourceᓼ rider, on
our new permanent insurance products. This rider allows its policy holder to accelerate a portion of the life insurance death
benefit in the event of a qualified chronic care need.
Our sales of RiverSource individual life insurance in 2011, as measured by scheduled annual premiums, lump sum and
excess premiums, consisted of 30% variable universal life, 65% fixed universal life and 5% traditional life. Our RiverSource
Life companies issue only non-participating policies that do not pay dividends to policyholders from the insurer’s earnings.
Assets supporting policy values associated with fixed account life insurance and annuity products, as well as those assets
associated with fixed account investment options under variable insurance and annuity products (collectively referred to as
the ‘‘fixed accounts’’), are part of the RiverSource Life companies’ general accounts. Under fixed accounts, the
RiverSource Life companies bear the investment risk. More information on the RiverSource Life companies’ general
accounts is found under ‘‘Business — Our Segments — Asset Management — Columbia Management — Management of
Institutional Owned Assets’’ above.
Variable Universal Life Insurance
Variable universal life insurance provides life insurance coverage along with investment returns linked to underlying
investment accounts of the policyholder’s choice. Options may include VIT Funds discussed above, Portfolio Navigator
funds of funds, as well as variable portfolio funds of other companies. RiverSource variable universal life insurance
products in force offer a fixed account investment option with guaranteed minimum interest crediting rates ranging from
3.0% to 4.5% at December 31, 2011.
Fixed Universal Life Insurance and Traditional Whole Life Insurance
Fixed universal life and traditional whole life insurance policies do not subject the policyholder to the investment risks
associated with variable universal life insurance.
RiverSource fixed universal life insurance products provide life insurance coverage and cash value that increases by a fixed
interest rate. The rate is periodically reset at the discretion of the issuing company subject to certain policy terms relative
to minimum interest crediting rates. RiverSource fixed universal life insurance policies in force provide guaranteed minimum
interest crediting rates ranging from 2.0% to 5.0% at December 31, 2011. The majority of fixed universal life policies
issued in recent years provide a secondary guarantee that ensures, subject to specified conditions, the policy will not
terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly
deductions and charges. In 2009, we discontinued new sales of traditional whole life insurance; however, we continue to
service existing policies. Our in force traditional whole life insurance policies combine a death benefit with a cash value
that generally increases gradually over a period of years.
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