Ameriprise 2012 Annual Report Download - page 32

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 2012, as measured by scheduled annual premiums, lump sum and
excess premiums, consisted of 11% variable universal life, 85% fixed universal life and 4% 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
Enterprise 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
2.0% to 4.5% at December 31, 2012.
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, 2012. Certain fixed universal life policies offered by
RiverSource Life provide secondary guarantee benefits. The secondary guarantee ensures that, 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.
In 2011, RiverSource Life began offering indexed universal life (‘‘IUL’’) insurance. IUL is similar to universal life insurance in
that it provides life insurance coverage and cash value that increases as a result of credited interest. In addition, as with
universal life insurance, there is a minimum guaranteed credited rate of interest. Unlike universal life insurance, the rate of
credited interest above the minimum guarantee for funds allocated to the indexed account is linked to the S&P 500 Index
(subject to a cap). The policyholder may allocate all or a portion of the policy value to a fixed or indexed account.
Term Life Insurance
Term life insurance provides a death benefit, but it does not build up cash value. The policyholder chooses the term of
coverage with guaranteed premiums at the time of issue. During the chosen term, we cannot raise premium rates even if
claims experience deteriorates. At the end of the chosen term, coverage may continue with higher premiums until the
maximum age is attained, or the policy expires with no value. We also offer a term life insurance product that pays the
death benefit in the form of a monthly income stream.
Disability Income Insurance
Disability income insurance provides monthly benefits to individuals who are unable to earn income either at their
occupation at time of disability (‘‘own occupation’’) or at any suitable occupation (‘‘any occupation’’) for premium
payments that are guaranteed not to change. Depending upon occupational and medical underwriting criteria, applicants
for disability income insurance can choose ‘‘own occupation’’ and ‘‘any occupation’’ coverage for varying benefit periods. In
some states, applicants may also choose various benefit provisions to help them integrate individual disability income
insurance benefits with Social Security or similar benefit plans and to help them protect their disability income insurance
benefits from the risk of inflation.
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