NEW HORIZONS WORLDWIDE INC
401(K) SEPARATE ACCOUNT INVESTMENT RIDER
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<H2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SEPARATE
ACCOUNT INVESTMENT RIDER</FONT></H2>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This rider is added to the
Group Annuity Contract issued by us of which it is a part. All terms defined in
the contract have the same meaning where used in this rider. The effective date
of this rider is the latest of (i)the Contract Date, (ii) the date this rider
has been approved for use in the state of issue, or (iii)&#160;the date stated
in the amendment adding this rider to the contract. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The purpose of this rider
is to allow the contract to participate in our Separate Accounts. We reserve the
right to limit both the number of Separate Accounts available under the contract
and the number available to each Member. The following Separate Accounts may be
available under this contract: </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
              Principal Bond and Mortgage Separate Account<BR>
              Principal Bond Emphasis Balanced Separate Account<BR>
              Principal European Equity Separate Account<BR>
              Principal Government Securities Separate Account<BR>
              Principal High Quality Intermediate-Term Bond Separate Account<BR>
              Principal High Quality Long-Term Bond Separate Account<BR>
              Principal High Quality Short-Term Bond Separate Account<BR>
              Principal International Emerging Markets Separate Account<BR>
              Principal International Small Company Separate Account<BR>
              Principal International Stock Separate Account<BR>
              Principal International Stock II Separate Account<BR>
              Principal Large Cap Stock Index Separate Account (aka Stock Index 500)<BR>
              Principal Large Company Blend Separate Account<BR>
              Principal Large Company Growth Separate Account<BR>
              Principal Large Company Value Separate Account<BR>
              Principal Medium Company Blend Separate Account<BR>
              Principal Medium Company Growth Separate Account<BR>
              Principal Medium Company Value Separate Account<BR>
              Principal Mid Cap Stock Index Separate Account<BR>
              Principal Money Market Separate Account<BR>
              Principal Pacific Basin Separate Account<BR>
              Principal Partners Large-Cap Blend Separate Account<BR>
              Principal Partners Large-Cap Growth Separate Account<BR>
              Principal Partners Large-Cap Growth I Separate Account<BR>
              Principal Partners Large-Cap Growth II Separate Account<BR>
              Principal Partners Large-Cap Value Separate Account<BR>
              Principal Partners Mid-Cap Growth Separate Account<BR>
              Principal Partners Mid-Cap Value Separate Account<BR>
              Principal Partners Small-Cap Growth I Separate Account<BR>
              Principal Partners Small-Cap Growth II Separate Account<BR>
              Principal Real Estate Separate Account<BR>
              Principal Small Cap Stock Index Separate Account<BR>
              Principal Small Company Blend Separate Account<BR>
              Principal Small Company Growth Separate Account<BR>
              Principal Small Company Value Separate Account<BR>
              Principal Stock Emphasis Balanced Separate Account<BR>
              Principal Technology Separate Account<BR>
              Principal Total Market Stock Index Separate Account<BR>
</FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although all Separate
Accounts listed above may be available under this contract, you may send us
Notification indicating you want the contract administered so that assets held
under this contract will not participate in one or more of these Separate
Accounts. You may revoke your Notification by sending us a new Notification. </FONT></P>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 1</FONT></P>
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<B>DESCRIPTIONS OF THE SEPARATE ACCOUNTS.</B> Each Separate Account is a pooled
Separate Account for use by our retirement plan customers. The funds held in
each Separate Account will be invested and reinvested by us in accordance with
applicable law, without regard to any investment requirements of our general
account assets or of any of our other Separate Accounts.<BR><BR>

A Separate Account consists of funds we receive under group annuity contracts or
policies which permit deposit in such Separate Account and under which amounts
are directed to such Separate Account. All income gains and losses (whether or
not realized), and expenses from the assets allocated to a Separate Account will
be credited to or charged against that Separate Account without regard to any
other income, gains or losses, or expenses we might have for our general account
or any other Separate Account. The assets of a Separate Account will not be
charged with any liabilities arising out of the investment experience of our
general account or any other Separate Accounts outside that Separate Account. We
may occasionally invest the assets of any Separate Account in short term money
market instruments, cash or cash equivalents.<BR><BR>

<B>PRINCIPAL BOND AND MORTGAGE SEPARATE ACCOUNT. </B>Principal Bond and Mortgage Separate
Account is invested primarily in bond and mortgage-type investments similar to
our general account, including bonds and mortgages from both United States and
non-United States corporations.<BR><BR>

<B>PRINCIPAL BOND EMPHASIS BALANCED SEPARATE ACCOUNT. </B>Principal Bond Emphasis Balanced
Separate Account is invested in other Separate Accounts established and
maintained by us. The majority of the assets will be invested in other Separate
Accounts which are invested primarily in bonds, mortgages, commercial paper and
other fixed income type investments. The remainder of the assets of this
Separate Account will be invested in one or more of our Separate Accounts
invested primarily in common stocks and other equity investments.<BR><BR>

<B>PRINCIPAL EUROPEAN EQUITY SEPARATE ACCOUNT. </B>Principal European Equity Separate Account
is invested primarily in common stocks and other securities issued by
corporations located in Europe. The Separate Account can also include a
reasonable amount of stock index futures, commercial paper or other cash
equivalents, derivative securities, other equity securities, and other
convertible securities that may be converted to common stocks. These investments
will be made in either United States or foreign currency or equivalents. This
Separate Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL GOVERNMENT SECURITIES SEPARATE ACCOUNT. </B>Principal Government Securities
Separate Account is invested primarily in obligations issued or guaranteed by
United States governmental agencies and instrumentalities, including, but not
limited to, the Government National Mortgage Association, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Association and the Student
Loan Marketing Association. This Separate Account may invest in the investments
outlined in this Separate Account description or in an underlying mutual fund or
other type of investment that maintains the investment described.<BR><BR>>

<B>PRINCIPAL HIGH QUALITY INTERMEDIATE-TERM BOND SEPARATE ACCOUNT.</B> Principal High Quality
Intermediate-Term Bond Separate Account is a pooled investment account invested
primarily in high quality, publicly traded bonds (mainly corporates), Treasury
notes and bonds, and government agency bonds. The investments may also include
such other foreign bond investments as are generally considered appropriate for
a high quality bond account. Such holdings shall be predominantly denominated in
U.S. dollars. In addition, some funds may be invested in derivative instruments
such as options and futures. The fixed income investments in the account
typically have maturities of five to ten years. This Separate Account may invest
in the investments outlined in this Separate Account description or in an
underlying mutual fund or other type of investment that maintains the investment
described.</FONT></P></TD>
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<B>PRINCIPAL HIGH QUALITY LONG-TERM BOND SEPARATE ACCOUNT. </B>Principal High Quality
Long-Term Bond Separate Account is a pooled investment account invested
primarily in high quality, publicly traded bonds (mainly corporates), Treasury
notes and bonds, and government agency bonds. The investments may also include
such other foreign bond investments as are generally considered appropriate for
a high quality bond account. Such holdings shall .be predominantly denominated
in U.S. dollars. In addition, some funds may be invested in derivative
instruments such as options and futures. The fixed income investments in the
account typically have maturities of ten years or longer. This Separate Account
may invest in the investments outlined in this Separate Account description or
in an underlying mutual fund or other type of investment that maintains the
investment described.<BR><BR>

<B>PRINCIPAL HIGH QUALITY SHORT-TERM BOND SEPARATE ACCOUNT. </B>Principal High Quality
Short-Term Bond Separate Account is a pooled investment account invested
primarily in high quality, publicly traded bonds (mainly corporates), Treasury
notes and bonds, and government agency bonds. The investments may also include
such other foreign bond investments as are generally considered appropriate for
a high quality bond account. Such holdings shall be predominantly denominated in
U.S. dollars. In addition, some funds may be invested in derivative instruments
such as options and futures. The fixed income investments in the account
typically have maturities of less than five years. This Separate Account may
invest in the investments outlined in this Separate Account description or in an
underlying mutual fund or other type of investment that maintains the investment
described.<BR><BR>

<B>PRINCIPAL INTERNATIONAL EMERGING MARKETS SEPARATE ACCOUNT. </B>Principal International
Emerging Markets Separate Account is invested primarily in common stocks of
corporations located in countries outside the United States where structural
changes are causing rapid economic growth and improved standards of living.
These investments may be made in either United States or foreign currency or
equivalencies. This Separate Account may invest in the investments outlined in
this Separate Account description or in an underlying mutual fund or other type
of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL INTERNATIONAL SMALL COMPANY SEPARATE ACCOUNT. </B>Principal International Small
Company Separate Account is invested primarily in stocks or other securities of
small corporations located outside the United States. These investments may be
made in either United States or foreign currency or equivalencies. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL INTERNATIONAL STOCK SEPARATE ACCOUNT.</B> Principal International Stock Separate
Account is invested primarily in a broad base of stocks or other securities of
corporations located outside the United States, but especially in Europe, South
America, and the Pacific rim. These investments will be made in foreign currency
or equivalencies but investments in U.S. dollars are also allowed. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.</FONT></P></TD>
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<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PRINCIPAL
INTERNATIONAL STOCK&#160;II SEPARATE ACCOUNT.</B> Principal International Stock
II Separate Account invests primarily in a broad base of stocks or other
securities of corporations located outside the United States, whose shares
primary trading market is outside the United States, or who derive most of their
revenues outside the United States. These investments will be made in foreign
currency or equivalencies but investments in U.S. dollars are also allowed. This
Separate Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL LARGE CAP STOCK INDEX SEPARATE ACCOUNT (AKA STOCK INDEX 500).</B> Principal
Large Cap Stock Index Separate Account is invested primarily in stocks and
securities of companies similar to those stocks which are used to calculate the
Standard and Poor&#146;s 500 Stock Index (or a similar stock index if the
Standard and Poor&#146;s 500 Stock Index is no longer calculated). The
investments may also include a reasonable amount of stock index futures,
commercial paper, derivative securities and other types of investments. In
addition, some funds may be invested in stock index accounts operated by other
investment managers, including funds operated by affiliates of ours. Principal
Large Cap Stock Index Separate Account attempts to earn a return similar to that
of Standard &amp; Poor&#146;s 500 Stock Index. This Separate Account may invest
in the investments outlined in this Separate Account description or in an
underlying mutual fund or other type of investment that maintains the investment
described.<BR><BR>

<B>PRINCIPAL LARGE COMPANY BLEND SEPARATE ACCOUNT. </B>Principal Large Company Blend Separate
Account is invested primarily in common stocks from large, established companies
whose stock exhibits a combination of substantial value and good earnings growth
potential. The investments may also include derivative instruments such as
options and futures, other equity securities, or other convertible securities
that may be converted to common stocks. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL LARGE COMPANY GROWTH SEPARATE ACCOUNT. </B>Principal Large Company Growth
Separate Account is invested primarily in common stocks from large, established
companies whose earnings are expected to grow at above-average rates. The
investments may also include derivative instruments such as options and futures,
other equity securities, or other convertible securities that may be converted
to common stocks. This Separate Account may invest in the investments outlined
in this Separate Account description or in an underlying mutual fund or other
type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL LARGE COMPANY VALUE SEPARATE ACCOUNT. </B>Principal Large Company Value Separate
Account is invested primarily in common stocks from large, established companies
with below-average price/earnings ratios and above-average dividend yields which
we view as undervalued by the market. The investments may also include
derivative instruments such as options and futures, other equity securities or
other convertible securities that may be converted to common stocks. If the
market as a whole is overvalued, we may hold assets of this account in fixed
income securities instead of stocks. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL MEDIUM COMPANY BLEND SEPARATE ACCOUNT. </B>Principal Medium Company Blend
Separate Account is invested primarily in common stocks from medium-sized,
established companies whose stock exhibits a combination of substantial value
and good earnings growth potential. The investments may also include derivative
instruments such as options and futures, other equity securities, or other
convertible securities that may be converted to common stocks. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.</FONT></P></TD>
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<B>PRINCIPAL MEDIUM COMPANY GROWTH SEPARATE ACCOUNT. </B>Principal Medium Company Growth
Separate Account is invested primarily in common stocks from medium-sized,
developing companies whose earnings are expected to grow at above-average rates.
The investments may also include derivative instruments such as options and
futures, other equity securities, or other convertible securities that may be
converted to common stocks. This Separate Account may invest in the investments
outlined in this Separate Account description or in an underlying mutual fund or
other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL MEDIUM COMPANY VALUE SEPARATE ACCOUNT. </B>Principal Medium Company Value
Separate Account is invested primarily in common stocks from medium-sized,
financially stable companies with below-average price/earnings ratios and
above-average dividend yields which we view as undervalued by the market. The
investments may also include derivative instruments such as options and futures,
other equity securities or other convertible securities that may be converted to
common stocks. If the market as a whole is overvalued, we may hold assets of
this account in fixed income securities instead of stocks. This Separate Account
may invest in the investments outlined in this Separate Account description or
in an underlying mutual fund or other type of investment that maintains the
investment described.<BR><BR>

<B>PRINCIPAL MID CAP STOCK INDEX SEPARATE ACCOUNT. </B>Principal Mid Cap Stock Index Separate
Account is invested primarily in stocks and securities of companies similar to
those stocks which are used to calculate the Standard and Poor&#146;s 400 MidCap
Stock Index (or a similar stock index if the Standard and Poor&#146;s 400 MidCap
Stock Index is no longer calculated). The investments may also include a
reasonable amount of stock index futures, commercial paper, derivative
securities and other types of investments. In addition, some funds may be
invested in stock index accounts operated by other investment managers,
including funds operated by affiliates of ours. Principal Mid Cap Stock Index
Separate Account attempts to earn a return similar to that of the Standard &amp;
Poor&#146;s 400 MidCap Stock Index. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL MONEY MARKET SEPARATE ACCOUNT.</B> Principal Money Market Separate Account is
invested primarily in money market instruments such as the obligations of the
United States government and its agencies, commercial paper, bank certificates
of deposit and similar instruments. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL PACIFIC BASIN SEPARATE ACCOUNT.</B> Principal Pacific Basin Separate Account is
invested primarily in common stocks and other securities issued by corporations
located in the Pacific Basin (including Japan). The Separate Account can also
include a reasonable amount of stock index futures, commercial paper or other
cash equivalents, derivative securities, other equity securities, and other
convertible securities that may be converted to common stocks. The investments
may be made in either United States or foreign currency or equivalents. This
Separate Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.</FONT></P></TD>
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<B>PRINCIPAL PARTNERS LARGE-CAP BLEND SEPARATE ACCOUNT. </B>Principal Partners Large-Cap
Blend Separate Account invests primarily in equity securities of companies that
offer superior growth prospects or of companies whose stock is undervalued and,
to a limited extent, foreign companies. The investments may also include
derivative instruments such as options and futures, other equity securities or
other convertible securities that may be converted to common stocks. This
Separate Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS LARGE-CAP GROWTH SEPARATE ACCOUNT. </B>Principal Partners Large-Cap
Growth Separate Account uses an active and aggressive style of management to
invest primarily in common stocks of larger, established companies. The
investments may also include derivative instruments such as options and futures,
other equity securities, or other convertible securities that may be converted
to common stocks. This Separate Account may invest in the investments outlined
in this Separate Account description or in an underlying mutual fund or other
type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS LARGE-CAP GROWTH I SEPARATE ACCOUNT. </B>Principal Partners Large-Cap
Growth I Separate Account seeks to maximize long-term capital appreciation by
investing primarily in equity securities of U.S. and, to a limited extent,
foreign companies that exhibit strong or accelerating earnings growth. This
Separate Account uses an active and aggressive style of management to invest
primarily in common stocks of larger, established companies. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS LARGE-CAP GROWTH&#160;II SEPARATE ACCOUNT.</B> Principal Partners
Large-Cap Growth II Separate Account invests primarily in common stocks of large
capitalization companies that are expected to experience accelerating growth.
The investments may also include derivative instruments such as options and
futures, other equity securities, or other convertible securities that may be
converted to common stocks. This Separate Account may invest in the investments
outlined in this Separate Account description or in an underlying mutual fund or
other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS LARGE-CAP VALUE SEPARATE ACCOUNT.</B> Principal Partners Large-Cap
Value Separate Account invests primarily in undervalued equity securities of
companies among the 750 largest by market capitalization believed to offer
above-average potential for growth in future earnings. The investments may also
include derivative instruments such as options and futures, other equity
securities or other convertible securities that may be converted to common
stocks. This Separate Account may invest in the investments outlined in this
Separate Account description or in an underlying mutual fund or other type of
investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS MID-CAP GROWTH SEPARATE ACCOUNT.</B> Principal Partners Mid-Cap Growth
Separate Account uses an active and aggressive style of management to invest
primarily in common stocks of medium sized companies. The investments may also
include derivative instruments such as options and futures, other equity
securities, or other convertible securities that may be converted to common
stocks. This Separate Account may invest in the investments outlined in this
Separate Account description or in an underlying mutual fund or other type of
investment that maintains the investment described.</FONT></P></TD>
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<B>PRINCIPAL PARTNERS MID-CAP VALUE SEPARATE ACCOUNT. </B>Principal Partners Mid-Cap Value
Separate Account invests primarily in common stocks of medium sized companies
using a value-oriented investment approach. The investments may also include
derivative instruments such as options and futures, other equity securities, or
other convertible securities that may be converted to common stocks. This
Separate Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS SMALL-CAP GROWTH I SEPARATE ACCOUNT. </B>Principal Partners Small-Cap
Growth I Separate Account invests mainly in common stocks of smaller companies
believed to be poised for growth because of new products, markets, or
management. The investments may also include derivative instruments such as
options and futures, other equity securities, or other convertible securities
that may be converted to common stocks. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL PARTNERS SMALL-CAP GROWTH&#160;II SEPARATE ACCOUNT.</B> Principal Partners
Small-Cap Growth 11 Separate Account invests primarily in equity securities of
smaller companies offering superior prospects for earnings growth. These
companies are generally characterized as &#147;growth&#148; companies. The
investments may also include derivative instruments such as options and futures,
other equity securities, or other convertible securities that may be converted
to common stocks. This Separate Account may invest in the investments outlined
in this Separate Account description or in an underlying mutual fund or other
type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL REAL ESTATE SEPARATE ACCOUNT.</B> Principal Real Estate Separate Account is
invested primarily in real estate such as office buildings, industrial
buildings, shopping centers, retail stores and similar property.<BR><BR>

<B>PRINCIPAL SMALL CAP STOCK INDEX SEPARATE ACCOUNT. </B>Principal Small Cap Stock Index
Separate Account is invested primarily in stocks and securities of companies
similar to those stocks which are used to calculate Standard and Poor&#146;s 600
SmaIICap Stock Index (or a similar stock index if the Standard and Poor&#146;s
600 SmaIICap Index in no longer calculated). The investments may also include a
reasonable amount of stock index futures, commercial paper, derivative
securities and other types of investments. In addition, some funds may be
invested in stock index accounts operated by other investment managers,
including funds operated by affiliates of ours. Principal Small Cap Stock Index
Separate Account attempts to earn a return similar to that of the Standard &amp;
Poor&#146;s 600 SmaIICap Stock Index. This Separate Account may invest in the
investments outlined in this Separate Account description or in an underlying
mutual fund or other type of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL SMALL COMPANY BLEND SEPARATE ACCOUNT.</B> Principal Small Company Blend Separate
Account is invested primarily in common stocks from smaller, established
companies whose stock exhibits a combination of substantial value and good
earnings growth potential. The investments may also include derivative
instruments such as options and futures, other equity securities, or other
convertible securities that may be converted to common stocks. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.<BR><BR>

<B>PRINCIPAL SMALL COMPANY GROWTH SEPARATE ACCOUNT. </B>Principal Small Company Growth
Separate Account is invested primarily in common stocks from smaller, developing
companies whose earnings are expected to grow at above-average rates. The
investments may also include derivative instruments such as options and futures,
other equity securities, or other convertible securities that may be converted
to common stocks. This Separate Account may invest in the investments outlined
in this Separate Account description or in an underlying mutual fund or other
type of investment that maintains the investment described.</FONT></P></TD>
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<B>PRINCIPAL SMALL COMPANY VALUE SEPARATE ACCOUNT. </B>Principal Small Company Value Separate
Account is invested primarily in common stocks from smaller, financially stable
companies with below-average price/earnings ratios and above-average dividend
yields which we view as undervalued by the market. The investments may also
include derivative instruments such as options and futures, other equity
securities or other convertible securities that may be converted to common
stocks. If the market as a whole is overvalued, we may hold assets of this
account in fixed income securities instead of stocks. This Separate Account may
invest in the investments outlined in this Separate Account description or in an
underlying mutual fund or other type of investment that maintains the investment
described.<BR><BR>

<B>PRINCIPAL STOCK EMPHASIS BALANCED SEPARATE ACCOUNT. </B>Principal Stock Emphasis Balanced
Separate Account is invested in other Separate Accounts established and
maintained by us. The majority of the assets will be invested in other Separate
Accounts which are invested primarily in common stocks and other equity
investments. The remainder of the assets of this Separate Account will be
invested in one or more of our Separate Accounts invested primarily in bonds,
mortgages, commercial paper and other fixed income type investments.<BR><BR>

<B>PRINCIPAL TECHNOLOGY SEPARATE ACCOUNT. </B>Principal Technology Separate Account invests
primarily in common stocks and other securities of technology and
telecommunications companies domiciled in any of the nations of the world.
Companies considered are a broad range of technology-related industries,
generally including computers, software and peripheral products, electronics,
communications equipment and services, and information services. The investments
may also include derivative instruments such as options and futures, other
equity securities, or other convertible securities that may be converted to
common stocks. This Separate Account may invest in the investments outlined in
this Separate Account description or in an underlying mutual fund or other type
of investment that maintains the investment described.<BR><BR>

<B>PRINCIPAL TOTAL MARKET STOCK INDEX SEPARATE ACCOUNT. </B>Principal Total Market Stock
Index Separate Account is invested in a manner calculated to give a result
similar to the Standard and Poor&#146;s 1500 Supercomposite Stock Index (or a
similar stock index if the Standard and Poor&#146;s 1500 Supercomposite Stock
Index is no longer calculated). Initially, this Account will be invested in the
other Stock Index Separate Accounts that we offer. If we choose, the Account may
also be invested in stocks or securities, stock index futures, commercial paper,
mutual funds or other funds managed by other investment managers, and other
types of investments as permitted under applicable state law. This Separate
Account may invest in the investments outlined in this Separate Account
description or in an underlying mutual fund or other type of investment that
maintains the investment described.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>DETERMINING SEPARATE ACCOUNT VALUES; OPERATING EXPENSES.</B> The value of a
Separate Account is its market value (appraised market value for Principal Real
Estate Separate Account) less Operating Expenses accrued but not deducted, if
any. If a Separate Account invests in an underlying Mutual Fund the value of
such Separate Account is the number of the shares invested in the Mutual Fund
multiplied by the Mutual Fund&#146;s NAV for that Valuation Date. If there is no
readily available market, its value is the fair market value of the assets held
in such Separate Account as determined by us using generally accepted accounting
practices and applicable law. The value of all Separate Accounts will always be
expressed in U.S. dollars. We will determine the value of a Separate Account on
each Valuation Date.</FONT></P></TD>
</TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 8</FONT></P>
<PAGE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Net
Asset Value (NAV)</U> means the price per share represented as a dollar amount. <BR><BR>

<U>Operating Expenses </U>are those charges which must be paid in order to operate a Separate
Account or obtain investments for a Separate Account. Operating Expenses
include, but are not limited to, custodial fees, transfer taxes, brokerage fees,
processing fees, and other taxes and fees associated with the operation of a
Separate Account. Operating Expenses will be deducted from the Separate Account
associated with a particular charge on the next Valuation Date after the
Operating Expenses have been paid or are immediately payable. In accordance with
our then-current procedures, various Separate Accounts may share in the payment
of certain Operating Expenses and, in some cases, we may use certain fees paid
to us by third parties to offset Operating Expenses incurred by a Separate
Account which would otherwise be payable from that Separate Account.<BR><BR>

<U>Valuation Date</U> means the date we determine the value of a Separate Account. Valuation
Dates will occur on dates we determine, but at least on the last Business Day of
a calendar month. Valuation will occur at the end of each such day, according to
our then-current procedures. For purposes of the Principal European Equity
Separate Account, Principal International Stock Separate Account, Principal
International Stock II Separate Account, Principal International Small Company
Separate Account, Principal International Emerging Markets Separate Account,
Principal Pacific Basin Separate Account, and Principal Technology Separate
Account only those days on which both the value of the underlying investments is
determined and we are open for business will be Valuation Dates.</FONT></P></TD>
</TR>

<TR>
   <TD COLSPAN=2>&nbsp;</TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>MANAGEMENT CHARGES.</B> The Management Charge under each Separate Account
will be a percentage of the value of assets in such Separate Account, subject to
the equivalent of a maximum annual percentage listed in the Table of Separate
Account Features. We reserve the right to change the Management Charge to any
charge up to the maximum limit at any time by giving you written notice at least
30 days before the date the change is to take effect.<BR><BR>

<U>Management Charge</U> means the charge consisting of the investment management charge and
the contract expense charge applicable to this class of contracts for each
Separate Account.<BR><BR>

The assets of Principal Bond Emphasis Balanced Separate Account, Principal Stock
Emphasis Balanced Separate Account, and Principal Total Market Stock Index
Separate Account will pay Management Charges under our other Separate Accounts
in which they are invested. An additional Management Charge will be charged
under these Separate Accounts only for management services actually performed
exclusively for assets held in these Separate Accounts.<BR><BR>

A pro rata charge will be deducted from each Separate Account on each Valuation
Date for the number of calendar days within the Valuation Period ending on such
Valuation Date.<BR><BR>

<U>Valuation Period</U> means the period from the end of a Valuation Date to the end of the
next following Valuation Date.</FONT></P></TD>
</TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 9</FONT></P>
<PAGE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
    <TR VALIGN=TOP>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.</FONT></TD>
        <TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        SEPARATE ACCOUNT  INVESTMENT.  A Separate Account Investment is established for each Member for a Separate
        Account for each type of Contribution a Member directs to a Separate Account.<BR><BR>

Where Principal Money Market Separate Account is available and we receive Notification
from you to do so, an Unallocated Separate Account Investment will be
established for Contributions for which either i) we do not have all the
necessary information needed to allocate such Contributions to individual
Members, or ii) you have notified us that such Contributions are to be
unallocated. If Principal Money Market Separate Account is not available, an
Unallocated Contribution Investment will be established, using a Guaranteed
Interest Investment with the shortest Guaranteed Period available.<BR><BR>

<U>Unallocated Separate Account Investment</U> means the Investment established to hold
unallocated Contributions, invested in Principal Money Market Separate Account,
if available, and operates as if it were a Member&#146;s Investment. However, by
mutual agreement, you may specify one or more other Separate Accounts to use in
addition to or in place of Principal Money Market Separate Account.</FONT></P></TD>
</TR>

<TR>
   <TD COLSPAN=2>&nbsp;</TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>RETURNS CREDITED TO SEPARATE INVESTMENT ACCOUNTS.</B> Each Separate Account
Investment established under this contract will be credited with its portion of
the return associated with the appropriate Separate Account. The return for a
Separate Account will be based on the change in value of that Separate Account
less any Management Charge.<BR><BR>

In order to track the returns for the Separate Account Investments established
under this contract, we will use a unit value system of recordkeeping, unless we
determine that another recordkeeping system would be more appropriate.</FONT></P></TD>
</TR>

<TR>
   <TD COLSPAN=2>&nbsp;</TD>
</TR>

<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>UNIT VALUE SYSTEM OF RECORDKEEPING</B>. Under a unit value system of
recordkeeping, we will calculate the value of a Separate Account Investment for
each Valuation Date by multiplying the number of Separate Account units held in
the Separate Account Investment by the applicable Unit Value. A Unit Value is
the dollar value for one unit.<BR><BR>

Contributions or transfers to a Separate Account Investment increase the number of Separate
Account units credited to it. Transfers and payments from a Separate Account
Investment reduce the number of Separate Account units. The increase or decrease
in the number of Separate Account units is calculated by dividing the dollar
amount of the contribution, transfer, or payment by the applicable Unit Value.<BR><BR>

We will calculate the Unit Value applicable to each Separate Account Investment on
each Valuation Date. The Unit Value will be based upon the total value of the
Separate Account and the number of existing Separate Account units.<BR><BR>

The investment increment factor which may be used in computing the value of a
Separate Account may be determined as the sum of 1.00000000 plus the earnings
rate of the Separate Account. The earnings rate for a Valuation Period is equal
to (a) divided by (b):</FONT></P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Investment income for such Valuation Period plus capital gains and losses, both
realized and unrealized, minus any applicable taxes attributable to the Separate
Account and minus the pro rata investment manager charge described in 3. above.</FONT></TD>
</TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 10</FONT></P>
<PAGE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</font></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The  value  of  the  Separate  Account  as  of  the  beginning  of  the  Valuation  Period,  adjusted  for
Contributions to and applications from the account.</FONT></P></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
When crediting Contributions and transfers added to a Separate Account Investment we
will use the Unit Value applicable to the Separate Account Investment for the
Valuation Date on which we accept the Contribution or transfer. If we accept the
Contribution or transfer on a date other than a Valuation Date, we will use the
Unit Value for the next following Valuation Date. We reserve the right to change
our unit value recordkeeping system upon 30 days notice to you.</FONT></P></TD>
</TR>

<TR>
   <TD COLSPAN=2>&nbsp;</TD>
</TR>

<TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.</FONT></TD>
    <TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
       DEPOSITS  TO SEPARATE  ACCOUNTS;  RESTRICTIONS  AND ORDER OF ENTRY.  We reserve the right to defer or stop
                  your ability to direct  Contributions  and  transfers to a Separate  Account,  and we may require
                  you to transfer  existing  account  balances out of a Separate  Account.  We may  exercise  these
                  rights if we</FONT></P></TD>
</TR>
</TABLE>

<TABLE WIDTH=100%>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
        <TD WIDTH=5%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        need to comply with regulation, statute, or decisional law to which we are subject,</FONT></P></TD>
    </TR>
    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
        <TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        believe it would be imprudent not to do so in  fulfilling  our  fiduciary  role as an  investment  advisor
        under ERISA,</FONT></P></TD>
    </TR>
    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c)</FONT></TD>
        <TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        believe the investment approach of the Separate Account no longer makes sense,
        is excessively expensive, or does not currently have any favorable investment
        opportunities available, or</FONT></P></TD>
    </TR>
    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>d)</FONT></TD>
        <TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        decide to discontinue operation of such Separate Account.</FONT></P></TD>
    </TR>
    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        Contributions or transfers directed to a Separate Account that we have closed on a temporary
or permanent basis will be directed to Principal Money Market Separate Account,
if available, or to the Guaranteed Interest Investment with the shortest
Guarantee Period available under the contract. If the Separate Account has been
closed on a temporary basis, we will treat a Contribution or transfer request as
a Notification that money should be transferred to the closed Separate Account
as soon as permitted under the terms of the contract.<BR><BR>

<U>Provisions for a temporarily closed Separate Account.</U> We have established the following
order of entry into a Separate Account that was temporarily closed, then
reopened:</FONT></P></TD>
    </TR>
    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
        <TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        All amounts held in Principal Money Market Separate Account waiting for transfer
        to the Separate Account.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
        <TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        Any amounts held in any other  Separate  Account or in our general  account which are to be transferred to
        the Separate Account.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        Within each of the above 2 categories, funds will be transferred one customer at a
        time, in order from the oldest waiting Notification to the newest Notification.<BR><BR>

        Normally, if the amount of the intended transfer is greater than the amount open for
acceptance by a previously closed Separate Account, the entire amount of the
transfer will continue to be held in the account it was at the time of the
request until the Valuation Date when complete transfer may be made. However, we
and you (the Member, if permitted by the Plan) may mutually agree to transfer
only a portion of the intended amount to the Separate Account.<BR><BR>

        We will notify you in writing when amounts have been transferred to a reopened
Separate Account. </FONT></P></TD>
    </TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 11</FONT></P>
<PAGE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
You or a Member, as permitted by the Plan, may revoke a request for transfer of
funds to a Separate Account by giving us Notification before the date transfer
is made. The Notification must also include new investment directions for the
intended transfer.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Provisions for a permanently closed Separate Account.</U> We will notify you in writing of
our intent to permanently close a Separate Account. You will have 60 days to
request transfer as described in 8. below. If after 60 days we have not received
Notification of where to transfer a closed Separate Account balance, we will
treat the account as a Contribution for which we do not have investment
direction.</FONT></P></TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
    <TR>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=90%>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8. </FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        <B>TRANSFERS  AND PAYMENTS FROM A SEPARATE ACCOUNT INVESTMENT.</B>  We will,  upon
        Notification  from you (the Member if  permitted  by the Plan),  and  subject
        to our right to defer a transfer  or payment as described in Section 9,</FONT></P></TD>
    </TR>
    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        transfer to the Member's  Guaranteed  Interest  Investment or another Separate  Account  Investment all or
        any portion of the Separate Account Investment specified, or</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        transfer to another Funding Agent all or any portion of the Member&#146;s
        Separate Account Investment, or</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        pay the Member an amount equal to all or any portion of the Member&#146;s
        Separate Account Investment.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        The amount to be paid or transferred will be determined and paid or transferred
within seven Business Days after (i) the Valuation Date on which we receive the
Notification, or (ii) a later Valuation Date specified in the Notification.
Payments and transfers will be made in accordance with our then current
procedures. We will notify you in writing of these procedures. The amount
transferred or paid will be deducted from the Separate Account Investment from
which such transfer or payment was requested on the date of such transfer or
payment. Each transfer to another Separate Account Investment may occur only on
a Valuation Date of that Separate Account.<BR><BR>

We are not responsible for the application of amounts transferred to another
Funding Agent. </FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.</FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>LIMITATIONS ON TRANSFERS AND PAYMENTS FROM A SEPARATE ACCOUNT INVESTMENT</B>.
In general, transfers and payments from a Separate Account Investment will be
made within seven Business Days after the first Valuation Date following the
request specified in Section 8 of this rider. We reserve the right, however, to
defer such transfers or payments for a period not to exceed 60 days. We further
reserve the right to defer payments for an additional period up to the maximum
number of days shown in the Table of Separate Account Features for each Separate
Account, if, in our opinion, liquidation of the Separate Account Assets would
have an adverse financial impact on other customers who invest in such Separate
Account. If we defer any transfer or payment under this Section, we will
determine the amount to be transferred or paid on the date transfer or payment
occurs. We will notify you in the event of any deferment of more than 30 days
under the provisions of this Section.<BR><BR>

These limitations will not apply to the payments to the beneficiary of a Member due to
the Member&#146;s death, payments to a Member due to disability or retirement
under the Plan and to purchases of annuity under Article IV, Section 2 of the
contract.</FONT></P></TD>
    </TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 12</FONT></P>
<PAGE>

<TABLE WIDTH=100%>
    <TR>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=85%>&nbsp;</TD>
    </TR>
    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD COLSPAN=3><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>Special Real Estate Limitations</U>. Because of the illiquid nature of the assets in
which Principal Real Estate Separate Account is invested, we reserve the right
to defer transfers or payments from a Principal Real Estate Separate Account
Investment if a transfer or payment would exceed the amount of cash and other
liquid assets held in Principal Real Estate Separate Account, reduced by amounts
committed to purchase properties or needed for Operating Expenses. We will not
defer requested transfers or payments for longer than three years under this
paragraph. For any Plan that allows Members to direct some or all of their
investments to the Principal Real Estate Separate Account and for which we keep
records, we will notify all Members in the event of any deferment of more than
45 days of a type described under this paragraph which arises under any of our
contracts having access to the Principal Real Estate Separate Account. Our
notice to those Members will be in writing and will explain the investment and
transfer options available to the Members.<BR><BR>

Principal Real Estate Separate Account may be illiquid for indefinite periods of time. We
will not manage Principal Real Estate Separate Account to provide a liquidity
pool for requests for transfer or payment. If requests for transfer or payment
from Principal Real Estate Separate Account are deferred, then the deferred
transfers or payments, when made, will be made in the following order:</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        Any death benefits payable under a defined contribution plan.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        All or a portion of each of the other requests for payment, determined as follows:</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD COLSPAN=2>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>i)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        the amount of the request, divided by</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD COLSPAN=2>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ii)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        the amount of all waiting requests, multiplied by</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD COLSPAN=2>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>iii)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the amount we determine to be available to pay requests; provided, however, that
no more than the amount of the request shall be paid out.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=4>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD COLSPAN=3><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        Deferred transfers or payments, when paid, will be made as of a Valuation Date and will
be based on the Principal Real Estate Separate Account Unit Value as of the date
paid. In determining the amount available to pay requests, we will subtract
amounts payable under any other group annuity contract which requires that we
make payments from the Principal Real Estate Separate Account using a method
other than the one described in this Section.<BR><BR>

        We reserve the right to make payments in a different manner than described in this
Section if we (i) are required to do so under applicable statutes, regulations,
or decisional law to which we are subject, (ii) must do so to comply with our
fiduciary responsibilities as an ERISA investment manager as described in
Article Il, Section 8, or (iii) deem it necessary to make a change to maintain
an equitable distribution of assets under all of our group annuity contracts. We
will not implement a change under item (iii) before the notice to all affected
contractholders is provided and the appropriate time period after the notice has
elapsed.<BR><BR>

        <U>Special Limitation for Certain Separate Accounts. </U>We reserve the right to make the
portion of a requested transfer in excess of the specified dollar limit in
substantially equal monthly installments over a period not to exceed the
specified period, if, in the specified period which ends on the requested date
of transfer, all transfers and payments from the total of all Separate Account
Investments invested in a particular Separate Account which is subject to the
dollar limit total the specified dollar limit or more. For purposes of this
limitation, transfers and payments from any other Separate Account investments
or funds included in the Separate Account from any other contracts or policies
issued in connection with the Plan or with any other retirement plan of the
Employer will be included as a transfer or payment from a Separate Account
Investment. If this limitation is imposed by us, the first installment will be
made one month after the date of request, or on such later date that you
specify. The specified dollar limit and period are:</FONT></P></TD>
    </TR>
</TABLE>
<BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 13</FONT></P>
<PAGE>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
    <TR>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=5%>&nbsp;</TD>
        <TD WIDTH=90%>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
$1,000,000 and 12 months, respectively, for Principal International Small
Company Separate Account, Principal International Emerging Markets Separate
Account, Principal Pacific Basin Separate Account, and Principal Technology
Separate Account.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b)</FONT></TD>
        <TD><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
$20,000,000 and 36 months, respectively, for Principal Bond Emphasis Balanced
Separate Account, Principal European Equity Separate Account, Principal
Government Securities Separate Account, Principal High Quality Intermediate-Term
Bond Separate Account, Principal High Quality Long-Term Bond Separate Account,
Principal High Quality Short-Term Bond Separate Account, Principal International
Stock Separate Account, Principal International Stock II Separate Account,
Principal Large Company Blend Separate Account, Principal Large Cap Stock Index
Separate Account, Principal Large Company Growth Separate Account, Principal
Large Company Value Separate Account, Principal Medium Company Blend Separate
Account, Principal Medium Company Growth Separate Account, Principal Medium
Company Value Separate Account, Principal Mid Cap Stock Index Separate Account,
Principal Partners Large-Cap Blend Separate Account, Principal Partners
Large-Cap Growth Separate Account, Principal Partners Large-Cap Growth I
Separate Account, Principal Partners Large-Cap Growth II Separate Account,
Principal Partners Large-Cap Value Separate Account, Principal Partners Mid-Cap
Growth Separate Account, Principal Partners Mid-Cap Value Separate Account,
Principal. Partners Small-Cap Growth I Separate Account, Principal Partners
Small-Cap Growth II Separate Account, Principal Small Cap Stock Index Separate
Account, Principal Small Company Blend Separate Account, Principal Small Company
Growth Separate Account, Principal Small Company Value Separate Account,
Principal Stock Emphasis Balanced Separate Account, and Principal Total Market
Stock Index Separate Account.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD>&nbsp;</TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        <U>Mutual Fund Limitation. </U>Without regard to any other feature of the contract or this
rider, if any limitation or delay is imposed by an underlying Mutual Fund, we
will be unable to transfer, make payments, or apply amounts held under these
Separate Accounts.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.</FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>PLANS WHICH MAY INVEST IN THE SEPARATE ACCOUNTS</B>. The Separate Accounts
are not registered with the Federal Securities and Exchange Commission and
therefore only Plans which meet certain requirements under the Code may invest
in the Separate Accounts. If the Internal Revenue Service or a court makes a
final determination that the Plan no longer qualifies as a qualified plan, we
will require that you transfer any assets invested in the Separate Accounts. If
we decide that you must transfer assets from the Separate Accounts, we will send
you a notice describing your options. Your Notification must clearly specify the
Guaranteed Interest Investment(s) or the Funding Agent to which you want the
assets transferred. If we do not receive an acceptable Notification from you
within 5 Business Days, we will transfer the assets to the Guaranteed Interest
Investment with the shortest duration.</FONT></P></TD>
    </TR>

    <TR>
        <TD COLSPAN=3>&nbsp;</TD>
    </TR>

    <TR VALIGN=TOP>
        <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.</FONT></TD>
        <TD COLSPAN=2><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
       <B>FUNDS</B>. We are the sole owner of all assets held in the Separate Accounts.</FONT></P></TD>
    </TR>
</TABLE>
<BR>
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
PRINCIPAL LIFE INSURANCE COMPANY<BR><BR>
PRESIDENT AND<BR>
CHIEF EXECUTIVE OFFICER</FONT></P>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page 14</FONT></P>
<PAGE>


<H4 ALIGN=CENTER>TABLE OF SEPARATE ACCOUNT FEATURES</H4>

<PRE>
                                              Current       Maximum   Maximum No.
                                               Annual        Annual      Days
                                            Mgt. Charge   Mgt. Charge  Allowed to
                                            <u> Percentage</u>   <u>Percentage </u>    Defer
                                                                       Transfers
                                                                     <u>or Payments</u>

Principal Bond Emphasis                          None          2.00*       210
Balanced Separate Account

Principal Bond and Mortgage                       0.45         2.00        210
Separate Account

Principal European Equity                         1.00         2.00        210
Separate Account

Principal Government Securities                   0.45         2.00         30
Separate Account

Principal High Quality                            0.45         2.00        210
Intermediate-Term Bond Separate
Account

Principal High Quality Long-Term                  0.45         2.00        210
Bond Separate Account

Principal High Quality Short-Term                 0.45         2.00        210
Bond Separate Account

Principal International Emerging                  0.69         2.00        210
Markets Separate Account

Principal International Small                     0.69         2.00        210
Company Separate Account

Principal International Stock                     0.69         2.00        210
Separate Account

Principal International Stock II                  0.00***      2.00        210
Separate Account

Principal Large Cap Stock Index                   0.35         2.00        210
Separate Account

Principal Large Company Blend                     0.45         2.00        210
Separate Account

Principal Large Company Growth                    0.45         2.00        210
Separate Account

Principal Large Company Value                     0.45         2.00        210
Separate Account

Principal Medium Company Blend                    0.45         2.00        210
Separate Account

Principal Medium Company Growth                   0.45         2.00        210
Separate Account

Principal Medium Company Value                    0.45         2.00        210
Separate Account

Principal Mid Cap Stock Index                     0.35         2.00        210
Separate Account

Principal Money Market Separate                   0.45         2.00         30
Account

Principal Pacific Basin Separate                  1.10         2.00        210
Account

Principal Partners Large-Cap Blend                0.00***      2.00        210
Separate Account

Principal Partners Large-Cap Growth               1.00         2.00        210
Separate Account

Principal Partners Large-Cap Growth               0.00***      2.00        210
I Separate Account

Principal Partners Large-Cap Growth               0.00***      2.00        210
II Separate Account

Principal Partners Large-Cap Value                0.00***      2.00        210
Separate Account

Principal Partners Mid-Cap Growth                 1.00         2.00        210
Separate Account

Principal Partners Mid-Cap Value                  0.00***      2.00        210
Separate Account

Principal Partners Small-Cap Growth               0.00***      2.00        210
I Separate Account

Principal Partners Small-Cap Growth               0.00***      2.00        210
II Separate Account

Principal Real Estate Separate                    1.05         None   Indefinite
Account Principal Small Cap

Principal Small Cap Stock Index                   0.35         2.00        210
Separate Account

Principal Small Company Blend                     0.45         2.00        210
Separate Account

Principal Small Company Growth                    0.45         2.00        210
Separate Account

Principal Small Company Value                     0.45         2.00        210
Separate Account

Principal Stock Emphasis Balanced                 None         2.00"       210
Separate Account

Principal Technology Separate                     0.00***      2.00        210
Account

Principal Total Market Stock Index                0.35**       2.00        210
Separate Account

</PRE>
<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*The maximum annual
Management Charge percentage includes Management Charges paid under this
Separate Account (currently none) and the Separate Accounts in which this
Separate Account is invested. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**There will be no
Management Charge under this Separate Account unless no Management Charge is
being charged by the underlying assets. Then the Management Charge is as shown. </FONT></P>

<P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>***This charge does not
include management charges of any underlying Mutual Funds. Please see the
appropriate prospectuses for such charges. </FONT></P>

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