UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended September 30, 2004

                                       or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the Transition Period from ________ to ________

                         Commission file number 33-28976


                           IDS LIFE INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)


                 Minnesota                                41-0823832
    --------------------------------       -----------------------------------
      (State or other jurisdiction         (I.R.S. Employer Identification No.)
    of incorporation or organization)



 829 AXP Financial Center, Minneapolis, Minnesota            55474
---------------------------------------------------   -----------------
     (Address of principal executive offices)             (Zip Code)


Registrant's telephone number, including area code   (612) 671-3131
                                                  ------------------------

                                      None
-------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                        Yes  X            No
                                            -----            -------


Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                        Yes               No   X
                                            ------           --------




THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.


<PAGE>


                           IDS LIFE INSURANCE COMPANY

                                    FORM 10-Q

                                      INDEX
                                                                      Page No.
 PART I.     Financial Information:

          Item 1.  Financial Statements

                   Consolidated Balance Sheets --
                   September 30, 2004 and December 31, 2003               1

                   Consolidated Statements of Income --
                   Three months ended September 30, 2004 and 2003         2

                   Consolidated Statements of Income --
                   Nine months ended September 30, 2004
                   and 2003                                               3

                   Consolidated Statements of Cash Flows --
                   Nine months ended September 30, 2004 and 2003          4

                   Notes to Consolidated Financial Statements          5-10

          Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results
                   of Operations                                      11-18

          Item 4.  Controls and Procedures                               19

 PART II. Other Information

          Item 1.  Legal Proceedings                                     20

          Item 6.  Exhibits and Reports on Form 8-K                      20

          Signatures                                                     21

          Exhibit Index                                                 E-1


<PAGE>


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS



                                          IDS LIFE INSURANCE COMPANY
                                          CONSOLIDATED BALANCE SHEETS
                                        (thousands, except share data)

<TABLE>
<CAPTION>

                                                                       September 30,           December 31,
                                                                           2004                    2003
                                                                     ------------------     --------------------
Assets                                                                  (Unaudited)
Investments:
    Available-for-Sale:
       Fixed maturities, at fair value (amortized cost: 2004,
<S>                                                                  <C>                    <C>
       $26,780,791; 2003, $26,596,709)                               $       27,518,496     $        27,293,565
       Preferred and common stocks, at fair value (cost:  2004,
       $30,019; 2003, $30,019)                                                   31,074                  31,046
    Mortgage loans on real estate, at cost (less reserves: 2004,
       $45,347; 2003, $47,197)                                                2,995,749               3,180,020
    Policy loans                                                                581,738                 578,000
    Other investments                                                           755,421                 801,871
                                                                     ------------------     --------------------
            Total investments                                                31,882,478              31,884,502

Cash and cash equivalents                                                       786,889                 400,294
Restricted cash                                                                 510,499                 834,448
Amounts recoverable from reinsurers                                             843,391                 754,514
Amounts due from brokers                                                        105,579                   1,792
Other accounts receivable                                                        37,649                  68,422
Accrued investment income                                                       358,976                 355,374
Deferred policy acquisition costs                                             3,605,204               3,336,208
Deferred sales inducement costs                                                 298,034                 278,971
Other assets                                                                    333,200                 253,858
Separate account assets                                                      29,448,993              27,774,319
                                                                     ------------------     --------------------
            Total assets                                                    68,210,892               65,942,702
                                                                     ==================     ====================

Liabilities and Stockholder's Equity
Liabilities:
    Future policy benefits:
       Fixed annuities                                                       26,795,532              26,376,944
       Variable annuity guarantees                                               31,771                      --
       Universal life insurance                                               3,672,716               3,569,882
       Traditional life insurance                                               265,293                 254,641
       Disability income and long-term care insurance                         1,878,772               1,724,204
    Policy claims and other policyholders' funds                                 77,660                  67,911
    Amounts due to brokers                                                       96,299                 228,707
    Deferred income taxes, net                                                  205,070                 139,814
    Other liabilities                                                           418,667                 408,444
    Separate account liabilities                                             29,448,993              27,774,319
                                                                     ------------------     --------------------

            Total liabilities                                                62,890,773              60,544,866
                                                                     ------------------     --------------------

Stockholder's equity:
    Capital stock, $30 par value;
       100,000 shares authorized, issued and outstanding                          3,000                   3,000
    Additional paid-in capital                                                1,370,388               1,370,388
    Retained earnings                                                         3,526,673               3,624,837
    Accumulated other comprehensive income, net of tax:
        Net unrealized securities gains                                         444,760                 405,456
        Net unrealized derivative losses                                        (24,702)                 (5,845)
                                                                     ------------------     --------------------
            Total accumulated other comprehensive income                        420,058                 399,611
                                                                     ------------------     --------------------

            Total stockholder's equity                                        5,320,119               5,397,836
                                                                     ------------------     --------------------

    Total liabilities and stockholder's equity                               68,210,892              65,942,702
                                                                     ==================     ====================
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      -1-

<PAGE>



                           IDS LIFE INSURANCE COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                Three months ended
                                                                                   September 30,
                                                                     --------------------------------------
                                                                           2004                   2003
                                                                     -----------------        -------------
Revenues:
    Premiums:
<S>                                                                  <C>                      <C>
       Traditional life insurance                                    $         17,040         $     16,021
       Disability income and long-term care insurance                          71,879               71,433
                                                                       ---------------        -------------
           Total premiums                                                      88,919               87,454

    Net investment income                                                     443,534              427,603
    Contractholder and policyholder charges                                   139,449              131,895
    Mortality and expense risk and other fees                                 106,420              101,980
    Net realized gain (loss) on investments                                       788              (10,665)
                                                                       ---------------        -------------
           Total                                                              779,110              738,267
                                                                       ---------------        -------------

Benefits and Expenses:
    Death and other benefits:
       Traditional life insurance                                               6,921               11,179
       Investment contracts and universal life-type insurance                  51,442               58,982
       Disability income and long-term care insurance                          18,726               14,877
    Increase (decrease) in liabilities for future policy benefits:
       Traditional life insurance                                                 104               (2,374)
       Disability income and long-term care insurance                          33,067               36,398
    Interest credited on investment contracts and universal
       life-type insurance                                                    278,902              303,438
    Amortization of deferred policy acquisition costs                          63,446               82,419
    Other insurance and operating expenses                                    128,754              103,776
                                                                     -----------------        -------------
           Total                                                              581,362              608,695
                                                                     -----------------        -------------
Pre-tax income                                                                197,748              129,572
Income tax provision (benefit)                                                 65,245               (3,592)
                                                                     -----------------        -------------

Net income                                                           $        132,503         $    133,164
                                                                     =================        =============
</TABLE>
                 See Notes to Consolidated Financial Statements.

                                      -2-

<PAGE>



                           IDS LIFE INSURANCE COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                 Nine months ended
                                                                                   September 30,
                                                                     ------------------------------------------
                                                                           2004                    2003
                                                                     ------------------     -------------------
Revenues:
    Premiums:
<S>                                                                  <C>                    <C>
       Traditional life insurance                                    $           51,094     $          48,406
       Disability income and long-term care insurance                           210,245               210,814
                                                                     ------------------     -------------------
           Total premiums                                                       261,339               259,220

    Net investment income                                                     1,323,351             1,246,136
    Contractholder and policyholder charges                                     413,833               397,335
    Mortality and expense risk and other fees                                   315,402               284,430
    Net realized gain on investments                                             18,301                12,655
                                                                     ------------------     -------------------
           Total                                                              2,332,226             2,199,776
                                                                     ------------------     -------------------

Benefits and Expenses:
    Death and other benefits:
       Traditional life insurance                                                27,011                31,037
       Investment contracts and universal life-type insurance                   168,149               161,166
       Disability income and long-term care insurance                            50,262                42,224
    (Decrease) increase in liabilities for future policy benefits:
       Traditional life insurance                                                  (512)               (2,733)
       Disability income and long-term care insurance                            87,753               102,237
    Interest credited on investment contracts and universal
       life-type insurance                                                      841,982               905,330
    Amortization of deferred policy acquisition costs                           175,230               236,232
    Other insurance and operating expenses                                      374,166               341,724
                                                                     ------------------     -------------------
           Total                                                              1,724,041             1,817,217
                                                                     ------------------     -------------------
Pre-tax income before accounting change                                         608,185               382,559
Income tax provision                                                            205,781                42,974
                                                                     ------------------     -------------------
Income before accounting change                                                 402,404               339,585
Cumulative effect of accounting change, net of tax (Note 1)                     (70,568)                   --
                                                                     ------------------     -------------------

Net income                                                           $          331,836     $         339,585
                                                                     ==================     ===================
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      -3-

<PAGE>


<TABLE>
<CAPTION>

                           IDS LIFE INSURANCE COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (thousands)
                                   (Unaudited)

                                                                                       Nine months ended
                                                                                         September 30,
                                                                            ----------------------------------------
                                                                                  2004                  2003
                                                                            ------------------    ------------------
Cash Flows from Operating Activities
<S>                                                                         <C>                   <C>
    Net income                                                              $       331,836       $        339,585
    Adjustments to reconcile net income
         to net cash provided by operating activities:
            Policy loans, excluding universal life-type insurance
               Repayment                                                             28,693                 33,403
               Issuance                                                             (29,587)               (25,868)
            Change in amounts recoverable from reinsurers                           (88,877)               (89,583)
            Change in other accounts receivable                                      30,773                 (2,258)
            Change in accrued investment income                                      (3,602)               (72,249)
            Change in deferred policy acquisition costs, net                       (222,936)              (190,159)
            Change in liabilities for future policy benefits for
               traditional life, disability income and long-term care
               insurance                                                            165,220                191,227
            Change in policy claims and other policyholders' funds                    9,749                 (2,170)
            Deferred income taxes                                                    92,243                 11,800
            Change in other assets and liabilities, net                             200,400                (87,688)
            Amortization of premium, net                                             68,107                136,950
            Net realized gain on investments                                        (18,301)               (12,655)
            Net realized gain on trading securities                                 (20,644)               (19,079)
            Policyholder and contractholder charges, non-cash                      (174,704)              (175,764)
            Cumulative effect of accounting change, net of tax (Note 1)              70,568                     --
                                                                            ------------------    ------------------
    Net cash provided by operating activities                                       438,938                 35,492
                                                                            ------------------    ------------------

Cash Flows from Investing Activities
    Available-for-Sale securities:
            Sales                                                                 1,235,236              9,205,312
            Maturities, sinking fund payments and calls                           1,577,817              3,546,041
            Purchases                                                            (3,037,184)           (16,738,868)
    Other investments, excluding policy loans:
            Sales, maturities, sinking fund payments and calls                      588,641                471,588
            Purchases                                                              (342,767)              (697,042)
    Change in amounts due to and from brokers, net                                 (236,195)            (3,285,344)
                                                                            ------------------    ------------------
    Net cash used in investing activities                                          (214,452)            (7,498,313)
                                                                            ------------------    ------------------

Cash Flows from Financing Activities
    Activity related to investment contracts
    and universal life-type insurance:
            Considerations received                                               1,768,159              3,701,940
            Interest credited to account values                                     841,982                905,330
            Surrenders and other benefits                                        (2,015,188)            (1,492,730)
    Universal life-type insurance policy loans:
            Repayment                                                                66,526                 66,085
            Issuance                                                                (69,370)               (61,895)
    Cash dividend to American Express Financial Corporation                        (430,000)                    --
                                                                            ------------------    ------------------
    Net cash provided by financing activities                                       162,109              3,118,730
                                                                            ------------------    ------------------

Net increase (decrease) in cash and cash equivalents                                386,595             (4,344,091)
Cash and cash equivalents at beginning of period                                    400,294              4,424,061
                                                                            ------------------    ------------------

Cash and cash equivalents at end of period                                  $       786,889       $         79,970
                                                                            ==================    ==================
</TABLE>


                 See Notes to Consolidated Financial Statements.

                                      -4-

<PAGE>


                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   Basis of Presentation

     The accompanying Consolidated Financial Statements should be read in
     conjunction with the financial statements in the Annual Report on Form 10-K
     of IDS Life Insurance Company (IDS Life) for the year ended December 31,
     2003. Certain reclassifications of prior period amounts have been made to
     conform to the current presentation.

     The interim financial information in this report has not been audited. In
     the opinion of management, all adjustments necessary for a fair
     presentation of the consolidated financial position and the consolidated
     results of operations for the interim periods have been made. All
     adjustments made were of a normal, recurring nature. Results of operations
     reported for interim periods are not necessarily indicative of results for
     the entire year.

     Recently Issued Accounting Standards

     In June 2004, the Financial Accounting Standards Board (FASB) issued FASB
     Staff Position (FSP) FAS No. 97-1, "Situations in Which Paragraphs 17(b)
     and 20 of FASB Statement No. 97, Accounting and Reporting by Insurance
     Enterprises for Certain Long-Duration Contracts and for Realized Gains and
     Losses from the Sale of Investments (SFAS No. 97), Permit or Require
     Accrual of an Unearned Revenue Liability" (FSP 97-1). The implementation of
     Statement of Position 03-1, "Accounting and Reporting by Insurance
     Enterprises for Certain Nontraditional Long-Duration Contracts and for
     Separate Accounts" (SOP 03-1), raised a question regarding the
     interpretation of the requirements of SFAS No. 97 concerning when it is
     appropriate to record an unearned revenue liability. FSP 97-1 clarifies
     that SFAS No. 97 is clear in its intent and language, and requires the
     recognition of an unearned revenue liability for amounts that have been
     assessed to compensate insurers for services to be performed over future
     periods. SOP 03-1 describes one situation, when assessments result in
     profits followed by losses, where an unearned revenue liability is
     required. SOP 03-1 does not amend SFAS No. 97 or limit the recognition of
     an unearned revenue liability to the situation described in SOP 03-1. The
     guidance in FSP 97-1 is effective for financial statements for fiscal
     periods beginning after June 18, 2004. The adoption of FSP 97-1 did not
     have a material impact on IDS Life's consolidated financial condition or
     results of operations. (For further discussion of SOP 03-1, see below and
     Note 3).

     The AICPA released a series of technical practice aids (TPAs) in September
     2004 which provide additional guidance related to, among other things, the
     definition of an insurance benefit feature and the definition of policy
     assessments in determining benefit liabilities, as described within SOP
     03-1. Although IDS Life is studying the TPAs, its initial assessment is
     that it will not have a material effect on IDS Life's calculation of
     liabilities that were recorded in the first quarter of 2004 upon adoption
     of SOP 03-1.

     In July 2003, the American Institute of Certified Public Accountants issued
     SOP 03-1 effective for fiscal years beginning after December 15, 2003. SOP
     03-1 provides guidance on separate account presentation and accounting for
     interests in separate accounts. Additionally, SOP 03-1 provides clarifying
     guidance as to the recognition of bonus interest and other sales inducement
     benefits and the presentation of any deferred amounts in the financial
     statements. Lastly, SOP 03-1 requires insurance enterprises to establish
     additional liabilities for benefits that may become payable under variable
     annuity death benefit guarantees or other insurance or annuity contract
     provisions. Where an additional liability is established, the recognition
     of this liability will then

                                      -5-

<PAGE>

                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



     be considered in amortizing deferred policy acquisition costs (DAC) and any
     deferred sales  inducement costs associated with those insurance or annuity
     contracts.

     The adoption of SOP 03-1 as of January 1, 2004, resulted in a cumulative
     effect of accounting change that reduced 2004 results by $70.6 million
     ($108.6 million pretax). The cumulative effect of accounting change
     consisted of: (i) $42.8 million pretax from establishing additional
     liabilities for certain variable annuity guaranteed benefits and from
     considering these liabilities in valuing DAC and deferred sales inducement
     costs associated with those contracts and (ii) $65.8 million pretax from
     establishing additional liabilities for certain variable universal life and
     single pay universal life insurance contracts under which contractual cost
     of insurance charges are expected to be less than future death benefits and
     from considering these liabilities in valuing DAC associated with those
     contracts. Prior to the adoption of SOP 03-1, amounts paid in excess of
     contract value were expensed when payable. IDS Life's accounting for
     separate accounts was already consistent with the provisions of SOP 03-1
     and, therefore, there was no impact related to this requirement.

     In November 2003, the Financial Accounting Standards Board (FASB) ratified
     a consensus on the disclosure provisions of Emerging Issues Task Force
     (EITF) Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
     Application to Certain Investments." IDS Life complied with the disclosure
     provisions of this rule in Note 2 to the Consolidated Financial Statements
     included in its Annual Report on Form 10-K for the year ended December 31,
     2003. In March 2004, the FASB reached a consensus regarding the application
     of a three-step impairment model to determine whether investments accounted
     for in accordance with SFAS No. 115, "Accounting for Certain Investments in
     Debt and Equity Securities," and other cost method investments are
     other-than-temporarily impaired. However, with the issuance of FASB Staff
     Position (FSP) No. EITF 03-1-1, the provisions of the consensus relating to
     the measurement and recognition of other-than-temporary impairments will be
     deferred pending further clarification from the FASB. The remaining
     provisions of this rule, which primarily relate to disclosure requirements,
     are required to be applied prospectively to all current and future
     investments accounted for in accordance with SFAS No. 115 and other cost
     method investments. IDS Life will evaluate the potential impact of EITF
     03-1 after the FASB completes its reassessment.

2.   Investment Securities

     Gross realized gains and losses on sales and losses recognized for
     other-than-temporary impairments of securities classified as
     Available-for-Sale, using the specific identification method, were as
     follows for the three and nine months ended September 30, 2004 and 2003:

<TABLE>
<CAPTION>

                                                       Three Months Ended                 Nine Months Ended
                                                         September 30,                      September 30,
                                                   ---------------------------        ------------------------
                                                       2004            2003             2004          2003
                                                   ----------    -----------        ---------      -----------
     (Millions)
<S>                                                <C>           <C>                <C>            <C>
     Gross realized gains on sales                 $    10.2     $     26.3         $    33.9      $    217.3
     Gross realized (losses) on sales              $    (5.3)    $    (36.6)        $   (11.7)     $    (91.4)
     Realized (losses) recognized for
         other-than-temporary impairments          $      --     $       --         $    (0.1)     $   (102.6)
</TABLE>

                                      -6-

<PAGE>


                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


3.   Variable Annuities and Sales Inducement Costs

     The majority of the variable annuity contracts offered by IDS Life contain
     guaranteed minimum death benefit (GMDB) provisions. When market values of
     the customer's accounts decline, the death benefit payable on a contract
     with a GMDB may exceed the contract accumulation value. IDS Life also
     offers variable annuities with death benefit provisions that gross up the
     amount payable by a certain percentage of contract earnings; these are
     referred to as gain gross-up benefits (GGU). In addition, IDS Life offers
     contracts containing guaranteed minimum income benefit (GMIB) provisions.
     If elected by the contract owner and after a stipulated waiting period from
     contract issuance, a GMIB guarantees a minimum lifetime annuity based on a
     specified rate of contract accumulation value growth and predetermined
     annuity purchase rates. IDS Life has established additional liabilities for
     these variable annuity death and GMIB benefits under SOP 03-1. IDS Life has
     not established additional liabilities for other insurance or annuitization
     guarantees for which the risk is currently immaterial.

     The variable annuity death benefit liability is determined each period by
     estimating the expected value of death benefits in excess of the projected
     contract accumulation value and recognizing the excess over the estimated
     meaningful life based on expected assessments (e.g., mortality and expense
     fees, contractual administrative charges and similar fees). Similarly, the
     GMIB liability is determined each period by estimating the expected value
     of annuitization benefits in excess of the projected contract accumulation
     value at the date of annuitization and recognizing the excess over the
     estimated meaningful life based on expected assessments.

     In determining the additional liabilities for variable annuity death
     benefits and GMIB, IDS Life projects these benefits and contract
     assessments using actuarial models to simulate various equity market
     scenarios. Significant assumptions made in projecting future benefits and
     assessments relate to customer asset value growth rates, mortality,
     persistency and investment margins and are consistent with those used for
     DAC asset valuation for the same contracts. As with DAC, management will
     review, and where appropriate, adjust its assumptions each quarter. Unless
     management identifies a material deviation over the course of quarterly
     monitoring, management will review and update these assumptions annually in
     the third quarter of each year.

     The following provides summary information related to variable annuity
     contracts for which IDS Life has established additional liabilities for
     death benefits and guaranteed minimum income benefits:

                                      -7-

<PAGE>

                          IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

<TABLE>
<CAPTION>

       --------------------------------------------------------------------- ----------------- --------------------
                                                                                  As of
                  Variable Annuity GMDB and GMIB by Benefit Type              September 30,           As of
                                                                                   2004         December 31, 2003
       -------------------------------------------------------------------------------------- ---------------------
       (Dollar amounts in millions)
       -------------------------------------------------------------------------------------- ---------------------
<S>                                                                          <C>                 <C>
         Contracts with GMDB     Total Contract Value                        $       3,108.5     $         3,162.4
       Providing for Return of   Contract Value in Separate Accounts         $       1,605.4     $         1,600.7
               Premium           Net Amount at Risk*                         $          22.9     $            28.0
                                 Weighted Average Attained Age                            61                    62
       ------------------------- ---------------------------------------------- ------------- ----- ---------------
         Contracts with GMDB     Total Contract Value                        $      25,366.8     $        24,570.6
        Providing for Six Year   Contract Value in Separate Accounts         $      20,851.4     $        20,316.1
                Reset            Net Amount at Risk*                         $       1,839.4     $         2,077.5
                                 Weighted Average Attained Age                            60                    60
       ------------------------- ---------------------------------------------- ------------- ----- ---------------
         Contracts with GMDB     Total Contract Value                        $       2,989.2     $         2,827.5
        Providing for One Year   Contract Value in Separate Accounts         $       2,148.0     $         1,886.3
               Ratchet           Net Amount at Risk*                         $          62.5     $            84.7
                                 Weighted Average Attained Age                            61                    60
       ------------------------- ---------------------------------------------- ------------- ----- ---------------
         Contracts with Other    Total Contract Value                        $         346.4     $           251.8
                 GMDB            Contract Value in Separate Accounts         $         260.1     $           174.8
                                 Net Amount at Risk*                         $          36.1     $            20.8
                                 Weighted Average Attained Age                            65                    63
       ------------------------- ---------------------------------------------- ------------- ----- ---------------
          Contracts with GGU     Total Contract Value                        $         328.1     $           276.4
            Death Benefit        Contract Value in Separate Accounts         $         253.6     $           193.1
                                 Net Amount at Risk*                         $           9.1     $             5.8
                                 Weighted Average Attained Age                            64                    61
       ------------------------- ---------------------------------------------- ------------- ----- ---------------
         Contracts with GMIB     Total Contract Value                        $         397.6     $           357.8
                                 Contract Value in Separate Accounts         $         311.2     $           268.3
                                 Net Amount at Risk*                         $          16.1     $            23.0
                                 Weighted Average Attained Age                            59                    59
       -------------------------------------------------------------------------------------- ----- ---------------
</TABLE>


*    Represents current death benefit less total contract value for GMDB, amount
     of gross up for GGU and  accumulated  guaranteed  minimum benefit base less
     total contract value for GMIB and assumes the  actuarially  remote scenario
     that all claims become payable on the same day.

<TABLE>
<CAPTION>

       --------------------------------------------------------------------- ---------------- --------------------
                   Additional Liabilities and Incurred Benefits                 GMDB & GGU             GMIB
       --------------------------------------------------------------------- ---------------- --------------------
       ------------------------- ------------------------------------------- ---------------- --------------------
<S>                                                                           <C>                 <C>
       Nine months ended         Liability balance at January 1               $          30.6     $             2.2
       September 30, 2004        Reported claims                              $          14.5     $             0.1
                                 Liability balance at September 30            $          29.3     $             2.5
                                 Incurred claims (reported + change in
                                 liability)                                   $          13.2     $             0.4
       ------------------------- ------------------------------------------- ---------------- --------------------
</TABLE>

     The additional liabilities for guaranteed benefits established under SOP
     03-1 are supported by general account assets. Changes in these liabilities
     are included in death and other benefits in the Consolidated Statements of
     Income.

     Contract values in separate accounts were invested in various equity, bond
     and other funds as directed by the contract holder. No gains or losses were
     recognized on assets transferred to separate accounts for the periods
     presented.

                                      -8-

<PAGE>


                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



     Sales inducement costs consist of bonus interest credits and premium
     credits added to certain product contract values. These benefits are
     capitalized to the extent they are incremental to amounts that would be
     credited on similar contracts without the applicable feature. Deferred
     sales inducement costs were $298.0 million and $279.0 million at September
     30, 2004 and December 31, 2003, respectively. These costs were previously
     included in DAC and were reclassified as part of the adoption of SOP 03-1.
     The amounts capitalized are amortized using the same methodology and
     assumptions used to amortize DAC. IDS Life capitalized $15.8 million and
     $11.2 million during the three months ended September 30, 2004 and 2003,
     respectively, and $52.8 million and $54.3 million during the nine months
     ended September 30, 2004 and 2003, respectively. IDS Life amortized $7.1
     million and $4.6 million during the three months ended September 30, 2004
     and 2003, respectively, and $24.0 million and $17.9 million during the nine
     months ended September 30, 2004 and 2003, respectively.

4.   Comprehensive Income (Loss)

     Comprehensive income (loss) is defined as the aggregate change in
     stockholder's equity, excluding changes in ownership interests. It is the
     sum of net income and changes in (i) unrealized gains or losses on
     Available-for-Sale securities and applicable deferred policy acquisition
     and deferred sales inducement costs; and (ii) unrealized gains or losses on
     derivatives. The components of comprehensive income (loss), net of related
     tax, for the three and nine months ended September 30, 2004 and 2003 were
     as follows:

<TABLE>
<CAPTION>

                                                         Three Months Ended             Nine Months Ended
                                                           September 30,                  September 30,
                                                    -----------------------------  ----------------------------
     (Millions)                                         2004           2003            2004          2003
                                                    ------------- ---------------  ------------- --------------
<S>                                                 <C>           <C>              <C>           <C>
     Net income                                     $     132.5   $       133.2    $     331.8   $      339.6
     Change in:
       Net unrealized securities gains (losses)           407.7          (206.1)          39.3           38.1
       Net unrealized derivative (losses) gains            (6.7)           (0.2)         (18.9)           0.5
                                                    ------------- ---------------  ------------- --------------
     Total                                          $     533.5   $       (73.1)   $     352.2   $      378.2
                                                    ============= ===============  ============= ==============
</TABLE>

5.   Taxes and Interest

     Net income taxes paid during the nine months ended September 30, 2004 and
     2003, were $154.7 million and $58.8 million, respectively. The income tax
     benefit in the third quarter of 2003 reflects a $29 million reduction in
     the tax provision resulting from adjustments related to the finalization of
     the 2002 tax return filed during the quarter and the publication of
     favorable technical guidance related to the taxation of dividend income.
     Interest paid on borrowings during the nine months ended September 30, 2004
     and 2003, were $0.4 million and $2.3 million, respectively.

                                      -9-

<PAGE>

                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


6.   Commitments and Contingencies

     Commitments to fund mortgage loans on real estate at September 30, 2004 and
     December 31, 2003 were $93.1 million and $58.5 million, respectively.

     The maximum amount of life insurance risk retained by IDS Life is $750,000
     on any policy insuring a single life and $1.5 million on any policy
     insuring a joint-life combination. IDS Life generally retains 10 percent of
     the mortality risk on new life insurance policies. Risk not retained is
     reinsured with other life insurance companies. Risk on universal life and
     variable universal life policies is reinsured on a yearly renewable term
     basis. Risk on term insurance and long-term care policies is reinsured on a
     coinsurance basis. IDS Life retains all accidental death benefit,
     disability income and waiver of premium risk. Reinsurance contracts do not
     relieve IDS Life from its primary obligation to policyholders.

     Substantially all of IDS Life's life and annuity products have minimum
     interest rate guarantees in their fixed accounts. At September 30, 2004,
     these minimum interest rate guarantees ranged from 1.5 percent to 5.0
     percent. To the extent the yield on IDS Life's investment portfolio
     declines below its target spread plus the minimum guarantee, IDS Life's
     profitability would be negatively affected.

     The Securities and Exchange Commission (SEC), the National Association of
     Securities Dealers (NASD) and several state attorneys general have brought
     proceedings challenging several mutual fund and variable account financial
     practices, including suitability generally, late trading, market timing,
     disclosure of revenue sharing arrangements and inappropriate sales. IDS
     Life Insurance Company has received requests for information and has been
     contacted by regulatory authorities concerning its practices and is
     cooperating fully with these inquiries.

     IDS Life Insurance Company and its subsidiaries are involved in other legal
     and arbitration proceedings concerning matters arising in connection with
     the conduct of their respective business activities. IDS Life believes it
     has meritorious defenses to each of these actions and intends to defend
     them vigorously. In addition, IDS Life is subject to periodic state
     insurance department regulatory action, through examinations or other
     proceedings. IDS Life believes that it is not a party to, nor are any of
     its properties the subject of, any pending legal, arbitration, or
     regulatory proceedings that would have a material adverse effect on its
     consolidated financial condition, results of operations or liquidity.
     However, it is possible that the outcome of any such proceedings could have
     a material impact on results of operations in any particular reporting
     period as the proceedings are resolved.

     The IRS routinely examines IDS Life's federal income tax returns and is
     currently conducting an audit for the 1993 through 1996 tax years.
     Management does not believe there will be a material adverse effect on IDS
     Life's consolidated financial position as a result of these audits.

                                      -10-


<PAGE>



     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS

     IDS Life  Insurance  Company is a stock life  insurance  company  organized
     under the laws of the State of Minnesota.  IDS Life Insurance  Company is a
     wholly owned subsidiary of American Express Financial  Corporation  (AEFC),
     which is a wholly owned subsidiary of American  Express  Company.  IDS Life
     Insurance  Company  serves  residents  of the  District of Columbia and all
     states except New York. IDS Life Insurance  Company  distributes  its fixed
     and  variable  insurance  and  annuity  products  exclusively  through  the
     American Express Financial  Advisors Inc.'s (AEFAI) retail sales force. IDS
     Life  Insurance  Company  has four  wholly  owned  life  insurance  company
     subsidiaries  that distribute their products  through various  distribution
     channels.  IDS Life Insurance Company of New York (IDS Life of New York) is
     a wholly owned subsidiary of IDS Life Insurance Company and serves New York
     State  residents.  IDS Life of New York  distributes its fixed and variable
     insurance and annuity  products  exclusively  through  AEFAI's retail sales
     force.  IDS Life  Insurance  Company  also owns  American  Enterprise  Life
     Insurance Company (American Enterprise Life), an Indiana corporation, which
     primarily  issues fixed and  variable  annuity  contracts  for sale through
     non-affiliated  representatives  and  agents of third  party  distributors.
     American Centurion Life Assurance Company (American Centurion Life) is also
     a subsidiary of IDS Life Insurance Company.  American Centurion Life offers
     fixed and variable annuity contracts to American Express(R) Cardmembers and
     others in New York,  as well as fixed and variable  annuity  contracts  for
     sale  through  non-affiliated  representatives  and  agents of third  party
     distributors,  in New York. IDS Life  Insurance  Company also owns American
     Partners  Life  Insurance  Company  (American  Partners  Life),  an Arizona
     corporation  which offers fixed and variable annuity  contracts to American
     Express(R) Cardmembers and others who reside in states other than New York.
     IDS Life  Insurance  Company  also owns IDS REO 1, LLC and IDS REO II, LLC.
     These two subsidiaries  hold real estate and mortgage loans on real estate.
     IDS  Life  Insurance  Company  and its six  subsidiaries  are  referred  to
     collectively herein as "IDS Life".

     IDS Life follows United States generally accepted accounting principles
     (GAAP), and the following discussion is presented on a consolidated basis
     consistent with GAAP.

     Certain of the statements below are forward-looking statements within the
     meaning of the Private Securities Litigation Reform Act of 1995. See the
     Forward-Looking Statements section below.

     Results of  Operations  for the Three Months Ended  September  30, 2004 and
     2003

     Net income was $132.5 million for the three months ended September 30, 2004
     and $133.2 for the three months ended September 30, 2003, which was
     reflective of the favorable prior year tax adjustment noted below. Pretax
     income rose 53 percent.

     Revenues

     Net investment income increased $15.9 million or 4 percent reflecting a
     $6.6 million pretax benefit from lower than expected losses related to
     management's first quarter decision to liquidate a secured loan trust
     managed by an affiliate. Additionally, net investment income for the third
     quarter of 2003 includes $19.3 million of amortization expense of certain
     low income housing investments, whereas there was no amortization expense
     of such investments in the third quarter of 2004. See effective tax rate
     discussion below regarding IDS Life's December 2003 low income housing
     investment distribution to AEFC. These increases were partially offset by
     the effect of depreciation during the current quarter versus appreciation
     in the same period a year ago in the S&P 500 on the value of options
     hedging equity indexed annuities, which was offset in the related benefits
     and expenses.

     Contractholder and policyholder charges increased $7.6 million or 6 percent
     reflecting increased cost of insurance charges on Variable Universal Life
     products, as well as an increase in surrender charges on variable annuity
     products.

                                      -11-


<PAGE>

     Mortality and expense risk and other fees increased $4.4 million or 4
     percent, reflecting higher average values of separate account assets and
     the impact of the change from IDS Life to AEFC as investment manager of the
     internally managed proprietary funds during the fourth quarter of 2003.
     Concurrent with the investment manager change, IDS Life entered into an
     agreement with AEFC to receive fees for the services, other than investment
     management, that IDS Life continues to provide the underlying proprietary
     mutual funds. The administrative service fees will vary with the market
     values of these proprietary mutual funds. Previous to this change, IDS Life
     received management fees directly from the proprietary funds and was party
     to an agreement with AEFC to compensate AEFC for the investment
     sub-advisory services AEFC provided these proprietary funds. In addition to
     the administrative service fees, IDS Life receives mortality and expense
     risk fees from the separate accounts based on the level of assets.

     Net realized gain on investments was $0.8 million for the three months
     ended September 30, 2004 compared to net realized loss on investments of
     $10.7 million for the three months ended September 30, 2003. For the three
     months ended September 30, 2004, $13.8 million of total investment gains
     were partially offset by $13.0 million of impairments and losses. Included
     in these total investment gains and losses are $10.2 million of gross
     realized gains and $5.3 million of gross realized losses from sales of
     securities, classified as Available-for-Sale.

     For the three months ended September 30, 2003, $26.4 million of investment
     gains were more than offset by $37.1 million of losses and impairments.
     Included in these total investment gains and losses are $26.3 million of
     gross realized gains and $36.6 million of gross realized losses from sales
     of securities, classified as Available-for-Sale.

     Benefits and Expenses

     Interest credited on investment contracts and universal life-type insurance
     decreased $24.5 million or 8 percent, primarily due to lower interest
     crediting rates and the effect of depreciation in the S&P 500 on equity
     index annuities during the current quarter versus appreciation in the same
     period a year ago, partially offset by higher average accumulation values
     of annuities and inforce levels of life insurance products.

     Amortization of deferred policy acquisition costs (DAC) decreased $19.0
     million or 23 percent primarily reflecting a net $24 million DAC
     amortization expense reduction in the third quarter of 2004, compared to a
     net $2 million DAC amortization expense reduction in the third quarter of
     2003, both as a result of IDS Life's annual third quarter review of various
     DAC assumptions and practices. See the DAC section below for further
     discussion of DAC and related third quarter 2004 and 2003 adjustments.

     Other insurance and operating expense increased $25.0 million or 24 percent
     reflecting increases in distribution costs and non-deferrable expenses
     related to product management and business reinvestment initiatives. These
     increases were partially offset by a reduction related to the change in the
     investment manager of the proprietary mutual funds from IDS Life to AEFC.
     Effective with this change, the previously existing arrangement under which
     IDS Life compensated AEFC for investment sub-advisory services were
     terminated.

     The effective tax rate was 33 percent for the three months ended  September
     30, 2004  compared to an income tax benefit for the same period a year ago.
     This change reflects the third quarter of 2003 $29 million reduction in the
     tax provision resulting from adjustments related to the finalization of the
     2002  tax  return  filed  during  the  third  quarter  of 2003 and also the
     publication  of  favorable  technical  guidance  related to the taxation of
     dividend  income.  Also  impacting  the  increased  effective  rate  is the
     December 2003  distribution of substantially all of IDS Life's interests in
     low  income  housing  investments  to AEFC  which  caused  unfavorable  tax
     provision

                                      -12-

<PAGE>


     impacts.  For 2003 and prior years,  IDS Life's  federal  income taxes were
     reduced by credits  arising from such low income housing  investments.  IDS
     Life's  distribution  to AEFC is more fully  discussed in IDS Life's Annual
     Report on Form 10-K for the year ended December 31, 2003.

     Results of Operations for the Nine Months Ended September 30, 2004 and 2003

     Income before accounting change rose 19 percent to $402.4 million for the
     nine months ended September 30, 2004. The increase primarily reflects
     increased net investment income, contractholder and policyholder charges,
     mortality and expense risk and other fees, net realized gain on
     investments, lower interest credited on investment contracts and universal
     life-type insurance costs and lower amortization of DAC, partially offset
     by higher other insurance and operating costs and a higher effective income
     tax rate. See the DAC section below for further discussion of DAC and
     related third quarter 2004 and 2003 adjustments.

     Net income for the nine months ended September 30, 2004 reflects the $70.6
     million ($108.6 million pretax) impact of IDS Life's January 1, 2004
     adoption of SOP 03-1. SOP 03-1 requires insurance enterprises to establish
     liabilities for benefits that may become payable under variable annuity
     death benefit guarantees or other insurance or annuity contract provisions.

     Revenues

     Net investment income increased $77.2 million or 6 percent reflecting
     slightly higher average levels of invested assets and slightly higher
     yields, as well as a $24.7 million pretax benefit in 2004, reflecting lower
     than expected losses resulting from management's first quarter 2004
     decision to liquidate a secured loan trust managed by an affiliate, offset
     by the first quarter 2004 $49.0 million pretax charge related to the same
     early liquidation. Additionally, net investment income for the nine months
     ended September 30, 2003 includes $58.0 million of amortization expense of
     certain low income housing investments. See effective tax rate discussion
     below.

     Contractholder and policyholder charges increased $16.5 million or 4
     percent reflecting increased cost of insurance charges on Variable
     Universal Life products as well as an increase in surrender charges on
     variable annuity products.

     Mortality and expense risk and other fees increased $31.0 million or 11
     percent, reflecting higher average values of separate account assets, and
     the impact of the change from IDS Life to AEFC as investment manager of the
     internally managed proprietary funds during the fourth quarter of 2003.

     Net realized gain on investments was $18.3 million for the nine months
     ended September 30, 2004 and $12.7 million for the nine months ended
     September 30, 2003. For the nine months ended September 30, 2004, $40.3
     million of total investment gains were partially offset by $22.0 million of
     impairments and losses. Included in these total investment gains and losses
     are $33.9 million of gross realized gains and $11.7 million of gross
     realized losses from sales of securities, as well as $0.1 million of
     other-than-temporary impairment losses on investments, classified as
     Available-for-Sale.

     For the nine months ended September 30, 2003, $218.4 million of total
     investment gains were partially offset by $205.7 million of impairments and
     losses. Included in these total net investment gains and losses are $217.3
     million of gross realized gains and $91.4 million of gross realized losses
     from sales of securities, as well as $102.6 million of other-than-temporary
     impairment losses on investments, classified as Available-for-Sale.

                                      -13-

<PAGE>


     Benefits and Expenses

     Interest credited on investment contracts and Universal Life-type insurance
     decreased $63.3 million or 7 percent, primarily due to lower interest
     crediting rates and the effect on equity indexed annuities of lower
     appreciation in the S&P 500 during the first nine months of 2004 versus the
     same period a year ago, partially offset by higher average accumulation
     values of annuities and inforce levels of life insurance products.

     DAC amortization expense decreased to $175.2 million for the nine months
     ended September 30, 2004 from $236.2 million for the nine months ended
     September 30, 2003. The decrease reflects the first quarter 2004 net $56.2
     million decrease in expenses primarily in conjunction with the adoption of
     SOP 03-1 during the first quarter of 2004, and the impact of the annual
     third quarter DAC-related adjustments. See the DAC section below for
     further discussion.

     Other insurance and operating expenses increased $32.4 million or 9 percent
     reflecting increases in distribution costs and non-deferrable expenses
     related to product management and business reinvestment initiatives. These
     increases were partially offset by a reduction related to the changes in
     the previously existing arrangement between IDS Life and AEFC as noted
     above.

     As previously disclosed, IDS Life completed a valuation system conversion
     for its Long-Term Care insurance business during the first quarter of 2004
     which resulted in a $6.5 million pretax reduction of estimated Long-Term
     Care liabilities for future policy benefits and an offsetting estimated
     increase of $9.6 million in amortization of deferred policy acquisition
     costs.

     The effective tax rate rose to 34 percent in the nine months ended
     September 30, 2004 from 11 percent in the nine months ended September 30,
     2003 as a result of the second quarter 2004 reduction in net deferred tax
     assets, and the effect of the $29 million reduction to the tax expense in
     the third quarter of 2003 related to the finalization of the 2002 tax
     return filed during the third quarter of 2003 and the publication of
     favorable technical guidance related to the taxation of dividend income,
     both of which caused relatively unfavorable tax provision impacts. Also
     impacting the increased effective rate is the December 2003 distribution of
     substantially all of IDS Life's interests in low income housing investments
     to AEFC which also caused unfavorable tax provision impacts.

     Deferred Policy Acquisition Costs

     Deferred Policy Acquisition Costs represent the costs of acquiring new
     business, including for example, direct sales commissions, related sales
     incentive bonuses and awards, underwriting costs, policy issue costs and
     other related costs, have been deferred on the sale of insurance and
     annuity contracts. DAC for universal life and variable universal life
     insurance and certain annuities are amortized as a percentage of the
     estimated gross profits expected to be realized on the policies. DAC for
     other annuities are amortized using the interest method. For traditional
     life, disability income and long-term care insurance policies, the costs
     are amortized in proportion to premium revenue.

     Amortization of DAC requires the use of certain assumptions including
     interest margins, mortality rates, persistency rates, maintenance expense
     levels and customer asset value growth rates for variable products. The
     customer asset value growth rate is the rate at which contract values are
     assumed to appreciate in the future. This rate is net of asset fees, and
     anticipates a blend of equity and fixed income investments. Management
     routinely monitors a wide variety of trends in the business, including
     comparisons of actual and assumed experience. Management reviews and, where
     appropriate, adjusts its assumptions with respect to customer asset value
     growth rates on a quarterly basis.

                                      -14-

<PAGE>

     Management monitors other principal DAC assumptions, such as persistency,
     mortality rate, interest margin and maintenance expense level assumptions,
     each quarter. Unless management identifies a material deviation over the
     course of the quarterly monitoring, management reviews and updates these
     DAC assumptions annually in the third quarter of each year.

     When assumptions are changed,  the percentage of estimated gross profits or
     portion of interest  margins used to amortize DAC may also change. A change
     in the required  amortization  percentage  is applied  retrospectively;  an
     increase in  amortization  percentage will result in an acceleration of DAC
     amortization  while a decrease in amortization  percentage will result in a
     deceleration  of DAC  amortization.  The impact on results of operations of
     changing  assumptions with respect to the amortization of DAC can be either
     positive or negative in any  particular  period,  and is  reflected  in the
     period that such changes are made. As a result of these  reviews,  IDS Life
     took  actions  in the third  quarters  of 2004 and 2003 that  impacted  DAC
     balances and expenses. In the third quarter 2004, these actions resulted in
     a net $24 million DAC amortization expense reduction reflecting:

     o    A  $27  million  DAC  amortization  reduction  reflecting  lower  than
          previously  assumed  surrender and mortality rates on variable annuity
          products, higher surrender charges collected on Universal and Variable
          Universal Life products,  and higher than previously  assumed interest
          rate spreads on annuity and Universal Life products.  Variable annuity
          surrender rates were reduced  between 0 and 20%,  depending on product
          and duration.  Additionally, there was an increase in surrender charge
          revenue ranging from 60% to 80% for Universal Life products and 10% to
          50% for certain variable annuity  products.  The mortality  assumption
          was changed  from  duration to an attained  age basis.  Interest  rate
          spreads  were  higher by  approximately  40 basis  points  relative to
          previously assumed spreads in 2003.

     o    A $3 million DAC  amortization  reduction  reflecting the extension of
          the mean reversion period by one year on variable annuity and Variable
          Universal Life products.

     o    A  $6  million  DAC  amortization   increase  primarily  reflecting  a
          reduction in estimated future premiums on variable annuity products.

     In the third quarter 2003,  these actions  resulted in a net $2 million DAC
     amortization expense reduction reflecting:

     o    A $106 million DAC amortization  reduction resulting from extending 10
          - 15 year  amortization  periods for certain Flex Annuity contracts to
          20 years. The Flex Annuity is an advisor-distributed  variable annuity
          product sold from 1986 - 1996.  In reviewing the  persistency  of this
          business in recent years,  IDS Life had observed  significant  volumes
          persisting beyond the end of the 10- and 15-year amortization periods.
          IDS Life had maintained these amortization  periods,  however,  due to
          uncertainty  over the impact of a program launched in April 2002 under
          which  eligible  Flex  Annuity  contracts  can be  exchanged  for  new
          variable annuity contracts offered by IDS Life. Exchange rates to date
          under  this  program  were  less  than  those  expected,  and IDS Life
          concluded  in the third  quarter  of 2003 it would be  appropriate  to
          measure the  meaningful  life of this  business  without  anticipating
          future  exchanges.  This is consistent with the  measurement  made for
          other IDS Life products,  and the resulting 20-year period is the same
          as that used for other advisor-distributed variable annuity products.

     o    A $92 million DAC amortization increase resulting from the recognition
          of a premium  deficiency on IDS Life's  Long-Term Care (LTC) business.
          IDS Life has  monitored  this  business  closely  in 2003 as claim and
          persistency  experience  developed  adversely.  IDS Life  discontinued
          sales of its proprietary LTC product in the first quarter of 2003, and
          outsourced  claims  administration  on the existing book in the second
          quarter of 2003.  On the basis of

                                      -15-

<PAGE>


          updated  analysis  completed  in the third  quarter of 2003,  IDS Life
          concluded that the associated DAC was not fully recoverable at current
          premium  levels.  The associated DAC remaining  after this $92 million
          reduction was $162 million.

     o    A  $12  million  net  DAC  amortization  increase  across  IDS  Life's
          Universal Life, Variable Universal Life and fixed and variable annuity
          products.  IDS Life updated a number of DAC  assumptions  resulting in
          increases  in  amortization  totaling  $26  million and  decreases  in
          amortization  totaling $14 million.  The largest single item was a $16
          million increase in amortization from reflecting lower than previously
          assumed spreads on fixed contract values.

     During the first quarter of 2004 and in conjunction with the adoption of
     SOP 03-1, IDS Life extended the time periods over which DAC associated with
     certain insurance and annuity products are amortized. In adopting SOP 03-1,
     IDS Life established additional liabilities for insurance benefits that may
     become payable under variable annuity death benefit guarantees or on single
     pay universal life contracts. In order to establish the proper
     relationships between these liabilities and DAC associated with the same
     contracts, IDS Life changed its estimates of meaningful life for certain
     contracts so DAC amortization periods are the same as liability funding
     periods. As a result, IDS Life recognized a $65.8 million valuation benefit
     reflecting the lengthening of the amortization periods for the same
     contracts impacted by SOP 03-1. The SOP 03-1 valuation benefit above was
     partially offset by the pretax $9.6 million DAC reduction* due to the
     valuation system conversion discussed in the Benefits and Expenses section
     of Management's Discussion and Analysis of Results of Operations for the
     nine months ended September 30, 2004 and 2003.

     DAC balances for various  insurance  and annuity  products sold by IDS Life
     are set forth below:
<TABLE>
<CAPTION>

     (Millions)                               September 30, 2004       December 31, 2003
                                              -------------------     -------------------
                                                  (Unaudited)
<S>                                           <C>                     <C>
     Annuities                                $            1,862      $             1,734
     Life and health insurance                             1,743                    1,602
                                              ------------------      -------------------
     Total                                    $            3,605      $             3,336
                                              ==================      ===================
</TABLE>

     In addition to the DAC balances shown above and in conjunction with IDS
     Life's adoption of SOP 03-1, sales inducement costs previously included in
     DAC were reclassified from DAC and presented as a separate line item in the
     Consolidated Balance Sheets. Deferred sales inducement costs were $298.0
     million and $279.0 million at September 30, 2004 and December 31, 2003,
     respectively. Sales inducement costs consist of bonus interest credits and
     premium credits added to certain product contract values. These benefits
     are capitalized to the extent they are incremental to amounts that would be
     credited on similar contracts without the applicable feature. The amounts
     capitalized are amortized using the same methodology and assumptions used
     to amortize DAC.

     * This valuation adjustment was an increase to the $92 million estimated
       premium deficiency IDS Life recognized in the third quarter of 2003.

                                      -16-

<PAGE>


     Impact of Market Volatility on Results of Operations

     Various aspects of IDS Life's business are impacted by equity market levels
     and other market-based events. Several areas in particular involve DAC and
     deferred sales inducement costs, recognition of benefits under guaranteed
     minimum death benefits (GMDB) and certain other variable annuity benefits,
     mortality and expense risk and other fees and structured investments. The
     direction and magnitude of the changes in equity markets can increase or
     decrease amortization of DAC and deferred sales inducement costs, incurred
     amounts under GMDB and other variable annuity benefit provisions and
     mortality and expense risk and other fees and correspondingly affect
     results of operations in any particular period. Similarly, the value of IDS
     Life's structured investment portfolio and derivatives arising from the
     consolidation of certain secured loan trusts are impacted by various market
     factors. Persistency of, or increases in, bond and loan default rates,
     among other factors, could result in negative adjustments to the market
     values of these investments in the future, which would adversely impact
     results of operations. See Liquidity and Capital Resources section for a
     further discussion of structured investments and consolidated derivatives.


     Liquidity and Capital Resources

     The liquidity  requirements of IDS Life are generally met by funds provided
     by premiums, investment income, proceeds from sales of investments, as well
     as  maturities,  periodic  repayments of  investment  principal and capital
     contributions  from AEFC.  The primary  uses of funds are policy  benefits,
     commissions,  other product-related acquisition and sales inducement costs,
     operating  expenses,   policy  loans,  dividends  to  AEFC  and  investment
     purchases.  IDS Life  routinely  reviews  its  sources and uses of funds in
     order to meet its ongoing  obligations.  IDS Life intends to pay a dividend
     to AEFC  during  the  fourth  quarter  of 2004,  which is  subject to state
     regulatory approval.  If approved and paid, IDS Life expects to continue to
     maintain adequate capital to meet internal and external  Risk-Based Capital
     requirements.

     IDS Life, on a consolidated basis, has available lines of credit with AEFC
     aggregating $295 million ($195 million committed and $100 million
     uncommitted). At September 30, 2004, there were no line of credit
     borrowings outstanding with AEFC and no outstanding reverse repurchase
     agreements. Both the line of credit and reverse repurchase agreements are
     used strictly as short-term sources of funds.

     Investment securities include $2.4 billion, $2.4 billion and $2.0 billion
     of below investment grade securities (excluding net unrealized appreciation
     and depreciation) at September 30, 2004, December 31, 2003 and September
     30, 2003, respectively. These investments represent 7.9 percent, 7.7
     percent and 6.2 percent of IDS Life's investment portfolio at September 30,
     2004, December 31, 2003 and September 30, 2003, respectively.

     During 2004, IDS Life continued to hold investments in Collateralized  Debt
     Obligations  (CDOs),  some of which are also managed by an  affiliate,  and
     were not  consolidated  pursuant to the  adoption of  Financial  Accounting
     Standards Board  Interpretation  No. 46 "Consolidation of Variable Interest
     Entities",  as revised (FIN 46) as IDS Life was not  considered the primary
     beneficiary.  IDS Life invested in CDOs as part of its investment  strategy
     in order to offer a  competitive  rate to  contractholders'  accounts.  IDS
     Life's  exposure  as  an  investor  is  limited  solely  to  its  aggregate
     investment  in  the  CDOs,  and  it  has  no  obligations  or  commitments,
     contingent  or otherwise,  that could  require any further  funding of such
     investments. At September 30, 2004, the carrying values of the CDO residual
     tranches,  managed by an affiliate,  were $5.2 million. IDS Life also has a
     retained interest in a CDO  securitization  with a carrying value of $519.6
     million, of which $383.3 million is considered investment grade, as well as
     an additional $20.7 million in rated CDO tranches managed by a third party.
     CDOs are illiquid  investments.  As an investor in the residual  tranche of
     CDOs,  IDS Life's  return  correlates to the  performance  of portfolios of
     high-yield bonds and/or bank loans.

     The carrying value of the CDOs, and IDS Life's projected return are based
     on discounted cash flow projections that require a significant degree of
     management judgment as to assumptions

                                      -17-

<PAGE>

     primarily  related to default and recovery  rates of the  high-yield  bonds
     and/or bank loans held  directly  by the CDO and,  as such,  are subject to
     change. Although the exposure associated with IDS Life's investment in CDOs
     is limited to the carrying value of such investments,  they have additional
     volatility  associated with them because the amount of the initial value of
     the loans  and/or  other debt  obligations  in the  related  portfolios  is
     significantly   greater  than  IDS  Life's  exposure.   In  addition,   the
     derivatives recorded as a result of consolidating the two remaining Secured
     Loan Trusts (SLT) under FIN 46 are valued based on the expected performance
     of a reference portfolio of high-yield loans. Deterioration in the value of
     the high-yield  bonds or bank loans would likely result in deterioration of
     IDS  Life's   investment  return  with  respect  to  the  relevant  CDO  or
     consolidated  derivative,  as the case may be. In the event of  significant
     deterioration of a portfolio,  the relevant CDO or SLT structure containing
     the  consolidated  derivative  may be subject to early  liquidation,  which
     could  result in  further  deterioration  of the  investment  return or, in
     severe cases, loss of the CDO or consolidated  derivative  carrying amount.
     During the nine months ended September 30, 2004, IDS Life liquidated one of
     its SLTs. The exposure to loss as a result of IDS Life's  investment in the
     two remaining SLTs  consolidated  under FIN 46 is represented by the pretax
     net assets of the consolidated  SLTs which were $471.7 million at September
     30, 2004.


     OTHER REPORTING MATTERS
     Accounting Developments

     See  "Recently  Issued  Accounting  Standards"  section  of  Note  1 to the
     Consolidated Financial Statements.

                                      -18-

<PAGE>


     ITEM 4. CONTROLS AND PROCEDURES

     IDS Life's management, with the participation of IDS Life's Chief Executive
     Officer and Chief Financial Officer, has evaluated the effectiveness of IDS
     Life's disclosure controls and procedures (as such term is defined in Rules
     13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act")) as of the end of the period covered by this
     report. Based on such evaluation, IDS Life's Chief Executive Officer and
     Chief Financial Officer have concluded that, as of the end of such period,
     IDS Life's disclosure controls and procedures are effective. There have not
     been any changes in IDS Life's internal control over financial reporting
     (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
     Exchange Act) during the fiscal quarter to which this report relates that
     have materially affected, or are reasonably likely to materially affect,
     IDS Life's internal control over financial reporting.

     Forward-Looking Statements

     This report includes forward-looking statements that are subject to risks
     and uncertainties that could cause results to differ materially from such
     statements. The words "believe," "expect," "anticipate," "optimistic,"
     "intend," "plan," "aim," "will," "should," "could," "likely," and similar
     expressions are intended to identify forward-looking statements. Readers
     are cautioned not to place undue reliance on these forward-looking
     statements, which speak only as of the date on which they are made. IDS
     Life undertakes no obligation to publicly update or revise any
     forward-looking statements. Important factors that could cause actual
     results to differ materially from IDS Life's forward-looking statements
     include, but are not limited to: fluctuations in external markets, which
     can affect the amount and types of investment products sold, the market
     value of its separate account assets and related fees received and the
     amount of amortization of DAC; potential deterioration in high-yield and
     other investments, which could result in further losses in IDS Life's
     investment portfolio; changes in assumptions relating to DAC which also
     could impact the amount of DAC amortization; the ability to sell certain
     high-yield investments at expected values and within anticipated time
     frames and to maintain its high-yield portfolio at certain levels in the
     future; the types and the value of certain death benefit features on
     variable annuity contracts; the affect of assessments and other surcharges
     for guaranty funds; the response of reinsurance companies under reinsurance
     contracts; the impact of reinsurance rates and the availability and
     adequacy of reinsurance to protect IDS Life against losses; negative
     changes in IDS Life Insurance Company's and its four life insurance company
     subsidiaries' credit ratings; increasing competition in all IDS Life's
     major businesses; the adoption of recently issued accounting rules related
     to the consolidation of variable interest entities, including those
     involving SLTs that IDS Life invests in, and accounting for guarantees
     under SOP 03-1, both of which could further affect both IDS Life's balance
     sheet and results of operations; and outcomes of litigation. A further
     description of these and other risks and uncertainties can be found in IDS
     Life's Annual Report on Form 10-K for the year ended December 31, 2003, and
     its other reports filed with the Securities and Exchange Commission (SEC).

                                      -19-

<PAGE>


PART II - OTHER INFORMATION

IDS LIFE INSURANCE COMPANY

Item 1.  Legal Proceedings

         The Securities and Exchange Commission (SEC), the National Association
         of Securities Dealers (NASD) and several state attorneys general have
         brought proceedings challenging several mutual fund and variable
         account financial practices, including suitability generally, late
         trading, market timing, disclosure of revenue sharing arrangements and
         inappropriate sales. IDS Life Insurance Company has received requests
         for information and has been contacted by regulatory authorities
         concerning its practices and is cooperating fully with these inquiries.

         In November 2002, IDS Life Insurance Company was named in a purported
         class action entitled John Haritos, et al. v. American Express
         Financial Advisors, Inc. et al., No. 02 2255, United States District
         Court, District of Arizona. The complaint originally named IDS Life
         Insurance Company as a defendant, but IDS Life Insurance Company was
         dismissed when plaintiffs chose to file an Amended Complaint not naming
         IDS Life Insurance Company. This action alleges that defendants
         violated the Investment Advisors Act of 1940, 15 U.S.C., in the sale of
         financial plans and various products including those of IDS Life
         Insurance Company. The complaint seeks certification of a nationwide
         class, restitution, injunctive relief, and punitive damages. Defendants
         have moved to dismiss the action and that motion is pending.

         IDS Life Insurance Company and its subsidiaries are involved in other
         legal and arbitration proceedings concerning matters arising in
         connection with the conduct of their respective business activities.
         IDS Life believes it has meritorious defenses to each of these actions
         and intends to defend them vigorously. IDS Life believes that it is not
         a party to, nor are any of its properties the subject of, any pending
         legal or arbitration proceedings that would have a material adverse
         effect on IDS Life's consolidated financial condition, results of
         operations or liquidity. However, it is possible that the outcome of
         any such proceedings could have a material impact on results of
         operations in any particular reporting period as the proceedings are
         resolved.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

                           See Exhibit Index on page E-1 hereof.

         (b) Reports on Form 8-K.

                           There were no reports on Form 8-K filed by IDS Life
                           during the quarterly period ended September 30, 2004.

                                      -20-

<PAGE>


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                IDS LIFE INSURANCE COMPANY
                                --------------------------
                                       (Registrant)





Date:  November 10, 2004    By   /s/ Mark E. Schwarzmann
                                 ------------------------
                                 Mark E. Schwarzmann
                                 Director, Chairman of the Board and
                                 Chief Executive Officer




Date:  November 10, 2004    By   /s/ Arthur H. Berman
                                 ---------------------
                                 Arthur H. Berman
                                 Director and Executive Vice President -
                                 Finance and Chief Financial Officer



                                      -21-

<PAGE>



                                  EXHIBIT INDEX


The following exhibits are filed as part of this Quarterly Report:


Exhibit                            Description


31.1       Certification of Mark E. Schwarzmann pursuant to Rule 13a-14(a)
           promulgated under the Securities Exchange Act of 1934, as amended.

31.2       Certification of Arthur H. Berman pursuant to Rule 13a-14(a)
           promulgated under the Securities Exchange Act of 1934, as amended.

32.1       Certification of Mark E. Schwarzmann and Arthur H. Berman pursuant
           to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
           the Sarbanes-Oxley Act of 2002.

                                      E-1