<PAGE>

                                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 JUNE 30, 2006

                                     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 of         (I.R.S. Employer Identification No.)
incorporation or organization)

55 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA         55474
        (Address of principal executive offices)             (Zip Code)

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

Former name, former address and former fiscal year, if changed since last
report  NOT APPLICABLE

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 a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act.

  Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

                                                              Yes |_|  No |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                 CLASS                         OUTSTANDING AT AUGUST 9, 2006
 -----------------------------------------     -----------------------------
  Common Stock (par value $30 per share)                 100,000 shares

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

<TABLE>
<CAPTION>
                                                                                                                  PAGE NO.
                                                                                                                  --------
<S>                                                                                                                 <C>
Part I. Financial Information:

     Item 1.   Financial Statements

               Consolidated Balance Sheets - June 30, 2006 and December 31, 2005...................................    1

               Consolidated Statements of Income - Three months and six months ended June 30, 2006 and 2005........    2

               Consolidated Statements of Cash Flows - Six months ended June 30, 2006 and 2005.....................    3

               Consolidated Statements of Shareholder's Equity - Six months ended June 30, 2006 and 2005...........    4

               Notes to Consolidated Financial Statements..........................................................  5-8

     Item 2.   Management's Discussion and Analysis................................................................ 9-13

     Item 4.   Controls and Procedures.............................................................................   14

Part II.Other Information:

     Item 1.   Legal Proceedings...................................................................................   14

     Item 1A.  Risk Factors........................................................................................   14

     Item 6.   Exhibits............................................................................................   14

     Signatures....................................................................................................   15

     Exhibit Index.................................................................................................  E-1
</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                          IDS LIFE INSURANCE COMPANY

                         CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                                      JUNE 30,         DECEMBER 31,
                                                                                                        2006               2005
                                                                                                    ------------       ------------
ASSETS                                                                                               (UNAUDITED)
<S>                                                                                                 <C>                <C>
Investments:
Available-for-Sale:
   Fixed maturities, at fair value (amortized cost: 2006, $27,000,557; 2005, $27,817,021) ....      $ 26,123,018       $ 27,753,174
   Common and preferred stocks, at fair value (cost: 2006, $29,965; 2005, $13) ...............            29,573                 21
Mortgage loans on real estate, at cost (less allowance for loan losses: 2006, $37,347;
   2005, $41,347) ............................................................................         2,797,890          2,842,362
Policy loans .................................................................................           622,459            605,212
Trading securities and other investments .....................................................           406,137            547,668
                                                                                                    ------------       ------------
  Total investments ..........................................................................        29,979,077         31,748,437

Cash and cash equivalents ....................................................................            48,172            233,589
Reinsurance recoverables .....................................................................         1,042,741            982,521
Amounts due from brokers .....................................................................             6,349              4,166
Other accounts receivable ....................................................................            54,550             62,930
Accrued investment income ....................................................................           325,313            328,567
Deferred acquisition costs ...................................................................         4,240,902          4,035,879
Deferred sales inducement costs ..............................................................           419,792            370,166
Deferred income tax assets, net ..............................................................           194,584                 --
Other assets .................................................................................           259,249            220,371
Separate account assets ......................................................................        41,788,456         37,929,960
                                                                                                    ------------       ------------
  Total assets ...............................................................................      $ 78,359,185       $ 75,916,586
                                                                                                    ============       ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Future policy benefits:
   Fixed annuities ...........................................................................      $ 24,801,082       $ 26,126,068
   Variable annuity guarantees ...............................................................            12,460             29,550
   Universal life insurance ..................................................................         3,692,498          3,711,628
   Traditional life insurance ................................................................           314,594            298,479
   Disability income and long-term care insurance ............................................         2,270,494          2,145,969
Policy claims and other policyholders' funds .................................................           102,139             90,233
Amounts due to brokers .......................................................................           200,922             31,772
Deferred income tax liabilities, net .........................................................                --              9,099
Other liabilities ............................................................................           358,285            381,938
Separate account liabilities .................................................................        41,788,456         37,929,960
                                                                                                    ------------       ------------
  Total liabilities ..........................................................................        73,540,930         70,754,696
                                                                                                    ------------       ------------
Shareholder's equity:
Common shares, $30 par value;
    100,000 shares authorized, issued and outstanding ........................................             3,000              3,000
Additional paid-in capital ...................................................................         2,020,388          2,020,388
Retained earnings ............................................................................         3,390,402          3,269,206
Accumulated other comprehensive loss, net of tax .............................................          (595,535)          (130,704)
                                                                                                    ------------       ------------
  Total shareholder's equity .................................................................         4,818,255          5,161,890
                                                                                                    ------------       ------------
  Total liabilities and shareholder's equity .................................................      $ 78,359,185       $ 75,916,586
                                                                                                    ============       ============
</TABLE>

               See Notes to Consolidated Financial Statements.


                                      1
<PAGE>

                          IDS LIFE INSURANCE COMPANY

                CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                                   JUNE 30,                         JUNE 30,
                                                                          --------------------------      --------------------------
                                                                              2006           2005            2006             2005
                                                                          ----------      ----------      ----------      ----------
<S>                                                                       <C>             <C>             <C>             <C>
REVENUES
   Premiums:
     Traditional life insurance ....................................      $   18,162      $   19,267      $   36,326      $   36,757
     Disability income and long-term care insurance ................          77,567          72,776         151,910         144,119
                                                                          ----------      ----------      ----------      ----------
         Total premiums ............................................          95,729          92,043         188,236         180,876

   Net investment income ...........................................         416,180         422,922         860,655         881,710
   Contractholder and policyholder charges .........................         173,425         142,757         325,833         285,814
   Mortality and expense risk and other fees .......................         153,849         108,390         300,121         223,168
   Net realized investment gains ...................................           4,976          37,645          10,815          37,839
                                                                          ----------      ----------      ----------      ----------

         Total revenues ............................................         844,159         803,757       1,685,660       1,609,407
                                                                          ----------      ----------      ----------      ----------

BENEFITS AND EXPENSES
   Death and other benefits:
     Traditional life insurance ....................................           7,079           8,511          12,497          20,580
     Investment contracts and universal life-type insurance ........          69,786          66,437         127,109         118,724
     Disability income and long-term care insurance ................          19,847          19,022          40,595          36,199
   Increase in liabilities for future policy benefits:
     Traditional life insurance ....................................           2,911           1,472           2,692           2,410
     Disability income and long-term care insurance ................          31,278          29,969          73,449          59,566
   Interest credited to account values .............................         264,626         280,359         533,867         553,621
   Amortization of deferred acquisition costs ......................         104,507          98,193         209,792         197,275
   Separation costs ................................................          30,785          25,772          55,392          25,772
   Other insurance and operating expenses ..........................         159,780         148,171         316,634         285,695
                                                                          ----------      ----------      ----------      ----------

         Total benefits and expenses ...............................         690,599         677,906       1,372,027       1,299,842
                                                                          ----------      ----------      ----------      ----------

Income before income tax provision .................................         153,560         125,851         313,633         309,565
Income tax provision ...............................................          44,263          34,387          92,437          92,560
                                                                          ----------      ----------      ----------      ----------

Net income .........................................................      $  109,297      $   91,464      $  221,196      $  217,005
                                                                          ==========      ==========      ==========      ==========
</TABLE>

               See Notes to Consolidated Financial Statements.


                                      2
<PAGE>

                          IDS LIFE INSURANCE COMPANY

              CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                                            SIX MONTHS ENDED
                                                                                                                 JUNE 30,
                                                                                                    -------------------------------
                                                                                                        2006                2005
                                                                                                    -----------         -----------
<S>                                                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................................................................        $   221,196         $   217,005
Adjustments to reconcile net income to net cash provided by operating activities:
  Amortization of deferred acquisition costs ...............................................            209,792             197,275
  Amortization of deferred sales inducement costs ..........................................             23,951              20,206
  Capitalization of deferred acquisition costs .............................................           (341,599)           (303,430)
  Capitalization of deferred sales inducement costs ........................................            (60,732)            (46,064)
  Premium and discount amortization on Available-for-Sale and other securities .............             37,599              46,370
  Deferred income taxes ....................................................................             46,612              39,900
  Policyholder and contractholder charges, non-cash ........................................           (109,338)           (115,827)
  Net realized investment gains ............................................................            (10,815)            (37,839)
  Net realized gain on trading securities and equity method investments in hedge funds .....            (28,531)             (4,962)
Change in operating assets and liabilities:
  Trading securities and equity method investments in hedge funds, net .....................            182,057             116,791
  Future policy benefits for traditional life, disability income and long-term care
     insurance .............................................................................            140,640             119,236
  Policy claims and other policyholders' funds .............................................             11,906               9,771
  Policy loans, excluding universal life-type insurance:
     Repayment .............................................................................             17,553              18,265
     Issuance ..............................................................................            (19,416)            (18,500)
  Reinsurance recoverables .................................................................            (60,220)            (71,548)
  Other accounts receivable ................................................................              8,380              (4,999)
  Accrued investment income ................................................................              3,254              13,021
  Other assets and liabilities, net ........................................................            (91,862)             47,587
                                                                                                    -----------         -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ..................................................            180,427             242,258
                                                                                                    -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-Sale securities:
  Proceeds from sales ......................................................................            926,510           1,907,590
  Maturities, sinking fund payments and calls ..............................................          1,081,838             887,324
  Purchases ................................................................................         (1,245,802)         (2,458,636)
Other investments, excluding policy loans:
  Proceeds from sales, maturities, sinking fund payments and calls .........................            243,879             308,521
  Purchases ................................................................................           (211,554)           (227,876)
Change in amounts due to and from brokers, net .............................................            166,967              47,033
Change in restricted cash ..................................................................                 --             327,511
                                                                                                    -----------         -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES ..................................................            961,838             791,467
                                                                                                    -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Activity related to investment contracts and universal life-type insurance:
  Considerations received ..................................................................            651,682             883,552
  Interest credited to account values ......................................................            533,867             553,621
  Surrenders and other benefits ............................................................         (2,397,847)         (1,578,649)
Universal life-type insurance policy loans:
  Repayment ................................................................................             47,866              46,477
  Issuance .................................................................................            (63,250)            (50,771)
Cash dividend to Ameriprise Financial, Inc. ................................................           (100,000)                 --
                                                                                                    -----------         -----------
NET CASH USED IN FINANCING ACTIVITIES ......................................................         (1,327,682)           (145,770)
                                                                                                    -----------         -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......................................           (185,417)            887,955
Cash and cash equivalents at beginning of period ...........................................            233,589             131,427
                                                                                                    -----------         -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................................        $    48,172         $ 1,019,382
                                                                                                    ===========         ===========

Supplemental Disclosures:
  Income taxes paid, net ...................................................................        $    85,559         $    99,798
  Interest paid on borrowings ..............................................................        $       589         $        63
</TABLE>

               See Notes to Consolidated Financial Statements.


                                      3
<PAGE>

                          IDS LIFE INSURANCE COMPANY

         CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (UNAUDITED)
                   SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                                                  ADDITIONAL                           OTHER
                                                   COMMON           PAID-IN          RETAINED      COMPREHENSIVE
                                                   SHARES           CAPITAL          EARNINGS       INCOME (LOSS)         TOTAL
                                                 -----------      -----------      -----------     --------------      -----------
<S>                                              <C>              <C>              <C>               <C>               <C>
BALANCES AT DECEMBER 31, 2004 .............      $     3,000      $ 1,370,388      $ 3,190,474       $   341,693       $ 4,905,555

Comprehensive income:
   Net income .............................                                            217,005                             217,005
   Unrealized holding losses on
     securities, net ......................                                                              (18,656)          (18,656)
   Unrealized derivative losses, net ......                                                               (8,008)           (8,008)
                                                                                                                       -----------
Total comprehensive income ................                                                                                190,341
                                                 -----------      -----------      -----------       -----------       -----------

BALANCES AT JUNE 30, 2005 .................      $     3,000      $ 1,370,388      $ 3,407,479       $   315,029       $ 5,095,896
                                                 ===========      ===========      ===========       ===========       ===========

BALANCES AT DECEMBER 31, 2005 .............      $     3,000      $ 2,020,388      $ 3,269,206       $  (130,704)      $ 5,161,890

Comprehensive loss:
   Net income .............................                                            221,196                             221,196
   Unrealized holding losses on
     securities, net ......................                                                             (468,102)         (468,102)
   Unrealized derivative gains, net .......                                                                3,271             3,271
                                                                                                                       -----------
Total comprehensive loss ..................                                                                               (243,635)
Cash dividend to Ameriprise Financial, Inc.                                           (100,000)                           (100,000)
                                                 -----------      -----------      -----------       -----------       -----------

BALANCES AT JUNE 30, 2006 .................      $     3,000      $ 2,020,388      $ 3,390,402       $  (595,535)      $ 4,818,255
                                                 ===========      ===========      ===========       ===========       ===========
</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 include the accounts
      of IDS Life Insurance Company and companies in which it directly or
      indirectly has a controlling financial interest. All material
      intercompany transactions and balances between or among IDS Life
      Insurance Company and its subsidiaries and affiliates have been
      eliminated in consolidation. IDS Life Insurance Company is a
      wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
      Financial"). IDS Life Insurance Company is a stock life insurance
      company with four wholly-owned operating subsidiaries: IDS Life
      Insurance Company of New York, American Partners Life Insurance
      Company, American Enterprise Life Insurance Company and American
      Centurion Life Assurance Company. IDS Life Insurance Company also owns
      IDS REO 1, LLC; IDS REO 2, LLC and American Enterprise REO 1, LLC which
      hold real estate investments. IDS Life Insurance Company and its seven
      subsidiaries are referred to collectively in this Form 10-Q as "IDS
      Life".

      The accompanying Consolidated Financial Statements have been prepared
      in accordance with U.S. generally accepted accounting principles
      ("GAAP"). 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. These Consolidated Financial
      Statements and Notes should be read in conjunction with the
      Consolidated Financial Statements and Notes in the Annual Report on
      Form 10-K of IDS Life for the year ended December 31, 2005, filed with
      the Securities and Exchange Commission ("SEC") on March 10, 2006.

      Certain reclassifications of prior period amounts have been made to
      conform to the current presentation.

2.    RECENT ACCOUNTING PRONOUNCEMENTS

      In June 2006, the Financial Accounting Standards Board ("FASB") issued
      FASB Interpretation No. 48, "Accounting for Uncertainty in Income
      Taxes - an interpretation of FASB Statement 109" ("FIN 48"). FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in
      accordance with FASB Statement No. 109, "Accounting for Income Taxes."
      FIN 48 prescribes a two-step process to recognize and measure a tax
      position taken or expected to be taken in a tax return. The first step
      is to determine whether a tax position has met the more-likely-than
      -not recognition threshold and the second step is to measure a tax
      position that meets the threshold to determine the amount of benefit
      to recognize. FIN 48 also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN 48 is effective for fiscal years
      beginning after December 15, 2006. IDS Life is currently evaluating
      the impact of FIN 48 on IDS Life's consolidated financial condition
      and results of operations.

      In February 2006, the FASB issued Statement of Financial Accounting
      Standards ("SFAS") No. 155, "Accounting for Certain Hybrid Financial
      Instruments-an amendment of FASB Statements No. 133 and 140." SFAS No.
      155 improves financial reporting by eliminating the exemption from
      applying SFAS No. 133 to interests in securitized financial assets so
      that similar instruments are accounted for similarly regardless of the
      form of the instruments. It also improves financial reporting by
      allowing a preparer to elect fair value measurement at acquisition, at
      issuance, or when a previously recognized financial instrument is
      subject to a remeasurement (new basis) event, on an
      instrument-by-instrument basis, in cases in which a derivative would
      otherwise have to be bifurcated. SFAS No. 155 is effective for all
      financial instruments acquired or issued after the beginning of an
      entity's first fiscal year that begins after September 15, 2006. IDS
      Life is currently evaluating the impact of SFAS No. 155 on IDS Life's
      consolidated financial condition and results of operations.


                                      5
<PAGE>

                          IDS LIFE INSURANCE COMPANY

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2.    RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

      In September 2005, the American Institute of Certified Public
      Accountants issued Statement of Position 05-1, "Accounting by Insurance
      Enterprises for Deferred Acquisition Costs in Connection With
      Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"). SOP
      05-1 provides guidance on accounting by insurance enterprises for
      deferred acquisition costs on internal replacements of insurance and
      investment contracts other than those specifically described in SFAS
      No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
      Long-Duration Contracts and for Realized Gains and Losses from the Sale
      of Investments." SOP 05-1 is effective for internal replacements
      occurring in fiscal years beginning after December 15, 2006, with
      earlier adoption encouraged. IDS Life is currently evaluating the
      impact of SOP 05-1 on IDS Life's consolidated financial condition and
      results of operations.

3.    SEPARATION OF AMERIPRISE FINANCIAL, INC.

      Prior to August 1, 2005, Ameriprise Financial was referred to as
      American Express Financial Corporation. On February 1, 2005, the
      American Express Company ("American Express") Board of Directors
      announced its intention to pursue the disposition of 100% of its
      shareholdings in what is now Ameriprise Financial ("the Separation")
      through a tax-free distribution to American Express shareholders.
      Effective as of the close of business on September 30, 2005, American
      Express completed the Separation and distribution of common shares to
      American Express shareholders ("the Distribution"). In connection with
      the Distribution, Ameriprise Financial entered into certain agreements
      with American Express to effect the separation of its business and to
      define the responsibility for obligations arising before and after the
      date of the Distribution, including, among others, obligations relating
      to transition services, taxes, and employees. IDS Life was allocated
      certain expenses incurred as a result of Ameriprise Financial becoming
      an independent company. Cumulatively, the expenses allocated to IDS
      Life are significant to IDS Life. IDS Life received a capital
      contribution of $650 million from Ameriprise Financial during the third
      quarter of 2005 to support its financial strength ratings and to cover
      separation costs.

      During 2005, Ameriprise Financial developed an allocation policy for
      separation costs resulting in the allocation of certain costs to IDS
      Life that it considered to be a reasonable reflection of separation
      costs benefiting IDS Life. Separation costs incurred during the first
      half of 2006 primarily related to marketing and rebranding and
      technology costs, while separation costs in 2005 were primarily
      comprised of marketing and rebranding, technology costs and advisor and
      other retention programs. Net income includes separation costs of $30.8
      million and $25.8 million for the three months ended June 30, 2006 and
      2005, respectively, and $55.4 million and $25.8 million for the six
      months ended June 30, 2006 and 2005, respectively.


                                      6
<PAGE>

4.    INVESTMENTS

      The following is a summary of Available-for-Sale securities by type for
      the periods indicated:

<TABLE>
<CAPTION>
                                                                                  GROSS            GROSS
                                                                                UNREALIZED       UNREALIZED
                                                               AMORTIZED        INVESTMENT       INVESTMENT           FAIR
      JUNE 30, 2006                                               COST             GAINS            LOSSES            VALUE
                                                               -----------      -----------      -----------       -----------
                                                                                      (IN THOUSANDS)
<S>                                                            <C>              <C>              <C>               <C>
      Fixed maturities:
      Corporate debt securities .........................      $12,842,265      $    80,108      $  (515,246)      $12,407,127
      Mortgage and other asset-backed securities ........       10,335,156           17,341         (363,004)        9,989,493
      Foreign corporate bonds and obligations ...........        3,257,576           30,400         (132,558)        3,155,418
      U.S. government and agencies obligations ..........          296,227           10,248           (9,616)          296,859
      State and municipal obligations ...................          149,165            1,553           (6,951)          143,767
      Foreign government bonds and obligations ..........          117,773           10,524             (338)          127,959
      Structured investments (a) ........................            2,395               --               --             2,395
                                                               -----------      -----------      -----------       -----------
      Total fixed maturities ............................       27,000,557          150,174       (1,027,713)       26,123,018
      Preferred and common stocks .......................           29,965                7             (399)           29,573
                                                               -----------      -----------      -----------       -----------
      Total .............................................      $27,030,522      $   150,181      $(1,028,112)      $26,152,591
                                                               ===========      ===========      ===========       ===========
</TABLE>

      (a)   Includes unconsolidated collateralized debt obligations.

<TABLE>
<CAPTION>
                                                                                  GROSS            GROSS
                                                                                UNREALIZED       UNREALIZED
                                                               AMORTIZED        INVESTMENT       INVESTMENT           FAIR
      DECEMBER 31, 2005                                           COST             GAINS            LOSSES            VALUE
                                                               -----------      -----------      -----------       -----------
                                                                                      (IN THOUSANDS)
<S>                                                            <C>              <C>              <C>               <C>
      Fixed maturities:
      Corporate debt securities .........................      $13,318,636      $   208,577      $  (198,774)      $13,328,439
      Mortgage and other asset-backed securities ........       10,804,984           45,531         (158,784)       10,691,731
      Foreign corporate bonds and obligations ...........        3,148,534           67,097          (54,721)        3,160,910
      U.S. government and agencies obligations ..........          300,337           16,207           (5,282)          311,262
      State and municipal obligations ...................          114,165            2,756           (3,262)          113,659
      Foreign government bonds and obligations ..........          127,912           16,922             (114)          144,720
      Structured investments (a) ........................            2,453               --               --             2,453
                                                               -----------      -----------      -----------       -----------
      Total  fixed maturities ...........................       27,817,021          357,090         (420,937)       27,753,174
      Preferred and common stocks .......................               13                8               --                21
                                                               -----------      -----------      -----------       -----------
      Total .............................................      $27,817,034      $   357,098      $  (420,937)      $27,753,195
                                                               ===========      ===========      ===========       ===========
</TABLE>

      (a)   Includes unconsolidated collateralized debt obligations.

      The majority of the gross unrealized investment losses related to
      corporate debt securities and substantially all of the gross unrealized
      investment losses related to mortgage and other asset-backed securities
      was attributable to changes in interest rates. A portion of the gross
      unrealized investment losses, particularly related to corporate debt
      securities, was also attributable to credit spreads and specific issuer
      credit events.

      Gross realized investment gains and losses on Available-for-Sale
      securities and other-than-temporary impairments on
      Available-for-Sale securities included in net realized investment gains
      were as follows:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                         JUNE 30,                           JUNE 30,
                                                               ----------------------------      ----------------------------
                                                                   2006             2005             2006             2005
                                                               -----------      -----------      -----------      -----------
                                                                                      (IN THOUSANDS)
<S>                                                            <C>              <C>              <C>              <C>
      Gross realized investment gains ....................     $     9,440      $    63,529      $    19,977      $    72,363
      Gross realized investment losses ...................          (4,096)         (24,153)          (9,268)         (32,247)
      Other-than-temporary impairments ...................              --               --               --             (636)
</TABLE>


                                      7
<PAGE>

                          IDS LIFE INSURANCE COMPANY

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5.    LINES OF CREDIT

      Effective June 30, 2006, IDS Life has available a committed line of
      credit with Ameriprise Financial aggregating $200 million. The
      interest rate for any borrowings is established by reference to LIBOR
      plus 28 basis points. There were no amounts outstanding on this line
      of credit at June 30, 2006.

6.    INCOME TAXES

      IDS Life is required to establish a valuation allowance for any portion
      of the deferred tax assets that management believes will not be
      realized. Included in IDS Life's deferred tax assets is a significant
      deferred tax asset relating to capital losses realized for tax return
      purposes and capital losses that have been recognized for financial
      statement purposes but not yet for tax return purposes. Under current
      U.S. federal income tax law, capital losses generally must be used
      against capital gain income within five years of the year in which the
      capital losses are recognized for tax purposes. IDS Life's deferred tax
      assets include $231 million in capital loss carryforwards that expire
      December 31, 2009. Based on analysis of IDS Life's tax position,
      management believes it is more likely than not that the results of
      future operations and implementation of tax planning strategies will
      generate sufficient taxable income to enable IDS Life to utilize all of
      its deferred tax assets. Accordingly, no valuation allowance for
      deferred tax assets was established as of June 30, 2006 and December
      31, 2005.

7.    COMMITMENTS AND CONTINGENCIES

      At June 30, 2006 and December 31, 2005, IDS Life had commitments to
      fund mortgage loans on real estate of $111.7 million and $106.8
      million, respectively.

      The SEC, the National Association of Securities Dealers and several
      state authorities have brought proceedings challenging several mutual
      fund and variable product financial practices, generally including
      suitability, late trading, market timing, compensation and disclosure
      of revenue sharing arrangements. IDS Life has received requests for
      information and has been contacted by regulatory authorities concerning
      its practices and is cooperating fully with these inquiries.

      IDS Life is involved in other proceedings concerning matters arising in
      connection with the conduct of its business activities. 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 adverse
      impact on results of operations in any particular reporting period as
      the proceedings are resolved.


                                      8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Management's Discussion and Analysis ("MD&A") should be read in
conjunction with IDS Life Insurance Company's Consolidated Financial
Statements and related notes presented in Item 1. IDS Life Insurance Company
and its seven subsidiaries are referred to collectively in this Form 10-Q as
"IDS Life". This discussion may contain forward-looking statements that
reflect IDS Life's plans, estimates and beliefs. Actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to these differences include, but are not
limited to, those discussed under "Forward-Looking Statements." IDS Life
believes it is useful to read its MD&A in conjunction with its Annual Report
on Form 10-K for the year ended December 31, 2005, filed with the Securities
and Exchange Commission ("SEC") on March 10, 2006, as well as its current
reports on Form 8-K and other publicly available information.

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

Management's narrative analysis of the results of operations is presented in
lieu of MD&A, pursuant to General Instructions H(2) (a) of Form 10-Q.

OVERVIEW

IDS Life Insurance Company is a stock life insurance company with four
wholly-owned operating subsidiaries: IDS Life Insurance Company of New York,
American Partners Life Insurance Company, American Enterprise Life Insurance
Company and American Centurion Life Assurance Company. IDS Life Insurance
Company is a wholly-owned subsidiary of Ameriprise Financial, Inc.
("Ameriprise Financial").

o     IDS Life Insurance Company is domiciled in Minnesota and holds
      Certificates of Authority in American Samoa, the District of Columbia
      and all states except New York. IDS Life Insurance Company issues
      insurance and annuity products.

o     American Enterprise Life Insurance Company ("American Enterprise Life")
      is a stock life insurance company domiciled in Indiana, which holds
      Certificates of Authority in the District of Columbia and all states
      except New York. American Enterprise Life provides RiverSource branded
      financial products and wholesaling services to support its annuity
      operations. American Enterprise Life issues variable and fixed annuity
      contracts primarily through regional and national financial
      institutions and regional and/or independent broker-dealers, in all
      states except New York. In past years, American Enterprise Life issued
      a nominal number of variable universal life contracts.

o     American Partners Life Insurance Company ("American Partners Life") is
      a stock life insurance company domiciled in Arizona, which holds
      Certificates of Authority in the District of Columbia and all states
      except New York and New Hampshire. American Partners Life markets
      annuity products directly to customers, generally persons holding an
      American Express(R) Card.

o     IDS Life Insurance Company of New York ("IDS Life of New York") is a
      stock life insurance company domiciled in New York, which holds
      Certificates of Authority in New York and North Dakota. IDS Life of New
      York issues insurance and annuity products.

o     American Centurion Life Assurance Company ("American Centurion Life")
      is a stock life insurance company domiciled in New York, which holds
      Certificates of Authority in New York, Alabama and Delaware. American
      Centurion Life issues fixed and variable annuity contracts primarily
      through financial institutions and independent broker-dealers. American
      Centurion Life also markets annuity products directly, generally to
      persons holding an American Express(R) Card.

IDS Life Insurance Company also owns IDS REO 1, LLC; IDS REO 2, LLC and
American Enterprise REO 1, LLC which hold real estate investments.


                                      9
<PAGE>

Prior to August 1, 2005, Ameriprise Financial was referred to as American
Express Financial Corporation. On February 1, 2005, American Express Company
("American Express") announced its intention to pursue the disposition of
100% of its shareholdings in what is now Ameriprise Financial ("the
Separation") through a tax-free distribution to American Express
shareholders. Effective as of the close of business on September 30, 2005,
American Express completed the Separation and distribution of common shares
to American Express shareholders ("the Distribution"). In connection with the
Distribution, Ameriprise Financial entered into certain agreements with
American Express to effect the separation of its business and to define the
responsibility for obligations arising before and after the date of the
Distribution, including, among others, obligations relating to transition
services, taxes, and employees. IDS Life was allocated certain expenses
incurred as a result of Ameriprise Financial becoming an independent company.
Cumulatively, the expenses allocated to IDS Life are significant to IDS Life.
The majority of such costs are expected to be incurred by December 31, 2006.
IDS Life received a capital contribution of $650 million from Ameriprise
Financial during the third quarter of 2005 to support its financial strength
ratings and to cover separation costs.

RECENT ACCOUNTING PRONOUNCEMENTS

For information regarding recent accounting pronouncements and their expected
impact on future consolidated financial condition or results of operations,
see Note 2 to the Consolidated Financial Statements.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005

Overview

Net income was $221.2 million for the six months ended June 30, 2006 compared
to $217.0 million for the six months ended June 30, 2005. The increase in net
income primarily reflects increases in mortality and expense risk and other
fees and contractholder and policyholder charges, as well as a decrease in
interest credited, partially offset by lower net realized gain on investments
and net investment income and higher other insurance and operating expense
and separation costs.

Revenues

Premiums for disability income ("DI") and long-term care ("LTC") insurance
increased $7.8 million or 5% reflecting higher DI insurance in force levels.

Net investment income decreased $21.1 million or 2% reflecting a decrease in
both the average yield and in the average level of invested assets, as well
as unfavorable mark-to-market adjustments on derivatives economically
hedging guaranteed minimum withdrawal benefit ("GMWB") provisions. The lower
level of invested assets is primarily a result of declining fixed annuity
account values. The decrease in net investment income also reflects a
reduction in income in 2006 compared to 2005 related to the liquidation of
secured loan trusts. These changes were partially offset by favorable
mark-to-market adjustments on both equity method investments in hedge funds
and derivatives economically hedging equity index annuities ("EIA") and
lower losses related to other derivatives. The impacts from derivatives
economically hedging EIA and GMWB were primarily offset in the interest
credited to account values and death and other benefits for investment
contracts and universal life-type insurance line items, respectively.

Contractholder and policyholder charges increased $40.0 million or 14%
including $17.9 million from recognizing previously deferred cost of
insurance revenues and an increase in the cost of insurance charges on
variable universal life products and charges for variable annuity GMWB
provisions.

Mortality and expense risk and other fees increased $77.0 million or 34%
reflecting higher average values of separate account assets due to increased
inflows and market appreciation.

Net realized investment gains were $10.8 million for the six months ended
June 30, 2006 compared to $37.8 million for the six months ended June 30,
2005. For the six months ended June 30, 2006, $20.5 million of gross realized
investment gains were partially offset by $9.7 million of losses. Included in
these total net investment gains and losses were $20.0 million of gross
realized investment gains, partially offset by $9.3 million of gross realized
investment losses, classified as Available-for-Sale.


                                     10
<PAGE>

For the six months ended June 30, 2005, $72.5 million of gross realized
investment gains were partially offset by $34.7 million of losses and
impairments. Included in these total net investment gains and losses were
$72.4 million of gross realized investment gains partially offset by $32.2
million of gross realized investment losses, as well as $0.6 million of
other-than-temporary impairment losses on investments, classified as
Available-for-Sale. Included in net realized investment gains classified as
Available-for-Sale for the six months ended June 30, 2005 were gross realized
investment gains and losses of $39.2 million and $14.3 million, respectively,
related to the sale of all of IDS Life's retained interest in a collateralized
debt obligation securitization trust.

Benefits and Expenses

Death and other benefits for traditional life insurance decreased $8.1
million or 39% reflecting lower claims volume.

Death and other benefits for investment contracts and universal life-type
insurance increased $8.4 million or 7% reflecting a net increase in guaranteed
minimum death benefit ("GMDB") costs of $15.5 million, $13.8 million of
additional claims expense, including $6.9 million in connection with the
recognition of the previously deferred cost of insurance revenues discussed
previously, higher sales inducement costs of $5.3 million and other increases
in costs and benefits of $10.4 million, partially offset by a net decrease in
GMWB costs of $36.6 million.

Benefits for DI and LTC insurance increased $4.4 million or 12% reflecting
unfavorable claims experience relative to the same period a year ago.

Increase in liabilities for future policy benefits for DI and LTC insurance
increased $13.9 million or 23% including a $5.1 million adjustment to the
liabilities for incurred but not reported claims.

Interest credited to account values decreased by $19.8 million or 4%
primarily due to lower interest crediting rates and lower average
accumulation values of annuities, partially offset by the effect of
appreciation on equity indexed annuities linked to the S&P 500 Index in 2006
versus depreciation in the same period a year ago.

Amortization of deferred acquisition costs ("DAC") increased to $209.8 million
for the six months ended June 30, 2006 from $197.3 million for the six months
ended June 30, 2005. Continued strong growth in variable annuity products and
the associated DAC balance resulted in increased DAC amortization. DAC
amortization also increased as a result of an adjustment of $4.7 million to
the unearned commission balance. Partially offsetting these increases, in
connection with recognizing the deferred cost of insurance revenues, the
related claim liabilities and other outstanding claim liabilities were
included in the calculation of estimated gross profits for variable universal
life/universal life resulting in a $5.1 million reduction to DAC amortization.

During the six months ended June 30, 2006 and 2005, IDS Life incurred $55.4
million and $25.8 million, respectively, in separation costs. Separation
costs incurred during the first half of 2006 primarily related to marketing
and rebranding and technology costs, while separation costs in 2005 were
primarily comprised of marketing and rebranding, technology costs and advisor
and other retention programs.

Other insurance and operating expenses increased $30.9 million or 11%
primarily reflecting increased business reinvestment initiatives,
compensation costs and corporate overhead expenses, as well as increased
non-deferrable distribution costs, due in part to higher variable annuity
sales.

Income Taxes

IDS Life's effective tax rate was 29% for the six months ended June 30, 2006
compared to 30% for the six months ended June 30, 2005. The lower effective
tax rate primarily reflects higher tax-advantaged items compared to pretax
income in the six months of 2006 compared to the same period a year ago.


                                     11
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The liquidity requirements of IDS Life are generally met by funds provided
by investment income, maturities and periodic repayments of investments,
deposits, premiums and proceeds from sales of investments, as well as
capital contributions from Ameriprise Financial. The primary uses of funds
are surrenders and other benefits, commissions, other product-related
acquisition and sales inducement costs, operating expenses, policy loans,
dividends to Ameriprise Financial and investment purchases. IDS Life
routinely reviews its sources and uses of funds in order to meet its ongoing
obligations. In connection with the separation, IDS Life received a capital
contribution of $650 million from Ameriprise Financial during the third
quarter of 2005 to support its financial strength ratings and to cover
separation costs. On May 15, 2006, IDS Life paid an extraordinary dividend
of $100 million to Ameriprise Financial. Prior to the payment of this
dividend, IDS Life made the required advance notice to the Minnesota
Department of Commerce, its primary state regulator, and received a response
from them stating that they did not object to the payment of this dividend.
IDS Life of New York and American Centurion Life paid dividends to IDS Life
Insurance Company on June 19, 2006 of $23 million and $2 million, respectively.

Effective June 30, 2006, IDS Life has available a committed line of credit
with Ameriprise Financial aggregating $200 million. At June 30, 2006 there
were no amounts outstanding on this line of credit. At June 30, 2006 and
December 31, 2005, IDS Life had outstanding reverse repurchase agreements
totaling $106.4 million and $25.0 million, respectively. Both the line of
credit and reverse repurchase agreements are used strictly as short-term
sources of funds.

IDS Life Insurance Company and its wholly-owned life insurance subsidiaries
are subject to regulatory capital requirements. Actual capital, determined on
a statutory basis, and regulatory capital requirements, based on the most
recent statutory risk-based capital filings for each of the life insurance
entities, are as follows:

<TABLE>
<CAPTION>
                                                                                                 REGULATORY CAPITAL
                                                              ACTUAL CAPITAL AS OF (a)               REQUIREMENT
                                                        -----------------------------------      ------------------
                                                           JUNE 30,            DECEMBER 31,          DECEMBER 31,
                                                             2006                  2005                 2005
                                                        --------------        -------------      ------------------
                                                                             (IN THOUSANDS)
<S>                                                     <C>                   <C>                   <C>
IDS Life Insurance Company..........................    $    3,382,370        $  3,270,285          $    750,975
American Enterprise Life Insurance Company..........           565,009             583,303               125,285
IDS Life Insurance Company of New York..............           239,052             246,001                39,880
American Partners Life Insurance Company............            73,199              67,884                10,906
American Centurion Life Assurance Company...........            65,167              61,748                12,654
</TABLE>

(a)   Actual capital, as defined by the National Association of Insurance
      Commissioners for purposes of meeting regulatory capital requirements,
      includes statutory capital and surplus, plus certain statutory
      valuation reserves.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements, which are subject to risks
and uncertainties. The words "believe," "expect," "anticipate," "optimistic,"
"intend," "plan," "aim," "will," "may," "should," "could," "would," "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 update or revise any forward-looking statements.
Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the following:
the success, timeliness and financial impact (including the amount of
intercompany costs allocated to IDS Life, cost savings and other benefits
including increased revenues), both in the short-term and over time, of
reengineering initiatives being implemented or considered by Ameriprise
Financial that could impact IDS Life, including cost management, structural
and strategic measures such as vendor, process, facilities and operations
consolidation and outsourcing (including, among others, technologies
operations); the ability to control and manage operating infrastructure,
advertising and promotion expenses as business expands or changes; the
ability to attract and retain high-quality personnel; a downturn in IDS
Life's businesses and/or negative


                                     12
<PAGE>

changes in IDS Life's credit or financial strength ratings, which could
result in decreased liquidity, negative impact on marketing and sale of
products, and higher borrowing costs; IDS Life's ability to improve
investment performance and reduce outflows of invested funds; IDS Life's
ability to develop and introduce new and attractive products to clients in a
timely manner and effectively manage the economics in selling a growing
volume of non-proprietary mutual funds and other retail financial products to
clients; fluctuation in the equity and fixed income markets, which can affect
the amount and types of investment products sold by IDS Life, and other fees
received based on the value of those assets; IDS Life's ability to recover
DAC, as well as the timing of such DAC amortization, in connection with the
sale of annuity and insurance products; the level of GMDB or living benefits
paid to clients; changes in assumptions relating to DAC, which could impact
the amount of DAC amortization; IDS Life's ability to avoid deterioration in
its high-yield portfolio in order to mitigate losses in its investment
portfolio; fluctuations in interest rates, which impact IDS Life's borrowing
costs, return on lending products and spreads in the insurance and annuity
products; accuracy of estimates for the fair value of the assets in IDS
Life's investment portfolio and, in particular, those investments that are
not readily marketable; the potential negative effect on IDS Life's
businesses and infrastructure, including information technology, terrorist
attacks, disasters or other catastrophic events in the future; changes in
laws or government regulations, including changes in tax laws or regulations
that could result in the elimination of certain tax benefits; outcomes and
costs associated with litigation and compliance and regulatory matters;
successfully cross-selling insurance and annuity products and services to
Ameriprise Financial's customer base; lower than anticipated spreads in the
insurance and annuity business; the type and the value of certain benefit
features on variable annuity contracts; the effect of assessments and other
surcharges for guaranty funds; the response of reinsurance companies under
reinsurance contracts; the impact of the separation of Ameriprise Financial
from American Express; the impact of reinsurance rates and the availability
and adequacy of reinsurance; and competitive pressures in IDS Life's
business. A further description of these and other risks and uncertainties
can be found under "Item 1A - Risk Factors" and elsewhere in IDS Life's
Annual Report on Form 10-K for the year ended December 31, 2005, filed on
March 10, 2006 and its other reports filed with the Securities and Exchange
Commission.


                                     13
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

IDS Life maintains disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended
("the Exchange Act")) designed to provide reasonable assurance that the
information required to be reported in the Exchange Act filings is recorded,
processed, summarized and reported within the time periods specified and
pursuant to the regulations of the Securities and Exchange Commission,
including controls and procedures designed to ensure that this information is
accumulated and communicated to IDS Life's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding the required disclosure.

IDS Life's management, with the participation of its Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of IDS Life's
disclosure controls and procedures as of the end of the period covered by
this report. Based upon that evaluation, IDS Life's Chief Executive Officer
and Chief Financial Officer have concluded that IDS Life's disclosure
controls and procedures were effective at a reasonable level of assurance as
of June 30, 2006.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no 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.

PART II . OTHER INFORMATION

Item 1.     Legal Proceedings

            The information set forth in Note 7 to the Consolidated Financial
            Statements in Part I, Item 1 is incorporated herein by reference.

Item 1A.    Risk Factors

            There have been no material changes in the risk factors provided
            in Part I, Item 1A of IDS Life's Annual Report on Form 10-K for
            the year ended December 31, 2005 filed with the SEC on March 10,
            2006.

Item 6.     Exhibits

            The list of exhibits required to be filed as exhibits to this
            report are listed on page E-1 hereof, under "Exhibit Index,"
            which is incorporated herein by reference.


                                     14
<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: August 9, 2006                By  /s/ Mark E. Schwarzmann
                                        ------------------------------------
                                        Mark E. Schwarzmann
                                        Director, Chairman of the Board and
                                        Chief Executive Officer


Date: August 9, 2006                By  /s/ Brian J. McGrane
                                        ------------------------------------
                                        Brian J. McGrane
                                        Executive Vice President and
                                        Chief Financial Officer


                                     15
<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 Brian J. McGrane pursuant to Rule 13a-14(a)
              promulgated under the Securities Exchange Act of 1934, as
              amended.

*  32.1       Certification of Mark E. Schwarzmann and Brian J. McGrane
              pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
              Section 906 of the Sarbanes-Oxley Act of 2002.

*     Filed electronically herewith.


                                     E-1