ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II, N-4 EL, 1996-05-17

ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II
N-4 EL, 1996-05-17

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<PAGE> 1

File Nos. 33-______, 811-______

As filed with the Securities and Exchange Commission on May 16, 1996

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

Registration Statement Under the Securities Act of 1933 /X/
Pre-Effective Amendment No. ____ / /
Post-Effective Amendment No. ____ / /

and/or

Registration Statement Under the Investment Company Act of 1940 /X/
Amendment No. ____ / /

(Check appropriate box or boxes.)

------------------------------------------------

ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II
(Exact Name of Registrant)

ACACIA NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)

51 Louisiana Avenue, N.W.
Washington, D.C. 20001
(Address of Depositor's Principal Executive Office)

Depositor's Telephone Number: (800) 369-9407

Ellen Jane Abromson, Esquire
Acacia National Life Insurance Company
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
(Name and Address of Agent for Service)

Copy to:
Frederick R. Bellamy, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D. C. 20004-2404

Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement.

------------------------------------------------

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
declares that an indefinite amount of securities is being registered under the
Securities Act of 1933. The amount of the filing fee is $500.

------------------------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
<PAGE> 2
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933

Showing Location of Information Required by Form N-4
in Part A (Prospectus) and Part B (Statement of
Additional Information) of the Registration Statement

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<TABLE>
<CAPTION>
Caption(s) in the Statement
---------------------------
Item of Form N-4 Caption(s) in the Prospectus of Additional Information
---------------- ---------------------------- -------------------------
PART A: INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <C> <C>
1. Cover Page Cover page

2. Definitions Glossary of Defined Terms

3. Synopsis Summary

4. Condensed Financial N/A
Information

5. General Description of ANLIC and the Variable Account;
Registrant, Depositor and The Portfolios; Voting Rights;
Portfolio Companies Administration

6. Deductions Summary; Charges and Deductions; Surrender Charge Calculation
The Portfolios

7. General Description of Summary; The Policy; Annuity General Provisions; Fixed Account
Variable Annuity Contracts Payments; Voting Rights;
Additional Information

8. Annuity Period Annuity Payments

9. Death Benefit The Policy -- Death Benefit

10. Purchases and Contract Value ANLIC and the Variable Account;
The Policy

11. Redemptions The Policy -- Surrender and
Partial Withdrawals; The Policy
-- Free Look Period

12. Taxes Federal Tax Matters Federal Tax Matters

13. Legal Proceedings Legal Proceedings

14. Table of Contents of the Statement of Additional Table of Contents
Statement of Additional Information
Information
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Caption(s) in the Statement
---------------------------
Item of Form N-4 Caption(s) in the Prospectus of Additional Information
---------------- ---------------------------- -------------------------

PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<S> <C> <C> <C>
15. Cover Page Cover Page

16. Table of Contents Table of Contents

17. General Information and N/A
History

18. Services Administration Experts; Distribution of the
Policies; Records and Reports

19. Purchase of Securities Being Summary; The Policy General Provisions; Distribution
Offered of the Policies

20. Underwriters ANLIC and the Variable Account Distribution of the Policies

21. Calculation of Performance Performance Data Performance Data Calculations;
Data Performance Figures

22. Annuity Payments Annuity Payments General Provisions

23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
PROSPECTUS

- ------------------------------------------------------------------------------

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY
ISSUED BY
ACACIA NATIONAL LIFE INSURANCE COMPANY

51 LOUISIANA AVENUE, N.W., WASHINGTON, DC 20001
TELEPHONE: (202) 628-4506

- ------------------------------------------------------------------------------

The flexible premium deferred variable annuity policy (the "Policy")
offered by Acacia National Life Insurance Company ("ANLIC") and described in
this prospectus is designed to provide you, as a policy owner, with maximum
flexibility in attaining your financial goals, together with the opportunity to
allocate net premium payments ("Premium Payments") among investment
alternatives with different investment objectives. The Policy can be purchased
with a minimum Premium Payment of $300 the first year. Additional Premium
Payments must be at least $30. We will not issue a Policy if you are over age
85, or accept additional Premium Payments after age 75.

Net Premium Payments are allocated to one of fourteen sub-accounts (each,
a "Sub-account") of Acacia National Variable Annuity Separate Account II (the
"Variable Account") or ANLIC's general account (the "Fixed Account"), or to any
combination of them. You can freely transfer values among the Sub-accounts,
and transfer values between a Sub-account and the Fixed Account subject to
certain restrictions. (See "The Policy - Transfers.")

Each Sub-account will invest solely in a series (each, a "Portfolio") of
various mutual funds ("Funds"). The accompanying prospectuses for the Funds
describe the investment objectives and the attendant risks of the Portfolios.
The Portfolios currently available under the Policy are:

ALGER AMERICAN GROWTH STRONG ADVANTAGE FUND II
ALGER AMERICAN MIDCAP GROWTH STRONG ASSET ALLOCATION FUND II
ALGER AMERICAN SMALL CAPITALIZATION STRONG INTERNATIONAL STOCK FUND II
DREYFUS STOCK INDEX FUND STRONG DISCOVERY FUND II

ACACIA CAPITAL CORPORATION CALVERT RESPONSIBLY INVESTED MONEY MARKET
ACACIA CAPITAL CORPORATION CALVERT RESPONSIBLY INVESTED BALANCED
ACACIA CAPITAL CORPORATION CALVERT RESPONSIBLY INVESTED STRATEGIC GROWTH
NEUBERGER & BERMAN ADVISORS MANAGEMENT TRUST LIMITED MATURITY BOND
NEUBERGER & BERMAN ADVISORS MANAGEMENT TRUST GROWTH
VAN ECK WORLDWIDE INSURANCE TRUST GOLD AND NATURAL RESOURCES FUND

The value of your investment will reflect the investment experience of
the Portfolios you select, as well as the frequency and amount of premium
payments you make, any partial surrenders, and the charges assessed in
connection with the Policy. YOU BEAR THE ENTIRE INVESTMENT RISK FOR ALL
AMOUNTS ALLOCATED TO THE VARIABLE ACCOUNT; NO MINIMUM POLICY ACCOUNT VALUE IS
GUARANTEED. Your Policy Account Value will also reflect the deduction of
certain fees and charges. If you make a partial or full surrender within five
years of making a Premium Payment, a surrender charge may be imposed on that
Premium Payment. (See "Charges and Deductions" for a description of these and
other charges imposed under the Policy.)

This Prospectus sets forth the information that a prospective investor
should consider before investing in a Policy. A Statement of Additional
Information about the Policy and the Variable Account, which has the same date
as this Prospectus, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The Statement of Additional
Information is available at no cost to any person requesting a copy by writing
ANLIC at its Service Office, P.O. Box 79574, Baltimore, Maryland 21279-0574, or
by calling 1-800-369-9407. The table of contents of the Statement of
Additional Information is included at the end of this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 5
THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION, AND
THE POLICY IS NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER
AGENCY, AND INVOLVES INVESTMENT RISK, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER,
SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON.

THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR THE PORTFOLIOS.

This Prospectus and the Statement of Additional Information generally describe
only the Policies and the Variable Account, except
when the Fixed Account is specifically mentioned.

PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.

THE DATE OF THIS PROSPECTUS IS ____________, 1996

ii
<PAGE> 6
TABLE OF CONTENTS

GLOSSARY OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Policy Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Free Look Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Charges Associated with the Policy . . . . . . . . . . . . . . . . . . . . . . . 3
Partial Withdrawals and Surrender . . . . . . . . . . . . . . . . . . . . . . . . 4
Federal Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary of Fees and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ANLIC AND THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Acacia National Life Insurance Company . . . . . . . . . . . . . . . . . . . . . 8
The Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

THE PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Alger American Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Acacia Capital Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Neuberger & Berman Advisers Management Trust . . . . . . . . . . . . . . . . . . 11
Strong Variable Insurance Funds, Inc. . . . . . . . . . . . . . . . . . . . . . . 12
Van Eck Worldwide Insurance Trust . . . . . . . . . . . . . . . . . . . . . . . . 15
Risks Attendant to Investments in Junk Bonds . . . . . . . . . . . . . . . . . . 16
Investment Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Resolving Material Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . 17

THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Issuance of a Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Telephone Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Free Look Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Allocation of Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . . 18
Policy Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Surrender and Partial Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . 19
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Automatic Rebalancing, Dollar Cost Averaging, and Interest Sweep Programs . . . . 21
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Annual Policy Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Administrative Expense Charge . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>

iii
<PAGE> 7
<TABLE>
<S> <C>

Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . . . . . . . 24
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reduction In Charges For Certain Groups . . . . . . . . . . . . . . . . . . . . . 25

ANNUITY PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Election of an Annuity Payment Option . . . . . . . . . . . . . . . . . . . . . . 26
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Available Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Annuity Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Taxation of Annuities in General . . . . . . . . . . . . . . . . . . . . . . . . 27

VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

PUBLISHED RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

POLICY REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

iv
<PAGE> 8
Throughout this Prospectus, the words "us", "we", "our", and "ANLIC"
refer to Acacia National Life Insurance Company, and the words
"you", "your", and "Owner" refer to the policy owner.

GLOSSARY OF DEFINED TERMS

ACCUMULATION PERIOD The period before the Maturity Date and during the
lifetime of the Annuitant.

ACCUMULATION UNIT VALUE An accounting unit of measure used to calculate
the value of your interest in the Sub-accounts.
The initial number of Accumulation Units to be
credited to each Sub-account will be determined by
dividing the net Premium Payments allocated to
each Sub-account by the Accumulation Unit Value
for that Sub-account for that Valuation Period.

AGE Age at last birthday.

ANLIC Acacia National Life Insurance Company.

ANNUITANT The person(s) whose life is used to determine the
duration of Annuity Payments involving life
contingencies. The Annuitant must be a natural
person.

ANNUITY PAYMENT OPTIONS The options that are available for payment of the
Surrender Value of the Policy commencing upon the
Maturity Date.

BENEFICIARY The person(s) or legal entity that you designate
in the Application or thereafter in writing to our
Service Office as the Beneficiary.

DUE PROOF OF DEATH A certified copy of a death certificate, a
certified copy of a decree of a court of competent
jurisdiction as to the finding of death, a written
statement by the attending physician, or any other
proof satisfactory to us.

ELIGIBLE INVESTMENT(S) Those investments available under the Policy.
Current Eligible Investments are shown on the
Specifications Page.

FIXED ACCOUNT The account via which you may allocate or transfer
net Premium Payments to our General Account. An
initial allocation or transfer into the Fixed
Account does not entitle you to share in the
investment experience of the General Account.
Instead, we guarantee that any Policy Account
Value in the Fixed Account will accrue interest at
an annual rate of at least the Guaranteed Interest
Rate.

FREE WITHDRAWAL AMOUNT That portion of any Partial Withdrawal or
Surrender that is not subject to a Surrender
Charge under the terms of the Policy.

FUND A registered, open-end management investment
company (commonly called a "mutual fund"). Each
Sub-account invests exclusively in shares of a
single Portfolio of a Fund.

GENERAL ACCOUNT The assets of ANLIC other than those in the
Variable Account or any other separate account.

v
<PAGE> 9
GUARANTEED INTEREST RATE An interest rate established in good faith by
ANLIC applicable to the General Account for an
Interest Rate Guarantee Period. Your Fixed
Account Value will accrue interest at least at the
Guaranteed Interest Rate. The Guaranteed Interest
Rate is currently 4%, although we may declare
interest at a rate in excess of the Guaranteed
Interest Rate. Any such excess interest rate when
declared will remain in effect at least one year.

INTEREST RATE GUARANTEE A specified period whereby funds allocated to the
PERIOD General Account accumulate interest at a
Guaranteed Interest Rate. Interest rates will
be determined on no less than an annual basis.

INVESTMENT ALLOCATION The percent of each Premium Payment you choose to
allocate to the Sub-Accounts or the Fixed Account.

IRREVOCABLE BENEFICIARY A Beneficiary or Beneficiaries whose interest
cannot be changed without their, his or her
consent or as required by law.

JOINT ANNUITANT A person other than the Annuitant who may be
designated by the Owner and whose life is also
used to determine the duration of Annuity Payments
involving life contingencies. If one of the joint
Annuitants dies prior to the Maturity Date, the
survivor shall become the sole Annuitant.

MATURITY DATE The date upon which Annuity Payments begin. You
may choose a Maturity Date commencing no later
than the first day of the calendar month after the
Annuitant's 90th birthday.

NET ASSET VALUE For each Portfolio, the current price of one share
of that Portfolio. The Net Asset Value is
computed by adding the value of the Portfolio's
investments plus cash and other assets, deducting
liabilities and then dividing the result by the
number of its shares outstanding. The Net Asset
Value of each portfolio is generally calculated as
of the close of business on each day the New York
Stock Exchange is open.

NET PREMIUM PAYMENT The Premium Payment less any applicable tax
charges.

OWNER The person named on the Application as Owner or
the persons named on the Application as Joint
Owners. Any reference to Owner in this Prospectus
or in the Policy will include both Owners, if
there are Joint Owners. The Owner is entitled to
all of the ownership rights under the Policy. The
Owner has the legal right to make all changes in
the policy designations where permitted
specifically by the terms of the Policy. The
Owner is as specified in the Application, unless
changed. "You" and "your" are also used
throughout this Prospectus and the Policy to refer
to the Owner.

POLICY ACCOUNT VALUE The sum of the Variable Account Value and the
Fixed Account Value.

POLICY ANNIVERSARY Each anniversary of the Policy Date.

POLICY DATE The date set forth in the Policy that is used to
determine Policy years and months. Policy
Anniversaries are measured from the Policy Date.

PORTFOLIO A separate investment portfolio of a Fund in which
the Variable Account assets may be invested.

vi
<PAGE> 10
PREMIUM PAYMENT An amount paid to ANLIC in accordance with the
provisions of the Policy.

SERVICE OFFICE The office where Policy administration is done,
whether at ANLIC or at the offices of a third
party administrator, as designated by ANLIC in
writing. The Service Office address is Acacia
National Life Insurance Company, P.O. Box 79574,
Baltimore, Maryland 21279-0574.

SINGLE PREMIUM POLICY Between issue ages 75 and 85, we will accept only
Single Premium Policies. The Premium Payment is
due on the Policy Date. The maximum Premium
Payment that can be paid without prior approval of
ANLIC is $500,000.

SUB-ACCOUNTS The sub-divisions of the Variable Account which
each invest exclusively in shares of a specified
Portfolio or any other investment portfolio with a
specific investment objective that we determine to
be suitable for the Policy's purposes.

SURRENDER VALUE The Policy Account Value as of any Valuation Date,
reduced by applicable Surrender Charges, the
Annual Policy Fee, and any premium or other taxes.

SYSTEMATIC PARTIAL Owners choosing this option will withdraw a level
WITHDRAWALS dollar amount of Policy Account Value on a
periodic basis. Systematic Partial Withdrawals
are subject to the same Surrender Charges as
partial withdrawals, as set forth on the
Specifications Page of the Policy.

VALUATION DATE Each regular business day that ANLIC and the New
York Stock Exchange is open for business,
excluding holidays and any other day in which
there is insufficient trading in the Portfolio
securities to materially affect the value of the
assets in the Variable Account.

VALUATION PERIOD The period between two successive Valuation Dates,
commencing at the close of business of a Valuation
Date and ending at the close of business for the
next succeeding Valuation Date.

VARIABLE ACCOUNT Acacia National Variable Annuity Separate Account
II, a separate investment account that has been
was established by ANLIC to receive and invest the
net Premium Payments paid under the Policy.

VARIABLE ACCOUNT VALUE The sum of the values held in all the Sub-accounts
of the Variable Account.

vii
<PAGE> 11
SUMMARY

This is a brief summary of the Policy provisions and how they relate to
your rights and benefits. Complete details are contained elsewhere in the
Prospectus and should be read carefully in conjunction with this summary
information.

THE POLICY

The Policy is designed to aid individuals in long-term financial planning
and provides for the accumulation of capital on a tax-deferred basis for
retirement or other long-term purposes. The Policy also provides for annuity
payments ("Annuity Payments") to begin at maturity. You may select from a
number of Annuity Payment Options, including a life annuity, joint life
annuity, and life annuity for a guaranteed period. All Annuity Payment Options
are on a fixed basis. (See "Annuity Payments.")

The Policy is issued in consideration of the application and payment of
the initial Premium Payment. Premium Payments of at least $300 must be paid
during the first Policy year. (See "The Policy - Premium Payments.") The
Policy can be purchased for a single Premium Payment. However, additional
Premium Payments of at least $30 may be paid at your option. (See "The Policy
- - Premium Payments.") The Policy can be purchased on a non-qualified tax basis
(a "Nonqualified Policy") or it can be purchased and used in connection with
plans qualifying for favorable Federal income tax treatment (a "Qualified
Policy").

THE VARIABLE ACCOUNT

The Variable Account currently has fourteen Sub-accounts
("Sub-accounts"), each of which invests solely in shares of a portfolio of one
of several open-end, registered investment companies ("Funds"). Currently, the
following fourteen Portfolios are available under the Policy:

Each of these Portfolios has a different investment objective. (See "The
Portfolios.")

You determine the allocation of Premium Payments and Policy Account Value
among the Sub-accounts. Because the Policy Account Value depends on the
investment experience of the Sub-accounts you select, you bear the entire
investment risk under the Policy for all Premium Payments allocated to, and
amounts transferred to, the Variable Account. (See "The Policy - Allocation of
Premium Payments.") Prior to the Maturity Date, you may transfer amounts from
one Sub-account to one or more other Sub-accounts at no cost. In addition, you
may transfer amounts between a Sub-account and the Fixed Account, subject to
certain restrictions. (See "The Policy - Transfers.")
<PAGE> 12
THE FIXED ACCOUNT

The Fixed Account is a part of the general account of ANLIC (the "General
Account"). The General Account consists of all of ANLIC's assets other than
those in any separate account. We guarantee that we will credit interest at a
rate of not less than 4% per year (the "Guaranteed Interest Rate") to amounts
allocated to the Fixed Account. We may credit interest at a rate in excess of
the Guaranteed Interest Rate. Any excess interest credited will be determined
in our sole discretion. You assume the risk that interest credited to the
Fixed Account allocations may not exceed the Guaranteed Interest Rate. The
Fixed Account may not be available in all states. (See "Fixed Account," in the
Statement of Additional Information.)

You determine the allocation of Premium Payments and Policy Account Value
to the Fixed Account. Transfers out of the Fixed Account are subject to
certain limitations. (See "The Policy - Transfers.")

POLICY ACCOUNT VALUE

The Policy Account Value is the total of your Policy's value held in both
the Variable Account and the Fixed Account.

Your Policy's value in the Variable Account is the sum total of all
values held in the Sub-accounts. This value reflects the investment
performance of the Sub-accounts net of Premium Payments paid, transfers, and
partial surrenders. You bear the entire investment risk for amounts allocated
to the Variable Account and consequently there is no guaranteed minimum amount
of value for Premium Payments allocated to the Sub-accounts.

Your Policy's value in the Fixed Account will reflect net Premium
Payments allocated or transferred to it, plus credited interest, less any
amounts transferred or withdrawn (See "Fixed Account," in the Statement of
Additional Information). Interest credited to amounts in the Fixed Account
will be declared by ANLIC in advance and may from year to year in the complete
discretion of ANLIC, but is guaranteed to equal or exceed the Guaranteed
Interest Rate of 4% per year.

FREE LOOK PERIOD

If for any reason you are not satisfied with the Policy, you may cancel
it by returning it to us within 10 days after you receive it (the "Free Look
Period"). If you choose to do so, we will void the Policy and refund the
Policy Account Value (or the Premium Payments made to that point, where
required by state law). (See "The Policy - Free Look Period.")

TRANSFERS

Unlimited transfers are allowed from the Variable Account to the Fixed
Account or between Sub-accounts of the Variable Account. You may also
participate in three asset allocation programs under which you authorize
automatic transfers. (See "The Policy - Automatic Rebalancing, Dollar Cost
Averaging, and Interest Sweep Programs.")

The maximum amount allowed to be transferred out of the Fixed Account during
one Policy Year is 100% of Fixed Account interest accrued since the last Policy
Anniversary; plus 10% of:

(1) Account Value of the Fixed Account as of the last Policy Anniversary; plus
(2) Deposits and transfers made into the Fixed Account since the last Policy
Anniversary; minus
(3) All partial withdrawals from the Fixed Account since the last Policy
Anniversary.

You may also elect to systematically reallocate all interest generated from the
Fixed Account into the Sub-

2
<PAGE> 13
accounts of the Variable Account on an interest only basis according to your
allocation election. (See "Interest Sweep Program.")

DEATH BENEFIT

The Policy provides a Death Benefit if you or a Joint Owner dies before
the Maturity Date. You may choose whether the Death Benefit under the Policy
will be paid in a lump sum or under one of the Annuity Payment Options. If no
election is made, the Death Benefit will be paid in a lump sum. (See "The
Policy - Death Benefit," and "Annuity Payments.")

The amount of the Death Benefit is guaranteed not to be less than the
Policy Account Value or the cumulative Premium Payments made less cumulative
withdrawals (including Surrender Charges, if applicable). In addition, up to
age 75, we also guarantee that the amount of the Death Benefit will not be less
than the Minimum Guaranteed Death Benefit, which is calculated every five years
from the fifth Policy Anniversary through the Owner's age 75. (See "The Policy
- - Death Benefit.")

Certain distribution requirements under Federal income tax laws will
apply to payments of Death Benefits. (See "The Policy - Required
Distributions.")

CHARGES ASSOCIATED WITH THE POLICY

ANNUAL POLICY FEE - An annual charge of $42 is made on each Policy
Anniversary and at the time a Policy is surrendered and at the Maturity Date to
partially compensate ANLIC for the cost of administering the Policy. (See
"Charges and Deductions - Annual Policy Fee.") This annual deduction will be
made from the Sub-accounts in the same proportion that their values bear to the
total Variable Account Value. The Annual Policy Fee is waived if the Policy
Account Value exceeds $50,000 at the time the Annual Policy Fee would be
imposed.

ADMINISTRATIVE EXPENSE CHARGE - A monthly charge at an effective annual
rate of .10% of the average daily net asset value of the Variable Account will
be deducted from the Sub-accounts to partially compensate ANLIC for the costs
of administering the Variable Account and the Policies. (See "Charges and
Deductions - Administrative Expense Charge.")

MORTALITY AND EXPENSE RISK CHARGE - A monthly charge at an effective
annual rate of 1.25% of the average daily net asset value of the Sub-accounts
will be deducted from the Sub-accounts for ANLIC's assumption of certain
mortality and expense risks incurred in connection with the Policy. (See
"Charges and Deductions - Mortality and Expense Risk Charge.") There is no
Mortality and Expense Risk Charge for amounts in the Fixed Account.

The Mortality and Expense Risk Charge is guaranteed to decrease by .05%
on each Policy Anniversary beginning in year 16 until it reaches an effective
annual rate of .50% at the end of year 30.

SURRENDER CHARGE - A Surrender Charge is deducted on a percentage basis
from Premium Payments made within five years of surrender. The amount of the
Surrender Charge is equal to 8% of Premium Payments made within three years of
surrender, 6% of Premium Payments made during the fourth year prior to
surrender, and 4% of Premium Payments made during the fifth year prior to
surrender. The Surrender Charge is applied to Premium Payments on a first-in,
first-out basis. (See "Charges and Deductions - Surrender Charge.")

PREMIUM TAXES - Certain states impose premium taxes. ANLIC will deduct
amounts equal to these taxes as applicable. (See "Charges and Deductions -
Premium Taxes.")

3
<PAGE> 14
FUND EXPENSES - Because the Variable Account purchases shares of the
Portfolios, the value of the net assets in the Sub-accounts will reflect the
investment management fee and other expenses of the Portfolios. (See "Charges
and Deductions - Fund Expenses" and the Fund prospectuses).

PARTIAL WITHDRAWALS AND SURRENDERS

You may, prior to the earlier of the Maturity Date or your death,
withdraw all or a portion of the current Surrender Value. If there are Joint
Owners, you both must agree to a withdrawal.

You may, prior to the earlier of the Maturity Date or your death,
withdraw 100% of earnings (since the last Policy Anniversary) in the Variable
Account and the Fixed Account free of Surrender Charges. Additionally, up to
10% of the Policy Account Value (as of the last Policy Anniversary); plus 10%
of:

(1) Deposits since the last Policy Anniversary; minus
(2) Withdrawals since the last Policy Anniversary

may also be withdrawn free of Surrender Charges.

Upon a Partial Withdrawal, Surrender, or Annuitization we will apply
the Surrender Charge Percentage shown on the Policy Specification Page to those
Premium Payments received within five years of the Partial Withdrawal or
Surrender Date. After the free amounts are determined, the calculation will be
based on a first-in, first-out basis. Also, Surrender Charges may be waived in
certain limited circumstances. (See "The Policy - Surrender and Partial
Withdrawals.")

Surrenders may be taxable transactions and subject to a tax penalty.
(See "Federal Tax Matters.") Payment of amounts from the Fixed Account upon
surrender and refund of premium may be delayed under certain circumstances.
(See "The Policy - Surrender and Partial Withdrawals.")

FEDERAL TAX MATTERS

With respect to Owners who are natural persons, under existing tax law
there should be no federal income tax on increases (if any) in the Policy
Account Value until a distribution under the Policy occurs (e.g., a withdrawal
or Annuity Payment) or is deemed to occur (e.g., a pledge or assignment of a
Policy). Generally, a portion of any distribution or deemed distribution will
be taxable as ordinary income. The taxable portion of certain distributions
will be subject to withholding unless the recipient (if permitted) elects
otherwise. In addition, a penalty tax of 10% of the amount withdrawn may apply
to certain distributions or deemed distributions under the Policy made prior to
the Owner's attaining age 59 1/2. (See "Federal Tax Matters.")

The ultimate effect of Federal income taxes on the Policy Account Value,
on Annuity Payments and on the economic benefit to you, the Annuitant or the
Beneficiary depends on whether Premium Payments are made pursuant to a
retirement plan, the type of retirement plan, the tax and employment status of
the individual concerned and ANLIC's tax status. In addition, certain
requirements must be satisfied in purchasing a Qualified Policy with proceeds
from a tax qualified plan in order to continue receiving favorable tax
treatment. Therefore, you should seek competent legal and tax advice regarding
the suitability of the Policy for your situation, the applicable requirements
and the tax treatment of the rights and benefits of a Policy.

4
<PAGE> 15
(See "Federal Tax Matters -- Taxation of Annuities in General.")

SUMMARY OF FEES AND CHARGES

The following information summarizes the fees and charges payable by the
Owner of a Policy:

CONTRACT OWNER TRANSACTION EXPENSES:

<TABLE>
<S> <C> <C>
Maximum Surrender Charge . . . . . . . 8.0%

Transfer fee . . . . . . . . . . . . . $00

ANNUAL POLICY FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42
</TABLE>

VARIABLE ACCOUNT ANNUAL EXPENSES (expressed as a
percent of the average daily net assets of each
Sub-account of the Variable Account):

<TABLE>
<S> <C> <C>
Maximum Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.10%

Total Variable Account Annual Expenses: . . . . . . . . . . . . . . . . . . . . . . . . . . 1.35%
</TABLE>

PORTFOLIO ANNUAL EXPENSES
(Expressed as a Percentage of Net Assets of each Portfolio)
<TABLE>
<CAPTION>
TOTAL
PORTFOLIO
MANAGEMENT OTHER ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
Alger American Growth . . . . . . . . . . . . . . . . . . . . . . . . . 0.75% 0.10% 0.85%
Alger American MidCap Growth . . . . . . . . . . . . . . . . . . . . . 0.80% 0.10% 0.90%
Alger American Small Capitalization . . . . . . . . . . . . . . . . . . 0.85% 0.07% 0.92%
Acacia Capital Corporation Calvert Responsibly Invested Money Market . 0.50% 0.16% 0.66%
Acacia Capital Corporation Calvert Responsibly Invested Balanced . . . 0.70% 0.13% 0.83%
Acacia Capital Corporation Calvert Responsibly Invested Strategic Growth 1.50% 0.52% 2.02%
Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . . . . . . . 0.30% 0.12% 0.42%
Neuberger & Berman Advisors Management Trust Limited Maturity Bond . . 0.65% 0.10% 0.75%
Neuberger & Berman Advisors Management Trust Growth . . . . . . . . . . 0.84% 0.10% 0.94%
Strong Advantage Fund II . . . . . . . . . . . . . . . . . . . . . . . 0.60% 0.40% 1.00%
Strong Asset Allocation Fund II . . . . . . . . . . . . . . . . . . . . 0.85% 0.75% 1.60%
Strong International Stock Fund II . . . . . . . . . . . . . . . . . . 1.00% 0.30% 1.30%
Strong Discovery Fund II . . . . . . . . . . . . . . . . . . . . . . . 1.00% 0.30% 1.30%
Van Eck Worldwide Insurance Trust Gold and Natural Resources Fund . . . 0.75% 0.21% 0.96%
</TABLE>

The purpose of the following table is to assist you in understanding the
various costs and expenses that

5
<PAGE> 16
you will bear directly and indirectly. The Table reflects charges and expenses
of the Variable Account and charges and expenses of the Portfolios for the year
ended December 31, 1995; the Portfolios' charges and expenses for future years
may be higher or lower. For more information on the charges summarized in this
Table, see "Charges and Deductions," and the Prospectuses for the Funds. In
addition, premium taxes may be applicable.

EXAMPLE

If you surrender or annuitize your contract at the end of the applicable
time period, you would pay the following expenses on a $1,000 investment,
assuming 5% annual return on assets:

<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS
<S> <C> <C>
Alger American Growth . . . . . . . . . . . . . . . . . . . . . . . . . $96 $148
Alger American MidCap Growth . . . . . . . . . . . . . . . . . . . . . 96 150
Alger American Small Capitalization . . . . . . . . . . . . . . . . . . 96 150
Acacia Capital Corporation Calvert Responsibly Invested Money Market . 94 142
Acacia Capital Corporation Calvert Responsibly Invested Balanced . . . 95 147
Acacia Capital Corporation Calvert Responsibly Invested Strategic 107 185
Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . . . . . . . 91 134
Neuberger & Berman Advisors Management Trust Limited Maturity Bond . . 95 145
Neuberger & Berman Advisors Management Trust Growth . . . . . . . . . . 96 151
Strong Advantage Fund II . . . . . . . . . . . . . . . . . . . . . . . 97 153
Strong Asset Allocation Fund II . . . . . . . . . . . . . . . . . . . . 103 172
Strong International Stock Fund II . . . . . . . . . . . . . . . . . . 107 184
Strong Discovery Fund II . . . . . . . . . . . . . . . . . . . . . . . 100 162
Van Eck Worldwide Insurance Trust Gold and Natural Resources Fund . . . 97 152
</TABLE>

6
<PAGE> 17
If you do not surrender or annuitize your contract, you would pay the
following expenses on a $1,000 investment, assuming 5% annual return on assets:

<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS
<S> <C> <C>
Alger American Growth . . . . . . . . . . . . . . . . . . . . . $24 $76
Alger American MidCap Growth . . . . . . . . . . . . . . . . . 24 78
Alger American Small Capitalization . . . . . . . . . . . . . . 24 79
Acacia Capital Corporation Calvert Responsibly Invested Money 22 70
Market . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acacia Capital Corporation Calvert Responsibly Invested 23 76
Balanced
Acacia Capital Corporation Calvert Responsibly Invested 35 113
Strategic Growth . . . . . . . . . . . . . . . . . . . . . . .
Dreyfus Stock Index Fund . . . . . . . . . . . . . . . . . . . 19 63
Neuberger & Berman Advisors Management Trust Limited Maturity 23 73
Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Neuberger & Berman Advisors Management Trust Growth . . . . . . 25 79
Strong Advantage Fund II . . . . . . . . . . . . . . . . . . . 25 81
Strong Asset Allocation Fund II . . . . . . . . . . . . . . . . 31 100
Strong International Stock Fund II . . . . . . . . . . . . . . 35 112
Strong Discovery Fund II . . . . . . . . . . . . . . . . . . . 28 91
Van Eck Worldwide Insurance Trust Gold and Natural Resources 25 80
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

In addition, ANLIC will deduct a charge for premium taxes when they are
incurred.

THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES AND THE ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN. The
examples are based on an anticipated average initial Premium Payment of
approximately $25,000 and a pro rata portion of the Annual Policy Fee of $42.

7
<PAGE> 18
ANLIC AND THE VARIABLE ACCOUNT

ACACIA NATIONAL LIFE INSURANCE COMPANY

ANLIC is a stock life insurance company incorporated in the Commonwealth
of Virginia on December 9, 1974. ANLIC is principally engaged in offering life
insurance policies and annuity contracts. ANLIC is admitted to do business in
46 states and the District of Columbia.

Acacia Mutual Life Insurance Company ("Acacia Mutual") owns all the
outstanding stock of ANLIC. The principal offices of both ANLIC and Acacia
Mutual are at 51 Louisiana Avenue, N.W., Washington, D.C. 20001. Acacia Mutual
is a mutual life insurance company chartered by a Special Act of Congress in
1869 and is subject to the laws of the District of Columbia. It is the only
life insurance company operating today under a Federal Charter. Acacia Mutual
is licensed in 41 states and in the District of Columbia and offers a complete
line of life insurance products. While ANLIC is a wholly-owned subsidiary of
Acacia Mutual, the assets of Acacia Mutual do not support the obligations of
ANLIC under the Policy.

A number of the directors and officers of ANLIC are also either directors
or officers or both of Acacia Mutual. Acacia Mutual's employees perform
certain administrative functions for ANLIC for which Acacia Mutual is
reimbursed.

Acacia Mutual also owns all of the outstanding stock of the Acacia
Financial Corporation, a holding company, which owns all of the stock of the
Calvert Group, Ltd. ("Calvert"), which in turn owns The Advisors Group, Inc.
and Calvert Asset Management Company, Inc. ("CAM"). CAM is the investment
adviser of Acacia Capital Corporation, one of the Funds available under the
Policies. The Advisors Group, Inc. is the principal underwriter for the
Policies described in this prospectus. The Advisors Group, Inc. sells shares
of other mutual funds and other securities, and may also sell variable annuity
or variable life policies of other issuers.

THE VARIABLE ACCOUNT

Acacia National Variable Annuity Separate Account II (the "Variable
Account") was established by ANLIC as a separate account on November 30, 1995.
The Variable Account will receive and invest the net Premium Payments paid
under this Policy.

Although the assets of the Variable Account are the property of ANLIC,
the Code of Virginia under which the Variable Account was established provides
that the assets in the Variable Account attributable to the Policies are
generally not chargeable with liabilities arising out of any other business
which ANLIC may conduct.

The Variable Account is currently divided into fourteen Sub-accounts.
Each Sub-account invests exclusively in shares of a single Portfolio of a
registered, open end investment management company (a "Fund" or the "Funds"
collectively). Income and both realized and unrealized gains or losses from
the assets of each Sub-account of the Variable Account are credited to or
charged against that Sub-account without regard to income, gains or losses from
any other Sub-account of the Variable Account or arising out of any other
business ANLIC may conduct. Each Sub-account reinvests all dividends and
income and capital gain distributions declared by the Portfolio.

The Variable Account has been registered as a unit investment trust under
the Investment Company Act of 1940. Registration with the Securities and
Exchange Commission does not involve supervision of the management or
investment practices or policies of the Variable Account or ANLIC by the
Commission.

8
<PAGE> 19
THE PORTFOLIOS

THE INVESTMENT OBJECTIVES OF EACH OF THE PORTFOLIOS ARE SUMMARIZED BELOW.
THERE IS NO ASSURANCE THAT ANY PORTFOLIO WILL ACHIEVE ITS STATED OBJECTIVE.
MORE DETAILED INFORMATION ABOUT THE PORTFOLIOS, INCLUDING A DESCRIPTION OF THE
RISKS, MAY BE FOUND IN THE PROSPECTUS FOR EACH OF THE PORTFOLIOS WHICH MUST
ACCOMPANY OR PRECEDE THIS PROSPECTUS. IN ADDITION, THE VARIABLE ACCOUNT
PURCHASES SHARES OF EACH PORTFOLIO SUBJECT TO THE TERMS OF THE PARTICIPATION
AGREEMENTS BETWEEN ANLIC AND THE FUNDS. COPIES OF THOSE AGREEMENTS HAVE BEEN
FILED AS EXHIBITS TO THE REGISTRATION STATEMENT FOR THE VARIABLE ACCOUNT. EACH
OF THE FUNDS HAS OR MAY HAVE ADDITIONAL PORTFOLIOS THAT ARE NOT AVAILABLE TO
THE VARIABLE ACCOUNT.

THE ALGER AMERICAN FUND

The Variable Account has three Sub-accounts that invest exclusively in
shares of the Alger American Fund. The Large-Cap Growth Sub-account, the
Mid-Cap Growth Sub-account and the Small-Cap Growth Sub-account invest in the
Alger American Growth Portfolio, the Alger American Mid Cap Growth Portfolio,
and the Alger American Small Capitalization Portfolio, respectively, of the
Alger American Fund.

The Alger American Growth Portfolio seeks to provide long- term capital
appreciation by investing in equity securities, such as common or preferred
stocks, or securities convertible into or exchangeable for equity securities,
including warrants and rights, primarily of companies with total market
capitalization of $1 billion or greater. The Portfolio may invest up to 35% of
its total assets in equity securities of companies that, at the time of
purchase, have total market capitalization of less than $1 billion and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods. The Portfolio will invest primarily in companies whose securities are
traded on domestic stock exchanges or in the over-the-counter market. These
companies may still be in the developmental stage, may be older companies that
appear to be entering a new stage of growth progress owing to factors such as
management changes or development of new technology, products, or markets or
may be companies providing products or services with a high unit volume growth
rate. In order to afford the Portfolio the flexibility to take advantage of
new opportunities for investments in accordance with its investment objective,
it may hold up to 15% of its net assets in money market instruments and
repurchase agreements, and in excess of that amount (up to 100% of its assets)
during temporary defensive periods. This amount may be higher than that
maintained by other funds with similar investment objectives.

The Alger American Mid Cap Growth Portfolio seeks to provide long-term
capital appreciation by investing in equity securities, such as common or
preferred stocks, or securities convertible into or exchangeable for equity
securities, including warrants and rights. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the S&P
MidCap 400 Index, updated quarterly. The S&P MidCap 400 Index is designed to
track the performance of medium capitalization companies. As of March 31,
1996, the range of market capitalization of these companies was $153 million to
$8.88 billion. The Portfolio may invest up to 35% of its total assets in
equity securities of companies that, at the time of purchase, have total market
capitalization outside the range of companies included in the S&P MidCap 400
Index and in excess of that amount (up to 100% of its assets) during temporary
defensive periods. This amount may be higher than that maintained by other
funds with similar investment objectives.

The Alger American Small Capitalization Portfolio seeks to provide
long-term capital appreciation by investing in equity securities, such as
common or preferred stocks, or securities convertible into or exchangeable for
equity securities, including warrants and rights. The Portfolio will invest in
companies whose securities are traded on domestic stock exchanges or in the
over-the-counter market. These companies may still be in the developmental
stage, may be older companies that appear to be entering a new stage of growth
progress owing to factors such as management changes or development of new
technology, products, or

9
<PAGE> 20
markets or may be companies providing products or services with a high unit
volume growth rate. Except during temporary defensive periods, the Portfolio
invests at least 65% of its total assets in equity securities of companies
that, at the time of purchase, have "total market capitalization" - present
market value per share multiplied by the total number of shares outstanding -
within the range of companies included in the Russell 2000 Growth Index,
updated quarterly. The Russell 2000 Growth Index is designed to track the
performance of small capitalization companies. As of March 31, 1996, the range
of market capitalization of these companies was $20 million to $3.04 billion.
The Portfolio may invest up to 35% of its total assets in equity securities of
companies that, at the time of purchase, have total market capitalization
outside the range of companies included in the Russell 2000 Growth Index and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods. This amount may be higher than that maintained by other funds with
similar investment objectives.

Alger Management, Inc. serves as investment manager to the Alger American
Fund.

ACACIA CAPITAL CORPORATION

The Variable Account has three Sub-accounts that invest exclusively in
shares of Acacia Capital Corporation. The Money Market Sub-account, the
Responsibly Balanced Growth Sub-account, and the Strategic Growth Sub-account
of the Variable Account invest in shares of the Calvert Responsibly Invested
Money Market Portfolio, the Calvert Responsibly Invested Balanced Growth
Portfolio and the Calvert Responsibly Invested Strategic Growth Portfolio,
respectively, of Acacia Capital Corporation. Acacia Capital Corporation is one
of eight registered investment companies in the Calvert Group of Funds.
Calvert is an indirect wholly-owned subsidiary of Acacia Mutual. Calvert is
the sponsor of the Fund.

These Portfolios seek to achieve competitive returns while encouraging
responsible corporate conduct. The Portfolios look for enterprises that make a
significant contribution to society through their products and the way they do
business. Each proposed portfolio investment that is deemed financially viable
is then screened according to the stated social criteria of the particular
Portfolio. Investments must, in the judgment of the investment adviser, be
consistent with these criteria. It should be noted that the Portfolios' social
criteria tend to limit the availability of investment opportunities more than
is customary with other investment portfolios. (See the individual Portfolio
Prospectuses for a complete description of each social screen).

The Calvert Responsibly Invested Money Market Portfolio ("CRI Money
Market") seeks to provide the highest level of current income, consistent with
liquidity, safety and security of capital, by investing in money market
instruments, including repurchase agreements with recognized securities dealers
and banks secured by such instruments, selected in accordance with the
Portfolios' investment and social criteria. CRI Money Market attempts to
maintain a constant net asset value of $1.00 per share. There can be no
assurance that the Portfolio will maintain a constant net asset value of $1.00
per share. An investment in the Portfolio is neither insured nor guaranteed by
the United States government.

Calvert Responsibly Invested Balanced Growth Portfolio ("CRI Balanced
Growth") seeks to achieve a total return above the rate of inflation through an
actively managed portfolio of stocks, bonds and money market instruments
(including repurchase agreements secured by such instruments) selected with a
concern for the investment and social impact of each investment.

CRI Balanced Growth may invest up to 20% of its assets in non-investment
grade debt obligations ("junk bonds"). (See "The Portfolios - Risks Attendant
to Investments in Junk Bonds.")

Calvert Responsibly Invested Strategic Growth ("CRI Strategic Growth")
seeks, with a concern for social impact, maximum long-term growth through
investments primarily in the equity securities of companies that have little or
no debt, high relative strength and substantial management ownership. The
Portfolio considers

10
<PAGE> 21
issuers of all sizes, industries, and geographic markets, and does not seek
interest income or dividends.

CRI Strategic Growth may invest up to 35% of its assets in debt
securities, excluding money market instruments. These debt securities may
consist of investment-grade obligations and junk bonds. (See "The Portfolios -
Risks Attendant to Investments in Junk Bonds.")

Calvert Asset Management Company, Inc. ("CAM") is the investment adviser
to all the Acacia Capital Corporation Portfolios. CAM is a wholly owned
subsidiary of Calvert which is in turn an indirect wholly owned subsidiary of
Acacia Mutual. Pursuant to its investment advisory agreement, CAM manages the
investment and reinvestment of the assets of each Portfolio and is responsible
for the overall business affairs of each Portfolio. Calvert Administrative
Services, an affiliate of CAM, has been retained by CRI Strategic Growth to
provide administrative services and is entitled to receive a fee from each of
the Portfolios of a percentage of net assets per year.

On behalf of CRI Balanced Growth, CAM has entered into a subadvisory
agreement with United States Trust Company of Boston, a Massachusetts chartered
commercial bank with full trust powers. On behalf of CRI Strategic Growth, CAM
has entered into a subadvisory agreement with Portfolio Advisory Services, Inc.
of California. The subadvisers manage the investment and reinvestment of the
assets of the Portfolio, although CAM may screen potential investments for
compatibility with the Portfolio's social criteria. CAM continuously monitors
and evaluates the performance of the subadvisers.

DREYFUS STOCK INDEX FUND

The Variable Account has one Sub-account that invests exclusively in
shares of the Dreyfus Stock Index Portfolio.

Dreyfus Stock Index Portfolio has as an investment objective to provide
investment results that correspond to the price and yield performance of
publicly traded common stocks in the aggregate, as represented by the Standard
& Poor's 500 composite Price Index, which is composed of 100 selected common
stocks, most of which are listed on the New York Stock Exchange. Standard &
Poor's Corporation chooses the stocks to be included in the Index solely on a
statistical basis. The Portfolio attempts to be fully invested at all times in
the stocks that comprise the Index and stock index futures as described below
and, in any event, at least 80% of the Portfolio's net assets will be so
invested. Inclusion of a stock in the Index in no way implies an opinion by
Standard & Poor's Corporation as to its attractiveness as an investment. The
Portfolio uses the Index as the standard performance comparison because it
represents approximately 70% of the total market value of all common stocks and
is well known to investors. An investment in the Portfolio involves risks
similar to those of investing in common stocks.

The Fund Administrator is Dreyfus Corporation ("Dreyfus"), a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Bank Corporation, a publicly owned multibank holding company.

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

The Variable Account has two Sub-Accounts that invest exclusively in
shares of Portfolios of the Neuberger & Berman Advisers Management Trust
("AMT"). The Bond and Large Cap Value Sub-accounts of the Variable Account
invest in shares of the Limited Maturity Bond Portfolio and Growth Portfolio,
respectively, of AMT.

The Neuberger & Berman Limited Maturity Bond Portfolio. The investment
objective of the Limited Maturity Bond Portfolio is to provide the highest
current income consistent with low risk to principal and

11
<PAGE> 22
liquidity; and secondarily, total return. Neuberger & Berman Limited Maturity
Bond invests in a diversified portfolio of fixed and variable rate debt
securities and seeks to increase income and preserve or enhance total return by
actively managing average portfolio maturity in light of market conditions and
trends.

The Neuberger & Berman Limited Maturity Bond Portfolio invests in a
diversified portfolio of short-to-intermediate-term U.S. Government and Agency
securities and debt securities issued by financial institutions, corporations,
and others, of at least investment grade. These securities include
mortgage-backed and asset-backed securities, repurchase agreements with respect
to U.S. Government and Agency securities, and foreign investments. The
Neuberger & Berman Limited Maturity Bond Portfolio may invest up to 5% of its
net assets in municipal securities when the Portfolio Manager believes such
securities may outperform other available issues. The Portfolio may purchase
and sell covered call and put options, interest-rate futures contracts, and
options on those futures contracts, and may engage in lending portfolio
securities. The Portfolio's dollar-weighted average portfolio maturity may
range up to five years.

The Neuberger & Berman Growth Portfolio seeks capital appreciation,
without regard to income. The Neuberger & Berman Growth Portfolio invests in
securities believed to have the maximum potential for long-term capital
appreciation. It does not seek to invest in securities that pay dividends or
interest, and any such income is incidental. The Portfolio expects to be
almost fully invested in common stocks, often of companies that may be
temporarily out of favor in the market. The Portfolios' aggressive growth
investment program involves greater risks and share price volatility than
programs that invest in more conservative securities. Moreover, the Portfolio
does not follow a policy of active trading for short-term profits.
Accordingly, the Series may be more appropriate for investors with a
longer-range perspective. While the Portfolio uses the AMT value-oriented
investment approach, when the Portfolio Manager believes that particular
securities have greater potential for long-term capital appreciation, the
Portfolio may purchase such securities at prices with higher multiples to
measures of economic value (such as earnings). In addition, the Portfolio
focuses on companies with strong balance sheets and reasonable valuations
relative to their growth rates. It also diversifies its investments into many
companies and industries.

The investment adviser for the Limited Maturity Bond and Growth
Portfolios of AMT is Neuberger & Berman Management Incorporated ("N&B
Management"). N&B Management retains Neuberger & Berman, L.P., without cost to
AMT, as subadviser to furnish it with investment recommendations and research
information. N&B Management provides investment management services to each
Portfolio that include, among other things, making and implementing investment
decisions and providing facilities and personnel necessary to operate the
Portfolio. N&B Management provides administrative services to each Portfolio
that include furnishing similar facilities and personnel for the Portfolio.
With the Portfolio's consent, N&B Management is authorized to subcontract some
of its responsibilities under its administration agreement with the Portfolio
to third parties.

STRONG VARIABLE INSURANCE FUNDS, INC.

The Variable Account has four Sub-accounts that invest exclusively in
shares of Portfolios of the Strong Variable Insurance Funds, Inc. (the "Strong
Funds"). The Income, Balanced, International and Aggressive Growth
Sub-accounts of the Variable Account invest in shares of the Strong Advantage
Fund II, Strong Asset Allocation Fund II, Strong International Stock Fund II,
and Strong Discovery Fund II, respectively, of the Strong Funds.

Strong Advantage Fund II seeks to provide current income with a very low
degree of share-price fluctuation. The Portfolio invests primarily in ultra
short-term investment-grade debt obligations. The Portfolio is designed for
investors who seek higher yields than money market funds generally offer and
who are willing to accept some modest principal fluctuation in order to achieve
that objective. Because its share price will vary, the Portfolio is not an
appropriate investment for those whose primary objective is absolute

12
<PAGE> 23
principal stability. The Portfolio's investments include a combination of
high-quality money market instruments, as well as securities with longer
maturities and debt obligations of lower quality. Under normal market
conditions, it is anticipated that the portfolio will maintain an average
effective portfolio maturity of one year or less. When the investment adviser
determines market conditions warrant a temporary defensive position, the
Portfolio may invest without limitation in cash and short-term fixed income
securities.

Strong Advantage Fund II may invest up to 25% of its total assets in junk
bonds that are rated in the fifth-highest category (e.g. BB by Standard and
Poors Corporation) or in unrated securities of comparable quality. (See "The
Portfolios - Risks Attendant to Investments in Junk Bonds.") However, because
these securities compose the tier immediately below investment-grade, they are
considered the least speculative non-investment grade securities.

Although the net asset value of the Fund is expected to fluctuate, the
investment adviser actively manages the Fund's portfolio and adjusts its
average portfolio maturity according to the investment adviser's interest rate
outlook while seeking to avoid or reduce, to the extent possible, any negative
changes in net asset value.

Strong Asset Allocation Fund II seeks high total return consistent with
reasonable risk over the long term. The Portfolio allocates its assets
globally among a diversified portfolio of equity securities, bonds, and
short-term fixed income securities. Under normal market conditions, the
Portfolio's net assets will be allocated according to a benchmark of 40%
equities, 40% bonds, and 20% short-term fixed income securities. The
investment adviser intends to actively manage the Portfolio's assets,
maintaining a balance over time between investment opportunities and their
associated potential risks. In response to changing market and economic
conditions, the investment adviser may reallocate the Portfolio's net assets
among these asset categories. Those allocations normally will be within these
ranges. However, in pursuit of total return, the investment adviser may
under-allocate or over-allocate the Portfolio's net assets in a particular
category.

Furthermore, when the investment adviser determines that market
conditions warrant adopting a temporary defensive position, the Portfolio may
invest without limitation in cash and short-term fixed income securities.

ASSET-ALLOCATION CATEGORIES

<TABLE>
<CAPTION>
Percentage of Fund Net Assets

Category of Investment Benchmark Range
---------------------- --------- -----

<S> <C> <C>
Equities 40% 10% - 60%

Bonds 40% 20% - 60%

Short-Term Fixed Income Securities 20% 0% - 70%
</TABLE>

Equity securities in which the Portfolio may invest include common
stocks, preferred stocks, and securities that are convertible into common
stocks, such as warrants and convertible bonds. Bonds purchased by the
Portfolio will be primarily investment-grade debt obligations, although the
Portfolio may invest up to, but not including, 35% of its total assets in junk
bonds. (See "The Portfolios - Risks Attendant to Investments in Junk Bonds.")

The Portfolio also has the flexibility to take advantage of investment
opportunities around the world by investing in foreign securities. While the
Portfolio may invest without limitation in foreign securities, the investment
adviser does not expect that, under normal market conditions, the Portfolio
will invest more than 40% of its total assets in foreign securities. Portfolio
investments involve risks not normally found when investing in securities of
U.S. issuers.

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<PAGE> 24
Within the asset-allocation categories described above, the investment
adviser will allocate the Portfolio's investments among countries, geographic
regions, and currencies in response to changing market and economic trends. In
making geographical allocations of investments, the investment adviser will
consider such factors as the historical and prospective relationships among
currencies and governmental policies that influence currency-exchange rates,
current and anticipated interest rates, inflation levels, and business
conditions within various countries, as well as other macro-economic, social,
and political factors. While there are no prescribed limits on the Portfolio's
geographic allocations, the investment adviser anticipates that the Portfolio
will generally invest in issuers in industrialized countries and in major
currencies, including the United States, Canada, the countries of Western
Europe, Japan, Australia, and New Zealand. The Portfolio may also, however,
invest in securities of issuers in developing countries.

Strong International Stock Fund II seeks capital growth. The Portfolio
invests primarily in the equity securities of issuers located outside the
United States. The Portfolio will invest at least 65% of its total assets in
foreign equity securities, including common stocks, preferred stocks, and
securities that are convertible into common or preferred stocks, such as
warrants and convertible bonds, that are issued by companies whose principal
headquarters are located outside the United States.

Under normal conditions, the Portfolio expects to invest at least 90% of
its total assets in foreign equity securities. The Portfolio may, however,
invest up to 35% of its total assets in equity securities of U.S. issuers or
debt obligations, including intermediate to long-term debt obligations of U.S.
issuers or foreign-government entities. When the investment adviser determines
that market conditions warrant a temporary defensive position, the Portfolio
may invest without limitation in cash (U.S. dollars, foreign currencies, or
multi-currency units) and short-term fixed income securities. Although the
debt obligations in which it invests will be primarily investment-grade, the
Portfolio may invest up to 5% of its total assets in junk bonds. (See "The
Portfolios - Risks Attendant to Investments in Junk Bonds.")

The Portfolio will normally invest in securities of issuers located in at
least three different countries. The investment adviser expects that the
majority of the Portfolio's investments will be in issuers in the following
markets: Argentina, Australia, Brazil, Chile, Cambodia, the Czech Republic,
France, Germany, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Malaysia,
Mexico, the Netherlands, New Zealand, Norway, Peru, the Philippines, Poland,
Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland,
Taiwan, the United Kingdom, and Vietnam. The Portfolio will also invest in
other European, Pacific Rim, and Latin American markets.

Strong Discovery Fund II seeks capital growth. The Portfolio invests in
securities that the investment adviser believes represent growth opportunities.
The Portfolio normally emphasizes equity securities, although it has the
flexibility to invest in any type of security that the investment adviser
believes has the potential for capital appreciation. The Portfolio may invest
up to 100% of its total assets in equity securities, including common stocks,
preferred stocks, and securities that are convertible into common or preferred
stocks, such as warrants and convertible bonds. The Portfolio may also invest
up to 100% of its total assets in debt obligations, including intermediate to
long-term corporate or U.S. government debt securities. When the investment
adviser determines that market conditions warrant a temporary defensive
position, the Portfolio may invest, without limitation, in cash and short-term
fixed income securities. Although the debt obligations in which it invests
will be primarily investment-grade, the Portfolio may invest up to 5% of its
total assets in junk bonds. (See "The Portfolios - Risks Attendant to
Investments in Junk Bonds.")

The Portfolio may invest up to 15% of its total assets directly in the
securities of foreign issuers. It may also invest without limitation in
foreign securities in domestic markets through depositary receipts. However,
as a maker of policy, the investment adviser intends to limit total foreign
exposure, including both direct investments and depositary receipts, to no more
than 25% of the Fund's total assets.

14
<PAGE> 25
The investment adviser seeks to uncover emerging investment trends and
attractive growth opportunities. In its search for potential investments, the
investment adviser attempts to identify companies that are poised for
accelerated earnings growth due to innovative products or services, new
management, or favorable economic or market cycles. These companies may be
small, unseasoned firms in the early stages of development, or they may be
mature organizations. Whatever their size, history, or industry, the
investment adviser believes their potential earnings growth is not yet
reflected in their market value and that, over time, the market prices of these
securities will move higher.

Strong Capital Management, Inc. is the investment adviser for all the
Strong Funds pursuant to its investment advisory agreements, manages the
investment and reinvestment of the assets of each Portfolio, and is responsible
for the overall business affairs of each Portfolio.

VAN ECK WORLDWIDE INSURANCE TRUST

The Variable Account has one Sub-account that invests exclusively in
shares of a Portfolio of the Van Eck Worldwide Insurance Trust (the "Van Eck
Trust").

The Van Eck Gold and Natural Resources Sub-account of the Variable
Account invests in shares of the Van Eck Gold and Natural Resources Portfolio
of the Van Eck Trust.

Van Eck Gold and Natural Resources Portfolio. This Portfolio seeks
long-term capital appreciation by investing in equity and debt securities of
companies engaged in the exploration, development, production and distribution
of gold and other natural resources such as strategic and other metals,
minerals, forest products, oil, natural gas and coal. Current income is not an
investment objective. During normal market conditions, the Portfolio will have
at least 65% of its total assets invested in securities of companies engaged in
gold mining and natural resources activities. The Portfolio may also invest in
equity and debt securities of companies which themselves invest in companies
engaged in these activities. The Portfolio also has the right to invest up to
35% of its assets in the securities of non-precious metals and natural
resources companies.

The Portfolio may invest up to 35% of the value of its total assets in:
(a) securities of companies not in the gold mining/natural resources areas; (b)
high grade corporate debt securities; and (c) obligations issued or guaranteed
by the U.S. or foreign governments and repurchase agreements. The Portfolio
may invest up to 5% of its assets at the time of purchase in warrants. The
Portfolio may also invest up to 5% of its assets at the time of purchase in
preferred stocks and preferred stocks which may be converted into common stock.

The Portfolio has reserved the right to invest up to 10% of its net
assets, taken at market value at the time of investment in gold bullion and
coins.

Since the Portfolio may substantially invest all of its assets in
securities of companies engaged in gold mining and natural resources
activities, the Portfolio may be subject to greater risks and market
fluctuations than other investment companies with less concentrated portfolios.
The Portfolio has no restrictions on the amount of its assets that may be
invested in securities of foreign issuers and thus the relative amount of such
investments will change from time to time. Investments by the Portfolio in
securities of gold mining shares, coins and gold bullion, foreign issuers,
foreign currencies, and options and futures may involve particular investment
risks.

The investment adviser for the Van Eck Gold and Natural Resources
Portfolio is Van Eck Associates Corporation.

15
<PAGE> 26
RISKS ATTENDANT TO INVESTMENTS IN JUNK BONDS

Investments in non-investment grade debt securities, commonly referred to
as "junk bonds", involve special risks in addition to the risks associated with
investments in higher rated debt securities. In general, non-investment grade
securities are regarded as predominately speculative with respect to the
capacity of the issuer to pay interest and repay principal.

CRI Balanced Growth, CRI Strategic Growth, Strong Advantage Fund II,
Strong Asset Allocation Fund II, Strong International Stock Fund II, and Strong
Discovery Fund II each may invest in junk bonds. These Portfolios each
describe the risks attendant to these investments in its prospectus. You
should review these prospectuses carefully and consider the risks associated
with junk bonds before investing in Sub-accounts corresponding to these
Portfolios.

INVESTMENT ADVISORY FEES

ALGER. Alger Management, Inc. ("Alger Management") serves as investment
adviser to the Alger American Fund. It receives a management fee of .75% of
the annual value of the Alger American Growth Portfolio's average daily net
assets. Alger American Mid Cap Growth Portfolio pays Alger Management a fee of
.80% of the annual value of the Portfolio's average daily net assets. Alger
American Small Capitalization Portfolio pays Alger Management a fee at an
annual rate of .85% of the value of the Portfolio's average daily net assets.

CALVERT. For its services, CAM is entitled to receive a fee based on a
percentage of the average daily net assets of each of the Portfolios. CAM is
currently entitled to receive a maximum fee of .50% of net assets from CRI
Money Market Portfolio, .70% of net assets of CRI Balanced Growth and 1.50% of
net assets of Strategy Growth Portfolio.

DREYFUS. Pursuant to the terms of an administration agreement, the
Dreyfus Stock Index Fund pays Dreyfus a monthly fee at the annual rate of .15
of 1.00% of the value of the Portfolio's average daily net assets.

NEUBERGER & BERMAN. For combined administrative and investment
management services, N&B Management is paid fees as a percentage of the average
daily net assets based upon the following schedules:
<TABLE>
<CAPTION>
For the Limited Maturity Bond Portfolio: For the Growth Portfolio:

Average Daily Net Assets Fee Average Daily Net Assets Fee
------------------------ --- ------------------------ ---
<S> <C> <C> <C>
First $500 million .65% First $250 million .85%

Next $500 million .615% Next $250 million .825%

Next $500 million .60% Next $500 million .75%

Next $500 million .575% Thereafter .725%

Thereafter .55%
</TABLE>

STRONG. For its services, Strong Capital Management, Inc. is entitled to
receive a fee based on a percentage of the average daily net assets of each of
the Portfolios that it manages. For its services to Strong Advantage Fund II,
it is entitled to receive an annual fee of .60% of the average daily net asset
value of the Portfolio. For its services to Strong Asset Allocation Fund II,
it is entitled to receive an annual fee of .85% of the Portfolio's average
daily net assets up to $35 million and .80% of the Portfolio's average daily
net assets in excess of $35 million. For its services to Strong International
Stock Fund II, it is entitled to receive an

16
<PAGE> 27
annual fee of 1.00% of the average daily net asset value of the Portfolio. For
its services to Strong Discovery Fund II, it is entitled to receive an annual
fee of 1.00% of the average daily net asset value of the Portfolio.

VAN ECK. The investment adviser for Gold and Natural Resources Portfolio
is Van Eck Associates Corporation ("Van Eck Associates"). As compensation for
its services, Van Eck Associates receives a monthly fee at an annual rate of
.75% of the first $500 million of the average daily net assets of the
Portfolio, .65% of the next $250 million of the daily net assets of the
Portfolio, and .50% of the average daily net assets of the Portfolio in excess
of $750 million.

RESOLVING MATERIAL CONFLICTS

In addition to variable annuity and variable life insurance policies
issued by ANLIC, the Funds are also available to registered separate accounts
of insurance companies other than ANLIC. As a result, there is a possibility
that a material conflict may arise between your interests and the owners of
life insurance policies and variable annuities issued by other companies whose
values are allocated to one or more other separate accounts investing in any
one of the Portfolios.

In addition, one or more of the Portfolios may sell shares to certain
retirement plans qualifying under Section 401 of the Internal Revenue Code of
1986, as amended (the "Code") (including cash or deferred arrangements under
Section 401 (k) of the Code) or other sections of the Code. As a result, there
is a possibility that a material conflict may arise between your interests
generally and such retirement plans or participants in such retirement plans.

In the event of a material conflict, ANLIC will take any necessary steps,
including removing the Variable Account from that Portfolio, to resolve the
matter. The Board of Directors or Trustees of the Portfolios intend to monitor
events in order to identify any material conflicts that may possibly arise and
to determine what action, if any, should be taken in response to those events
or conflicts. (See the individual Fund Prospectuses for more information.)

THE POLICY

The Policy is a flexible premium deferred variable annuity. The rights
and benefits of the Policy are described below and in the Policy. The
obligations under the Policies are obligations of ANLIC. However, we reserve
the right to make any modification to conform the Policy to, or to give you or
other Owners the benefit of, any Federal or state statute or rule or
regulation.

The Policy may be purchased on a non-qualified tax basis ("Nonqualified
Policy"). The Policy may also be purchased and used in connection with plans
qualifying for favorable Federal income tax treatment ("Qualified Policy").

ISSUANCE OF A POLICY

Individuals wishing to purchase a Policy must complete an application and
send it to our Service Office. Acceptance is subject to our rules, and we
reserve the right to reject any application or Premium Payment. If your
application can be accepted in the form received, your initial Premium Payment
will be applied within two business days after its receipt at our Service
Office. If your initial Premium Payment cannot be applied after receipt
because of deficiencies in the application or other issuing requirements, you
will be contacted within five business days and given an explanation for the
delay. The initial Premium Payment will be returned to you at that time unless
you consent to our retention of it and our crediting of it as soon as the
necessary requirements are fulfilled. If you are between the ages of 75 and 85
when you purchase a Policy, you can only

17
<PAGE> 28
make a single Premium Payment. You cannot purchase a Policy if you are over
age 85.

TELEPHONE REQUESTS

At the time an application for a Policy is completed, or at any
subsequent time, you may request a telephone transfer authorization form. If
the form is properly completed and on file with us, transfers may be made
pursuant to telephone instructions, subject to the above terms and the terms of
the authorization form. Otherwise, transfer requests must be in writing in a
form acceptable to us. Transfer requests made by telephone are processed upon
the date of receipt, if received prior to 4:00 p.m. EST. We may, at any time,
revoke or modify the transfer privilege.

FREE LOOK PERIOD

If for any reason you are not satisfied with the Policy, you may return
it to us within 10 days after you receive it. If you cancel the Policy within
this 10-day Free Look Period, we will refund the Policy Account Value at the
end of the Valuation Period during which the Policy was received by us (or,
where required by state law, the greater of the Policy Account Value or the
Premium Payments that were paid), and the Policy will be void from the Policy
Date. (See "The Policy - Allocation of Premium Payments.") To cancel the
Policy, you must mail or deliver it to either our Service Office or the
registered agent who sold it to you within 10 days after you receive it. The
Free Look Period may be longer where required by state law.

Certain states require us to refund the greater of Premium Payments made
or the Policy Account Value at the end of the Free Look Period. Under Policies
issued in these states, we reserve the right to allocate the initial Premium
Payment and any additional Premium Payments received during the Free Look
Period in their entirety to the Money Market Sub-account until the end of the
Free Look Period. For administrative reasons, the Free Look Period is assumed
to be fifteen days for this purpose.

PREMIUM PAYMENTS

The minimum Premium Payments during the first Policy year must be at
least $300. Additional Premium Payments may be made in amounts of $30 or more.

If, after the first five Policy anniversaries, you have made no Premium
Payments during a 24-month period and your then-current Policy Account Value
totals less than $2,000, we have the right to pay you the total value of your
account in a lump sum.

ALLOCATION OF PREMIUM PAYMENTS

You determine in the application how the initial net Premium Payment will
be allocated among the Sub-accounts and the Fixed Account. You may allocate
any whole percentage of net Premium Payments, from 5% to 100%. Additional net
Premium Payments will be allocated to the Sub-accounts and the Fixed Account
according to the allocation percentage specified in your application, unless
subsequently changed.

Notwithstanding the foregoing, all Premium Payments made on Policies in
certain states may be allocated to the Money Market Sub-account during the Free
Look Period. (See "The Policy - Free Look Period.")

The Policy Account Value will vary with the investment performance of the
Sub-accounts you select, and you bear the entire risk for amounts allocated to
the Variable Account. You should periodically review your allocations of
Policy Account Value in light of all relevant factors, including market
conditions and your overall financial planning requirements.

18
<PAGE> 29
POLICY ACCOUNT VALUE

The Policy Account Value prior to the Maturity Date is equal to the
Variable Account Value plus the Fixed Account Value. Variable Account Values
are not guaranteed. The Variable Account Value is equal to the sum of the
values of the Sub-accounts under the Policy. The value of each Sub-account is
calculated first on the Policy Date and thereafter on each normal business day
("Valuation Date").

Variable Account Value. On any Valuation Date, each Sub-account's value
is equal to the number of Accumulation Units in that Sub-account multiplied by
the Accumulation Unit Value. The number of Accumulation Units to be credited
to the Policy for each Sub-account is determined at the time of initial Premium
Payment by dividing the net Premium Payments allocated to each Sub-account by
the Accumulation Unit Value for that Sub-account for the Valuation Period
during which the Application is accepted. For additional Premium Payments, the
number of units of each Sub-account credited under the Policy is determined by
dividing the net Premium Payments allocated to that Sub-account by the unit
value for that Sub-account at the end of the Valuation Period during which the
Premium Payment was received at our Service Office.

Each Sub-account's Accumulation Unit Value for any Valuation Period is
determined by multiplying its Accumulation Unit Value for the immediately
preceding Valuation Period by the "net investment factor" for the Valuation
Period for which the value is being determined. The net investment factor is
an index that measures the investment performance of a Sub-account from one
Valuation Period to the next. For a complete description on how the net
investment factor is calculated, see "Net Investment Factor" in the Statement
of Additional Information.

Fixed Account Value. At the end of any Valuation Period, the Fixed
Account Value is equal to: (1) the sum of your net Premium Payments allocated
to the Fixed Account; plus (2) any amounts that you transferred from the
Variable Account to the Fixed Account; plus (3) the total interest credited to
your Policy Account Value in the Fixed Account; less (4) any amounts that you
transferred from the Fixed Account to the Variable Account; less (5) the
portion of any withdrawals and Surrender Charges allocated to your Policy
Account Value in the Fixed Account; less (6) the portion of the Annual Policy
Fee which is allocated to your Policy Account Value in the Fixed Account.

SURRENDER AND PARTIAL WITHDRAWALS

Surrender. You may, prior to the earlier of the Maturity Date or the
date of your death, withdraw all or a portion of your then-current Surrender
Value, upon written request to our Service Office. If there are Joint Owners,
both of you must agree to the withdrawal. We may defer payment of your
Surrender Value allocated to the Fixed Account for a period not longer than six
months after you request its withdrawal. Payment of amounts from the Variable
Account will normally be made within seven days, but may be delayed in certain
circumstances. (See "Delay or Suspension of Payments" in the Statement of
Additional Information.)

You may, prior to the earlier of the Maturity Date or your death,
withdraw 100% of earnings (since the last Policy Anniversary) in all
Sub-accounts and the Fixed Account free of Surrender Charges. Additionally, up
to 10% of the Policy Account Value (as of the last Policy Anniversary); plus
10% of:

(1) Deposits since the last Policy Anniversary; minus
(2) Withdrawals since the last Policy Anniversary

may also be withdrawn free of Surrender Charges.

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<PAGE> 30
Upon a Partial Withdrawal, Surrender, or Annuitization We will apply
the Surrender Charge Percentage shown on the Policy Specification Page to those
Premium Payments received within five years of the Partial Withdrawal or
Surrender Date. After the free amounts are determined, the calculation will be
based on a first-in, first-out basis.

Full surrenders and partial withdrawals may be subject to the 10% Federal
tax penalty on early withdrawals and to income tax. (See "Federal Tax
Matters.")

Surrender Value. The Surrender Value is equal to the Policy Account
Value less any applicable Surrender Charges, the Annual Policy Fee, and any
premium or other taxes. (See "Charges and Deductions.")

Partial Withdrawal. You may also request to make a Partial Withdrawal,
and may direct us to allocate the withdrawal amount among the Fixed Account and
the Sub-accounts in a particular manner. If no allocation is specified, the
partial withdrawal will be prorated among the Fixed Account and the
Sub-accounts based upon your current Policy Account Value allocated to each
account.

Restrictions Under the Texas Optional Retirement Program and Section
403(b) Plans. The Texas Educational Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw or surrender their interest in
a variable annuity contract issued under the ORP only upon (1) termination of
employment in the Texas public institutions of higher education, (2)
retirement, or (3) death. Accordingly, a participant in the ORP (or the
participant's estate if the participant has died) will be required to obtain a
certificate of termination from the employer or a certificate of death before
the account can be redeemed.

Similar restrictions apply to variable annuity contracts used as
funding vehicles for retirement plans qualifying under Section 403(b) of the
Internal Revenue Code of 1986, as amended (the "Code"). Section 403(b)
provides for tax-deferred retirement savings plans for employees of certain
non-profit and educational organizations. In accordance with the requirements
of Section 403(b), any Policy used for a Section 403(b) plan will prohibit
distributions of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributable to elective contributions held as of the end of the
last year beginning before January 1, 1989. However, distributions of such
amounts will be allowed upon death of the employee, attainment of age 59-1/2,
separation from service, disability, or financial hardship, except that income
attributable to elective contributions may not be distributed in the case of
hardship.

Restrictions Under Other Qualified Policies. Other restrictions on
surrenders or with respect to the election, commencement, or distributions of
benefits may apply under Qualified Policies or under the terms of the plans in
respect of which Qualified Policies are issued.

TRANSFERS

You may transfer all or part of the value of a Sub-account of the
Variable Account to one or more of the other Sub-accounts or the Fixed Account
at any time prior to the Maturity Date, free of charge. The minimum for each
transfer is $50. The transfer will be made as of the date we receive the
written request for such transfer at our Service Office.

The maximum amount allowed to be transferred out of the Fixed Account
during one Policy Year is 100% of Fixed Account interest accrued since the last
Policy Anniversary; plus 10% of:

20
<PAGE> 31
You may also elect to systematically reallocate all interest generated from the
Fixed Account into the Sub-accounts of the Variable Account on an interest only
basis according to your allocation election. (See "Interest Sweep Program.")

Transfers may be made by a written request or by calling our Service
Office if a written authorization for telephone transfers is on file. We may
honor any telephone transfer request believed to be authentic. We employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. For example, a personal identification number is required in
order to initiate a transfer. We will not be liable for the consequences of a
fraudulent telephone transfer request that we believe to be authentic when
those procedures have been followed. As a result, you bear the risk of loss
arising from such a fraudulent request if you authorize telephone transfers.

Each transfer will be made, without the imposition of any fee or charge,
at the end of the Valuation Period during which we receive a valid, complete
transfer request at our Service Office. We may suspend or modify this transfer
privilege at any time, and we may postpone transfers under certain
circumstances. (See "Delay or Suspension of Payments" in the Statement of
Additional Information.)

AUTOMATIC REBALANCING, DOLLAR COST AVERAGING, AND INTEREST SWEEP PROGRAMS

The Automatic Rebalancing, Dollar Cost Averaging, and Interest Sweep
Programs are three asset allocation programs available to you under the Policy.
You may elect to participate in one or more of these programs by filing a
written authorization with us. We reserve the right to alter, assess a charge,
or terminate these programs upon thirty days advance written notice.

Under the Automatic Rebalancing Program, you may have automatic transfers
made on a monthly, quarterly, semi-annual or annual basis to adjust the values
among the Sub-accounts and the Fixed Account to meet your designated Investment
Allocation percentages. The allocations are subject to a minimum 5% designated
percentage proportion per Sub-account.

The Dollar Cost Averaging Program is an option under which you may
"dollar cost average" your allocations to the Variable Account by authorizing
us to make periodic transfers of specific dollar amounts from the Money Market
Sub-account to one or more other designated Sub-accounts, on a monthly,
quarterly, semi-annual, or annual basis. Each transfer pursuant to this
program is subject to the $50 minimum transfer amount. Dollar cost averaging
does not guarantee profits, nor does it assure that you will not lose
principal.

The Interest Sweep Program allows you to systematically reallocate
interest earnings from the Fixed Account to one or more of the Sub-accounts on
a monthly, quarterly, semi-annual, or annual basis to meet your Investment
Allocation percentages.

If a periodic transfer would reduce the value in the Money Market
Sub-account below the minimum dollar amount, we reserve the right to transfer
the entire remaining Policy Account Value allocated to the Money Market
Sub-account. We also reserve the right to establish a minimum Money Market
Sub-account balance before allowing you or any other Owner to elect to
participate in the Dollar cost Averaging Program.

Transfers and adjustments pursuant to these Programs will occur on the
monthly Policy Anniversary date in the month in which the transaction is to
take place, or the next succeeding business day if the monthly Policy
Anniversary Date falls on a day other than a Valuation Date.

DEATH BENEFIT

The Policy pays a Death Benefit to a beneficiary you designate (the
"Beneficiary") if any Owner or any Joint Owner dies prior to the Maturity Date
while the Policy is in force (unless the Beneficiary is the

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<PAGE> 32
decedent's spouse, in which case the spouse may elect to continue the Policy in
force).

During the first five years of the Policy, the Death Benefit will be
equal to the greater of the Policy Account Value or the value of the cumulative
Premium Payments made less cumulative withdrawals. On the fifth Policy
Anniversary a "Minimum Guaranteed Death Benefit" is calculated as the greater
of these values. Every five years thereafter through the Maturity Date, a new
Minimum Guaranteed Death Benefit is calculated as the greater of the current
Minimum Guaranteed Death Benefit or the then-current Policy Account Value.

For Owners up to issue age 75, the Death Benefit will be the highest of:

1. the Minimum Guaranteed Death Benefit (increased for Premium Payments
made and decreased for cumulative withdrawals since the most recent
fifth Policy Anniversary);

2. the Policy Account Value (as of the date of payment); or

3. the cumulative Premium Payments made less cumulative withdrawals
(including Surrender Charges).

For Owners over issue age 75, the Death Benefit is the greater of:

1. the Policy Account Value (as of the date of payment); or

2. the cumulative Premium Payments made less cumulative withdrawals
(including Surrender Charges).

ANLIC will pay the Death Benefit proceeds to the Beneficiary upon
receiving due proof of death. The Death Benefit will be paid in a lump sum or
under one of the Annuity Payment Options. (See "Annuity Payments.") If you or
the Annuitant dies after the Maturity Date, the amount payable, if any, will be
as provided in the Annuity Payment Option then in effect.

If the death of the Annuitant occurs prior to the Maturity Date and the
Annuitant is also an Owner or Joint Owner of the Policy, the rules governing
distribution of death benefit proceeds in the event of the death of the Owner
shall apply. (See "Required Distributions," below.) If there is a surviving
Joint Owner at the Annuitant's death, the surviving Joint Owner is the
Beneficiary. If, upon your death your spouse, as designated Beneficiary,
elects to continue the Policy in accordance with the required distributions
rules, the named Beneficiary does not have a right to receive the death benefit
proceeds.

If both Joint Owners die simultaneously, the Death Benefit will be paid
to the named Beneficiary.

If the Owner is a corporation or other entity, the Annuitant will be
treated as an Owner for purposes of the timing or the amount of any payout
under the Policy.

As far as permitted by law, the proceeds under the Policy will not be
subject to any claim of the Beneficiary's creditors.

REQUIRED DISTRIBUTIONS

In order to be treated as an annuity contract for Federal income tax
purposes, Section 72(s) of the Code requires any Nonqualified Policy to provide
that (a) if any Owner dies on or after the annuity starting date but prior to
the time the entire interest in the Policy has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Owner's death; and (b)
if any Owner dies prior to the annuity starting date, the entire interest in
the

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<PAGE> 33
Policy will be distributed within five years after the date of that Owner's
death.

These requirements will be considered satisfied as to any portion of the
Owner's interest that is payable as annuity payments which will begin within
one year of that Owner's death and which will be made over the life of the
Owner's Designated Beneficiary or over a period not extending beyond his life
expectancy.

If the designated Beneficiary is your surviving spouse, the Policy may be
continued with the surviving spouse as the new Owner and no distributions will
be required.

If any Owner or Joint Owner dies prior to the Maturity Date, and if the
designated Beneficiary does not elect to receive the Death Benefit in a lump
sum at that time, then we will increase the Policy Account Value so that it
equals the Death Benefit amount, if that amount is higher than the Policy
Account Value. This would occur if the Owner's designated Beneficiary elects
to delay receipt of the proceeds for up to five years, or is the deceased
Owner's spouse and elects to continue the Policy, or elects to receive the
proceeds as Annuity Payments. Any such increase in the Policy Account Value
would be paid by us, and allocated to the Sub-accounts in proportion to the
pre-existing Policy Account Value unless we are instructed otherwise.

Other rules may apply to Qualified Policies.

CHARGES AND DEDUCTIONS

We do not impose any charge or deduction against a Premium Payment prior
to its allocation to the Variable Account or the Fixed Account (except for a
charge, in some states, for any premium taxes incurred when the Premium Payment
is accepted). However, certain charges (explained below) will be deducted in
connection with the Policy to compensate us for administering and distributing
the Policy, for providing the insurance benefits set forth in the Policy, for
assuming certain risks in connection with the Policy, and for any applicable
taxes.

ANNUAL POLICY FEE

An annual charge of $42, which meets the "at cost" standards of Rule
26a-1 under the Investment Company Act of 1940, is deducted to partially
compensate us for expenses incurred in administering the Policy. These
expenses include costs of maintaining records, processing Death Benefit claims,
surrenders, transfers and Policy changes, providing reports to Owners, and
overhead costs. This charge is guaranteed not to increase during the life of
the Policy. This deduction will be made from the Sub-accounts in the same
proportion that the values in the Sub-accounts bear to the total Variable
Account Value. This charge is deducted on each Policy Anniversary, the
Maturity Date, and a full surrender.

The Annual Policy Fee is waived if the Policy Account Value exceeds
$50,000 at the time the Annual Policy Fee would be imposed.

ADMINISTRATIVE EXPENSE CHARGE

In addition to the Annual Policy Fee, we deduct a monthly charge from the
Sub-accounts at an effective annual rate of .10% of the average daily net
assets of each Sub-account to partially compensate us for expenses incurred in
administering the Variable Account and the Policy. These expenses include
costs of maintaining records, processing Death Benefit claims, surrenders,
transfers and Policy changes, providing reports to Owners, and overhead costs.
This charge is guaranteed not to increase during the life of the Policy.

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<PAGE> 34
MORTALITY AND EXPENSE RISK CHARGE

A monthly charge is deducted from the Sub-accounts at an effective annual
rate of 1.25% of the average daily net assets of each Sub-account to compensate
us for assuming certain mortality and expense risks under the Policy. The
Mortality and Expense Risk Charge is guaranteed to decrease by .05% on each
Policy Anniversary beginning in year 16 until it reaches an effective annual
rate of .50% at the end of year 30. There is no Mortality and Expense Risk
Charge for amounts in the Fixed Account. We may realize a profit from this
charge. However, the level of this charge is guaranteed for the life of the
Policy and may not be increased. We will continue to deduct this charge after
the Maturity Date.

The mortality risk we bear arises in part from our obligation to make
monthly Annuity Payments (determined in accordance with the annuity tables and
other provisions contained in the Policy) regardless of how long all Annuitants
or any individual may live. This undertaking assures that neither an
Annuitant's own longevity, nor an improvement in general life expectancy
greater than expected, will have any adverse effect on the monthly Annuity
Payments the Annuitant will receive under the Policy. It therefore relieves
the Annuitant from the risk that he or she will outlive the funds accumulated
for retirement. The mortality risk also arises in part because of the risk
that the Death Benefit may be greater than the Policy Account Value. We also
assume the risk that the other expense charges may be insufficient to cover the
actual expenses incurred in connection with the Policy.

SURRENDER CHARGE

If you make partial withdrawals under the Policy, surrender the Policy,
or annuitize the Policy, then a Surrender Charge may be imposed, measured as a
percent of the Premium Payments included in the withdrawal (in the case of a
partial withdrawal) or the amount of the total Premium Payments (in the case of
a surrender or annuitizing) as specified in the following table of Surrender
Charges:

<TABLE>
<CAPTION>
NUMBER OF POLICY ANNIVERSARIES 5 OR
SINCE RECEIPT OF PREMIUM PAYMENT: 0 1 2 3 4 MORE
--------------------------------- --- --- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C>
Surrender Charge Rate 8% 8% 8% 6% 4% none
</TABLE>

Free Withdrawal Amount. You may, prior to the earlier of the Maturity Date or
your death, withdraw 100% of earnings (since the last Policy Anniversary) in
the Variable Account and the Fixed Account free of Surrender Charges.
Additionally, up to 10% of the Policy Account Value (as of the last Policy
Anniversary); plus 10% of:

(1) Deposits since the last Policy Anniversary; minus
(2) Withdrawals since the last Policy Anniversary

may also be withdrawn free of Surrender Charges. However, income taxes and a
tax penalty may apply.

Amounts withdrawn in addition to the Free Withdrawal Amount may be
subject to a Surrender Charge. The Surrender Charge is determined by
multiplying each Premium Payment included in the withdrawal by the Surrender
Charge rate applicable to the year in which the Premium Payment was received.

For purposes of calculating the Surrender Charge, (1) the oldest Premium
Payments will be treated as the first withdrawn; (2) amounts withdrawn up to
the Free Withdrawal Amount will not be considered a withdrawal of Premium
Payments; and (3) if the Surrender Value is withdrawn or applied under an
Annuity Payment Option, the Surrender Charge will apply to all Premium Payments
not previously assessed with a Surrender Charge. Thus, the Surrender Charges
are applied to Premium Payments on a first-in, first-out basis.

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<PAGE> 35
As shown above, the Surrender Charge percentage varies, depending on the
Policy Year in which the Premium Payment included in the withdrawal was made.
A Surrender Charge rate of 8% applies to Premium Payments withdrawn that are
less than three years old. Thereafter the Surrender Charge rate decreases to
6% in the fourth year and 4% in the fifth year. Amounts representing Premium
Payments five years old or older may be withdrawn without charge.

The Surrender Charge will be deducted from the remaining Policy Account
Value, or from the amount paid if the remaining value is insufficient. The
Surrender Charge partially compensates us for sales expenses with regard to the
Policy, including agent sales commissions, the cost of printing prospectuses
and sales literature, advertising, and other marketing and sales promotional
activities.

The amounts we receive from the Surrender Charge may not be sufficient to
cover sales expenses. We expect to recover any deficiency from our general
assets (which include amounts derived from the Mortality and Expense Risk
Charge). We believe that this distribution financing arrangement will benefit
you, the Variable Account, and all other Owners.

Waiver of Surrender Charges. ANLIC may waive the Surrender Charge described
above provided that certain conditions described in the Policy are met,
including: (a) you are confined to a "hospital", "nursing home", or a "Long
Term Care Facility" (as defined in the Policy) for at least 30 days; (b)
written notice and satisfactory proof of confinement are received no later than
91 days after confinement ends; and (c) confinement was recommended by a
physician for medically necessary reasons. We will not accept any additional
Premium Payments on a Policy after this waiver has been exercised under that
Policy.

This Waiver is not available if you were confined to a nursing home,
hospital, or Long Term Care Facility on the Policy Date.

PREMIUM TAXES

We will deduct a charge for any premium taxes when (and if) incurred.
Depending on state and local law, premium taxes can be incurred when a Premium
Payment is accepted, when Policy Account Value is withdrawn or surrendered, or
when annuity payments start.

FEDERAL TAXES

Currently no charge is made to the Variable Account for Federal income
taxes that may be attributable to the Variable Account. We may, however, make
such a charge in the future. Charges for other taxes, if any, attributable to
the Variable Account may also be made. (See "Federal Tax Matters.")

FUND EXPENSES

The value of the assets of the Variable Account will reflect the
investment management fee and other expenses incurred by the Portfolios. See
the Fund prospectuses for complete information on these fees and expenses.

REDUCTION IN CHARGES FOR CERTAIN GROUPS

We may reduce or eliminate the Annual Policy Fee, Administrative Expense
Charge, or Surrender Charge on policies that have been sold to (1) employees
and sales representatives of ANLIC or its affiliates; (2) customers of ANLIC or
distributors of the Policies who are transferring existing policy values to a
Policy; (3) individuals or groups of individuals when sales of the contract
result in savings of sales or administrative expenses; or (4) individuals or
groups of individuals where Premium Payments are to be made through an

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<PAGE> 36
approved group payment method and where the size and type of the group results
in savings of administrative expenses.

In no event will reduction or elimination of any fees or charges be
permitted where such reduction or elimination will be unfairly discriminatory
to any person.

ANNUITY PAYMENTS

ELECTION OF AN ANNUITY PAYMENT OPTION

You have the sole right to elect or change one of the Annuity Payment
Options listed below during the lifetime of the Annuitant and prior to the
Maturity Date, either in the application or by written request to our Service
Office any time at least 30 days before the Maturity Date. We may require the
exchange of the Policy for a contract covering the option selected.

MATURITY DATE

The first annuity payment will be made as of the Maturity Date. You
select the Maturity Date in the application for the Policy. You may change the
Maturity Date at any time by giving us written notice of the change at least 30
days prior to the new Maturity Date. A Maturity Date may be the first day of
any calendar month commencing no later than the first day of the calendar month
after the Annuitant's 90th birthday. If the Maturity Date occurs during the
first five Policy Years after receipt of a Premium Payment, a Surrender Charge
will apply. (See "Charges and Deductions - Surrender Charge.") If the net
amount to be applied to an option is less than $2,000 or if payments under any
option would be less than $20, we have the right to pay the net amount to be
applied to the option to you or the Annuitant in one sum.

AVAILABLE OPTIONS

On the Maturity Date, the Surrender Value will be applied to make fixed
annuity payments. Fixed annuity payments provide guaranteed annuity payments
which remain fixed in amount throughout the payment period. Fixed annuity
payments do not vary with the investment experience of the Sub-accounts.

The amount and duration of Annuity Payments will depend on the Annuity
Payment Option that you select. Once an Annuity Payment Option is selected, the
Surrender Value for the Valuation Period which ends immediately before the
Maturity Date will be transferred to our general account and the Annuity
Payments will be fixed in amount by the Annuity Payment Option selected and the
age and sex (if sex distinction is allowed under state law) of the Annuitant.

ANNUITY PAYMENT OPTIONS

The Annuity Payment Options currently available are:

OPTION A -- INTEREST FOR LIFE. We will pay interest on the amount
retained for the lifetime of the Annuitant. At the Annuitant's death, we will
pay the principal amount to the Beneficiary or as otherwise agreed.

OPTION B -- INTEREST FOR A FIXED PERIOD. We will pay interest on the
retained amount for a fixed period of not more than 30 years. At the end of
the period we will pay the principal amount to you or as otherwise agreed.

OPTION C -- PAYMENTS FOR A FIXED PERIOD. We will pay the amount
retained, with interest, in equal monthly

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<PAGE> 37
payments, for a period of not more than 30 years. The amount of each payment
will be based on a payment schedule set forth in the Policy.

OPTION D -- PAYMENTS OF A FIXED AMOUNT. We will pay the amount retained,
with interest, in equal payments until the amount retained has been paid in
full. The total payments in any year must be at least 5% of the amount
retained.

OPTION E -- LIFE INCOME. We will pay the amount retained in monthly
installments, adjusted to reflect the crediting of interest as set forth in the
Policy, for the guaranteed period elected and continuing during the lifetime of
a person that you designate. You may elect to have no guaranteed period or a
guaranteed period of 5, 10, or 15 years, or the period in which the total
payments would equal the amount retained (an installment refund). If no
guaranteed period is elected, only one payment will be made if the Annuitant
dies before the second payment is made, only two payments will be made if the
Annuitant dies before the third payment is made, and so on.

FEDERAL TAX MATTERS

THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.

INTRODUCTION

This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may receive
a distribution under a Policy. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon ANLIC's understanding of the
present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of
the continuation of the present Federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.

Both Nonqualified Policies and Qualified Policies may be purchased. The
Qualified Policies were designed for use by individuals whose Premium Payments
are comprised solely of proceeds from and/or contributions under retirement
plans which are intended to qualify as plans entitled to special income tax
treatment under Sections 401(a), 403(b), 408, or 457 of the Internal Revenue
Code of 1986, as amended (the "Code"). The ultimate effect of Federal income
taxes on the Policy Account Value, on Annuity Payments and on the economic
benefit to an Owner, the Annuitant or the Beneficiary depends on the type of
retirement plan, on the tax and employment status of the individual concerned
and on ANLIC's tax status. In addition, certain requirements must be satisfied
in purchasing a Qualified Policy with proceeds from a tax qualified plan in
order to continue receiving favorable tax treatment. Therefore, purchasers of
Qualified Policies should seek competent legal and tax advice regarding the
suitability of the Policy for their situation, the applicable requirements and
the tax treatment of the rights and benefits of a Policy. The following
discussion assumes that Qualified Policies are purchased with proceeds from
and/or contributions under retirement plans that qualify for the intended
special Federal income tax treatment.

TAXATION OF ANNUITIES IN GENERAL

The following discussion assumes that the Policy will qualify as an
annuity contract for Federal income tax purposes. The Statement of Additional
Information describes such qualifications.

Section 72 of the Code governs taxation of annuities in general. ANLIC
believes that an annuity owner who is a natural person generally is not taxed
on increases in the value of a Policy until distribution occurs either in the
form of a lump sum received by withdrawing all or part of the cash value (i.e.,
withdrawals) or

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<PAGE> 38
as Annuity Payments under the Annuity Payment Option elected. For this
purpose, the assignment, pledge, or agreement to assign or pledge any portion
of the Policy Account Value generally will be treated as a distribution. The
taxed portion of a distribution (in the form of a lump sum payment or an
annuity) is taxed as ordinary income.

An owner of any deferred annuity contract who is not a natural person
generally must include in income any increase in the excess of the owner's cash
value over the owner's investment in the contract during the taxable year.
However, there are some exceptions to this rule and you may wish to discuss
these with your tax adviser.

In recent years, legislation has been proposed that would have adversely
modified the Federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of nonqualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this Prospectus Congress
is not considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, and
judicial decisions). Moreover, it is also possible that any legislative change
could be retroactive (that is, effective prior to the date of such change).

The following discussion applies to Policies owned by natural persons.

In the case of a withdrawal under a Qualified Policy, a ratable portion
of the amount received is taxable, generally based on the ratio of the
"investment in the contract" to the total Policy Account Value. The
"investment in the contract" equals the portion, if any, of any Premium
Payments paid by or on behalf of an individual under a Policy which was not
excluded from the individual's gross income. For Policies issued in connection
with qualified plans, the "investment in the contract" can be zero. Special
rules may apply to a withdrawal from a Qualified Policy with respect to
"investment in the contract" as of December 31, 1986, and in other
circumstances.

Generally, in the case of a withdrawal under a Nonqualified Policy before
the Maturity Date, amounts received are first treated as taxable income to the
extent that the Policy Account Value immediately before the withdrawal exceeds
the "investment in the contract" at that time. Any additional amount withdrawn
is not taxable.

In the case of a full surrender under a Qualified or Nonqualified Policy,
the amount received generally will be taxable only to the extent it exceeds the
"investment in the contract".

Although the tax consequences may vary depending on the Annuity Payment
Option elected under the Policy, generally only the portion of the annuity
payment that represents the amount by which the Policy Account Value exceeds
the "investment in the contract" will be taxed. For fixed annuity payments, in
general there is no tax on the amount of each payment which represents the same
ratio that the "investment in the contract" bears to the total expected value
of annuity payments for the term of the payments; however, the remainder of
each payment is taxable. After the "investment in the contract" is recovered,
the full amount of any additional annuity payments is taxable.

In the case of a distribution pursuant to a Nonqualified Policy, there
may be imposed a Federal penalty tax equal to 10% of the amount treated as
taxable income. In general, however, there is no penalty tax on distributions:
(1) made on or after the taxpayer attains age 59-1/2, (2) made as a result of
the owner's death or is attributable to the taxpayer's disability, or (3)
received in substantially equal periodic payments as a life annuity.

The tax rules applicable to a Qualified Policy vary according to the type
of plan and the terms and conditions of the plan. Special favorable tax
treatment may be available for certain types of contributions and

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<PAGE> 39
distributions. Adverse tax consequences may result from contributions in
excess of specified limits; distributions prior to age 59-1/2 (subject to
certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances.

We make no attempt to provide more than general information about the use
of the Policy with the various types of retirement plans. Owners and
participants under retirement plans as well as Annuitants and Beneficiaries are
cautioned that the rights of any person to any benefits under a Qualified
Policy may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Policy issued in connection with
such a plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated into our Policy administration
procedures. Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Qualified Policy comply with applicable law. Purchasers of
annuity contracts for use with any qualified retirement plan should consult
their legal counsel and tax adviser regarding the suitability of the annuity
contract.

Code Section 401(a) permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Policies to accumulate
retirement savings under the plans. Adverse tax or other legal consequences to
the plan, to the participant or to both may result if this Policy is assigned
or transferred to any individual as a means to provide benefit payments, unless
the plan complies with all legal requirements applicable to such benefits prior
to transfer of the Policy.

Tax Sheltered Annuity (TSA) Section 403(b) payments made by public school
systems and certain tax exempt organizations are excludable from the gross
income of the employee, subject to certain limitations. However, these
payments may be subject to FICA (Social Security) taxes. Code Section 403(b)
(11) restricts the distribution under Code Section 403(b) annuity contracts of:
(1) elective contributions made in years beginning after December 31, 1988; (2)
earnings on those contributions; and (3) earnings in such years on amounts held
as of the last year beginning before January 1, 1989. Distribution of those
amounts may only occur upon death of the employee, attainment of age 59-1/2,
separation from service, disability, or financial hardship. In addition,
income attributable to elective contributions may not be distributed in the
case of hardship.

Individual Retirement Annuities ("IRAs") are subject to limitations on
the amount which may be contributed and deducted and the time when
distributions may commence. In addition, distributions from certain other
types of retirement plans may be placed into an Individual Retirement Annuity
on a tax deferred basis. The Internal Revenue Service has not addressed in a
ruling of general applicability whether a death benefit provision such as the
provision in the Policy comports with IRA qualification requirements.

Code Section 457 provides for certain deferred compensation plans. These
plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. These plans are
subject to various restrictions on contributions and distributions. These
plans may permit participants to specify the form of investments for their
deferred compensation account. All investments under such Plans are owned by
the sponsoring employer and are subject to the claims of general creditors of
the employer. Depending on the terms of the particular plan, the employer may
be entitled to draw on deferred amounts for purposes unrelated to its Section
457 plan obligations. In general, all amounts received under a Section 457
plan are taxable and are subject to Federal income tax withholding as wages.

All nonqualified deferred annuities entered into after October 21, 1988
that are issued by ANLIC (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includable in gross income under Section 72(e) of the Code. In
addition, there may

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<PAGE> 40
be other situations in which the Treasury Department may (under its authority
to issue regulations or otherwise) conclude that it would be appropriate to
aggregate two or more annuity contracts purchased by the same owner.
Accordingly, a Policy Owner should consult a competent tax adviser before
purchasing more than one annuity contract.

A transfer or assignment of ownership of a Policy, or designation of an
Annuitant or other Beneficiary who is not also the Owner, may result in certain
tax consequences to the Owner that are not discussed herein. An Owner
contemplating any such transfer, assignment or designation should contact a
competent tax adviser with respect to the potential tax effects of such
transaction.

Amounts may be distributed from a Contract because of the death of an
Owner or an Annuitant. Generally, such amounts are includable in the income of
the recipient as follows: (1) if distributed in a lump sum, they are taxed in
the same manner as a full surrender of the Policy, as described above, or (2)
if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above.

As noted above, the foregoing comments about the Federal tax consequences
under these Policies are not exhaustive and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal tax consequences discussed herein reflect our understanding of current
law and the law may change. Federal estate and state and local estate,
inheritance and other tax consequences of ownership or receipt of distributions
under a Policy depend on the individual circumstances of each owner of the
Policy or recipient of the distribution. A competent tax adviser should be
consulted for further information.

VOTING RIGHTS

To the extent deemed to be required by law, we will vote the Portfolios'
shares held in the Variable Account at regular and special shareholder meetings
of the Funds in accordance with instructions received from persons having
voting interests in the corresponding Sub-accounts. If, however, the 1940 Act
or any regulation thereunder should be amended or if the present interpretation
thereof should change, or if we determine that it is allowed to vote the
Portfolio shares in its own right, we may elect to do so.

The number of votes which are available to you will be calculated
separately for each Sub-account. That number will be determined by applying
your percentage interest, if any, in a particular Sub-account to the total
number of votes attributable to that Sub-account. Prior to the Maturity Date,
you hold a voting interest in each Sub-account to which your Policy Account
Value is allocated. After the Maturity Date, the person receiving variable
annuity payments has the voting interest. The number of votes prior to the
Maturity Date will be determined by dividing the value of the Policy allocated
to the Sub-account by the net asset value per share of the corresponding
Portfolio. After the Maturity Date, you have no voting rights.

The number of votes of a Portfolio which are available will be determined
as of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the Fund. Voting
instructions will be solicited by written communication prior to such meeting
in accordance with procedures established by the Fund.

Portfolio shares attributable to the Policies as to which no timely
instructions are received will be voted in proportion to the voting
instructions which are received with respect to all Policies participating in
the Sub-account. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes eligible to be cast.

Each person having a voting interest in an Sub-account will receive proxy
material, reports and other

30
<PAGE> 41
materials relating to the appropriate Portfolio.

PERFORMANCE DATA

We may advertise yields and total returns for the Sub-accounts. In
addition, we may advertise the effective yield of the Money Market Sub-account.
These figures will be based on historical earnings and are not intended to
indicate future performance.

The yield of the Money Market Sub-account refers to the annualized income
generated by an investment in the Sub-account over a specified seven-day
period. The yield is calculated by assuming that the income generated for that
seven-day period is generated each seven-day period over a 52-week period and
is shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment in the
Sub-account is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.

The total return calculation of a Sub-account other than the Money Market
Sub-account assumes an investment has been held in the Sub-account for various
periods of time including: (a) one year; (b) five years; (c) ten years; and (d)
a period measured from the date the Sub-account commenced operations. The
total return will represent the average annual compounded rates of return that
would equate an initial investment of $1,000 to the redeemable value of that
investment as of the last day of each of the periods referenced above.
Total return figures in non-standard formats for the Sub-accounts other
than the Money Market Sub-account may also be disclosed from time to time. The
non-standard total return will assume that no surrender occurs at the end of
the applicable period. All non-standard performance data disclosed will be
accompanied by standard performance data for the same period.

ANLIC may also advertise performance figures for the Sub-accounts based
on the performance of a Portfolio prior to the time the corresponding
Sub-account commenced operations.

Performance data calculations are discussed in further detail in the
Statement of Additional Information.

PUBLISHED RATINGS

We may publish in advertisements, sales literature, and reports to
Owners, the ratings and other information assigned to ANLIC by one or more
independent insurance industry analyst or rating organizations such as A. M.
Best Company, Standard & Poor's Corporation, and Weiss Research, Inc. These
ratings reflect the current opinion of an insurance company's financial
strength and operating performance in comparison to the norms for the insurance
industry; they do not reflect the strength, performance, or safety (or lack
thereof) of the Variable Account. The claims-paying ability rating as measured
by Standard & Poor's is an opinion of an operating insurance company's
financial capacity to meet the obligations of its insurance and annuity
policies in accordance with their terms. These ratings should not be
considered as bearing on the investment performance of the assets held in the
Variable Account or the degree of risk associated with an investment in the
Variable Account.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Variable Account is a party
to or to which the assets of the Variable Account are subject. We are not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Variable Account.

31
<PAGE> 42
FINANCIAL STATEMENTS

The financial statements for ANLIC (as well as the Auditors' Report
thereon) are in the Statement of Additional Information. Neither this
Prospectus nor the Statement of Additional Information contains financial
statements for the Variable Account because it has not yet commenced
operations, has no assets or liabilities, and has received no income and
incurred no expenses as of the date of this Prospectus.

ADMINISTRATION

We have contracted with Financial Administrative Services, Inc. ("FAS"),
having its principal place of business at 95 Bridge Street, Haddam,
Connecticut, for it to provide us with certain administrative services for the
Policies. Pursuant to the terms of a Service Agreement, FAS will act as a
record keeping service agent for the policies and riders for an initial term of
three years and any subsequent renewals thereof. FAS, under our guidance and
direction, will perform Administration functions including: generation of
billing and posting of premium, computation of valuations, calculation of
benefits payable, maintenance of administrative controls over all activities,
correspondence, and data, and providing management reports to us.

POLICY REPORTS

At least once each Policy Year a statement will be sent to you describing
the status of the Policy, including setting forth the current Death Benefit,
the current Policy Account Value, the value in the Fixed Account, the value in
each Sub-account, Premium Payments paid since the last report, charges deducted
since the last report, any partial surrenders since the last report, and the
current Surrender Value. In addition, a statement will be sent to your showing
the status of the Policy following the transfer of amounts from one Sub-account
to another, a partial surrender and the payment of any Premium Payments
(excluding those paid by bank draft). You may request that a similar report be
prepared at other times. We may charge a reasonable fee for such requested
reports and may limit the scope and frequency of such requested reports.

You will be sent a semi-annual report containing the financial statements
of the Funds as required by the 1940 Act.

STATE REGULATION

We are subject to regulation and supervision by the Insurance Department
of the Commonwealth of Virginia which periodically examines our affairs. We
are also subject to the insurance laws and regulations of all jurisdictions
where we are authorized to do business. A copy of the Policy form has been
filed with and, where required, approved by insurance officials in each
jurisdiction where the Policies are sold. We are required to submit annual
statements of our operations, including financial statements, to the insurance
departments of the various jurisdictions in which we do business for the
purposes of determining solvency and compliance with local insurance laws and
regulations.

EXPERTS

The statement of our financial condition as of December 31, 1995 and the
statements of operations and changes in surplus and cash flows for the year
then ended as found in the Statement of Additional Information have been
included herein in reliance upon the report of Coopers & Lybrand, LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

LEGAL MATTERS

Sutherland, Asbill & Brennan of Washington, D.C. has provided advice on
legal matters relating to

32
<PAGE> 43
certain aspects of Federal securities laws applicable to the issue and sale of
the Policies. Matters of the Commonwealth of Virginia law pertaining to the
Policies, including ANLIC's right to issue the Policies and its qualification
to do so under applicable laws and regulations issued thereunder, have been
passed upon by Ellen Jane Abromson, our Legal Officer.

ADDITIONAL INFORMATION

A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Variable Account, ANLIC and the Policy offered
hereby. Statements contained in this prospectus as to the contents of the
Policy and other legal instruments are summaries. For a complete statement of
the terms thereof, reference is made to such instruments as filed.

33
<PAGE> 44
STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this Prospectus. The following is
the Table of Contents for that Statement:

<TABLE>
<S> <C>
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Misstatement of Age or Sex . . . . . . . . . . . . . . . . . . . . . . . B - 3
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Policy Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Owner and Joint Owner . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Beneficiary Change . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Delay or Suspension of Payments . . . . . . . . . . . . . . . . . . . . . B - 4

ACCUMULATION UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5
Accumulation Units . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5

FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
General Description . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
Transfer Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 7

PERFORMANCE DATA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . B - 9
Money Market Sub-account's Yield Calculation . . . . . . . . . . . . . . B - 9
Other Sub-accounts' Yield Calculations . . . . . . . . . . . . . . . . . B - 10
Average Annual Total Return Calculations . . . . . . . . . . . . . . . . B - 11
Cumulative Total Return Calculations . . . . . . . . . . . . . . . . . . B - 11

PERFORMANCE FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 12
Historical Performance Figures . . . . . . . . . . . . . . . . . . . . . B - 12
Hypothetical Performance Data . . . . . . . . . . . . . . . . . . . . . . B - 12

FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 13
Taxation of ANLIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 13
Tax Status of the Policies . . . . . . . . . . . . . . . . . . . . . . . B - 13
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 14

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . . . . . . . . B - 14

DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . B - 14

STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15
</TABLE>

34
<PAGE> 45
<TABLE>
<S> <C>
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15
</TABLE>

35
<PAGE> 46

Front side of postcard:

Place
STAMP
Here

ACACIA NATIONAL LIFE INSURANCE COMPANY
Variable Product Service Center
P.O. Box 79574
Baltimore, Maryland 21279-0574

Back side of postcard:

Allocator 2000 Annuity Logo
(Put in the upper left corner)

/ / I wish to receive the Statement of Additional Information.

Send To:

Name:
----------------------------------

Address:
-------------------------------

---------------------------------------
<PAGE> 47
ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II

STATEMENT OF ADDITIONAL INFORMATION
FOR THE
ALLOCATOR 2000 FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY

Offered by

Acacia National Life Insurance Company

This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Allocator 2000 Flexible Premium Deferred Variable
Annuity Policy ("Policy") offered by Acacia National Life Insurance Company.
You may obtain a copy of the Prospectus dated ________, 1996, by writing to the
Acacia National Life Insurance Company Service Office, P.O. Box 79574,
Baltimore, Maryland 21279-0574 or telephoning 1-800-369-9407. Terms used in
the current Prospectus for the Policy are incorporated in this Statement.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.

Dated _________, 1996

B - 1
<PAGE> 48
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>

GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Misstatement of Age or Sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Nonparticipating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Policy Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 3
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Owner and Joint Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Beneficiary Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4
Delay or Suspension of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 4

ACCUMULATION UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5
Accumulation Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 5

FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
General Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
Transfer Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 6
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 7

PERFORMANCE DATA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 9
Money Market Sub-account's Yield Calculation . . . . . . . . . . . . . . . . . . . . . B - 9
Other Sub-accounts' Yield Calculations . . . . . . . . . . . . . . . . . . . . . . . B - 10
Average Annual Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . B - 11
Cumulative Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . B - 11

PERFORMANCE FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 12
Historical Performance Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 12
Hypothetical Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 12

FEDERAL TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 13
Taxation of ANLIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 13
Tax Status of the Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 13
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 14

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . B - 14

DISTRIBUTION OF THE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 14

STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B - 15
</TABLE>

B - 2
<PAGE> 49
Throughout this Statement of Additional Information, the words "us", "we",
"our", and "ANLIC" refer to Acacia National Life
Insurance Company, and the words "you", "your", and "Owner" refer to
the policy owner.

GENERAL PROVISIONS

THE POLICY

The Allocator 2000 Annuity (the "Policy") is a flexible premium
deferred variable annuity policy.

(a) The Policy may be purchased on a non-tax qualified basis
("Non-qualified Policy"). The Policy may also be purchased and
used in connection with retirement plans or individual
retirement accounts that qualify for favorable federal income
tax treatment ("Qualified Policy").

(b) Before it will issue a Policy, we must receive a completed
Policy Application. A minimum Premium Payment of $300 during
the first Policy year is required.

(c) The Policy and the copy of the Application attached thereto
(except as otherwise may be required by law), and any
applicable riders are the entire contract. Only our Elected
Officers can agree to change or waive any provisions of the
Policy. Any change or waiver must be in writing and signed by
such Elected Officer.

MISSTATEMENT OF AGE OR SEX

If the age or sex of the Annuitant has been misstated, the benefits
payable under the Policy will be equal to the benefits which the Premium
Payments would have provided for the correct age or sex (if such distinction
based upon sex is allowed by law).

We may require proof of the age of the Annuitant before making any
Annuity Payments provided for by the Policy.

If a misstatement of age or sex results in monthly income payments
that are too large, the overpayments will be deducted from future payments. If
we have made payments that are too small, the underpayment will be added to the
next payment. Adjustments for overpayments or underpayment will include the
compound interest rate used to determine the Annuity Payments.

NONPARTICIPATING

No dividends will be paid. Neither you nor the Beneficiary will have
the right to share in our surplus earnings or profits.

PERIODIC REPORTS

At least once each Policy Year we will send you a statement showing
your Policy Account Value as of a date not more than two months prior to the
date of mailing. We will also send such statements as may be required by
applicable state and federal laws, rules, and regulations.

POLICY DATES

Policy months, years and Policy Anniversaries are measured from the
Policy Date shown on the Policy.

B - 3
<PAGE> 50
TERMINATION

The Policy will remain in force until surrendered for its Surrender
Value, an Annuity Payment Option has been elected, or the Death Benefit has
been paid.

After the first five Policy years, we may cancel the Policy if for two
subsequent years you have not made any Premium Payments and the Policy Account
Value is less than $2,000 or would provide for less than $20 monthly payments
under any Annuity Payment Option. We will then pay you the Surrender Value in
one lump sum.

OWNER AND JOINT OWNER

The Owner is the individual named as such in the Application or in any
later change shown in ANLIC's records. There may be Joint Owners. Prior to the
Maturity Date and during any Annuitant's lifetime, only the Owner has the right
to receive all benefits and may exercise the rights under this Policy. If there
are Joint Owners, the signatures of both Owners are needed to exercise rights
under the Policy.

If the Annuitant is not an Owner and the Annuitant dies before the
Maturity Date, the Owner may name a new Annuitant. If the Owner doesn't name a
new Annuitant, the Owner will become the Annuitant. If one of the Joint
Annuitants dies prior to the Maturity Date, the survivor shall become the sole
Annuitant.

Joint Owners are not permitted for Policies issued in connection with
Qualified Plans. If there are Joint Owners, the signatures of both Owners are
needed to exercise rights under the Policy.

BENEFICIARY CHANGE

You may change the named Beneficiary by sending a written request in a
form acceptable to us to our Service Office unless the Beneficiary is
irrevocable. If the named Beneficiary is irrevocable, you may change the named
Beneficiary only by joint written request from you and such named Beneficiary.

You need not send us the Policy unless we request it. When recorded and
acknowledged by us, the change will be effective as of the date you signed the
request. The change will not apply to any payments made or other action taken
by us before we recorded and acknowledged the request.

ASSIGNMENT

You may assign this policy as collateral, unless prohibited elsewhere
in this Policy or applicable rider. We will not be bound by the Assignment
until a copy is filed with us. We assume no responsibility for determining
whether an Assignment is valid or the extent of the assignee's interest.

No Beneficiary may assign any benefits under the Policy until they are
due, and to the extent permitted by law payments are not subject to the debts
of any Beneficiary nor to any judicial process for payment of the Beneficiary's
debts.

DELAY OR SUSPENSION OF PAYMENTS

We will normally pay a surrender or any withdrawal within seven days
after we receive your Written Request in our Service Office. However,
transfers and payment of any amount from the Sub-accounts of the Variable
Account may be delayed or suspended whenever:

a) the New York Stock Exchange is closed other than customary weekend and
holiday closing, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange

B - 4
<PAGE> 51
Commission ("Commission");

b) the Commission by order permits postponement for the protection of
Owners; or

c) an emergency exists, as determined by the Commission, as a result of
which disposal of the securities held in the Sub-accounts is not
reasonably practicable or it is not reasonably practicable to
determine the value of the Variable Account's net assets.

Payment of any amounts from the Fixed Account may be deferred for up
to six months from the date of the request to surrender. If payment is
deferred for more than 30 days, we will pay interest on the amount deferred at
a rate not less the Guaranteed Minimum Interest Rate.

Payments under the Policy of any amounts derived from Premium Payments
paid by check may be delayed until such time as the check has cleared your
bank.

ACCUMULATION UNITS

An Accumulation Unit is an accounting unit of measure used to
calculate the value of your interest in Sub-accounts of the Variable Account.
The portion of a net Premium Payment that you allocate to a Sub-account of the
Variable Account is credited as Accumulation Units in that Sub-account.
Similarly, the value that you transfer to a Sub-account of the Variable Account
is credited as Accumulation Units in that Sub-account. The number of
Accumulation Units to be credited to the Policy for each Sub-account is
determined by dividing (1) the net Premium Payments allocated to each
Sub-account by (2) the Accumulation Unit Value for that Sub-account for the
Valuation Period during which we received the Premium Payment or transfer
request at our Service Office, or in the case of the initial Premium Payment,
for the Valuation Period during which the Application is accepted.

The value of an Accumulation Unit for each Sub-account was initially
arbitrarily set at $1 when the first investments were bought. The value for
any later Valuation Period is found by multiplying the Accumulation Unit Value
for a Sub-account for the last prior Valuation Period by such Sub-account's
"net investment factor" for the following Valuation Period. Like the Policy
Account Value, the value of an Accumulation Unit may increase or decrease from
one Valuation Period to the next.

NET INVESTMENT FACTOR

The "net investment factor" is an index that measures the investment
performance of a Sub-account from one Valuation Period to the next. The net
investment factor may be greater or less than one, so the value of a
Sub-account may increase or decrease.

The net investment factor for each Sub-account for any Valuation
Period is determined by dividing (a) by (b), where:

(a) is the net result of:

(1) the net asset value per share of the Portfolio shares held in
the Sub-account determined as of the end of the current
Valuation Period; plus

(2) the per share amount of any dividend or capital gain
distributions made by the Portfolio on shares held in the
Sub-account, if the "ex-dividend" date occurs during the
current Valuation

B - 5
<PAGE> 52
Period; plus or minus

(3) a per unit charge or credit for any taxes incurred by or
reserved for in the Sub-account, which is determined by ANLIC
to have resulted from the maintenance of the Sub-account; and

(b) is the net result of:

(1) the net asset value per share of the Portfolio shares held in
the Sub-account, determined as of the end of the immediately
preceding Valuation Period; plus or minus

(2) the per unit charge or credit for any taxes reserved for the
immediately preceding Valuation Period.

FIXED ACCOUNT

This Prospectus is generally intended to serve as a disclosure
document only for the Policy and the Variable Account. For complete details
regarding the Fixed Account, see the Policy itself.

Premium Payments allocated and amounts transferred to the Fixed
Account become part of the General Account assets of ANLIC. Interests in the
General Account have not been registered under the Securities Act of 1933 (the
"1933 Act"), nor is the General Account registered as an investment company
under the 1940 Act. Accordingly, neither the General Account nor any interests
therein are generally subject to the provisions of the 1933 or 1940 Acts, and
ANLIC has been advised that the staff of the Securities and Exchange Commission
has not reviewed the disclosures in this Prospectus which relate to the Fixed
Account.

GENERAL DESCRIPTION

The General Account consists of all assets owned by ANLIC other than
those in the Variable Account and other separate accounts. Subject to
applicable law, ANLIC has sole discretion over the investment of the assets in
the General Account.

The General Account is supported by ANLIC's assets that are held in
the General Account. Premium Payments applied and any amounts transferred to
the General Account are credited with a fixed rate of interest for a specified
period. This is the account known as the "Fixed Account".

The allocation of Premium Payments and/or transfer of Policy Account
Value to the Fixed Account does not entitle an Owner to share in the investment
experience of the General Account. Instead, the guaranteed interest rate used
in the calculation of the Fixed Account Value is the amount stated in the
Policy, compounded annually, or any higher amount of interest in excess of the
guaranteed rate may be used in the calculation of the Fixed Account Value at
such times and in such a manner as we may determine. Interest rates will be
determined on no less than an annual basis.

Prior to the Maturity Date you may elect to allocate net Premium
Payments to the Fixed Account or to transfer Accumulation Value to or from the
Fixed Account (subject to certain restrictions upon transfers from the Fixed
Account, as discussed, below).

TRANSFER LIMITATION

The maximum amount allowed to be transferred out of the Fixed Account
during one Policy Year is 100% of Fixed Account interest accrued since the last
Policy Anniversary; plus 10% of:

B - 6
<PAGE> 53
(1) Account Value of the Fixed Account as of the last Policy Anniversary; plus
(2) Deposits and transfers made into the Fixed Account since the last Policy
Anniversary; minus
(3) All partial withdrawals from the Fixed Account since the last Policy
Anniversary.

You may also elect to systematically reallocate all interest generated from the
Fixed Account into the Sub-accounts of the Variable Account on an interest only
basis according to your allocation election. (See "Interest Sweep Program" in
the prospectus.)

FIXED ACCOUNT VALUE

We will credit all net Premium Payments allocated to the Fixed Account
to your Fixed Account Value. The Fixed Account Value at any time equals:

(1) The net Premium Payments allocated to the Fixed Account; plus

(2) The total of all amounts transferred to the Fixed Account from
the Variable Account; minus

(3) The total of all amounts transferred from the Fixed Account to
the Variable Account, minus

(4) The total of all Policy fees attributable to the Fixed
Account; minus

(5) The total of all partial withdrawals from the Fixed Account
(including any Surrender charges); plus

(6) Interest.

ANLIC'S MANAGEMENT HAS COMPLETE AND SOLE DISCRETION TO DETERMINE THE
CURRENT INTEREST RATES. ANLIC CANNOT PREDICT OR GUARANTEE THE LEVEL OF FUTURE
CURRENT INTEREST RATES, EXCEPT THAT ANLIC GUARANTEES THAT FUTURE CURRENT
INTEREST RATES WILL NOT BE BELOW AN EFFECTIVE RATE OF 4% PER YEAR COMPOUNDED
ANNUALLY. THE OWNER BEARS THE RISK THAT CURRENT INTEREST RATES WILL NOT EXCEED
AN EFFECTIVE RATE OF 4% PER YEAR.

SURRENDER CHARGE CALCULATION

Owners may, prior to the earlier of the Maturity Date or death,
withdraw 100% of earnings (since the last Policy Anniversary) in all
Sub-accounts of the Variable Account and the Fixed Account free of Surrender
Charges. Additionally, up to 10% of the Policy Account Value (as of the last
Policy Anniversary); plus 10% of:

(1) Deposits since the last Policy Anniversary; minus
(2) Withdrawals since the last Policy Anniversary

may also be withdrawn free of Surrender Charges.

Upon a Partial Withdrawal, Surrender, or Annuitization We will apply
the Surrender Charge Percentage shown below to those Premium Payments received
within five years of the Partial Withdrawal or Surrender or Annuitization Date.
After the free amounts are determined, the calculation will be based on a
first-in, first-out basis.

Surrender Charges are assessed on Premium Payments made within five
years of a surrender or partial withdrawal. To determine the Surrender Charge
for a particular Premium Payment, the Surrender Charge

B - 7
<PAGE> 54
percentage is multiplied by the Premium Payment less any withdrawals previously
allocated to the Premium Payment. The total Surrender Charge is then
determined by summing the previous result over all Premium Payments used in the
calculation. The Surrender Charge will be based on the excess of the Surrender
amount over the Free Withdrawal Amounts. This excess is distributed over the
Premium Payments on a first-in, first-out basis until the excess is exhausted.
Partial surrenders will be charged based on the above method. There are no
Surrender Charges assessed on distributions made pursuant to the death of the
Owner. The Surrender Charge percentages are as follows:

<TABLE>
<S> <C>
Years 1-3 . . . . . . . . 8%

Year 4 . . . . . . . . . 6%

Year 5 . . . . . . . . . 4%

Year 6 . . . . . . . . . 0%
</TABLE>

Example:

ISSUE DATE: 02/10/1990
<TABLE>
<CAPTION>
Premium Payments:
<S> <C>
02/10/90 $4,000
12/10/90 $1,000
06/02/91 $1,500
08/21/92 $3,000
10/02/95 $2,000
01/12/95 $1,000
</TABLE>

WITHDRAWAL ONE - 05/12/92

<TABLE>
<S> <C> <C>
Requested Withdrawal Amount (not including the Surrender Charge) $3,000.00

Policy Account Value (before withdrawal) 7,114.45

Policy Year Gain (free of charge) 109.22

Gross Premium Payments 6,500.00

10% Free Withdrawal Amount 6,500 X 0.10 = 650.00

Total Free Amount 109.22 + 650 = 759.22

Non-Free Amount 3,000 - 759.22 = 2,240.78

Surrender Surrender
Premium Payment Charge % Charge
--------------- -------- ------
$4,000 x .08 = 320

1,000 x .08 = 80

1,500 x .08 = 120

Total Surrender Charge 520.00

Partial Surrender Charge (2,240.78/.92) x .08 = 194.85
</TABLE>

B - 8
<PAGE> 55
<TABLE>
<S> <C>
Total Withdrawal 3,194.85

Policy Account Value (after withdrawal) 3,919.60
</TABLE>

Only those Premium Payments made before 5/12/92 will be used to
determine the Surrender Charge. The $3,000 withdrawal is less than the first
Premium Payment, therefore, we will use the Surrender Charge percentage on that
Premium Payment. However, it seems that we are applying one surrender Charge
percentage for all premiums. The reason is that the Surrender Charge for the
first three years is 8%.

Assume that your Policy Account Value is split among four Sub-accounts
in the following proportions:

<TABLE>
<S> <C> <C>
Sub-account 1 $ 784.02 .1102%
Sub-account 2 $ 3,111.15 .4373%
Sub-account 3 $ 1,730.23 .2432%
Sub-account 4 $ 1,489.05 .2093%
----------- ------
$ 7,114.45 1.000%
</TABLE>

The process for allocating the Surrender Charge among the Sub-accounts
is as follows:

STEP ONE - REMOVAL OF CONTRACT GAIN $109.22
<TABLE>
<S> <C> <C> <C>
.1102 Sub-account 1 $ 784.01 - 12.04 = $ 771.97
.4373 Sub-account 2 $3,111.15 - 47.76 = $3,063.39
.2432 Sub-account 3 $1,730.23 - 26.56 = $1,703.67
.2093 Sub-account 4 $1,489.05 - 22.86 = $1,466.19
</TABLE>

STEP TWO - REMOVAL OF 10% FREE WITHDRAWAL AMOUNT $650
<TABLE>
<S> <C> <C> <C>
.1102 Sub-account 1 $ 771,97 - 71.63 = $ 700.34
.4373 Sub-account 2 $3,063.39 - 284.25 = $2,779.14
.2432 Sub-account 3 $1,703,67 - 158.08 = $1,545.59
.2093 Sub-account 4 $1,466.19 - 136.04 = $1,330.15
</TABLE>

STEP THREE - REMOVAL OF NON-FREE $2,435.63
<TABLE>
<S> <C> <C> <C>
.1102 Sub-account 1 $ 700.34 - 268.41 = $ 431.93
.4373 Sub-account 2 $2,779.14 - 1,065.10 = $1,714.04
.2432 Sub-account 3 $1,545.59 - 592.35 = $ 953.25
.2093 Sub-account 4 $1,330.15 - 509.78 = $ 820.38
---------
$3,919.60
</TABLE>

PERFORMANCE DATA CALCULATIONS

We may advertise the yield and effective yield of the Acacia Capital
Corporation Calvert Responsibly Invested Money Market Sub-account (the "Money
Market Sub-account"). In addition, we may advertise yield and the total
returns for other Sub-accounts. All performance data calculations for
Sub-accounts or the Variable Account will be in accordance with SEC
regulations.

MONEY MARKET SUB-ACCOUNT'S YIELD CALCULATION

In accordance with regulations adopted by the SEC, if we disclose the
annualized yield of the Money Market Sub-account for a seven-day period, it is
required to be in a manner which does not take into consideration any realized
or unrealized gains or losses of the Money Market Portfolio or on its portfolio
securities. The annualized yield is computed by determining the net change
(exclusive of realized gains and

B - 9
<PAGE> 56
losses on the sale of securities and unrealized appreciation and depreciation)
in the value of a hypothetical account having a balance of one unit of the
Money Market Sub-account at the beginning of the seven-day period, dividing the
net change in Sub-account Value by the value of the account at the beginning of
the period to determine the base period return, and annualizing this quotient
on a 365-day basis. The net change in Sub-account Value reflects the deduction
for the Mortality and Expense Risk Charge and the Administration Fee as well as
reflecting income and expenses accrued during the period. Because of these
deductions, the yield for the Money Market Sub-account will be lower than the
yield for the Money Market Portfolio of the Fund.

The SEC also permits us to disclose the effective yield of the Money
Market Sub-account for the same seven-day period, determined on a
weekly-compounded basis. The effective yield is calculated by compounding the
base period return by adding one to the base period return, raising the sum to
a power equal to 365 divided by 7, and subtracting one from the result
according to the following formula:

365/7
Effective Yield = [(Base period return + 1) ] - 1

The actual yield of the Money Market Sub-account is affected by: (l)
changes in interest rates on money market securities; (2) the average portfolio
maturity of the Money Market Portfolio; (3) the types and quality of securities
held by the Money Market Portfolio; and (4) its operating expenses. The yield
on amounts held in the Money Market Sub-account normally will fluctuate on a
daily basis. Therefore, the disclosed yields for any given past period is not
an indication or representation of future yields or rates of return.

OTHER SUB-ACCOUNTS' YIELD CALCULATIONS

We may from time to time advertise or disclose the annualized yield
for each Sub-account other than the Money Market Sub-account for 30-day (or
one-month) periods. Calculation of the yield of a Sub-account begins with the
income generated by an investment in the Sub-account over a specific 30-day (or
one-month) period. This income is then annualized. That is, the amount of
income generated by the investment during that 30-day (or one-month) period is
assumed to be generated during, and reinvested at the end of, each such period
over a 360-day (or twelve-month) year. The 30-day (or one-month) yield is
calculated according to the following formula:

6
Yield = 2[({a-b}/cd + 1) - 1]

where

a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Sub-account;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of Accumulation Units outstanding during the
period; and

d = the maximum offering price per Accumulation Unit (i.e., net asset
value per Accumulation Unit) the last day in the period.

Because of the charges and deductions imposed by the Variable Account,
the yield for a Sub-account will be lower than the yield for its corresponding
Portfolio. The yield calculations do not reflect the effect of any premium
taxes or Surrender Charge that may be applicable to a particular Policy.
Surrender Charges range from 8% to 0% of the Premium Payments included in the
Withdrawal, depending on the number of years since each Premium Payment was
received. The yield on amounts held in the Sub-accounts of the

B - 10
<PAGE> 57
Variable Account normally will fluctuate over time. Therefore, the disclosed
yield for any given past period is not an indication or representation of
future yields or rates of return. A Sub-account's actual yield is affected by
the types and quality of the Portfolio's investments and the Portfolio's
operating expenses.

AVERAGE ANNUAL TOTAL RETURN CALCULATIONS

For each Sub-account other than the Money Market Sub-account, an
average annual total return may be calculated for a given period. It is
computed by finding the average annual compounded rate of return over one-,
five-, and ten-year periods (or, where a Sub-account has been in existence for
a period less than one, five, or ten years, for such lesser period) that would
equate the initial amount invested to the ending redeemable value (i.e.,
Surrender Value), according to the following formula:

n
P(1 + T) = ERV

where

P = a hypothetical initial Premium Payment of $1,000;

T = average annual total return;

n = number of years in the period; and

ERV = ending redeemable value of a hypothetical $1,000 Premium
Payment made at the beginning of the one-, five-, or ten-year
periods (or fractional portion thereof) at the end of such
period.

All recurring fees that are charged to all Policy Owner accounts are
recognized in the ending redeemable value. The average annual total return
calculation will also reflect the effect of Surrender Charges that may be
applicable due to surrender of the Policy at the end of a particular period.

From time to time we may also disclose average annual total returns in
a non-standard format in conjunction with the standard format described above.
The only difference between the two methods is that the non-standard format
assumes a Surrender Charge of 0%.

CUMULATIVE TOTAL RETURN CALCULATIONS

We may from time to time also disclose cumulative total return for
each Sub-account in conjunction with the standard format described above. The
cumulative returns will be calculated using the following formula:

CTR = (ERV / P) - 1

where

CTR = the cumulative total return net of Sub-account recurring
charges for the period;

ERV = ending redeemable value of a hypothetical $1,000 Premium
Payment made at the beginning of the one-, five-, or ten-year
period (or fractional portion thereof) at the end of such
period; and

P = a hypothetical initial Premium Payment of $1,000.

B - 11
<PAGE> 58
PERFORMANCE FIGURES

The performance information provided below reflects only the
performance of a Policy's allocation to the stated Sub-account during the time
period on which the calculations are based. Performance information provided
for any given past period is not an indication or representation of future
yields or rates of return.

HISTORICAL PERFORMANCE FIGURES

There are no historical performance figures for the Sub-accounts, as
no Sub-account invested in its corresponding Portfolio in 1995 because the
Variable Account had not yet commenced operations.

HYPOTHETICAL PERFORMANCE DATA

We may also disclose "hypothetical" performance data for a
Sub-account, for periods before the Sub-account commenced operations. Such
performance information for the Sub-account will be calculated based on the
performance of the corresponding Portfolio and the assumption that the
Sub-account was in existence for the same periods as its corresponding
Portfolio, with the level of Policy charges currently in effect. The Portfolio
used for these calculations is the actual Portfolio in which the Sub-account
invests. This type of hypothetical performance data, with respect to the total
return for each Sub-account other than the Money Market Sub-account, may be
disclosed on both an average annual total return and a cumulative total return
basis.

These figures are not an indication of past, present or future
performance of the Sub-accounts. The figures may reflect the waiver of
advisory fees and reimbursement of other expenses.

The hypothetical yield for the Money Market Sub-account for the
seven-day period ending December 31, 1995, on an annualized basis, was ____%.
The hypothetical effective yield for the Money Market Sub-account for the
seven-day period ending December 31, 1995, on an annualized basis, was ____%.

The hypothetical yield for certain Sub-accounts other than the Money
Market Sub-account for the 30-day (or one-month) period ending December 31,
1995, on an annualized basis, is as follows:

<TABLE>
<S> <C>
Sub-account For the 3-day period
----------- Ended 12/31/95
--------------

</TABLE>

[TO BE COMPLETED BY AMENDMENT]

The hypothetical average annual total return for each Sub-account is
as follows:

<TABLE>
<S> <C> <C> <C> <C>
From the Date of
Inception of the For the 1-year For the 5-year For the 10-year
Portfolio Date of Inception period ended period ended period ended
Sub-account of the Portfolio 12/31/95 12/31/95 12/31/95
----------- ---------------- -------- -------- --------
</TABLE>

[TO BE COMPLETED BY AMENDMENT]

The hypothetical cumulative total return for each Sub-account is as
follows:

B - 12
<PAGE> 59
<TABLE>
<S> <C> <C> <C> <C>
From the Date of
Inception of the For the 1-year For the 5-year For the 10-year
Portfolio Date of Inception period ended period ended period ended
Sub-account of the Portfolio 12/31/95 12/31/95 12/31/95
----------- ---------------- -------- -------- --------
</TABLE>

[TO BE COMPLETED BY AMENDMENT]

FEDERAL TAX MATTERS

TAXATION OF ANLIC

ANLIC is taxed as a life insurance company under Part 1 of Subchapter
L of the Internal Revenue Code of 1986 (the "Code"). Since the Variable
Account is not an entity separate from ANLIC and its operations form a part of
ANLIC, it will not be taxed separately as a "regulated investment company"
under Subchapter M of the Code. Investment income and realized net capital
gains on the assets of the Variable Account are reinvested and taken into
account in determining the Policy Account Value. As a result, such investment
income and realized net capital gains are automatically retained as part of the
reserves under the Policy. Under existing federal income tax law, we believe
that Variable Account investment income and realized net capital gains should
not be taxed to the extent that such income and gains are retained as part of
the reserves under the Policy.

TAX STATUS OF THE POLICIES

Section 817(h) of the Code provides that the investments of the
Variable Account must be "adequately diversified" in accordance with Treasury
regulations in order for the Policies to qualify as annuity contracts under
Section 72 of the Code. The Variable Account, through each Portfolio of the
Funds, intends to comply with the diversification requirements prescribed by
the Treasury in Treas. Reg. Section 1.817-5, which affect how the Portfolios'
assets may be invested. We do not control any of the Funds or their
Portfolios' investments. However, we have entered into an agreement regarding
participation in each Fund, which requires each participating Portfolio of the
Funds to be operated in compliance with the diversification requirements
prescribed by the Treasury.

In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of separate
account assets if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets.
The Treasury Department also announced, in connection with the issuance of
regulations concerning diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
policyholder), rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also stated that guidance would
be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular subaccounts without
being treated as owners of the underlying assets."

The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the Owner has additional flexibility in allocating premium payments
and Policy Account Values. These differences could result in an Owner being
treated as the owner of a pro rata portion of the assets of the Variable
Account. In addition, we do not know what standards will be set forth, if any,
in the regulations or rulings which the Treasury Department has stated it
expects to issue. We therefore

B - 13
<PAGE> 60
reserve the right to modify the Policy as necessary to attempt to prevent an
Owner from being considered the owner of a pro rata share of the assets of the
Variable Account.

WITHHOLDING

Pension and annuity distributions generally are subject to withholding
for the recipient's federal income tax liability at rates that vary according
to the type of distribution and the recipient's tax status. Generally, the
recipient is given the opportunity to elect not to have tax withheld from
distributions. However, certain distributions from Section 401(a) and 403(b)
plans are subject to mandatory withholding.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

We cannot guarantee that shares of the Portfolios currently being
offered will be available in the future for investment of Premium Payments or
for transfers. We reserve the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for, the shares of
the Funds that are held by the Variable Account (or any Sub-account) or that
the Variable Account (or any Sub-account) may purchase. We reserves the right
to eliminate the shares of any of the Portfolios of the Funds and to substitute
shares of another Portfolio of the Funds or any other investment vehicle or of
another open-end, registered investment company if laws or regulations are
changed, if the shares of any of the Funds or a Portfolio are no longer
available for investment, or if in our judgment further investment in any
Portfolio should become inappropriate in view of the purposes of the
Sub-account. We will not substitute any shares attributable to an Owner's
interest in a Sub-account without notice and prior approval of the Commission
and the insurance regulator of the state where the Policy was delivered, where
required. Nothing contained herein shall prevent the Variable Account from
purchasing other securities for other series or classes of policies, or from
permitting a conversion between series or classes of policies on the basis of
requests made by Owners.

We also reserve the right to establish additional Sub-accounts of the
Variable Account, each of which would invest in a new Portfolio of one of the
Funds, or in shares of another investment company or suitable investment, with
a specified investment objective. New Sub-accounts may be established when, in
our sole discretion, marketing needs or investment conditions warrant, and any
new Sub-accounts will be made available to existing Owners on a basis to be
determined by us. We may also eliminate one or more Sub-accounts if, in its
sole discretion, marketing, tax, or investment conditions warrant.

In the event of any such substitution or change, we may, by
appropriate endorsement, make such changes in the Policies as may be necessary
or appropriate to reflect such substitution or change. If deemed by us to be
in the best interests of persons having voting rights under the Policies, the
Variable Account may be operated as a management company under the Investment
Company Act of 1940, it may be deregistered under that Act in the event such
registration is no longer required, or it may be combined with other ANLIC
separate accounts.

DISTRIBUTION OF THE POLICIES

Applications for the Policies are solicited by agents who are licensed
by state insurance authorities to sell our variable annuity insurance policies,
and who are also registered representatives of The Advisors Group, Inc. ("TAG")
or registered representatives of broker/dealers who have Selling Agreements
with TAG or registered representatives of broker/dealers who have Selling
Agreements with such broker/dealers. TAG, whose address is 51 Louisiana
Avenue, N.W., Washington, D.C. 20001, is a registered broker/dealer under the
Securities Exchange Act of 1934 ("1934 Act") and a member of the National
Association of Securities Dealers, Inc. ("NASD"). TAG is an indirect
wholly-owned subsidiary of Acacia Mutual Life Insurance Company of Washington,
D.C. TAG acts as the principal underwriter, as defined in the 1940 Act, of the
Policies (as well as other variable life policies) pursuant to an Underwriting
Agreement with ANLIC. The Policies are offered

B - 14
<PAGE> 61
and sold only in those states where their sale is lawful.

We will refund any Premium Payments paid if a Policy ultimately is not
issued or will refund the applicable amount if the Policy is cancelled during
the Free Look Period.

Agents are compensated for sales of the Policies on a commission and
service fee basis and with other forms of compensation. Agent commissions will
vary, but in any event will not exceed 5% of Premium Payments made:

STATE REGULATION

We are subject to the insurance laws and regulations of states within
which we are licensed or may become licensed to operate. Generally, the
insurance department of a state applies the laws of the state of the insurance
company's domicile in determining permissible investments by that insurance
company. A Policy is governed by the law of the state in which it is
delivered. The values and benefits of each Policy are at least equal to those
required by the state in which it is delivered.

RECORDS AND REPORTS

All records and accounts relating to the Variable Account will be
maintained by ANLIC. As presently required by the Investment Company Act of
1940 and regulations promulgated thereunder, reports containing such
information as may be required under that Act or by any other applicable law or
regulation will be sent to Owners at their last known address of record.

LEGAL MATTERS

Legal advice regarding certain matters relating to federal securities
laws applicable to the issuance of the Policy described in the Prospectus have
been provided by Sutherland, Asbill & Brennan of Washington, D.C.

EXPERTS

The balance sheets of ANLIC as of December 31, 1995 and 1994, and the
related statements of operations, shareholder's equity, and cash flows for each
of the years in the three-year period ended December 31, 1995 have been
included herein in reliance upon the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

OTHER INFORMATION

A Registration Statement has been filed with the Commission under the
Securities Act of 1933, as amended, with respect to the Policies discussed in
this Statement of Additional Information. Not all of the information set forth
in the Registration Statement, amendments and exhibits thereto has been
included in this Statement of Additional Information. Statements contained in
this Statement of Additional Information concerning the content of the Policies
and other legal instruments are intended to be summaries. For a complete
statement of the terms of these documents, reference should be made to the
instruments filed with the Commission.

FINANCIAL STATEMENTS

The financial statements of ANLIC, which are included in this
Statement of Additional Information,

B - 15
<PAGE> 62
should be considered only as bearing on ANLIC's ability to meet ANLIC's
obligations under the Policies. They should not be considered as bearing on
the investment performance of the assets held in the Variable Account.

B - 16
<PAGE> 63
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

[FINANCIAL STATEMENTS TO BE FILED BY AMENDMENT.]

(b) Exhibits

(1) Resolution of the Board of Directors of Acacia National Life
Insurance Company ("ANLIC") authorizing establishment of the
Acacia National Variable Annuity Separate Account II.

(2) N/A

(3) (A) Principal Underwriting Agreement.*
(B) Form of Broker-Dealer Sales Agreement.*
(C) Commission Schedule.*

(4) Form of Annuity Policy.

(5) Form of Application.

(6) (A) Certificate of Incorporation of ANLIC is incorporated
by reference to Registration Statement on Form S-6
(No. 33-90208) filed on March 10, 1995.
(B) By-Laws of ANLIC.

(7) N/A

(8) (A) Participation Agreement(s).*
(B) Form of Administration Agreement.*

(9) Opinion and Consent of Ellen Jane Abromson, Esq.*

(10) (A) Consent of Sutherland, Asbill & Brennan.*
(B) Consent of Coopers & Lybrand L.L.P.*

(11) N/A

(12) N/A

(13) Performance Data Calculations.*

(14) N/A

- -----------
* To be filed by amendment.

C - 1
<PAGE> 64
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

<TABLE>
<CAPTION>
Name, Address and Principal Occupation
Position(s) With Depositor Last Five Years
-------------------------- ---------------
<S> <C>
CHARLES T. NASON (1) President and Chief Executive Officer since June 1988
Chairman of the Board, President, Acacia Mutual Life Insurance Company.
Chief Executive Officer, and
Director

ROBERT-JOHN H. SANDS (1) Senior Vice President and General Counsel since 1991
Senior Vice President, General Acacia Mutual Life Insurance Company.
Counsel, and Director

ROBERT W. CLYDE (1) Executive Vice President, Marketing and Sales since
Executive Vice President, Marketing September 1994 Acacia Mutual Life Insurance Company;
and Sales, and Director Vice President, Retail Long-Term Care
September 1993 until August 1994, Vice President, General
Agency July 1991 until August 1993, John Hancock Mutual
Life; Managing General Agent March 1989 until July 1991,
Mutual Benefit Life Insurance Company.

PAUL L. SCHNEIDER (1) Senior Vice President, Chief Financial Officer since March
Senior Vice President, Chief 1989; Treasurer since December 1994; Vice President,
Financial Officer, Treasurer, and Financial Analysis April 1988 to March 1989 Acacia Mutual
Director Life Insurance Company.

STEPHEN B. COUCH (1) Vice President and Chief Investment Officer since April
Vice President, Chief Investment 1988 Acacia Mutual Life Insurance Company.
Officer, and Director

HALUK ARITURK (1) Senior Vice President, Operations and Chief Actuary since
Senior Vice President, Operations, June 1989 Acacia Mutual Life Insurance Company.
Chief Actuary, and Director
</TABLE>

(1) The principal business address of each person listed is Acacia National
Life Insurance Company, 51 Louisiana Avenue, N.W., Washington, D.C. 20001.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT

[TO BE COMPLETED BY AMENDMENT]

ITEM 27. NUMBER OF POLICY OWNERS

(Not Applicable)

ITEM 28. INDEMNIFICATION

Article VII of ANLIC's By-Laws provides, in part:

Section 2 Indemnification. In the event any action, suit or
proceeding is brought against a present or former Director, elected
officer, appointed officer or other employee because of any action
taken by such person as a Director, officer or employee of the
Company, the Company shall reimburse or indemnify him for all loss
reasonably incurred by him in connection with such action to the
fullest

C - 2
<PAGE> 65
extent permitted by Section 13.1-3.1 of the Code of Virginia, as is
now or hereafter amended, except in relation to matters as to which
such person shall have been finally adjudged to be liable by reason of
having been guilty of gross negligence or willful misconduct in the
performance of duties as such director, officer or employee. In case
any such suit, action or proceeding shall result in a settlement prior
to final judgment and if, in the judgment of the Board of Directors,
such person in taking the action or failing to take the action
complained of was not grossly negligent or guilty of wilful misconduct
in the performance of his duty, the Company shall reimburse or
indemnify him for the amount of such settlement and for all expenses
reasonably incurred in connection with such action and its settlement.
This right of indemnification shall not be exclusive of any other
rights to which any such person may be entitled.

Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Directors, officers and controlling persons, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification may be against public policy as expressed in
the Act and may be, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

ANLIC Officers and Directors are covered under a Fidelity Bond issued
by Chubb Group of Insurance Companies with an aggregate limit of $8,000,000, a
single loss limit of $4,000,000, and a deductible of $50,000.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) The Advisors Group, Inc. is the principal underwriter of the Policies
as defined in the Investment Company Act of 1940, and is also the principal
underwriter, depositor, sponsor, or investment adviser for the following
investment companies:

[TO BE COMPLETED BY AMENDMENT]

(b) The following table provides certain information with respect to each
director, officer, or partner of Registrant.

Name and Principal Positions and Offices
Business Address* With Underwriter
- ------------------ ---------------------

[TO BE COMPLETED BY AMENDMENT]

<TABLE>
<CAPTION>
Net Underwriting
Name of Principal Discounts and Compensation on
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>

The Advisors Group, (N/A) (N/A) (N/A) (N/A)
Inc.
</TABLE>

C - 3
<PAGE> 66
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts and records required to be maintained by Section
31(a) of the 1940 Act and the rules under it are maintained by ANLIC at its
Service Office, P.O. Box 79574, Baltimore, MD 21270-0574, and at its Home
Office, 51 Louisiana Avenue, N.W., Washington, D.C. 20001.

ITEM 31. MANAGEMENT SERVICES

All management contracts are discussed in Part A or Part B.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes that it will file a Post-Effective Amendment to
this Registration Statement as frequently as necessary to ensure that
the audited financial statements in the Registration Statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.

(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.

(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request to ANLIC at the
address or phone number listed in the Prospectus.

STATEMENT PURSUANT TO RULE 6c-7

ANLIC and the Variable Account rely on 17 C.F.R. Sections
270.6c-7 and represent that the provisions of that Rule have been or will be
complied with. Accordingly, ANLIC and the Variable Account are exempt from the
provisions of Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act
of 1940 with respect to any variable annuity contract participating in such
account to the extent necessary to permit compliance with the Texas Optional
Retirement Program.

SECTION 403(b) REPRESENTATIONS

ANLIC represents that it is relying on a no-action letter
dated November 28, 1988, to the American Council of Life Insurance (Ref. No.
IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment
Company Act of 1940, in connection with redeemability restrictions on Section
403(b) policies, and that paragraphs numbered (1) through (4) of that letter
will be complied with.

C - 4
<PAGE> 67
SIGNATURES

As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, Acacia National Life Insurance Company Separate
Account II, has duly caused this Registration Statement to be signed on its
behalf in the City of Washington and the District of Columbia on the 9th day of
May, 1996.

ACACIA NATIONAL LIFE INSURANCE
COMPANY SEPARATE ACCOUNT II

By: ACACIA NATIONAL LIFE
INSURANCE COMPANY

By: /s/ Ellen Jane Abromson
-------------------------
Ellen Jane Abromson
Second Vice President and
Associate Counsel

Attest: /s/ W. Nicholas Goetz

------------------------

<PAGE> 68
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ Charles T. Nelson Chairman of the Board, President, May 13, 1996
---------------------------------- Chief Executive Officer, and
Charles T. Nason Director

/s/ Robert W. Clyde Executive Vice President, Marketing May 13, 1996
---------------------------------- and Sales, and Director
Robert W. Clyde

/s/ Paul L. Schneider Senior Vice President, Chief May 13, 1996
---------------------------------- Financial Officer, Treasurer, and
Paul L. Schneider Director

/s/ Robert-John H. Sands Senior Vice President, General May 13, 1996
---------------------------------- Counsel, and Director
Robert-John H. Sands

/s/ Haluk Ariturk Senior Vice President, Operations, May 13, 1996
---------------------------------- Chief Actuary, and Director
Haluk Ariturk

/s/ Stephen B. Couch Vice President, Chief Investment May 13, 1996
---------------------------------- Officer, and Director
Stephen B. Couch
</TABLE>
<PAGE> 69
EXHIBIT INDEX

Exhibit
Number Description
- ------ -----------
99(1) Resolution of the Board of Directors of Acacia National Life
Insurance Company ("ANLIC") authorizing establishment of the
Acacia National Variable Annuity Separate Account II.

99(4) Form of Annuity Policy.

99(5) Form of Application.

99(6)(B) By-Laws

<PAGE> 1

EXHIBIT 99(1)

ACACIA NATIONAL LIFE INSURANCE COMPANY
SECRETARY'S CERTIFICATION

I, W. NICHOLAS GOETZ, the duly elected Assistant Secretary of the Acacia
National Life Insurance Company, incorporated in 1974 and operating under the
laws of the Commonwealth of Virginia, do hereby certify that the Board of
Directors, at a meeting held on November 30, 1995, a quorum being present and
upon motion duly made, seconded and unanimously carried, did vote to approve
and adopt the following resolution which is now in full force and effect:

CORPORATE RESOLUTION
VARIABLE ANNUITY SEPARATE ACCOUNT II

BE IT RESOLVED, that the Company, pursuant to the provisions of Section
38.2.3113 of the Code of Virginia, hereby establishes a separate account
designated, "Acacia National Variable Annuity Separate Account II" (hereinafter
"Variable Account II") for the following use and purposes, and subject to such
conditions as hereinafter set forth:

FURTHER RESOLVED, that Variable Account II shall be established for the purpose
of providing for the issuance by the Company of such variable annuity contracts
or such other contracts as the Executive Committee may designate for such
purpose and shall constitute a separate account into which are allocated
amounts paid to or held by the Company under such contracts; and

FURTHER RESOLVED, that the income, gains and losses, whether or not realized,
from assets allocated to Variable Account II shall, in accordance with the
contracts, be credited to or charged against such account without regard to
other income, gains, or losses of the Company; and

FURTHER RESOLVED, that the fundamental investment policy of Variable Account II
shall be to invest or reinvest the assets of Variable Account II in securities
issued by investment companies registered under the Investment Company Act of
1940 as may be specified in the respective contracts; and

FURTHER RESOLVED, that the Variable Account II may be divided into sub-accounts
and that each such investment division shall invest only in the shares of a
single mutual fund or a single mutual fund portfolio of an investment company
organized as a series fund pursuant to the Investment Company Act of 1940; and

FURTHER RESOLVED, that the President, a Vice President, Secretary and
Treasurer, each be, and hereby are, authorized to take all necessary and
appropriate action to accomplish the registration of the Variable Account II as
an investment company under the Investment Company Act of 1940 and the
registration of the variable contracts issued in connection with the Variable
Account II as securities under the Securities Act of 1933, and to take all
action necessary to comply with the Acts, including but not limited to the
execution and filing of registration statements and amendments thereto,
applications for exemptions from the provisions of the Acts as may be necessary
or desirable, and agreements for the management of the Variable Account II and
for the distribution of variable contracts carrying an interest in the Variable
Account II assets;

FURTHER RESOLVED, that the President or a Vice President be, and hereby are,
authorized to adopt Rules and Regulations for the administration of the
Variable Accounts II;

FURTHER RESOLVED, that the President or a Vice President be, and hereby are,
authorized to take all necessary and appropriate action to enter into an
agreement for the sale or purchase of shares and to take such other actions and
execute such other agreements as they deem necessary or desirable to carry out
the foregoing resolutions and the intent and purposes thereof.

BE IT RESOLVED, that the following Standards of Conduct with respect to
investments of the Variable
<PAGE> 2
Account II and variable contract operations are hereby adopted:

Unless otherwise approved in writing by the insurance commissioner of the
applicable state in advance of the transaction, with respect to the Variable
Account II, the Company shall not:

1. Sell to, or purchase from, such separate account established
by the company any securities or other property, other than
variable annuity contracts.

2. Purchase, or allow to be purchased, for such separate account,
any securities of which the Company or an affiliate is the
issuer.

3. Accept any compensation, other than a regular salary or wages
from the Company or affiliate, for the sale or purchase of
securities to or from such separate account other than as
provided by law.

4. Engage in any joint transaction, participation or common
undertaking whereby the Company or an affiliate participates
with such separate account in any transaction in which the
Company or any of its affiliates obtain an advantage in the
price or quality of the item purchased, in the service
received, or in the cost of such service or is disadvantaged
in any of these respects by the same transaction.

5. Borrow money or securities from such separate account other
than under a loan by an eligible contract owner in connection
with a qualified retirement plan.

BE IT RESOLVED, that the following standards concerning asset diversification
requirements under Section 817(h) the Internal Revenue Code shall be adhered
to:

On the last day of each calendar quarter, no more than 55% of
the total assets of a Series may be represented by any one
investment, no more than 70% may be represented by any two
investments, no more than 80% may be represented by any three
investments, and no more than 90% may be represented by any
four investments.

BE IT RESOLVED, that the following Standards of Suitability shall apply to
Acacia National Life Insurance Company, its officers, directors, employees,
affiliates and agents with respect to the suitability of a variable annuity
contract for an applicant for such contract:

No recommendation shall be made to an applicant to purchase a variable annuity
contract, and no variable contract shall be issued, in the absence of
reasonable grounds to believe that the purchase of such a contract is suitable
for such applicant on the basis of information furnished after reasonable
inquiry into the following subjects of concern to the applicant:

1.) the applicant's investment objectives;

2.) the applicant's financial situation and needs; and

3.) other relevant information known to Acacia National Life
Insurance Company or the Registered Representative making the
recommendation.

A copy of this resolution shall be distributed to the officers, employees,
affiliates and agents of this Company assigned to distribute and administer the
variable annuity contracts.

AND BE IT FURTHER RESOLVED, that the President, a Vice President, Secretary or
other appropriate

- 2 -
<PAGE> 3
officers of the Company are hereby authorized and directed to carry into full
force and effect the purposes and provisions of this resolution.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Corporate Seal,
this 10th day of May, 1996.

/s/ W. Nicholas Goetz
---------------------
SEAL Assistant Secretary

- 3 -

<PAGE> 1
EXHIBIT 99(4)

WE AGREE TO PAY--The benefits provided in this policy, subject to its terms
and conditions.

/s/ Richard J. Fedalen /s/ Charles T. Nason
-------------------------- ------------------------
Richard J. Fedalen Charles T. Nason
Secretary President

Acacia National Life Insurance Company will pay you, if living, the annuity
payments as set forth in this Policy beginning on the Maturity Date. If you
die before the Maturity Date and while this Policy is in force, we will pay
the Death Benefit according to the Policy provisions.

READ YOUR POLICY CAREFULLY
IT INCLUDES THE PROVISIONS ON THE FOLLOWING PAGES.

THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND
ACACIA NATIONAL LIFE INSURANCE COMPANY ("ANLIC").

The Owner may cancel the Policy within 10 days after the Owner receives it.
The Owner should mail or deliver the Policy to either ANLIC or the Registered
Representative who sold the Policy. If the Policy is canceled within this 10
day "Free Look", the Policy will be deemed void, and in most states, ANLIC
will refund the Policy Account Value at the end of the Valuation Period during
which the Policy is received by Us. This may be more or less than the Initial
Premium Payment.

The following applies only in those states in which ANLIC, upon exercise of
the Free Look right is required to refund the greater of Premiums Paid or the
Policy Account Value. Notwithstanding the allocations in the Application, in
such states, ANLIC reserves the right to allocate the initial Premium Payment
allocated to Sub-accounts of the Variable Account in its entirety to the
Acacia Capital Calvert Money Market Variable Sub-account, (on the Policy Date
or the date the first Premium is received, whichever is later) until the end
of the Free Look Period (which is administratively assumed to be 15 days after
the Policy Date for allocation purposes). If We so allocate Payments, We will
refund the greater of the Premium Payments or the Policy Account Value. A
refund of Premium paid by check may be delayed until the check has cleared the
Owner's bank.

You may change the Investment Allocation any time before the Maturity Date.
You must specify Your new allocation choices. Payments received after We
receive Your Request will be applied based on the new allocation.

THIS IS A FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY. THE POLICY'S
ACCUMULATION VALUE IN EACH SUB-ACCOUNT OF THE VARIABLE ACCOUNT IS BASED ON THE
INVESTMENT EXPERIENCE IN THAT ACCOUNT AND WILL INCREASE OR DECREASE DAILY.
THE DOLLAR AMOUNT IS NOT GUARANTEED. NO DIVIDENDS ARE PAYABLE.

The Policy Account Value in the General Account will accumulate interest at a
minimum rate of 4.0% a year, although additional interest in excess of the
guaranteed rate may be credited at our sole discretion.

ALLOCATOR 2000 ANNUITY Annuity Payments Begin on the Maturity Date.
FLEXIBLE PREMIUM Flexible Premiums.
DEFERRED VARIABLE Non-participating; No Dividends.
ANNUITY POLICY Some Benefits Reflect Investment Results.

[ACACIA LOGO] ACACIA NATIONAL LIFE INSURANCE COMPANY
a Virginia Corporation
Principal Office: Home Office:
51 Louisiana Avenue, N.W. 9302 Lee Highway
Washington, D.C. 20001 Suite 750
1-800-369-9407 Fairfax, VA 22031
<PAGE> 2
PLEASE READ THIS POLICY CAREFULLY. IT IS A LEGAL CONTRACT BETWEEN YOU AND US.

IN THIS POLICY: YOU OR YOUR MEANS THE OWNER AS SHOWN IN THE APPLICATION OR
THE LATEST CHANGE FILED WITH US. WE, OUR OR US MENAS ACACIA NATIONAL LIFE
INSURANCE COMPANY.

INTRODUCTION

This is a Variable Annuity -- an individual flexible premium deferred
variable annuity policy (the "Policy") offered by Acacia National Life
Insurance Company ("ANLIC"). The Policy presents a dynamic concept in
retirement planning designed to give Policy Owners flexibility in attaining
financial goals. The Policy is available for individuals as a non-tax
qualified retirement plan ("Non-Qualified Plan") or in connection with a
retirement plan qualified under Section 401, 403, or 408 of the Internal
Revenue Code ("Qualified Plan").

During the Accumulation Period, the Policy provides for the accumulation
of a Policy Owner's value on either a variable basis, a fixed basis, or both.
The Policy also provides several options for annuity payments to begin on a
future date. Premium payments may be allocated at the Policy Owner's
discretion to one or more of the Sub-accounts of the Variable Account or to
ANLIC's General Account ("Fixed Account"). Each Sub-account of the Variable
Account will invest solely in a corresponding series ("Portfolio") of various
mutual funds ("Funds"). The Prospectuses You received for the Funds describe
the investment objectives and the attendant risks of the Portfolios.

The Policy Account Value in the Fixed Account will accrue interest at rates
that are paid by ANLIC as described in the "The General Account".

The Policy Account Value in the Variable Account under a Policy will vary
based on investment performance of the Sub-accounts to which the Policy
Account Value is allocated. No minimum amount of Policy Account Value is
guaranteed.

THIS POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK OR DEPOSITORY INSTITUTION. THE POLICY IS NOT FEDERALLY ISSUED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
AGENCY, AND INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED.

2
<PAGE> 3
POLICY SPECIFICATIONS PAGE

Policy Number:
Policy Owner:
Annuitant:
Policy Date:
Maturity Date:
Account Manager:

TYPE OF COVERAGE - Flexible Premium Deferred Variable Annuity

Initial Premium:

Premium Payment Mode: MONTHLY Planned Periodic Premium:

Subsequent Premiums are due at the discretion of the Owner with a $30 minimum.

INITIAL PREMIUM ALLOCATION

Acacia National Variable Annuity
Separate Account II

INITIAL
ALLOCATION % ACCOUNT
- ------------ -------
VARIABLE SUB-ACCOUNTS:
PORTFOLIO NAME CATEGORY
<S> <C> <C>
Alger American Growth Large Cap Growth
Alger American MidCap Growth Mid Cap Growth
Alger American Small Capitalization Small Cap Growth
Acacia Capital Corporation Calvert
Responsibly Invested
Money Market Cash - Money Market
Acacia Capital Corporation Calvert
Responsibly Invested Balanced Managed Growth
Acacia Capital Corporation Calvert
Responsibly Invested Strategic Growth Strategic Growth
Dreyfus Stock Index Fund S & P 500 Index
Neuberger & Berman Advisors
Management Trust Limited
Maturity Bond Government Bond
Neuberger & Berman Advisors
Management Trust Growth Large Cap Value
Strong Advantage Fund II Income
Strong Asset Allocation Fund II Balanced Fund
</TABLE>

Page 3

<PAGE> 4
POLICY SPECIFICATIONS PAGE
CONTINUED

<TABLE>
<CAPTION>
INITIAL
ALLOCATION % ACCOUNT
- ------------ -------

PORTFOLIO NAME CATEGORY
<S> <C> <C>
Strong International Stock Fund II International Growth
Strong Discovery Fund II Aggressive Growth
Van Eck Worldwide Insurance Trust
Gold and Natural Resources Fund Precious Metals

GENERAL ACCOUNT:

Acacia National Fixed Account Fixed Interest Rate

</TABLE>

POLICY CHARGES

Annual Policy Fee: $42.00 each policy year will be deducted
each year on or before the Policy Anniversary
Date, Maturity Date, or upon Surrender. Fee
waived when account value exceeds $50,000.

Mortality and Expense Risk Charge: Equal on an annual basis to 1.25% of the
average daily net assets of the Separate
Account and calculated monthly, The
Mortality and Expense Charge ("M&E") is
guaranteed to decrease by .05% of the
average daily net assests of the Separate
Account on an annual basis, beginning in
year 16, until it reaches .50% of the
average daily net assests of the Separate
Account on an annual basis at the end of
year 30. (See Mortality and Expense
Calculation Section).

Administrative Expense Charge: Not to exceed .10% of the average daily net
assets of the Separate Account on annual
basis and calculated monthly.

SCHEDULE OF SURRENDER CHARGES

YOU MAY WITHDRAW 100% OF EARNINGS (SINCE THE LAST ANNIVERSARY) IN ALL
SUB-ACCOUNTS AND THE FIXED ACCOUNT FREE OF SURRENDER CHARGES. ADDITIONALLY, UP
TO 10% OF THE POLICY ACCOUNT VALUE (AS OF THE LAST ANNIVERSARY); PLUS 10% OF
THE FOLLOWING

(1) DEPOSITS SINCE THE LAST ANNIVERSARY; MINUS

(2) WITHDRAWALS SINCE THE LAST ANNIVERSARY

Page 3 (continued)

<PAGE> 5
MAY ALSO BE WITHDRAWN FREE OF SURRENDER CHARGES, UPON A PARTIAL WITHDRAWAL,
SURRENDER OR ANNUITIZATION WE WILL APPLY THE SURRENDER CHARGE PERCENTAGE SHOWN
BELOW TO THOSE PREMIUM PAYMENTS RECEIVED WITHIN FIVE YEARS OF THE PARTIAL
WITHDRAWAL OR SURRENDER DATE. AFTER THE FREE AMOUNTS ARE DETERMINED, THE
CALCULATION WILL BE BASED ON A FIRST-IN FIRST-OUT BASIS.

<TABLE>
<CAPTION>
YEARS SINCE PERCENTAGE OF
PREMIUM PAYMENT EACH PREMIUM PAYMENT
<S> <C>
1 8%
2 8%
3 8%
4 6%
5 4%
6 AND LATER 0%

</TABLE>

INTEREST RATE

FIXED ACCOUNT MINIMUM GUARANTEED RATE: 4.00 %

IMPORTANT INFORMATION TO POLICYHOLDERS

In the event you need to contact someone about this Policy for any reason,
please contact your Registered Representative. If you have any additional
questions you may contact the Acacia National Life Insurance Company Service
Office at the following address and telephone number; P.O. Box 79574, Baltimore,
Maryland 21279-0574; toll free number 1-800-369-9407.

If you are unable to contact the Company or resolve a problem to your
satisfaction, you may contact the Virginia Bureau of Insurance at: Bureau of
Insurance, State Corporation Commission, P.O. Box 1197, Richmond, VA 23209;
Phone: (804) 371-9471.

Page 3 (continued)
<PAGE> 6
TABLE OF CONTENTS

<TABLE>
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . 2

POLICY SPECIFICATIONS . . . . . . . . . . . . . . . . 3

POLICY CHARGES . . . . . . . . . . . . . . . . . . . 3

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . 4

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 5

GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 8
The Policy . . . . . . . . . . . . . . . . . . . . 8
Misstatement of Age or Sex . . . . . . . . . . . . 8
Nonparticipating . . . . . . . . . . . . . . . . . 8
Periodic Reports . . . . . . . . . . . . . . . . . 8
Policy Dates . . . . . . . . . . . . . . . . . . . 8
Termination . . . . . . . . . . . . . . . . . . . 8
Owner and Joint Owner . . . . . . . . . . . . . . 9
Beneficiary Change . . . . . . . . . . . . . . . . 9
Assignment . . . . . . . . . . . . . . . . . . . . 9

PREMIUM PAYMENTS . . . . . . . . . . . . . . . . . . 9
Initial Premium . . . . . . . . . . . . . . . . . 9
Additional Premium . . . . . . . . . . . . . . . . 9
Payment Allocation . . . . . . . . . . . . . . . 10

GENERAL ACCOUNT . . . . . . . . . . . . . . . . . . 10
General Description . . . . . . . . . . . . . . 10
Transfer Limitation . . . . . . . . . . . . . . 10
Fixed Account Value . . . . . . . . . . . . . . 10

VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . 11
General Description . . . . . . . . . . . . . . 11
Sub-accounts . . . . . . . . . . . . . . . . . . 11
Investment Allocations . . . . . . . . . . . . . 11
Additions, Deletions, or Substitutions of
Investments . . . . . . . . . . . . . . . . . . 11
Transfers from Sub-accounts . . . . . . . . . . 12
Automatic Rebalancing, Dollar Cost Averaging,
and Interest Sweep Programs . . . . . . . . . . 12
Variable Account Value . . . . . . . . . . . . . 12
Accumulation Unit Value . . . . . . . . . . . . 13
Net Investment Factor . . . . . . . . . . . . . 13
Mortality and Expense Risk and
Administrative Charge Calculation . . . . . . . 13

POLICY ACCOUNT VALUE . . . . . . . . . . . . . . . 14
Description . . . . . . . . . . . . . . . . . . 14
Basis of Calculations . . . . . . . . . . . . . 14

POLICY CHARGES AND DEDUCTIONS . . . . . . . . . . . 14

PARTIAL WITHDRAWALS AND SURRENDERS . . . . . . . . 14
Surrender Policy . . . . . . . . . . . . . . . . 14
Surrender Value . . . . . . . . . . . . . . . . 14
Partial Withdrawal . . . . . . . . . . . . . . . 15
Payment upon Partial Withdrawal or
Surrender . . . . . . . . . . . . . . . . . . . 15
Waiver of Surrender Charges . . . . . . . . . . 15
Confinement to a Hospital or Nursing Home . . . 15

PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . 16
Description . . . . . . . . . . . . . . . . . . 16
Death Benefit . . . . . . . . . . . . . . . . . 16
Payment of Policy Benefits . . . . . . . . . . . 17
Annuity Payment Options . . . . . . . . . . . . 18
</TABLE>

V-20-010
<PAGE> 7
5

DEFINITIONS

ACCUMULATION PERIOD - The period before the Maturity Date and during the
lifetime of the Annuitant.

ACCUMULATION UNIT VALUE - An accounting unit of measure used to calculate the
value of Your interest in Sub-accounts of the Variable Account. The initial
number of Accumulation Units to be credited to each Sub-account of this Policy
will be determined by dividing the net premium allocated to each Sub-account
by the Accumulation Unit Value for that Sub-account for that Valuation Period.

AGE - Age at last birthday.

ANLIC - Acacia National Life Insurance Company.

ANNUITANT - The person or person(s) whose life is used to determine the
duration of Annuity Payments involving life contingencies. The Annuitant must
be a natural person. The Annuitant may also be the Owner of the Policy.

ANNUITY PAYMENT OPTIONS - The options that are available for payment of the
Surrender Value of the Policy commencing upon the Maturity Date

BENEFICIARY - The person(s) or legal entity listed by the Owner in the
Application or as changed, and referred to in this Policy as the Beneficiary.

DUE PROOF OF DEATH - A certified copy of a death certificate, a certified copy
of a decree of a court of competent jurisdiction as to the finding of death, a
written statement by the attending physician, or any other proof satisfactory
to Us.

EARNINGS - The excess of Policy Account Value minus Premiums Paid.

ELIGIBLE INVESTMENT(S) - Those investments available under the Policy.
Current Eligible Investments are shown on the Specifications Page.

FIXED ACCOUNT - The Account via which Owners may allocate or transfer net
Premium Payments to the General Account of ANLIC. An initial allocation or
transfer into the Fixed Account does not entitle an Owner to share in the
investment experience of the General Account. Instead ANLIC guarantees that
Policy Account Value in the Fixed Account will accrue interest at an annual
rate of at least 4%. Any excess interest rate when declared will remain in
effect at least one year.

FREE WITHDRAWAL AMOUNT - That portion of any Partial Withdrawal or Surrender
that is not subject to a Surrender Charge under the terms of the Policy.

FUND - A registered, open-end management investment company. Each Sub-account
invests exclusively in shares of a single Portfolio of such investment
company.

GUARANTEED INTEREST RATE - The applicable effective annual Guaranteed Interest
Rate established in good faith by the Company for an Interest Rate Guarantee
Period of the General Account at any given time.

GENERAL ACCOUNT - The assets of ANLIC other than those in the Variable Account
or any other separate account.

V-20-010 BACK
<PAGE> 8
INTEREST RATE GUARANTEE PERIOD - A specified period whereby funds allocated to
the Fixed Account accumulate at a Guaranteed Interest Rate. Interest Rates
will be determined on no less than an annual basis.

INVESTMENT ALLOCATION - The percent of each Premium Payment You choose to
allocate to the Fixed Account or any of the variable Sub-Accounts We offer.

IRREVOCABLE BENEFICIARY - A Beneficiary whose interest cannot be changed
without his or her consent or as required by law.

JOINT ANNUITANT - The person other than the Annuitant who may be designated by
the Owner and whose life is also used to determine the duration of Annuity
Payments involving life contingencies. If one of the Joint Annuitants dies
prior to the Maturity Date, the survivor shall become the sole Annuitant.

MATURITY DATE - The date upon which Annuity Payments begin. Owners may choose
a Maturity Date commencing no later than the first day of the month after the
Annuitant's 90th birthday.

NET ASSET VALUE - For each Portfolio, the current price of one share of that
Portfolio. The Net Asset Value is computed by adding the value of the
Portfolio's investments plus cash and other assets, deducting liabilities and
then dividing the result by the number of its shares outstanding. The Net
Asset Value of each Portfolio is generally calculated on each day the New York
Stock Exchange is open as of the close of business.

NET PREMIUM PAYMENT - The Premium less any applicable premium taxes.

OWNER - The person named on the Application as Owner or the persons named on
the Application as Joint Owners. Any reference to Owner in the Policy will
include both Owners if joint. The Owner(s) is entitled to all of the
ownership rights under the Policy. The Owner has the legal right to make all
changes in the Policy designations where permitted specifically by the terms
of the Policy. The Owner is as specified in the Application, unless changed.

POLICY ACCOUNT VALUE - The total value held in both the Variable Account and
the General Account.

POLICY DATE - The date set forth in the Policy that is used to determine
Policy years and months. Policy Anniversaries are measured from the Policy
Date.

PORTFOLIO - A separate investment portfolio of an open-end management
investment company (mutual fund) in which the Variable Account assets are
invested.

PREMIUM PAYMENT - An amount paid to ANLIC in accordance with the provisions of
this Policy.

SERVICE OFFICE - The office where Policy administration is done, whether at
ANLIC or at the offices of a third party administrator, as designated by ANLIC
in writing.

SINGLE PREMIUM POLICY - Between Annuitant ages 75 and 85, we will accept only
Single Premium Policies. The Premium is due on the Policy Date. The maximum
Premium that can be paid without the prior approval of ANLIC is $500,000.

V-20-020
<PAGE> 9
7

SUB-ACCOUNTS - The sub-divisions of the Variable Account which each invest
exclusively in shares of a specified Portfolio or any other investment
portfolio with a specific investment objective that we determine to be
suitable for this Policy's purposes.

SURRENDER VALUE - The Policy Account Value as of any Valuation Date of all
amounts accumulated in the Fixed Account and in the Variable Account under
this Policy prior to the Maturity Date, reduced by applicable Surrender
Charges, the Annual Policy Fee and any Premium or other taxes.

SYSTEMATIC PARTIAL WITHDRAWALS - Owners choosing this option will withdraw a
level dollar amount of their Policy Account Value on a periodic basis.
Systematic Partial Withdrawals are subject to the same surrender charges as
any partial withdrawals, as set forth on the Specifications Page.

VALUATION DATE - Each regular business day that ANLIC and the New York Stock
Exchange is open for business, and excluding holidays, and any other day in
which there is insufficient trading in the Fund Portfolio securities to
materially affect the value of the assets in the Variable Account.

VALUATION PERIOD - The period between two successive Valuation Dates,
commencing at the close of business on each Valuation Date and ending at the
close of business for the next succeeding Valuation Date.

VARIABLE ACCOUNT - Acacia National Life Insurance Company Separate Account II
(Variable Account). A separate investment account has been established by
ANLIC to receive and invest the net Premiums paid under this Policy. The
Variable Account is currently divided into a number of Sub-accounts. Each
Sub-account invests exclusively in shares of a single portfolio of a
management investment company.

VARIABLE ACCOUNT VALUE - The sum of the values held in all the Sub-accounts of
the Variable Account.

7-20-020 BACK
<PAGE> 10
GENERAL PROVISIONS

THE POLICY

The Allocator 2000 Annuity is a Flexible Premium Deferred Variable Annuity
Policy.

(a) The Policy may be purchased on a non-tax qualified basis
(Non-qualified Policy).
The Policy may also be purchased and used in connection with
retirement plans or individual retirement accounts that qualify for
favorable federal income tax treatment (Qualified Policy) as more
fully set forth in applicable Riders.

(b) Before it will issue a Policy, ANLIC must receive a completed Policy
Application.
A minimum Premium Payment of $300 during the first Policy year is
required.

(c) The Policy and attached copy of the Application (except as otherwise
may be required by law), and any applicable Riders are the entire
contract. Only Our Elected Officers can agree to change or waive
any provisions of the Policy. Any change or waiver must be in
writing and signed by such Officer.

MISSTATEMENT OF AGE OR SEX

If the age or sex of the Annuitant has been misstated the benefits payable
under the Policy will be equal to the benefits which the Premium Payments
would have provided for the correct age or sex. (If such distinction based
upon sex is allowed).

We may require proof of the age of the Annuitant before making any Annuity
Payments provided for by this Policy.

If a misstatement of age or sex results in monthly income payments that are
too large, the overpayments will be deducted from future payments. If We have
made payments that are too small, the underpayment will be added to the next
payment. Adjustments for overpayments or underpayment will include the
compound interest rate used to determine the Annuity Payments.

NONPARTICIPATING

No dividends will be paid. Neither You nor the Beneficiary of this Policy
will have the right to share in Our surplus earnings or profits.

PERIODIC REPORTS

At least once each Policy Year we will send You a statement showing Your
Policy Account Value as of a date not more than two months prior to the date
of mailing. We will also send such statements as may be required by
applicable state and federal laws, rules, and regulations.

POLICY DATES

Policy months, years and Policy Anniversaries are measured from the Policy
Date shown on the Specifications Page.

TERMINATION

This Policy will remain in force until Surrendered for its full value, a
Payment Option has been elected, or the Death Benefit has been paid.

After the first five Policy years, we may cancel this Policy if for two
subsequent years You have not made any Premium Payments and the Policy Account
Value is less than $2,000 or would provide for less than $20 monthly payments
under any Annuity Payment Option. We will then pay You the Surrender Value in
one lump sum.

V-20-030
<PAGE> 11
9

OWNER AND JOINT OWNER

The Policy Owner is the individual named as such in the Application or in any
later change shown in ANLIC's records. There may be Joint Owners. Prior to
the Maturity Date and during any Annuitant's lifetime, only the Owner has the
right to receive all benefits and may exercise the rights under this Policy.
If there are Joint Owners, the signatures of both Owners are needed to
exercise rights under the Policy.

If the Annuitant is not an Owner and the Annuitant dies before the Maturity
Date, the Owner may name a new Annuitant. If the Owner doesn't name a new
Annuitant, the Owner or Joint Owners will become the Annuitant. If one of the
Joint Annuitants die prior to the Maturity Date, the survivor shall become the
sole Annuitant.

BENEFICIARY CHANGE

You may change the named Beneficiary by sending a written request in a form
acceptable to Us at Our Service Office unless the Beneficiary is irrevocable.
If the named Beneficiary is irrevocable, You may change the named Beneficiary
only by joint written request from You and such named Beneficiary.

You need not send Us the Policy unless We request it. When recorded and
acknowledged by Us, the change will be effective as of the date You signed the
request. The change will not apply to any payments made or other action taken
by Us before the change has been recorded and acknowledged by Us.

ASSIGNMENT

You may assign this Policy as collateral, unless prohibited elsewhere in this
Policy or applicable Rider. We will not be bound by the Assignment until a
copy is filed with Us. We assume no responsibility for determining whether an
Assignment is valid or the extent of the assignees interest.

No Beneficiary may assign any benefits under the Policy until the benefits are
due. To the extent permitted by law, payments are not subject to the debts of
any Beneficiary nor to any judicial process for payment of the Beneficiary's
debts.

PREMIUM PAYMENTS

INITIAL PREMIUM

If the Application can be accepted in the form received, We will credit Your
initial Net Premium Payment to the Policy Account Value within two business
days after receipt of the initial Premium Payment. The amount credited to
Your Policy Account Value will be the Premium Payment less any applicable
taxes.

If the initial Premium Payment cannot be credited because the Application or
other issuing requirements are incomplete, the Applicant will be contacted
within five business days and given an explanation for the delay. The initial
Premium Payment will be returned at that time unless the Applicant consents to
ANLICs retaining of the initial Premium Payment and crediting it as soon as
the necessary requirements are fulfilled. At least $300 must be paid during
the first policy year.

ADDITIONAL PREMIUM

Additional Premium Payments are payable at Our Service Office. The minimum
additional Premium Payment is $30. Additional Net Premium Payments will be
credited to the Policy and added to the Policy Account Value as of the
Valuation Date when they are received at Our Service Office.

While the Annuitant is living and prior to the Maturity Date, the Owner may
make additional Premium Payments at any time, and in any frequency until the
Annuitant reaches age 75. We will not accept any additional Premium Payments
beginning on the Policy Anniversary next following the Annuitants 75th
birthday. Only Single Premium Policies will be written between ages 75 and
85.

V-20-030 BACK
<PAGE> 12
PAYMENT ALLOCATION

We will allocate Your net Premium Payments among the Fixed Account and the
Sub-accounts based on the Investment Allocation You specify. These
allocations are subject to a minimum 5% designated percentage proportion per
account. Your initial Investment Allocation is shown on the Specifications
Page.

GENERAL ACCOUNT

GENERAL DESCRIPTION

The General Account consists of all assets owned by ANLIC other than those in
the Variable Account and other separate accounts. Subject to applicable law,
ANLIC has sole discretion over the investment of the assets in the General
Account.

The Acacia National General Account is supported by assets of the Company that
are held in the General Account. Premiums applied and any amounts transferred
to the General Account are credited with a fixed rate of interest for a
specified period. This is the account known as the "Fixed Account".

The allocation of Premium Payments and/or transfer of Policy Account Value to
the Fixed Account does not entitle an Owner to share in the investment
experience of the General Account. Instead, the guaranteed interest rate used
in the calculation of the Fixed Account Value is the amount stated on the
Specifications Page, compounded annually. A higher amount of interest in
excess of the guaranteed rate may be used in the calculation of the Fixed
Account Value at such times and in such a manner as We may determine.
Interest rates will be determined on no less than an annual basis.

Prior to the Maturity Date an Owner may elect to allocate net Premium Payments
to the Fixed Account or to transfer Policy Account Value to or from the Fixed
Account (subject to certain restrictions upon transfers from the Fixed
Account, as discussed, below).

TRANSFER LIMITATION

The maximum amount allowed to be transferred during one policy year is 100% of
Fixed Account interest accrued since the last Anniversary; plus 10% of

(1) Account Value of the Fixed Account as of the last Anniversary; plus

(2) Deposits and transfers made into the Fixed Account as of the last
Anniversary; minus

(3) All partial withdrawals from the Fixed Account since the last
Anniversary.

You may also elect to systematically reallocate all interest generated from
the Fixed Account into the Sub-accounts on an interest only basis according to
Your allocation election. (See, Interest Sweep Program).

FIXED ACCOUNT VALUE

We will credit Premium Payments allocated to the Fixed Account to Your Fixed
Account Value. The Fixed Account Value at any time equals:

(1) The net Premium Payments allocated to the Fixed Account; plus

(2) The total of all amounts transferred to the Fixed Account from the
Variable Account; minus

(3) The total of all amounts transferred from the Fixed Account to the
Variable Account; minus

(4) The total of all Policy Fees attributable to the Fixed Account;
minus

V-20-040
<PAGE> 13
11

(5) The total of all Partial Withdrawals from the Fixed Account
(including any Surrender charges); plus

(6) Interest.

VARIABLE ACCOUNT

GENERAL DESCRIPTION

The variable benefits under Your Policy are provided through investments in
Acacia National Life Insurance Company Separate Account II which is referred
to in this Policy as the Variable Account. The Variable Account is kept
separate from Our General Account. We established the Variable Account as a
separate investment account to support variable annuity contracts.

We own the assets of the Variable Account. Assets equal to the reserves and
other liabilities of the Variable Account will not be charged with liabilities
that arise from any other business We conduct. We may transfer to our General
Account assets which exceed the reserves and other liabilities of the Variable
Account.

The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. It is
also governed by the laws of the State of Virginia.

SUB-ACCOUNTS

The Variable Account has a number of Sub-accounts. Each series represents a
separate investment portfolio of various registered investment companies.
Shares of a portfolio are purchased and redeemed for a Sub-account at their
Net Asset Value. All available Sub-accounts of the Variable Account are shown
on the Policy Specifications Page. You determine the percentage of net
Premium Payments which will be allocated to each Sub-account.

Income and realized and unrealized gains or losses from the assets of each
Sub-account of the Variable Account are credited to or charged against that
Sub-account without regard to income, gains or losses in the other
Sub-accounts of the Variable Account, the General Account or any other
separate accounts.

INVESTMENT ALLOCATIONS

An Owner may elect to allocate net Premium Payments to the General Account via
the Fixed Account, to Sub-accounts of the Variable Account, or both. The
Owner may also transfer value from the Sub-accounts to the Fixed Account, or
from the Fixed Account to the Sub-accounts subject to the limitation on
transfer from the Fixed Account. (See, Fixed Account - Transfer Limitation).
You may make unlimited transfers from the Sub-accounts to the General Account
and between such Sub-accounts. We will value the assets of each Sub-account
at the end of each Valuation Period.

ADDITIONS, DELETIONS, OR SUBSTITUTION OF INVESTMENTS

We reserve the right to transfer assets of a Sub-account or the Variable
Account, which We determine to be associated with the class of policies to
which the Policy belongs, to another Sub-account or Variable Account. If this
type of transfer is made, the Sub-account or Variable Account specified in
this Policy shall then refer to the Sub-account or Variable Account to which
the assets were transferred.

When permitted by law, We also reserve the right:

1. to create additional Variable Accounts; to create Sub-accounts from,
or combine or remove Sub-accounts from the Variable Account; or to
combine any two or more Variable Accounts;

2. to operate any one or more of the Sub-accounts as a management
investment company under the 1940 Act or in any other form permitted
by law;

3. to deregister the unit investment trusts under the 1940 Act;

V-20-040 BACK
<PAGE> 14
4. to modify the provisions of this Policy to comply with applicable
laws;

5. to restrict or eliminate any voting rights of any Owner or other
persons who have voting rights as to the Sub-accounts.

If you object to a material change in the investment Policy of a Sub-account
in which You have at such time a portion of Your Policy Account Value, You may
transfer such portion of Your Policy Account Value, upon written request, from
that Sub-account, without charge, to another Sub-account or to the Fixed
Account. You may then change your Premium allocation percentages. The
investment policy of a Sub-account shall not be changed without the approval
of the Insurance Supervisory Official from the Commonwealth of Virginia. A
statement of such approval process is on file with the Commonwealth of
Virginia.

TRANSFERS FROM SUB-ACCOUNTS

Any time prior to the Maturity Date, the Owner may ask ANLIC to transfer all
or part of the amount in one of the Sub-accounts to another Sub-account or to
the Fixed Account. The minimum for such transfer is $50. The transfer will
be made as of the date ANLIC receives the written request at Our Service
Office.

AUTOMATIC REBALANCING, DOLLAR COST AVERAGING, AND INTEREST SWEEP PROGRAMS

The Owner may also elect from the Automatic Rebalancing Program, the Dollar
Cost Averaging Program or the Interest Sweep Program by filing a written
authorization with ANLIC. ANLIC reserves the right to alter, assess a charge,
or terminate these administrative programs upon 30 days advance written
notice.

Under the Automatic Rebalancing Program, the Owner may have automatic
transfers on either a monthly, quarterly, semi-annual or annual basis, to
adjust the values among the Sub-accounts and the Fixed Account to meet the
Owner's designated percentage account value proportions the Owner has on file
with ANLIC. The allocations are subject to a 5% minimum.

ANLIC also offers an option under which Policy Owners may dollar cost average
their allocations to the Variable Account under the Policy by authorizing
ANLIC to make periodic transfers of specific dollar amounts from the Money
Market Sub-account to one or more of the other designated Sub-accounts, on
either a monthly, quarterly, semi-annual or annual basis. Each transfer is
subject to a $50 minimum transfer amount pursuant to the Owner's Allocation
election.

Dollar cost averaging does not guarantee profits, nor does it assure that an
Owner will not lose principal. If a periodic transfer would reduce the value
in the Money Market Sub-account below the minimum dollar amount, ANLIC
reserves the right to transfer the entire remaining Policy Account Value in
the Money Market Sub-account. ANLIC also reserves the right to establish a
minimum Money Market Sub-account balance before We allow You to elect the
program.

The Interest Sweep Program allows Owners to systematically reallocate interest
earnings from the Fixed Account to one or more of the Sub-accounts of the
Variable Account on a monthly, quarterly, semi-annual, or annual basis as
designated by the Owner.

Transfers and adjustments pursuant to these Programs will occur on the monthly
Policy Anniversary Date in the month in which the transaction is to take place
or the next succeeding business day if the monthly Policy Anniversary Date
falls on a day other than a Valuation Date.

VARIABLE ACCOUNT VALUE

The Variable Account Value will be the sum total of each Sub-account's value.
At any Valuation Date each Sub-account's value is equal to the Accumulation
Units multiplied by the Accumulation Unit Value. The initial number of
Accumulation Units to be credited to this Policy for each Sub-account is
determined at the time of initial Premium Payment by dividing the net Premium
Payments allocated to each Sub-account by the Accumulation Unit Value for that
Sub-account for the Valuation Period during which the Application is accepted.
For additional Premium Payments the number of units of each Sub-account
credited under this Policy is determined by dividing the net Premium Payments
allocated to that Sub-account by the unit value for that Sub-account at the
end of the Valuation Period during which We receive the Premium Payment at Our
Service Office.

V-20-050
<PAGE> 15
13

On each monthly Policy Anniversary Date We will make a deduction from the
Variable Account Value for both the Mortality and Expense Charge and
Administrative Charge equal to, on an annual basis, the amount shown on the
Specifications Page.

ACCUMULATION UNIT VALUE

Each Sub-account's Accumulation Unit Value for any subsequent Valuation Period
is determined by multiplying the Accumulation Unit Value for the immediately
preceding Valuation Period by the "net investment factor" for the Valuation
Period for which the value is being determined. The value of a Variable
Accumulation Unit may increase or decrease from one Valuation Period to the
next, since the net investment factor may be greater or less than one.

NET INVESTMENT FACTOR

The net investment factor is an index that measures the investment performance
of a Sub-account from one Valuation Period to the next. The net investment
factor for each Sub-account for any Valuation Period is determined by dividing
(a) by (b), where:

(a) is the net result of:

(1) the Net Asset Value per share of the portfolio shares held in the
Sub-account determined as of the end of the current Valuation
Period, plus

(2) the per share amount of any dividend or capital gain distributions
made by the portfolio on shares held in the Sub-account if the
"ex-dividend" date occurs during the current Valuation Period, plus
or minus

(3) a per unit charge or credit for any taxes incurred by or reserved
for in the Sub-account, which is determined by Acacia National to
have resulted from the maintenance of the Sub-account; and

(b) is the net result of:

(1) the Net Asset Value per share of the portfolio shares held in the
Sub-account determined as of the end of the immediately preceding
Valuation Period, plus or minus

(2) the per unit charge or credit for any taxes reserved for the
immediately preceding Valuation Period.

MORTALITY AND EXPENSE RISK AND ADMINISTRATIVE CHARGE CALCULATION

The Mortality and Expense charge as discussed on the Policy Specifications
Page is calculated on a monthly basis. This monthly deduction consists of a
monthly charge not to exceed .000036740 for each Valuation Date (1.35% on an
annual basis) for assets held in each Sub-account of the Variable Account.
This monthly charge will be reduced as follows:

<TABLE>
<CAPTION>
ANNUAL M&E MONTHLY CHARGE NOT TO
WITH ADMINISTRATIVE EXCEED FOR EACH
POLICY YEAR ANNUAL M&E EXPENSE CHARGE VALUATION DATE
<S> <C> <C> <C>
1 to 15 0.0125 0.0135 0.000036740
16 0.012 0.013 0.000035388
17 0.0115 0.0125 0.000034035
18 0.011 0.012 0.000032682
19 0.0105 0.0115 0.000031328
20 0.01 0.011 0.000029973
21 0.0095 0.0105 0.000028618
22 0.009 0.01 0.000027262
23 0.0085 0.0095 0.000025905
24 0.008 0.009 0.000024548
25 0.0075 0.0085 0.000023190
26 0.007 0.008 0.000021831
27 0.0065 0.0075 0.000020471
28 0.006 0.007 0.000019111
29 0.0055 0.0065 0.000017751
30+ 0.005 0.006 0.000016389
</TABLE>

V-20-050 BACK
<PAGE> 16
POLICY ACCOUNT VALUE

DESCRIPTION

The Policy Account Value is the total amount of value held in both the
Variable Account and the General Account.

BASIS OF CALCULATIONS

All values are at least equal to those required by the law of the state in
which the Policy is delivered. We have filed with that state a detailed
settlement method of calculating values for the Policy. With regard to
amounts allocated to the Fixed Account, the Accumulation Value, Surrender
Value, Death Benefit and paid-up Annuity Benefit are not less than those
required by the state in which this Policy is delivered.

POLICY CHARGES AND DEDUCTIONS

(a) ANNUAL POLICY FEE - An annual charge, shown on the Policy Specifications
Page, is deducted on each Policy Anniversary on or before the Maturity
Date or at once upon a Surrender. The Policy fee is deducted from the
Sub-accounts on a prorata basis by canceling Accumulation Units.

(b) ADMINISTRATIVE EXPENSE CHARGE - A charge equal, on an annual basis, to
the amount shown on the Specifications Page. The Administrative Expense
Charge is deducted monthly by canceling accumulation units and
compensates Us for some of the costs associated with the administration
of this Policy and the Separate Account.

(c) MORTALITY AND EXPENSE RISK CHARGE - A charge equal, on an annual basis,
to the amount shown on the Specifications Page. The Mortality and
Expense Risk Charge is deducted monthly by canceling accumulation units
and compensates Us for assuming the mortality and expense risks under
this Policy.

(d) OTHER - Depending on Fund choices, other charges may apply, such as
management fees or other expenses.

(e) SURRENDER CHARGES - upon a Partial Withdrawal, Annuitization, or
Surrender, we will apply the Surrender Charge percentage shown on the
Specifications Page.

(f) TAXES - Various states impose a tax on Annuity Premium Payments. Such
taxes will be deducted as applicable.

PARTIAL WITHDRAWALS AND SURRENDERS

SURRENDER POLICY

Prior to the earlier of the Maturity Date or the Date of the Death of the
Owner, You may withdraw all or a portion of the current Surrender Value, on
written request to Our Service Office. If there are Joint Owners, both must
agree to the withdrawal.

SURRENDER VALUE

The Surrender Value is equal to the Policy Account Value less any applicable
Surrender Charges, the Annual Policy Fee, and any Premium or other Taxes.

The appropriate surrender charge percentage of each Premium Payment used in
the Surrender Charge calculation is determined by the number of years since
the Premium Payment was deposited.

V-20-060
<PAGE> 17
15

To determine the Surrender Charge for a particular Premium Payment, the
Surrender Charge percentage is multiplied by the Premium Payment less any
withdrawals previously allocated to the Premium Payment. The total Surrender
Charge is then determined by summing the previous result over all Premium
Payments used in the calculation. The Surrender Charge will be based on the
excess of the Surrender amount over the Free Withdrawal Amount. This excess
is distributed over the Premium Payments on a first-in, first-out basis until
exhausted.

PARTIAL WITHDRAWAL

You may request to make a Partial Withdrawal. You may tell Us how to allocate
the withdrawal amount among the Fixed Account and the Sub-accounts. If You do
not specify how to allocate the withdrawal amount among the Fixed Account and
the Sub-accounts, We will prorate the amount among Your percentage allocation
elections to the Fixed Account and the Sub-accounts based on the Policy
Account Value of each account.

We will impose Surrender Charges as more fully set out on the Specifications
Page. One hundred percent (100%) of earnings (since the last Anniversary) in
all Sub-accounts and the Fixed Account may be withdrawn free of Surrender
Charges. Additionally, up to 10% of the Policy Account Value (as of the last
Anniversary); plus 10% of

(1) deposits since the last Anniversary; minus

(2) withdrawals since the last Anniversary

may also be withdrawn free of Surrender Charges.

PAYMENT UPON PARTIAL WITHDRAWAL OR SURRENDER

We will normally pay any Partial Withdrawal or Surrender from the Sub-accounts
to You, or to any other Payee that you designate, within seven (7) Business
Days after We receive Your written request in a form satisfactory to us at our
Service Office, unless you choose a different date. We can postpone such
payments or any transfers of amounts between Sub-accounts or into the Fixed
Account if:

(a) the New York Stock Exchange is closed for other than customary
weekend and holiday closings;

(b) trading on the New York Stock Exchange is restricted;

(c) an emergency exists as determined by the Securities and Exchange
Commission, as a result of which it is not reasonably practical to
determine the value of the net assets of the Separate Account;

(d) the Securities and Exchange Commission permits delay for the
protection of security holders.

The applicable rules of the Securities and Exchange Commission will govern as
to whether the conditions in (c) or (d) exist.

We may also defer payment of Partial Withdrawals or Surrenders of General
Account Value from the Fixed Account for up to six months from the date Your
written request is received at Our Service Office. We will pay interest on
any amount deferred for (30) days or more. The interest rate will be at least
the Minimum Guaranteed Interest Rate stated in the Specifications Page.

WAIVER OF SURRENDER CHARGES

We will waive any applicable Surrender Charges if you request a Partial
Withdrawal or Surrender under the following conditions, provided that You are
eligible as described below.

CONFINEMENT TO A HOSPITAL OR NURSING HOME - Surrender Charges will be waived
if any Owner is confined at the recommendation of a physician for medically
necessary reasons for at least 30 consecutive days to:

(a) a hospital licensed or recognized as general hospital by the proper
authority of the state in which it is located; or

V-20-060 BACK
<PAGE> 18
(b) a hospital recognized as a general hospital by the Joint Commission
on the Accreditation of Hospitals; or

(d) a nursing home - defined as a facility licensed and operated as a
Skilled Nursing Facility, an Intermediate Care Facility or a
Residential Care Facility by the jurisdiction in which it is
located. Skilled and Intermediate Care Facilities must provide
continuous 24 hours a day nursing care and maintain daily medical
records. A Residential Care Facility must provide nursing care
under the supervision of a R.N. by having a registered nurse on duty
24 hours a day; or

(e) a place certified by Medicare as a Long Term Care Facility.

You must provide proof of confinement and request the Partial Withdrawal or
Surrender no later than 91 days after the last day of confinement.

We will not accept any additional Premium Payments after you exercise this
Waiver.

You are not eligible for this Waiver if any Owner was confined to a nursing
home, hospital, or Long Term Care Facility on the Policy Date.

PAYMENT OF BENEFITS

DESCRIPTION

You may decide how the benefits will be paid. During the Owner's lifetime You
may arrange for the Death Benefits to be paid in a single lump sum or subject
to any limitation under any state or federal law, rule, or regulation, under
one of the Annuity Payment Options, unless a settlement agreement is effective
at the date of death. If no election is made within 60 days of the date that
due proof of death is received at Our Service Office We will pay the Death
Benefits in a single lump sum. We will also pay Benefits in a single lump sum
if the Surrender Value is less than $2,000 or would provide for less than $20
monthly payments under any Annuity Payment Option. These choices are also
available if You decide to Surrender the Policy or at its Maturity Date.
Similarly, if you make no election, we will pay the Surrender Value in a
single lump sum.

If any Owner or Joint Owner dies prior to the Maturity Date, and if the
designated Beneficiary does not elect to receive the Death Benefit in a lump
sum at that time, then we will increase the Policy Account Value so that it
equals the Death Benefit amount, if that amount is higher than the Policy
Account Value. This would occur if the Owner's designated Beneficiary elects
to delay receipt of the proceeds for up to five years, or is the deceased
Owner's spouse and elects to continue the Policy, or elects to receive the
proceeds as Annuity Payments. (See, Death Benefit, below). Any such increase
in the Policy Account Value would be paid by us, and allocated to the
Sub-accounts in proportion to the pre-existing Policy Account Value unless we
are instructed otherwise.

DEATH BENEFIT

If any Owner or Joint Owner dies before the Maturity Date, the Policy will end
and the Death Benefit will be paid to the Beneficiary, unless the Beneficiary
is the surviving spouse. A spouse who is the Beneficiary may either receive
the Death Benefit and the Policy will end, or the spouse may elect to continue
the Policy in force.

If there are Joint Owners, the designated Beneficiary is the surviving Joint
Owner. If both Joint Owners die simultaneously, the Death Benefit will be
paid to the named Beneficiary.

If an Owner of this Policy is a corporation or other legal person, the
Annuitant will be treated as an Owner of this Policy for purposes of the
timing or the amount of the payout under this Policy.

If any Owner or joint Owner dies on or after the Annuity starting date and
before all the proceeds have been paid, any remaining proceeds will be paid at
least as rapidly as under the payment option in effect at the time of such
Owner's death.

V-20-070
<PAGE> 19
17

If the Owner or Joint Owner dies before the Maturity Date, then any Death
Benefit will be paid within five years after the date of death unless the
Beneficiary is a surviving spouse who elects to continue the Policy. (See,
below). The five-year rule does not apply to that portion of the proceeds
which:

a. is payable to or for the benefit of an individual named Beneficiary;
and

b. will be paid over the lifetime or the life expectancy of that named
Beneficiary

as long as payments begin not later than one year after the date of the
deceased Owner or Joint Owner's death.

If any Owner or Joint Owner dies before the Maturity Date, ANLIC will pay the
Death Benefit proceeds to the Beneficiary upon receipt of due proof of the
Owner's death and instructions regarding payment to the Beneficiary, unless
the Beneficiary is the surviving spouse. A spouse who is the Beneficiary may
either receive the Death Benefit and the Policy will end, or the spouse may
elect to continue the Policy in force. If there is no named Beneficiary,
living on the date of death of the Owner, ANLIC will pay the Death Benefit
proceeds to the Owner's estate. For this purpose the death benefit will be:

If any Owner (including an Owner that is also the Annuitant) dies during the
first five years of the Policy, the Death Benefit will be equal to the greater
of the Policy Account Value or cumulative Premiums less cumulative
withdrawals. On the fifth Policy Anniversary a Minimum Guaranteed Death
Benefit is calculated as the greater of these values. Every five years
thereafter through the Maturity Date, a new Minimum Guaranteed Death Benefit
is calculated as the greater of the current Minimum Guaranteed Death Benefit
or the Policy Account Value.

For Owners up to issue age 75, the Minimum Guaranteed Death Benefit
(increased for Premiums Paid and decreased for cumulative withdrawals from the
current five year period until the date of death) is compared to the greater
of the Policy Account Value or the cumulative Premiums Paid less cumulative
withdrawals. The Death Benefit will be the highest of:

1. Minimum Guaranteed Death Benefit;

2. Policy Account Value at the date of payment;

3. Cumulative Premiums Paid less cumulative withdrawals (including
surrender charges).

For Owners over issue age 75, the Death Benefit is the greater of either:

1. Policy Account Value at the date of payment; or

2. Cumulative Premiums Paid less cumulative withdrawals (including
surrender charges).

If the Annuitant is not an Owner and the Annuitant dies before the Maturity
Date, the Owner may name a new Annuitant. If the Owner doesn't name a new
Annuitant, the Owner will become the Annuitant.

PAYMENT OF POLICY BENEFITS

We will pay interest from the Maturity Date shown on the Policy Specifications
Page to the Date of Payment. The interest rate will be at least the minimum
rate shown on the Specifications Page. We will make these payments to the
Payee according to the Annuity Payment Option elected. We will make payments
only if the Annuitant is living and this Policy is in force on that date.

You may request to change the Maturity Date shown on the Specifications Page.
We must receive Your Request not later than thirty days before the Maturity
Date. Any Irrevocable Beneficiary must consent in writing.

Before the Maturity Date, You may choose or change any Annuity Payment Option.
You must send Us Your written request not later than thirty days before the
Maturity Date. You may not change the Option You elected after the Maturity
Date. If no election is made We will pay the Surrender Value in a single lump
sum.

V-20-070 BACK
<PAGE> 20
When Payments become payable to a Beneficiary under a selected Annuity Payment
Option and the Beneficiary has the right to withdraw the entire amount, the
Beneficiary may name and change contingent beneficiaries.

We guarantee that the dollar amount of each Annuity Payment after the first
Payment will not be affected by variations in mortality experience.

ANNUITY PAYMENT OPTIONS

The amount and duration of Annuity Payments will depend on the Annuity Payment
Option that You select. Once an Annuity Payment Option is selected, the
Surrender Value for the Valuation Period which ends immediately before the
Maturity Date will be transferred to the ANLIC General Account, and the
Annuity Payments will be fixed in amount by the Annuity Payment Option
selected and the age and sex (if sex distinction is allowed) of the Annuitant.

1) OPTION A--INTEREST FOR LIFE

We will pay interest on the amount retained for the lifetime of the Annuitant.
At the Annuitant's death, We will pay the principal amount to the Beneficiary
or as otherwise agreed.

2) OPTION B--INTEREST FOR A FIXED PERIOD

We will pay interest on the retained amount for a fixed period of not more
than 30 years. At the end of the period, We will pay the principal amount to
You or as otherwise agreed.

3) PAYMENTS FOR A FIXED PERIOD--OPTION C

We will pay the amount retained, with interest, in equal monthly payments, for
a period of not more than 30 years. The amount of each payment will be based
on Our payment schedule as of the date payments start. These payments will
not be less than those shown below.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MONTHLY INSTALLMENTS FOR EACH
$1,000 OF AMOUNT RETAINED
- -------------------------------------------------------------------------------------------------------------------------------
YRS. AMT. YRS. AMT. YRS. AMT. YRS. AMT. YRS. AMT. YRS. AMT.
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 84.84 6 15.56 11 9.31 16 7.00 21 5.81 26 5.10
2 43.25 7 13.59 12 8.69 17 6.71 22 5.65 27 5.00
3 29.40 8 12.12 13 8.17 18 6.44 23 5.49 28 4.90
4 22.47 9 10.97 14 7.72 19 6.21 24 5.35 29 4.80
5 18.32 10 10.06 15 7.34 20 6.00 25 5.22 30 4.72
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

4) PAYMENTS OF A FIXED AMOUNT--OPTION D

We will pay the amount retained, with interest, in equal payments until the
fund has been paid in full. The total payments in any year must be at least
5% of the amount retained.

V-20-080
<PAGE> 21
19

5) LIFE INCOME--OPTION E

We will pay the amount retained, in monthly installments adjusted based on
current credited interest, in monthly installments, as shown in the table
below, for the guaranteed period elected and continue them during the lifetime
of the person upon whose life the option is based. You may elect to have no
guaranteed period or a guaranteed period of 5, 10, or 15 years, or the period
in which the total payments will equal the amount retained (Installment
Refund).

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MONTHLY LIFE INCOME PAYMENTS
FOR EACH $1,000 OF AMOUNT RETAINED
- -------------------------------------------------------------------------------------------------------------------------
GUARANTEED PERIODS
- -------------------------------------------------------------------------------------------------------------------------
MALE FEMALE
--------------------------------------------------------------------------------------------------------
AGE
PAYMENT PAYMENT
10 YRS. 20 YRS. REFUND 10 YRS. 20 YRS. REFUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
45 4.58 4.47 4.48 4.29 4.25 4.24
46 4.64 4.52 4.53 4.34 4.29 4.28
47 4.71 4.57 4.58 4.39 4.33 4.33
48 4.77 4.63 4.64 4.45 4.38 4.38
49 4.84 4.68 4.70 4.50 4.43 4.43

50 4.91 4.73 4.77 4.56 4.48 4.48
51 4.99 4.79 4.83 4.63 4.53 4.54
52 5.07 4.85 4.90 4.69 4.58 4.59
53 5.15 4.91 4.97 4.76 4.64 4.65
54 5.24 4.97 5.05 4.83 4.70 4.72

55 5.33 5.03 5.13 4.91 4.76 4.79
56 5.43 5.09 5.21 4.99 4.82 4.86
57 5.54 5.15 5.30 5.08 4.88 4.93
58 5.65 5.21 5.39 5.17 4.95 5.01
59 5.76 5.27 5.49 5.27 5.01 5.10

60 5.88 5.34 5.59 5.37 5.08 5.19
61 6.01 5.40 5.70 5.48 5.15 5.28
62 6.14 5.45 5.82 5.59 5.22 5.38
63 6.28 5.51 5.94 5.71 5.29 5.48
64 6.43 5.57 6.06 5.84 5.35 5.59

65 6.58 5.62 6.19 5.97 5.42 5.71
66 6.73 5.67 6.33 6.12 5.48 5.83
67 6.89 5.71 6.48 6.26 5.55 5.96
68 7.06 5.75 6.63 6.42 5.61 6.10
69 7.22 5.79 6.79 6.58 5.66 6.24

70 7.39 5.82 6.95 6.76 5.71 6.40
71 7.57 5.85 7.13 6.94 5.76 6.56
72 7.74 5.88 7.31 7.12 5.80 6.73
73 7.91 5.90 7.50 7.31 5.84 6.91
74 8.08 5.92 7.70 7.50 5.87 7.10

75 8.25 5.94 7.91 7.70 5.90 7.31
76 8.42 5.95 8.13 7.90 5.92 7.52
77 8.58 5.97 8.36 8.10 5.94 7.75
78 8.73 5.97 8.59 8.29 5.96 7.98
79 8.88 5.98 8.84 8.48 5.97 8.23

80 9.02 5.99 9.09 8.66 5.98 8.49
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

V-20-080 BACK
<PAGE> 22

FLEXIBLE PREMIUM Annuity Payments Begin on the
DEFERRED Maturity Date.
VARIABLE ANNUITY Non-participating Specifications
Shown on Page 3.

[ACACIA LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY
a Virginia Corporation

Principal Office: Home Office:
51 Louisiana Avenue, N.W. 9302 Lee Highway
Washington, D.C. 20001 Suite 750
Fairfax, VA 22031

FORM 850-000 3-96 BACK
<PAGE> 23
IRA DISCLOSURE STATEMENT

This Disclosure Statement is being furnished to You as required by law and is
designed to help You understand your Individual Retirement Annuity and the
applicable provisions of the tax laws which govern annuities in general. The
terms and conditions of Your Annuity Policy will be controlling in the event
of any variance between the terms of this statement and the provisions of the
Annuity.

10-DAY RIGHT TO REVOKE

You may revoke your Individual Retirement Annuity, for any reason, within 10
days after its establishment. Any written notice of revocation will be deemed
mailed on the date of postmark, or if sent by certified or registered mail,
the date of certification or registration.

If You choose to revoke, You will receive full refund of all amounts paid,
without penalty or cost to You, other than the loss of interest on the Premium
contributed.

If You have been provided a Disclosure Statement on or before (1) the earlier
of the purchase date, or (2) the last day on which You are permitted to revoke
this Annuity and there is a material change in the information set forth in
this Disclosure Statement or the Annuity Policy, Acacia National Life
Insurance Company will forward a new Disclosure Statement and/or Annuity
Policy informing You of such change.

If You have any questions or wish to revoke this Annuity, contact Acacia
National Life Insurance Company Service Office. The address is:

Acacia National Life Insurance Company
P.O. Box 79574
Baltimore, MD 21279
1(800) 369-9407

In General Your Individual Retirement Annuity is an Annuity Policy issued by
Acacia National Life Insurance Company ("ANLIC") for Your exclusive benefit or
that of your beneficiaries and is designed to qualify for the favorable tax
treatment afforded by applicable provisions of the Internal Revenue Code,
regarding Individual Retirement Annuities. Your rights are governed by the
provisions of Your Annuity Policy.

STATUTORY REQUIREMENTS

The following features of your Individual Retirement Annuity policy are
prescribed by the Internal Revenue Code.

a. Your Annuity Policy is nontransferable. You are not permitted to
sell, assign, discount or pledge as collateral Your interest in Your
Annuity. If You pledge Your Annuity as security for a loan, Your
Annuity Policy will no longer qualify as an Individual Retirement
Annuity and you will be taxed on the fair market value of your
Annuity.

b. Except for amounts transferred from another IRA or a qualified
pension plan (rollovers) or employer contributions to a SEP-IRA,
Your contributions is limited to $2,000 for each year. In the case
of contributions to a SEP-IRA, the maximum amount which may be
contributed is $30,000. These maximum amounts may be changed from
time to time by the Internal Revenue Service. All contributions to
the Annuity must in cash.

c. You have a nonforfeitable interest in Your Annuity.

d. Any refund of premiums will be applied before the close of the
calendar year following the year of the refund toward the payment of
future premiums, unless directed otherwise. The amount of Your
annual Premium Payments is not fixed.

F-261 4-96
<PAGE> 24
e. Your entire interest must be distributed commencing not later than
April 1st of the calendar year following the calendar year in which
You attain age 70 1/2. The entire interest must be distributed in
accordance with the regulations over Your life or over the lives of
You and a designated Beneficiary (or over a period not extending
beyond Your life expectancy or the joint life expectancy of You and
a designated Beneficiary).

If you die before distributions have started, then Your entire
interest must be distributed within 5 years after death. However,
if any portion of Your interest is payable to a designated
Beneficiary, then it may be distributed over the life of the
designated Beneficiary (or over a period not extending beyond the
life expectancy of the Beneficiary). Generally, the distributions
must begin not later than December 31st of the year after date of
death or such later date as the Secretary may prescribe by
regulation.

g. If the designated Beneficiary is Your surviving spouse, the
distributions can be postponed to the date You would have reached
age 70 1/2, unless the surviving spouse dies in the interim. In
this case the distributions must be made as if the spouse were the
Owner. The surviving spouse may also rollover the distribution to
his/her individual retirement account.

h. If You die after the distribution of Your interest has begun and
before Your entire interest has been distributed, the remaining
portion of Your interest must be distributed at least as rapidly as
under the method of distribution being used as of the date of Your
death.

CONTRIBUTIONS AND DEDUCTIONS

Each year You may contribute 100% of compensation up to a maximum of $2,000
($2,250 with a spousal IRA). This total includes both deductible and
nondeductible contributions.

Compensation is defined as wages, salaries, professional fees, or other
amounts derived from or received for personal service actually rendered
(including, but not limited to, commissions for paid salesmen, compensation
for services on the basis of a percentage of profits, commissions on insurance
premiums, tips, and bonuses) and includes earned income, as defined in section
401(c)(2) (reduced by the deduction the self-employed individual takes for
contributions made to a Keogh plan). Compensation also includes any amount
includible in the individuals gross income under section 71 with respect to a
divorce or separation instrument described in subparagraph (a) of section
71(b)(2).

Compensation does not include amounts derived from or received as earnings or
profits from property (including, but not limited to, interest and dividends)
or amounts not includible in gross income. Compensation also does not include
any amount received as a pension or annuity or as deferred compensation.

The deductible contribution to Your Individual Retirement Annuity program
reduces Your gross income. Therefore, even if You do not itemize Your
deductions and You use the standard deduction, You may still claim a deduction
for contributions to Your Individual Retirement Annuity program. The
deduction should be reported on Form 1040 or 1040A.

PARTICIPATION IN ANOTHER QUALIFIED RETIREMENT PLAN

If You are considered an active Participant in a qualified retirement plan, a
government plan or a Section 403(b) (Tax Sheltered Annuity) plan, and Your
adjusted gross income is over certain specified amounts, then the amount of
Your deductible IRA contribution may be limited to less than $2,000 ($2,250
for a spousal IRA).

F-261 4-96
<PAGE> 25
An active Participant is defined as follows: For a defined benefit plan, You
will be considered an active Participant if You are not excluded under the
eligibility requirements of the plan for any part of the plan year which ends
with or within Your taxable year. You are considered an active Participant
even if You have elected to decline participation in the plan or have failed
to make a mandatory contribution specified under the plan. You are also
considered an active Participant even though You have failed to meet the
minimum service required to accrue a benefit under the plan.

For a money purchase or target benefit plan, You are considered an active
Participant if an employer contribution or forfeiture is required to be
allocated to Your account with respect to the plan year which ends with or
within Your taxable year. If these allocation are made to Your account, You
are considered an active Participant, even if You are not employed by the
employer at any time during the plan year or Your taxable year.

Under a profit sharing or stock bonus plan, You are considered an active
Participant if any employer contribution is added or any forfeiture is
allocated to Your account during your taxable year. The contribution is
considered added to Your account on the later of the date the contribution is
made or the date the contribution is allocated. However, if the right to an
allocation is conditioned on the performance of a specified number of hours
(or employment on a specified day) and this condition is not met, You will not
be considered an active Participant for the taxable year in which the plan
year ends.

If only earnings, rather than contributions and forfeitures, are allocated to
Your account during the plan year which ends with or within your taxable year,
then you are not considered an active Participant. If You make a voluntary or
mandatory contribution during Your taxable year, You will be considered an
active Participant for the taxable year. Active Participant status does not
depend on whether or not Your rights in Your employers plan are nonfeitable.

For couples filing jointly, if either You or Your spouse is considered an
active Participant, then both of You are treated as active Participants.
Married couples filing separately are not treated as married for purposes of
determining active Participant status, if the couple has not lived together at
any time during the taxable year.

ACTIVE PARTICIPANT RULE

If You are considered an active Participant in an employee-maintained
retirement plan for any part of the retirement plan year which ends with or
within Your taxable year, no deductible contribution to Your IRA will be
permitted, if Your adjusted gross income exceeds certain specified amounts.
Adjusted gross income for purposes of the IRA deduction limitation is
calculated without regard to any deductible IRA contribution that is made for
the taxable year; however, taxable Social Security benefits or passive loss
limitations applicable to the taxpayer are taken into account.

If Your adjusted gross income is greater than the applicable dollar limit,
then the amount that may be considered a deductible contribution is determined
under the following steps:

(1) Subtract the applicable dollar amount from adjusted gross income;

(2) Divide the answer from Step (1) by $10,000;

(3) Multiply the ratio found in Step (2) by the $2,000 contribution
limitation ($2,250 for a spousal IRA);

(4) Subtract Step (3) from the contribution limitation.

If the deductible amount is not a multiple of $10, round down to the next
lowest multiple of $10.

F-261 4-96
<PAGE> 26
The minimum deductible IRA contribution for any taxpayer who is allowed any
deductible contribution is $200. The applicable dollar limit is $25,000 in
the case of an individual or $40,000 in the case of a married couple filing a
joint return. For married couples filing separately, the applicable limit is
0$, unless the couple has not lived together at any time during the taxable
year. In this case the applicable limit is $25,000. IRA deductions are
eliminated if your adjusted gross income exceeds $50,000 if you are married
and file a joint return, or $35,000 if you are unmarried.

WHEN TO DEDUCT

You must make contributions to Your Individual Retirement Annuity during the
tax year for which You claim the deduction or by the tax filing deadline,
without extensions. For a SEP-IRA, contributions must be made not later than
the due date of the employers tax return, including extensions. For example,
if You are a calendar year taxpayer, You must make contributions no later than
April 15th in order to take a deduction for the previous year.

NONDEDUCTIBLE CONTRIBUTIONS

You are permitted to make nondeductible contributions to your IRA to the
extent You are not eligible to make deductible IRA contributions. You may
also choose to make a contribution nondeductible even if You could have
deducted all or a portion of that contribution. The maximum nondeductible IRA
contributions that you can make for a taxable year is the difference between
$2,000 (or $2,250 if a spousal IRA is established) and the amount of any IRA
contributions You elect to deduct for the taxable year. Earnings on Your
non-deductible IRA contributions (and Your deductible contributions) will not
be taxed until distributed from Your IRA.

Nondeductible contributions must be made no later than the date deductible
contributions must be made (that is, the due date for filing Your federal
income tax return for the taxable year). If You file an amended return You
may change Your nondeductible contributions to deductible contributions or
vice-versa. If you make a nondeductible contribution to Your IRA for the
taxable year, the amount of such contribution must be reported on Your federal
income tax return for the year.

AGE 70 1/2

No contributions may be made during or after the tax year in which You attain
age 70 1/2. Contributions may be made to spousal IRAs during or after the tax
year in which You attain age 70 1/2, as long as your spouse is under age
70 1/2. No deduction for the spousal IRA can be claimed, once the nonworking
spouse reaches age 70 1/2.

MARITAL STATUS

Each employed spouse can open a regular IRA if eligible and each can claim the
allowable deduction which is computed separately, whether or not they file a
joint tax return.

TAX STATUS OF YOUR ANNUITY

Until distributed, Your Individual Retirement Annuity and earnings thereon are
exempt from tax, unless You engage in a prohibited transaction.

TAX TREATMENT OF DISTRIBUTIONS

Taxable distributions from Your Individual Retirement Annuity are taxed as
ordinary income in the year of receipt, regardless of their source. They are
not eligible for capital gains treatment or the special 5- or 10- year
averaging rules that apply to lump-sum distributions from qualified employer
plans.

F-261 4-96
<PAGE> 27
ROLLOVER CONTRIBUTIONS

A "rollover" is a tax-free transfer of cash or other assets from one
tax-qualified retirement program to another. There are two kinds of
contributions to a rollover IRA. In one, You transfer amounts from one IRA to
another. With the other, You transfer amounts from Your employers qualified
plan to an IRA.

ROLLOVER FROM ONE IRA TO ANOTHER

You may withdraw part of all of the assets from one IRA and transfer them to a
rollover IRA on a tax-free basis. You do not deduct the amount which you
reinvest in the new IRA. You must transfer the amount to be rolled over to
Your new IRA, by the 60th day after the day You receive the property from Your
first IRA. Partial rollover causes any amount not rolled over to be included
in ordinary income as a distribution. You may make a rollover from one IRA to
a rollover IRA only once a year. The rollover must take place at least one
year after the day You received an amount from an IRA in an earlier rollover.
If it takes place before one year, the amount rolled over is an excess
contribution.

ROLLOVER FROM A QUALIFIED PLAN TO AN IRA

You may make a tax-free transfer of a distribution of Your share in Your prior
employer's qualified employer plan to a rollover IRA. In order to rollover a
distribution, certain requirements must be satisfied. You may make a rollover
contribution to your IRA if the distribution from the retirement plan was (a)
a "lump sum distribution", (b) a partial distribution which is at least 50% of
your account balance in the retirement plan, (c) a distribution due to Your
status as a surviving spouse, or (d) a distribution You received from a
tax-qualified retirement plan, pursuant to a "qualified domestic relations
order", subject to certain other restrictions. You must elect the rollover as
the Secretary of Treasury prescribes by regulation. All or part of a partial
distribution can be rolled over. If a distribution is made to Your spouse
after Your death, Your surviving spouse can elect tax-free rollover treatment.
The most You can rollover is the fair market value of the assets You receive
as Your share from Your employer's plan (other than accumulated deductible
employee contributions). Also, the rollover amount must be deposited in the
rollover IRA within 60 days, after the day You receive the distribution.

Due to the strict limitations applicable to rollover contributions, You should
obtain competent tax advice before attempting to make a rollover contribution.

TRANSFER FROM ONE TRUSTEE TO ANOTHER

If you transfer the fund in Your IRA from one trustee directly to another,
either at Your request or at the trustees request, this is not a rollover. It
is a transfer that is not affected by the one-year waiting period. You do not
deduct the amount transferred. You do not include this amount in Your gross
income, if You do not receive any of it.

EXCISE TAX ON EXCESS CONTRIBUTIONS

Generally, any contributions exceeding the combined deductible, plus
nondeductible limitations are excess contributions, subject to a nondeductible
6% excise tax. The tax is imposed for the year the excess contribution is
made. You do not have to pay the tax if You did not deduct the excess
contribution and You withdraw it (plus any earnings), by the due date
(including extensions) for filing Your income tax return.. However, earnings
timely withdrawn are taxable income in the year in which the excess
contribution was made. Additionally, despite the fact that a timely withdrawn
excess contribution is not considered a distribution, earnings attributable to
it are. Such earnings are subject to the 10% penalty on premature
distributions, unless the Participant is 59 1/2 years of age.

The excess amounts which are not withdrawn in a timely matter are subject to
the 6% excise tax in the year of contribution and are carried over and taxed
each year, until the year the excess is reduced in one of the following ways.
Excess contributions made in

F-261 4-96
<PAGE> 28
1 year may be applied against the contribution limits in a later year, if the
contributions in the later years are less than the allowable limit. The
excess may be reduced by distribution of the excess part, which did not exceed
$2,000 ($2,500 for a spousal IRA), as long as no deduction was allowed for the
excess. The excess may also be reduced by distribution includible in income.
This distribution may also be subject to 10% premature distribution tax.

PROHIBITED TRANSACTIONS

Certain transactions such as borrowing from your annuity are prohibited by
Section 4975 of the Internal Revenue Code and will cause Your annuity to lose
its exemption from taxation. The annuity would become immediately taxable at
its full value. In addition, if You have not reached 59 1/2, you may be
liable for an additional 10% tax on the amount borrowed.

PREMATURE DISTRIBUTIONS

If You receive a payment from Your Individual Retirement Annuity, before You
attain age 59 1/2 or become disabled, the payment will be considered a
premature distribution, unless the payment was made based on Your life
expectancy or the life expectancy of You and a designated beneficiary, or a
period not exceeding Your life expectancy or the joint life expectancies of
You and a designated beneficiary. If You receive a premature distribution,
the amount received (less any amounts representing Your nondeductible
contributions) is included in Your gross income in the taxable year of receipt
and Your income tax liability for the year is increased by an amount equal to
10% of the amount of the premature distribution which is includible in Your
gross income. The amount distributed to You is not includible in Your gross
income or subject to the 10% penalty tax to the extent a rollover contribution
is made with the distributed funds.

TAXATION OF DISTRIBUTIONS

If You receive a distribution and have made no nondeductible contributions,
the amount received is included in Your gross income in the taxable year of
receipt. If You have made nondeductible IRA contributions, the amount
includible in Your gross income is as follows:

(1) Find the total of all IRA account balances as of December 31st of
the year of distributions;

(2) Add IRA distributions made during the year to Step (1);

(3) Add all IRA rollovers which had not been rolled over at year end,
but which are rolled over in the following year to the answer in
Step (2);

(4) Divide unrecovered nondeductible contributions by Step (3)

(5) Multiply Step (4) by the distribution amount;

(6) Subtract Step (5) from the distribution amount.

Your income tax liability may be increased by 10% of the amount includible in
Your gross income, if the distribution is considered a premature distribution.

ADDITIONAL PENALTIES

If You overstate Your nondeductible contribution, You will be liable for a
$100 penalty for the year in which the overstatement occurred.

DISABILITY CASES

If payments are made or deemed made to You from Your Individual Retirement
Annuity before You attain age 59 1/2 because You become disabled, the 10%
premature distribution tax does not apply.

F-261 4-96
<PAGE> 29
MINIMUM PAYMENTS AND PENALTIES FOR UNDER-DISTRIBUTION

Amounts contributed to an Individual Retirement Annuity are intended to be
used for retirement purposes and are not to be retained in Your Annuity beyond
the maximum age for payout. If sufficient payments are not timely made from
Your Annuity, You will be liable for an excise tax of 50% (explained below) on
the under-distribution.

50% EXCISE TAX

A 50% excise tax will be imposed on the under-distribution, representing the
difference between the minimum payout required for the tax year in question
and the amount actually paid out to You.

FIFTEEN PERCENT (15%) EXCISE TAX ON EXCESS DISTRIBUTIONS

If you receive total distributions from Your IRA and from any tax-qualified
retirement plans and tax-sheltered annuities in excess of $150,000 for a
calender year, You may be subject to a 15% excise tax on such excess
distribution. You should consult with Your tax advisor if You anticipate
receiving distributions in excess of $150,000 for a calender year as certain
exceptions and transitional rules may be applied.

REQUIRED TAX FILING

If You make an excess contribution, receive a premature distribution, or are
already receiving IRA benefits and have not taken out enough money for the
year, the You must file IRS Form 5329 for that particular year. Form 8606 is
filed for Nondeductible IRA Contributions and Nontaxable IRA Distributions.

FEDERAL INCOME TAX WITHHOLDING

The taxable portion of distributions from Your IRA is subject to federal
income tax withholding unless You elect not to have withholding apply. If You
elect not to have withholding apply to taxable distributions from Your IRA, or
if insufficient federal income tax is withheld from any distribution, You may
be responsible for payment of the estimated taxes, as well as for any
penalties applicable under the estimated tax rules. The amount of federal
income tax required to be withheld on any payment will generally equal 10% of
the amount distributed. Additional information regarding withholding and the
necessary election forms will be provided to You at the time a distribution is
requested.

ESTATE AND GIFT TAX

For information on how estate and gift tax laws relate to Your Individual
Retirement Annuity, see IRS Publication 448, Federal Estate and Gift Taxes.

ADDITIONAL INFORMATION

Further information about Individual Retirement Annuities can be obtained from
any District Office of the Internal Revenue Service. Refer to IRS Publication
590.

DISCLOSURE STATEMENT

The above disclosures are a nontechnical restatement and summary of certain
provisions of the Internal Revenue Code which may affect Your Individual
Retirement Annuity. Your legal rights and obligations are governed by the
Internal Revenue Code and Regulations and the Annuity Policy issued by Acacia
National Life Insurance Company. This disclosure statement is not intended to
constitute tax advice, and You should consult a competent tax advisor about
Your own circumstances.

GUARANTEED VALUES

Based on the Insurance Companys guaranteed cash value, the cash available to
You, if You were to withdraw at the end of years 1, 2, 3, 4, 5, age 60, age
65, and age 70, is specified on the Policy Schedule page.

F-261 4-96
<PAGE> 30
IMPORTANT INFORMATION

The Surrender Value is equal to the Policy Account Value less any applicable
Surrender Charges, the Annual Policy Fee, and any Premium or other Taxes.

The appropriate surrender charge percentage of each Premium Payment used in
the Surrender Charge calculation is determined by the number of years since
the Premium Payment was deposited.

Any withdrawals up to and including 100% of earnings since the last Policy
Anniversary in all Sub-accounts and the Fixed Account plus up to 10% of the
Policy Account Value remaining in any Policy Year may also be withdrawn free
of Surrender Charges.

THE TAX LAW PROVISIONS REGARDING ANNUITIES ARE VERY COMPLEX AND ARE SUBJECT TO
PERIODIC AMENDMENT AND TO CONTINUAL ADMINISTRATIVE AND JUDICIAL
INTERPRETATION. YOU ARE ENCOURAGED TO DISCUSS THE TAX ASPECTS OF THIS POLICY
WITH YOUR TAX ADVISOR.

FINANCIAL DISCLOSURE

The following illustrative guaranteed annuity values assume you contribute to
the Allocator 2000 Annuity (I) $1,000 on the first day of each and every year,
beginning on the issue date, and (ii) $1,000 on the issue date only. These
values reflect the guaranteed minimum interest rate of 4%.

Guaranteed Cash Surrender Value
<TABLE>
<CAPTION>
End of Year Policy $1,000 paid annually $1,000 paid at issue
<S> <C> <C>
1 824 904
2 1,752 888
3 2,702 872
4 3,779 874
5 5,170 911
60 134,725 0
65 155,848 0
70 183,847 0
</TABLE>

Any interest rate credited under the Policy in excess of the guaranteed rate
will be declared periodically. You may receive separately an illustration of
projected values based on the initial declared interest rate for this policy.
Premium tax may be deducted in certain states. Withdrawals may be subject to
the Surrender Charge described in the prospectus for the Policy.

F-261 4-96
<PAGE> 31
VARIABLE SUB-ACCOUNTS

Growth in the value of the amounts credited to the Variable Sub-Accounts is
neither projected nor guaranteed. The charges made and method for calculating
earnings under the Variable Sub-Accounts are described in the prospectus for
the Policy.

The Policy has been designed to be used as an Individual Retirement Annuity
(IRA) under Section 408(b) of the Internal Revenue Code.

Acacia National Life Insurance Company reserves the right to amend the Policy
as necessary or advisable from time to time to comply with future changes in
the Internal Revenue Code, regulations, or any other requirements imposed by
the IRS, to obtain or maintain its approval of the policy as an Individual
Retirement Annuity.

Acacia National Life Insurance Company will furnish You with an annual
statement which will report Your contributions made for each tax year and Your
contract value at the end of the year.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

F-261 4-96
<PAGE> 32
INDIVIDUAL RETIREMENT ANNUITY RIDER

This Rider is attached to and made a part of the Policy to qualify the Policy
as an Individual Retirement Annuity (Annuity) under the Internal Revenue Code
of 1986, as amended (the Code), and to permit the use of the Policy to fund a
Simplified Employee Pension Plan, as authorized by the 1978 Revenue Act. This
Rider is effective as of the Policy Date. Where the provisions of this Rider
and the Policy disagree, the provisions of this Rider will apply.

This plan is intended to qualify under the Code for tax favored status.
Language contained in this Policy referring to Federal tax statutes or rules
is informational and instructional and this language is not subject to
approval or disapproval by the state in which the Policy is issued for
delivery.

Your qualifying status is the controlling factor as to whether your funds will
receive tax favored treatment rather than the Policy. Any provisions of the
Policy that would allow joint ownership, or that would allow more than 1
person to share distribution is deleted. Please ask Your tax advisor if you
have any questions as to whether or not you qualify.

AMENDMENTS

OWNERSHIP - The Annuitant is the owner of the Policy and may exercise all
rights under the Policy during his or her lifetime. The Annuitant's rights to
benefits under the Policy are nonforfeitable.

ASSIGNMENT - The Policy is not transferable or assignable (other than pursuant
to a divorce decree in accordance with applicable law) and is established for
the exclusive benefit of the Annuitant and his beneficiaries. It may not be
sold, assigned, alienated, or pledged as collateral for a loan or as security.

PREMIUM PAYMENTS - Premium Payments shall be in cash. The following Premium
Payments shall be accepted under this Policy:

(a) Rollover contributions described in Sections 402(c), 403(a)(4),
403(b)(8), and 408(d)(3) of the Code;

(b) Amounts transferred from another individual retirement account or
annuity;

(d) Other Premium Payments in an amount not in excess of $2,000 for any
year.

The Annuitant shall have the sole responsibility for determining whether any
Premium Payment meets applicable income tax requirements.

This Policy does not require any particular number or amount of Premium
Payments. Any refund of Premium Payments (other than those attributable to
excess contributions) must be applied, before the close of the calendar year
following the year of the refund, toward additional Premium Payments or the
purchase of additional benefits.

MATURITY DATE - In no event may the Maturity Date, either as specified on the
Specifications Page of the Policy or as subsequently changed, be a date prior
to the date the Annuitant attains age 59 1/2.

The Maturity Date shall be no later than April 1 of the calender year
following the calender year in which the Annuitant attains age 70 1/2. The
Annuitant shall have the sole responsibility for requesting a distribution
that complies with this Rider and applicable law.

R-702
<PAGE> 33
ANNUITY OPTIONS (if applicable) - The annuity options available to the
Annuitant shall not extend beyond the following period [(a) and (c) or (b) and
(d) may be combined]:

(a) the life of the Annuitant;

(b) the joint lives of the Annuitant and a designated individual
Beneficiary;

(d) a period certain not longer than the joint life and survivor life
expectancies of the Annuitant and a designated individual
Beneficiary.

OPTIONAL METHODS OF SETTLEMENT (if applicable) - The options available for
application of the proceeds payable under the Policy during the lifetime of
the Annuitant shall be those under Annuity Options above. Such Payments shall
commence on or before the Maturity Date and shall be payable in substantially
equal amounts, no less frequently than annually.

DISTRIBUTIONS - If the Annuitant's entire interest is to be distributed in
other than a lump sum, then the minimum amount to be distributed each year
(commencing with the calender year following the calender year in which the
Annuitant attains age 70 1/2 and each year thereafter) shall be determined in
accordance with Code Section 408(b)(3) and the regulations thereunder,
including the incidental death benefit requirements of Section 401(a)(9)(G) of
the Code, the regulations thereunder, and the minimum distribution incidental
benefit requirement of Proposed Income Tax Regulations section 1.401(a)(9)-2.
Payments must be either nonincreasing or may increase only as provided in
Proposed Income Tax Regulation section 1.401(a)(9)-1, Q&A F-3.

If the Annuitant dies on or after the Maturity Date and before all the
proceeds have been paid, any proceeds remaining will be paid at least as
rapidly as under the method for payment in effect at the time of the
Annuitant's death.

If the payment of the proceeds has not begun prior to the Annuitant's death,
all the proceeds must generally be paid within five years after the date of
death.

The five-year rule does not apply to that portion of the proceeds which:

1. is payable to or for the benefit of a designated individual
Beneficiary; and

2. will be paid over the lifetime of that Beneficiary;

so long as payment begins not later than December 31 of the calender year
immediately following the calender year of the Annuitant's death.

In addition, the five-year rule does not apply to that portion of the proceeds
which:

1. is payable to or for the benefit of a designated individual
Beneficiary who is the surviving spouse; and

2. will be paid over the lifetime of the surviving spouse;

so long as payment begins not later than the date on which the Annuitant would
have attained age 70 1/2. Any portion of the proceeds paid to a child of the
Annuitant will be treated as if paid to the surviving spouse if the remainder
of the proceeds is payable to the surviving spouse when the child reaches the
age of majority.

If the Annuitant dies before his entire interest has been distributed, no
additional Premium Payments will be accepted under this Policy after his death
unless the Beneficiary is his or her surviving spouse.

If the Annuitant's spouse is not the named Beneficiary, the method of
distribution selected will assure that at least 50% of the present value of
the amount available for distribution is paid within the Annuitant's life
expectancy and that such method of distribution complies with the requirements
of Code Section 408(b)(3) and the regulations thereunder.

R-702
<PAGE> 34
For purposes of the foregoing provisions, life expectancy and joint and last
survivor expectancy shall be determined by use of the expected return
multiples in Tables V and VI of Treasury Regulation 1.72.9 in accordance with
Code Section 408(b)(3) and the regulations thereunder. Unless the Annuitant
(or his or her spouse) elects otherwise prior to the time distributions are
required to commence, the Annuitant's life expectancy and, if applicable, the
Annuitant's spouse life expectancy will be recalculated annually based on the
Annuitant's attained ages in the year for which the required distribution is
being determined. The life expectancy of a nonspouse Beneficiary will not be
recalculated.

The annual distribution required to be made by the Maturity Date is for the
calender year in which the Annuitant reaches age 70 1/2. Annual distributions
for subsequent years, including the year in which the Maturity Date occurs,
must be made by December 31 of that year. The amount distributed for each
year shall equal or exceed the Policy Account Value as of the close of
business on December 31 of the preceding year, divided by the applicable life
expectancy or joint and last survivor expectancy.

The Annuitant may satisfy the minimum distribution requirements under Section
408(b)(3) of the Code by receiving a distribution from one IRA that is equal
to the amount required to satisfy the minimum distribution requirement for two
or more IRAs. For this purpose, if the Annuitant owns two or more IRAs, he
may use the alternative method described in Notice 88-38, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements.

This provision shall not affect any option elected during the lifetime of the
Annuitant under which payments have commenced during the Annuitant's lifetime
to continue for a period not extending beyond the life expectancy of the
Annuitant or the Annuitant and designated individual Beneficiary.

EXCESS CONTRIBUTIONS - Excess contributions are:

(a) Premiums Paid to a Simplified Employee Pension by the Annuitant's
employer for a taxable year in excess of the lesser of $30,000 or
15% of compensation (not to exceed $150,000);

(b) Premiums Paid by the Annuitant for a taxable year in excess of the
lesser of $2,000 or the Annuitant's compensation;

(c) Premiums Paid for the Annuitant by his or her spouse for a taxable
year in excess of the lesser of $2,000 or the spouse's compensation
for the taxable year, where the Annuitant did not receive
compensation for the taxable year and where both spouses file a
joint income tax return for the taxable year (the maximum total
contribution for both such spouses during the taxable year is
$2,250).

NOTE: Premiums Paid as Rollover contributions are not subject to the
excess contribution limits.

PREMATURE DISTRIBUTIONS - To avoid income and penalty taxes, no distribution
(surrender or withdrawal) can be made prior to the Annuitant's age 59 1/2
except in the event of death or disability (disability means inability to
engage in any substantial, gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration).

R-702
<PAGE> 35
ANNUAL REPORT - We will furnish annual calendar reports concerning the status
of the Policy.

AMENDMENT RIGHT - This Individual Retirement Annuity Rider may be amended by
the Company to qualify the Policy as an Individual Retirement Annuity under
the Code, and applicable rules and regulations. Any such amendment may be
made effective the date of issue of the Policy. A copy of the amended Rider
will be sent to the Annuitant to be attached to the Policy.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

R-702
<PAGE> 36
ACACIA NATIONAL LIFE INSURANCE COMPANY

TAX SHELTERED ANNUITY ENDORSEMENT
UNDER SECTION 403(b) OF THE INTERNAL REVENUE CODE OF 1986

At the Owners request, this (ANLIC) Endorsement is a part of the Policy to
which it is attached by Acacia National Life Insurance Company. The
provisions of this endorsement shall override any other conflicting provisions
contained in, or forming part of, the Policy. The attachment of this
Endorsement to the Policy is intended to meet the form requirements,
limitations, and in all other respects, qualify under the provisions of
section 403(b) of the Internal Revenue Code of 1986 ("the Code"), as amended
from time to time and interpreted by Regulation or Ruling.

The Policy, for as long as this Endorsement remains in effect, is hereby
modified as follows:

1. The Annuitant will at all times be the sole Owner of this Policy.

2. The Owner's rights under this Policy shall be nonforfeitable and for
the exclusive benefit of the Owner and his or her Beneficiaries.

3. Premiums under the Policy must be paid by an employer described in
section 501(c)(3) which is exempt from tax under section 501(a) of
the Code, or an employer who is an educational organization
described in Section 170(b)(1)(A)(ii) of the Code, or an employer
which is a State, political subdivision of a State, or an agency or
instrumentality of any or more of the foregoing. Premiums paid by
the employer may include contributions made pursuant to salary
reduction agreements. Premiums may also be paid by the Owner from
the proceeds of a transfer from another tax sheltered annuity,
policy, contract or custodial agreement qualified under Section
403(b) of the Code.

4. This Policy is not transferable by the Owner, except that this
Policy may be transferred to a former spouse of the Owner under a
Qualified Domestic Relations Order, as defined in Code section
414(p). In the event of a transfer pursuant to a Qualified Domestic
Relations Order, the transferee shall for all purposes be treated as
the Owner under this Policy.

No benefits under this Policy may be sold, assigned, or pledged as
collateral for a loan, or as security for the performance of an
obligation, or for any other purpose.

5. Premium payments may not exceed the applicable limits of section
403(b), section 415(c) and section 402(g) of the Code, as determined
under the employer's Plan.

6. Should this Policy be issued to the Owner as part of an employer's
403(b) Plan or Program which is subject to the requirements of Title
I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), then any distributions from this Policy shall be subject
to the applicable requirements of ERISA and the employer's Plan. The
Plan Administrator shall certify compliance with those requirements
in a form satisfactory to us.

7. Distributions attributable to contributions made pursuant to a
salary reduction agreement (within the meaning of section
402(g)(3)(C) of the Code) and earnings (credited after December 31,
1988) may not be distributed unless the Owner has satisfied one of
the following:

a. attained age 59 1/2;

b. separated from service;

c. died;

d. become disabled (within the meaning of Code section 72(m)(7));

e. incurred a financial hardship;

E-2031
<PAGE> 37
f. if the Owner of this Annuity makes an election in writing to
take a series of substantially equal periodic payments which
will comply with code sections 72(g)(2)(D) or 72(t)(2)(A)(iv);

g. such other conditions have occurred as may be satisfactory
under the Income Tax Regulations. To the extent required by
Regulations issued under section 403(b) or other sections of
the Code, the Company may require written proof of the events
in items (a) through (c) and such proof must be satisfactory
under the Regulations.

The restrictions of this Part of the Endorsement shall only apply
with respect to:

(i) Contributions made after the close of the last plan year
beginning before January 1, 1989 and earnings on those
contributions.

(ii) Earnings on amounts held as of the close of the last
plan year beginning January 1, 1989.

(iii) Amounts transferred from other section 403(b) plans that
are subject to these restrictions, and earnings thereon.

8. Distributions from this Policy shall be made in accordance with the
minimum distribution incidental benefit requirement of section
403(b)(10) of the Code, including section 1.403(b)-2 of the Proposed
Income Tax Regulations, as amended.

Any method of payment selected on behalf of the Owner must be
primarily to distribute benefits to the Owner and not to designated
Beneficiaries or others. Accordingly, any method of payment
selected for an Owner must be such that: (a) the present value of
payments to be made to the Owner under the optional method of
payment selected is more than fifty percent (50%) of the present
value of the total payments to be made to the Owner and his
Beneficiaries; or (b) the payments to the Owner begin as of his or
her retirement with a like, or lesser amount, payable to the Owner's
spouse if the spouse survives the Owner or with a like, or lesser
amount, payable to another for the lifetime of the spouse if the
spouse survives the Owner.

9. Distributions from this Policy shall be made in accordance with the
minimum distribution requirement of section 403(b)(10) of the Code.

In accordance with regulations prescribed by the Secretary of the
Treasury or his delegate, the entire interest under this Policy will
begin to be distributed to the Owner no later than the first day of
April following the calendar year in which the Owner attains age
70 1/2 (required beginning date); provided, however, if this Policy
is issued in connection with a government or church sponsored tax
sheltered annuity plan, the required beginning date shall be the
April 1 of the calender year following the later of the calender
year in which the Owner retires or attains age 70 1/2.

Payments will be distributed in equal or substantially equal amounts
and in annual or more frequent installments over:

a. The Owner's life or the lives of the Owner and his or her named
Beneficiary; or

b. A period not exceeding the Owner's life expectancy or the joint
and last survivor life expectancy of the Owner and his or her
named Beneficiary.

In addition, distributions in the form of annuity payments must
be either non-increasing or they may increase only as provided
in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.

Any method of settlement described in the Settlement Options
section of the Policy, except for the Interest Only Election,
that satisfies these conditions can be selected. Distributions
subsequent to the initial distribution must be made prior to
December 31 of the calendar year.

E-2031
<PAGE> 38
The amount to be distributed each year, beginning with the
first calendar year for which distributions are required and
then for each succeeding calendar year, shall not be less than
the quotient obtained by dividing the Owner's benefit by the
lesser of:

a) the applicable life expectancy; or

b) if the Owner's spouse is not the named Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4
of section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Distributions after the death of the Owner shall
be calculated using the applicable life expectancy as the
relevant divisor without regard to Proposed Income Tax
Regulations section 1.401(a)(9)-2.

Life expectancy is computed by use of the expected return multiples
in Tables V and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Owner by the time distributions are
required to begin, life expectancies shall be recalculated annually.
Such election shall be irrevocable by the Owner and shall apply to
all subsequent years. The life expectancy of a non-spouse
Beneficiary may not be recalculated. Instead, life expectancy will
be calculated using the attained age of such Beneficiary during the
calendar year in which the Owner attains Age 70 1/2, and payments
for subsequent years shall be calculated based on such life
expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.

If the amount distributed is less than that required by Code section
403(b)(10), an excise tax is imposed on the Owner. The excise tax
will be an amount equal to 50% of the excess of the minimum amount
required to be distributed during the year, over the amount actually
distributed.

The provisions of this part of the endorsement shall only apply to
benefits accruing after December 31, 1986.

10. Distributions following the Owner's death shall be made in
accordance with section 403(b)(10) of the Code.

The Death Benefit in all cases will be paid according to the terms
of this provision, provided due proof of the Owner's death is
received at the ANLIC's Service Office. If the Owner dies after
distribution of his interest under this Policy has begun, the
remaining portion of such interest under this Policy will continue
to be distributed at least as rapidly as under the method of
distribution being used prior to the Owner's death.

If the Owner dies before distribution of his or her interest under
this Policy begins, distribution of the Owner's entire interest
under this Policy shall be completed by December 31, of the calendar
year containing the fifth anniversary of the Owners death except to
the extent that an election is made to receive distributions in
accordance with (a) or (b) below:

a) If a primary Beneficiary is named by the Owner, then the
interest under this Policy will begin to be paid in
substantially equal installments over the life or over a period
certain not greater than the life expectancy of the primary
Beneficiary commencing on or before December 31 of the calendar
year immediately following the calendar year in which the Owner
died.

b) If the primary Beneficiary is the Owner's surviving spouse, the
date distributions are required to begin in accordance with (a)
above shall not be earlier than the later of A) December 31 of
the calendar year immediately following the calendar year in
which the Owner died or B) December 31 of the calendar year in
which the Owner would have attained Age 70 1/2. The surviving
spouse may accelerate these payments at any time, such as
increasing the frequency or amount of such payments.

E-2031
<PAGE> 39
Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income
Tax Regulations. For purposes of distributions beginning after
the Owner's death, unless otherwise elected by the surviving
spouse by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election
shall be irrevocable by the surviving spouse and shall apply to
all subsequent years. In the case of any other designated
Beneficiary, life expectancy will be calculated using the
attained age of such Beneficiary during the calendar year in
which distributions are required to begin pursuant to this
part, and payments for subsequent years shall be calculated
based on such life expectancy reduced by one for each calendar
year which has elapsed since the calendar year life expectancy
was first calculated.

Distributions under this part are considered to have begun if
distributions are made on account of the Owner reaching his
required beginning date or if prior to the required beginning
date distributions irrevocably begin to the Owner over a period
permitted and in an annuity form acceptable under section
403(b)(10) of the Code, including section 1.403(b)-2 of the
Proposed Income Tax Regulations. If the Owner receives
distributions in the form of installment payments prior to the
required beginning date and the Owner dies, distributions will
not be considered to have begun.

11. Notwithstanding any provisions of this Policy to the contrary, with
respect to distributions made after December 31, 1992, the Owner
shall be permitted to elect to have any "eligible rollover
distribution" transferred directly to an "eligible retirement plan"
that the Owner specifies. Policy provisions otherwise applicable to
distributions continue to apply to the direct transfer option. The
Owner shall, in the time and manner prescribed by the Company,
specify the amount to be directly transferred and the "eligible
retirement plan" to receive the transfer. Any portion of a
distribution which is not transferred shall be distributed to the
Owner.

The term "eligible rollover distribution" means any distribution
other than a distribution of substantially equal periodic payments
over the life or life expectancy of the Owner (or joint life or
joint life expectancies of the Owner and the Owner's designated
Beneficiary) or a distribution over a period certain of ten years or
more. Amounts required to be distributed under Code section
401(a)(9) are not eligible rollover distributions. The direct
transfer option applies only to eligible rollover distributions
which would otherwise be includible in gross income if not
transferred.

The term "eligible retirement plan" means an Individual Retirement
Account as described in Code section 408(a), an Individual
Retirement Annuity as described in Code section 408(a), or a Tax
Sheltered Annuity plan or program described under code section
403(b) which accepts rollovers.

The direct rollover or transfer option applies to the Owner's
surviving spouse after the Owner's death; however, distributions to
the surviving spouse may only be transferred to an Individual
Retirement Account or Individual Retirement Annuity. For purposes
of the direct rollover or transfer option, a spouse or former spouse
who is the alternate payee under a Qualified Domestic Relations
Order as defined in Code section 414(p) will be treated as the
Owner.

With regard to an eligible rollover distribution, the Company shall
provide the Owner within the applicable period a written explanation
of the direct rollover option.

12. ANLIC may, if it becomes necessary under the Code and the
Regulations thereunder, discontinue acceptance of premiums as of the
date specified by ANLIC through a written notice to the Owner if the
Owner ceases to be employed by an

E-2031
<PAGE> 40
organization exempt from taxation under section 501(c)(3) of the
Code or a public school system. However, the Policy shall continue
in force, subject to such elections as the Owner or ANLIC may make
to terminate it under its provisions.

13. As a condition to the issuance of this Endorsement to the Policy,
the Owner agrees to be solely responsible for complying, in
operation, with the provisions and limitations of this Endorsement
and the Regulations under section 403(b) of the Code and other
applicable law. The Owner further agrees to provide ANLIC any
documentation necessary in order to maintain this Policy's
compliance under section 403(b) of the Code.

14. The Owner may terminate this agreement by surrendering this Policy.

15. This Policy is restricted as required by the Internal Revenue Code,
including any Regulations or Rulings thereto. The Policy will be
considered amended automatically to comply with any changes required
to maintain compliance with the Code or other applicable law. The
Owner agrees that he or she will surrender this Policy upon request
so that it may be appropriately endorsed or written to conform with
the above conditions or any amendments to section 403(b) of the
Code. ANLIC reserves the right to amend this Endorsement to comply
with future changes in the Code and any Regulations or Rulings
issued under the provisions of the Code. ANLIC shall provide the
Owner with a copy of any such amendment.

IN WITNESS WHEREOF, ANLIC has caused this Tax Sheltered Annuity Endorsement to
be executed as of the Effective Date of the Policy which it is attached and of
which it becomes a part.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

E-2031
<PAGE> 41
QUALIFIED PLAN RIDER

This Rider is part of the Policy. This Policy is issued to or purchased by
the Trustee of a Pension or Profit-sharing Plan intended to qualify under
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
This plan is intended to qualify under the Internal Revenue Code for tax
favored status. Language contained in this Policy referring to Federal tax
statutes or rules is informational and instructional and this language is not
subject to approval or disapproval by the state in which the Policy is
issued for delivery.

Your qualifying status is the controlling factor as to whether your funds will
receive tax favored treatment rather than the insurance contract. Please ask
Your tax advisor if you have any questions as to whether or not you qualify.

The following provisions apply and replace any contrary Policy provisions:

(1) Except as allowed by the Qualified Pension or Profit-sharing Plan of
which this Policy is a part, the Policy may not be transferred,
sold, assigned, discounted or pledged, either as collateral for a
loan or as security for the performance of an obligation or for any
other purpose, to any person other than the Company.

(2) This Policy shall be subject to the provisions, terms and conditions
of the Qualified Pension or Profit-sharing Plan of which the Policy
is a part. Any payment, distribution or transfer under this Policy
shall comply with the provisions, terms and conditions of such Plan
as determined by the Plan Administrator, Trustee or other designated
Plan Fiduciary. THE COMPANY SHALL BE UNDER NO OBLIGATION EITHER (a)
TO DETERMINE WHETHER ANY SUCH PAYMENT, DISTRIBUTION OR TRANSFER
COMPLIES WITH THE PROVISIONS, TERMS AND CONDITIONS OF SUCH PLAN OR
WITH APPLICABLE LAW, OR (b) TO ADMINISTER SUCH PLAN, INCLUDING,
WITHOUT LIMITATION, ANY PROVISIONS REQUIRED BY THE RETIREMENT EQUITY
ACT OF 1984.

(3) Notwithstanding any provision to the contrary in this Policy or the
Qualified Pension or Profit-sharing plan of which this Policy is a
part, the Company reserves the right to amend or modify this Policy
or Rider to the extent necessary to comply with any law, regulation,
ruling or other requirement deemed by the Company to be necessary to
establish or maintain the Qualified status of such Pension or
Profit-sharing Plan.

Except as otherwise set forth above, this Rider is subject to the exclusions,
definition, and provisions of the Policy.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

R-703
<PAGE> 42
RETIREMENT PLAN ANNUITY RIDER

This Rider is attached to and made a part of the Policy to qualify the Policy
for purchase by the trustee (the "Trustee") of a retirement plan under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Where
the provisions of this Rider and those of the Policy disagree, the provisions
of this Rider will apply.

Your qualifying status is the controlling factor as to whether your funds will
receive tax favored treatment rather than the Policy. Please ask your tax
advisor if you have any questions as to whether or not you qualify.

AMENDMENTS

MATURITY DATE - The date on which the proceeds are to be paid. The Maturity
Date may not be later than April 1 of the year following the year in which the
Annuitant attains age 70 1/2.

ANNUITANT - The Annuitant is the person named in the Application upon whose
life payments are based.

SUM PAYABLE AT DEATH - In the event the sum payable at death is payable to the
Annuitant's surviving spouse, these proceeds will be paid as a monthly income
for as long as the spouse lives, beginning at the Annuitant's earliest
retirement age under the terms of the retirement plan (or the Annuitant's
death, if later), unless the surviving spouse selects a different method of
payment available under this Rider. This selection will be effective only
when filed with us on a form approved by us.

OWNERSHIP - Unless and until the Trustee assigns the Policy to the Annuitant,
the Trustee may exercise all rights under the Policy except as provided in
this Rider. Thereafter, the Annuitant is the Owner and may exercise all
rights under the Policy except as provided in this Rider.

ASSIGNMENTS - Except as permitted by the terms of the retirement plan, this
Policy may not be sold, assigned, discounted or pledged as collateral for a
loan or as security for the performance of an obligation or for any other
purpose, to any person other than us. To the extent permitted by law, this
Policy will be exempt from the claims of creditors.

BENEFICIARY - The Beneficiary is determined according to the following
provisions:

1. The Beneficiary is the Annuitant's surviving spouse unless the
Annuitant named a different Beneficiary with the written consent of
the surviving spouse. In order to be effective, the Annuitant's
designation and the spouse's consent must be filed with us, on a
form approved by us, during the "consent period." The spouse's
consent must acknowledge the effect of the consent and must be
witnessed by a notary public or a representative of the Retirement
Plan.

2. If there is no surviving spouse of the Annuitant, or if the
Annuitant's spouse cannot be located, or if IRS regulations permit,
the Beneficiary is the person(s) named in the Application. In the
event there is no surviving Beneficiary of the Annuitant, the sum
payable upon the Annuitant's death is payable to the Annuitant's
estate.

R-701
<PAGE> 43
3. In the event a "qualified domestic relations order" (such as a
divorce decree) within the meaning of Section 414(p) of the Code so
requires, the beneficiary will be determined according to the above
provisions, as modified by the provisions of the order.

BENEFICIARY CHANGE - The Annuitant may change the Beneficiary while the
Annuitant is alive. To do this, send a written request to Us. If the new
Beneficiary is a person or entity other than the Annuitant's spouse, also send
a spousal consent that satisfies the above requirements. When recorded and
acknowledged, the change will be effective as of the date the Annuitant and
the Annuitant's spouse, if applicable, signed the request. The change will
not apply to any payments made or other action taken by us before recording.

OPTIONAL METHODS FOR PAYMENT OF POLICY PROCEEDS - SPECIAL CONDITIONS - The
method of payment for Policy proceeds (other than proceeds payable by reason
of the Annuitant's death) is determined according to the following provisions:

1. If the Annuitant is married on the Maturity Date, the proceeds will
be paid under a joint and 50% contingent survivor method of payment,
unless, during the "consent period," the Annuitant selects a
different method of payment available under this Rider with the
written consent of the Annuitant's spouse. In order to be
effective, the Annuitant's selection and the spouse's consent must
be filed with Our Service Office, on a form approved by Us during
the consent period. The "consent period" begins 90 days before the
Maturity date and ends on the day before payment begins. The
spouse's consent must acknowledge the effect of the consent and must
be witnessed by a notary public or a representative of the
Retirement Plan.

Under the joint and 50% contingent survivor method of payment, the
Proceeds will be paid to the Annuitant as a monthly income for as
long as the Annuitant lives. If the Annuitant's spouse as of the
Maturity Date survives the Annuitant, the monthly payments will
reduce to 50% of the initial amount and continue to be paid to this
spouse as long as this spouse lives.

The Annuitant may change to another method of payment available
under this Rider during the "consent period." If the change is to a
method of payment other than the joint and 50% contingent survivor
method of payment, send a written request, with a spousal consent
that satisfies the above requirements, to us. The change will not
apply to any payments or other action taken by Us before recording.

2. If the Annuitant is not married on the Maturity Date, or if the
spouse cannot be located, or if IRS regulations otherwise permit,
the proceeds will be paid to the Annuitant as a monthly income for
as long as the Annuitant lives, with no guaranteed period or amount,
unless the Annuitant selects a different method of payment available
under this Rider. In order to be effective, the Annuitant's
selection must be filed with us, on a form approved by us, during
the "consent period." The "consent period" begins 90 days before
the maturity date and ends on the day before payments begin.

The Annuitant may change to another method of payment available
under this Rider during the "consent period." To do this, send a
written request to us. The change will not apply to any payments
made or other action taken by us before recording.

3. In the event a "qualified domestic relations order" (such as a
divorce decree) within the meaning of Section 414(p) of the Internal
Revenue Code so required, the method of payment will be determined
according to the above provisions, as modified by the provisions of
the order.

4. In the event a married Annuitant elects to withdraw any part or all
of the Surrender Value of the Policy before the Maturity Date, the
Annuitant must obtain the consent of the Annuitant's spouse. The
spouse's consent must be filed with us, on a form approved by us,
and must acknowledge the effect of the consent and be witnessed by a
notary public or a representative of the Retirement Plan.

R-701
<PAGE> 44
The methods of payment available under this Rider are: joint and 50%
contingent survivor, joint and 50% survivor, lifetime income (without a
guaranteed period or amount), lifetime income with a guaranteed amount equal
to the Policy's accumulation value on the Maturity Date, lifetime income with
a 10-year guaranteed period, lump-sum and, upon request and if available,
other lifetime income methods of payment. No less than 30 days and no more
that 90 days before the Maturity Date, we will send a written notice
explaining these methods of payment (together with election and consent forms)
to the Annuitant's last known address. This written notice will also explain
the Annuitant's right to select a method of payment, the right to the
Annuitant's spouse to consent to any method of payment other than the joint
and 50% contingent survivor method, the right of the Annuitant's to revoke a
selection and the effect of the revocation.

DIRECT ROLLOVER - If this Policy has been assigned by the Trustee to a
Distributee, the Distributee may elect, at the time and in the manner
prescribed by Us, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.

1. An "Eligible Rollover Distribution" is any distribution of all or
any portion of the balance to the credit of the Distributee, except
that an Eligible Rollover Distribution does not include: (a) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for life (or life
expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributees Beneficiary,
or for a specified period of ten years or more; (b) any distribution
to the extent such distribution is required under Section 401(a)(9)
of the Code; and (c) the portion of any distribution that is not
includible in gross income.

2. An "Eligible Retirement Plan" is an individual retirement account
described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the
Distributees Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.

3. A "Distributee" includes (a) the Annuitant, and (b) the Annuitants
surviving spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of
the Code, with regard to the interest of the spouse or former
spouse.

4. A "Direct Rollover" is a payment by Us to the Eligible Retirement
Plan specified by the Distributee.

This provision shall be interpreted in accordance with Code Section 401(a)(31)
and the regulations thereunder.

ANNUITY OPTIONS - The annuity options available to the Annuitant shall not
extend beyond the following period [(a) and (c) or (b) and (d) may be
combined]:

a. the life of the Annuitant;

b. the joint lives of the Annuitant and a designated individual
Beneficiary;

c. a period certain not longer than the life expectancy of the
Annuitant;

d. a period certain not longer than the joint life and survivor life
expectancies of the Annuitant and a designated individual
Beneficiary.

REQUIRED DISTRIBUTION - If the Annuitants entire interest is to be distributed
in other than a lump sum, then the minimum amount to be distributed each year
(commencing with the calendar year following the calendar year in which the
Annuitant attains age 70 1/2 and each year thereafter) shall be determined in
accordance with Code Section 401(a)(9) and the

R-701
<PAGE> 45
regulations thereunder, including the incidental death benefit requirements of
Section 401(a)(9)(G) of the Code, the regulations thereunder, and the minimum
distribution incidental benefit requirement of Proposed Income Tax Regulation
section 1.401(a)(9)-2. Payments must be either nonincreasing or may increase
only as provided in Proposed Income Tax Regulation section 1.401(a)(9)-1, Q&A
F-3.

If the payment of proceeds has not begun prior to the Annuitants death, all
the proceeds must generally be paid within five years after the date of death.
The five-year rule does not apply to the portion of proceeds which:

1. is payable to or for the benefit of a designated individual
beneficiary; and

2. will be paid over the lifetime of that Beneficiary;

so long as payment begins not later than December 31 of the calendar year
immediately following the calendar year of the Annuitant's death.

In addition, the five-year rule does not apply to that portion of the proceeds
which:

1. is payable to or for the benefit of a designated individual
Beneficiary who is the surviving spouse; and

2. will be paid over the lifetime of the surviving spouse;

so long as payment begins not later than the date on which the Annuitant would
have attained age 70 1/2. Any portion of the proceeds paid to a child of the
Annuitant will be treated as if paid to the surviving spouse of the remainder
of the proceeds is payable to the surviving spouse when the child reaches the
age of majority.

For purposes of the foregoing provisions, life expectancy and joint and last
survivor expectancy shall be determined by use of the expected return
multiples in Treasury Regulation 1.72-9 in accordance with Code Section
401(a)(9) and the regulations thereunder. Unless the Annuitant (or his
spouse) elect otherwise prior to the time distributions are required to
commence, the Annuitant's life expectancy and, if applicable, the Annuitant's
spouse life expectancy will be recalculated annually based on the Annuitants
attained ages in the year for which the required distribution is being
determined. The life expectancy of a nonspouse Beneficiary will not be
recalculated.

The annual distribution required to be made by the Maturity Date is for the
calendar year in which the Annuitant reached age 70 1/2. Annual payments for
subsequent years, including the year in which the Maturity Date occurs, must
be made by December 31 of that year. The amount distributed for each year
shall equal or exceed the Policy Account Value as of the close of business on
December 31 of the preceding year, divided by the applicable life expectancy
or joint and last survivor expectancy.

R-701
<PAGE> 46
ADMINISTRATION - We may rely on information submitted by the Annuitant or
other appropriate person to determine whether an Annuitant is married as of
any date. We will not be required at any time to determine the validity of
any marriage or the effectiveness of any common law relationship. We may
require the Annuitant or other appropriate person to provide an affidavit or
other satisfactory evidence as to the Annuitant's marital status or as to any
other fact needed to administer this Rider. The Annuitant or other
appropriate party is responsible for providing us with a copy of any domestic
relations order to which the Annuitant is a party.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

R-701
<PAGE> 47
ENDORSEMENT FOR
ACACIA NATIONAL LIFE INSURANCE COMPANY( ANLIC) -
QUALIFIED PLAN POLICY LOANS

THIS ENDORSEMENT FORMS PART OF THE POLICY TO WHICH IT IS ATTACHED.

THE ERISA RULES RELATING TO LOANS ARE COMPLEX AND VARY DEPENDING ON THE
INDIVIDUAL CIRCUMSTANCES OF EACH POLICY. PLEASE BE SURE TO CHECK WITH YOUR
PLAN ADMINISTRATOR FOR COMPLETE INFORMATION. EMPLOYERS AND OWNERS SHOULD
CONSULT WITH QUALIFIED ADVISERS BEFORE EXERCISING THE LOAN PRIVILEGES.

1. ELIGIBILITY - An Owner of a Policy issued in connection with a Retirement
Plan that is Qualified under Section 401 or 403(b) of the Internal Revenue
Code (but not Section 408) may request a Loan from ANLIC, using his or her
Policy Account Value as the only security for the Loan by submitting a proper
written request to ANLIC's Service Office, provided that Loans are permitted
by the Participant's Plan. No other Policy Owners may borrow against the
Policy. These Loans are subject to conditions and requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as well as the
terms of any Retirement Plan in connection with which the Policy has been
purchased.

2. LOAN AMOUNT - A Loan may be taken by eligible Owners at any time after the
first Policy year while the Annuitant is living and before the Maturity Date.
The minimum Loan that can be taken at any time is $1,000. The maximum Loan
that can be taken at any time is the amount that produces a Loan balance
immediately after the Loan that is the lesser of 50% of the Owner's Policy
Account Value or $50,000 reduced by the excess (if any) of the highest
outstanding Loan balance within the preceeding 12 month period ending on the
date the Loan is made. Reference should be made to the terms of the
particular Qualified Plan for any additional Loan restrictions. At any time a
new Loan is made, the sum of all prior Loans and Loan interest outstanding,
when added to the current Loan applied for, may not exceed that limit.

3. ALLOCATION OF POLICY LOAN - An Owner may allocate a Policy Loan among the
Fixed Account and the Sub-accounts of the Variable Account which have Policy
Account Value. If no such allocation is made, ANLIC will allocate the Loan to
the Fixed Account and among the Sub-accounts in the same proportion that the
value in each Sub-account bears to the Policy Account Value less indebtedness
at the end of the Valuation Period during which the request is received.
Proceeds of the Loan will normally be paid within seven days after receipt of
a written request. Postponement of Loans may take place under certain
circumstances. (See, Postponement of Payments in Policy).

4. EFFECT OF POLICY LOAN - We will transfer Policy Account Value in the
amount of the loan to the Loan Account from the Fixed Account and Sub-accounts
in the same proportion that each account bears to the Policy Account Value
less indebtedness at the end of the Valuation Period during which the request
is received, reducing the value in the Fixed Account and each Sub-account.
The Loan Account is part of the General Account to be used as collateral for
any Policy Loan. No charge will be imposed for these transfers.

While the amount to secure the loan is held in the Loan Account, the Owner
forgoes the investment experience of the Sub-accounts and the current interest
rate of the Fixed Account on the loaned amount. Outstanding Policy Debt will
reduce the amount of Accumulated Value paid upon full withdrawal, upon payment
of a death benefit or upon the Owner's exercise of the Free-Look right.

E-2030
<PAGE> 48
5. INTEREST RATES - ANLIC will charge interest on any outstanding Policy
Loan. The interest rate charged on Policy Loans is 6%. Value in the Loan
Account equal to indebtedness will be credited with interest at 4% per year.
NO ADDITIONAL INTEREST WILL BE CREDITED TO THIS VALUE. The interest earned
will be credited no less frequently than once each Policy month. Upon
repayment of indebtedness, the portion of the repayment allocated to a
Sub-account in accordance with the repayment of indebtedness provision will be
transferred to the Sub-account and increase the value in that Sub-account.

6. REPAYMENT OF LOANS - Loan must be repaid with five years (20 years if the
Owner certifies to ANLIC that the Loan is to be used to acquire a principal
residence for the Annuitant). Loan repayments must be made at least
quarterly. Loans not repaid within the required time periods will be subject
to taxation as distributions from the Policy. Loans may be prepaid at any
time before the Maturity Date. Repayments of Loan principal plus accrued
interest will be due on the Policy's Quarterly Anniversary. Repayment must be
received at ANLIC's Service Office before the end of the last day of the next
calendar quarter after which the payment is due. If the repayment is not
received before the end of such calendar quarter, the loan will be in default
and a partial withdrawal equal to the entire defaulted Loan balance and any
applicable Surrender Charge will be made from the Policy and paid to ANLIC.
The outstanding balance will be deducted first 100% to the Policy Account
Value in the Loan Account and then among the accounts in the same proportion
that the value in the Fixed Account and each Sub-account bears to the Policy
Account Value less indebtedness at the end of the Valuation Period. In the
event of a default, the entire Policy Account Value (not just the defaulted
amount) may be subject to taxation as a distribution.

Prepayment of the entire outstanding Policy Debt may be made. At the time of
the prepayment, the Policy Owner will be billed for any interest due and
unpaid. The Loan will be considered paid when the interest due is also paid.

Unless otherwise requested by an Owner, a Loan repayment will be transferred
into the Sub-accounts and the Fixed Account in accordance with Your most
recent allocation instructions.

7. ADDITIONAL ERISA RESTRICTIONS - Before we will make a Loan under an ERISA
governed plan:

a. The Policy Owner's spouse, if any, must consent to the Loan in the
form and manner specified by ERISA; and

b. The administrator of the plan must certify in writing, in a form
acceptable to us, that the requirements of ERISA Section 408(b)(1)
and the regulations thereunder have been satisfied.

We reserve the right to impose other terms and conditions on Loans as we
determine necessary or appropriate to satisfy applicable law.

8. LIMITATION ON LOANS FOR POLICIES USED WITH QUALIFIED PLANS - This Policy
may be used with several types of Qualified Plans. The tax rules applicable
to participants in such Qualified Plans vary according to the type of plan and
terms and conditions thereof. Owners, Annuitants, and Beneficiaries are
cautioned that the rights of any person to any benefits including loan
privileges may be subject to the terms and conditions of the plans themselves
or limited by applicable law regardless of the terms of the Policy and Riders
issued in connection with the plans.

E-2030
<PAGE> 49
THE POLICY AND RIDERS ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE PLANS
THEMSELVES OR MAY BE LIMITED BY APPLICABLE LAW, REGARDLESS OF THE TERMS OF
THE POLICY OR RIDERS THERETO, WHERE THERE IS A CONFLICT BETWEEN (1)THE TERMS
AND CONDITIONS OF THE PLANS AND/OR APPLICABLE LAW AND (2) THE POLICY AND
RIDERS, THE FORMER SHALL CONTROL AND THE CONFLICTING POLICY OR RIDER PROVISION
SHALL BE NULL AND VOID.

ACACIA NATIONAL LIFE INSURANCE COMPANY

/s/ Richard J. Fedalen
----------------------
Richard J. Fedalen
Secretary

E-2030

<PAGE> 1
EXHIBIT 99(5)

APPLICATION FOR AN ANNUITY

[ACACIA GROUP LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY
(A Virginia Corporation)

Principal Office
51 Louisiana Avenue, Northwest
Washington, D.C. 20001

F-596 3-95
<PAGE> 2
DO NOT WRITE ON THIS PAGE!

This page has been left blank to facilitate data
transmission to National Headquarters.

<PAGE> 3
APPLICATION FOR AN ANNUITY NO. 72843
Please Print Using Dark Ink

ACACIA NATIONAL LIFE INSURANCE COMPANY
Principal Office
51 Louisiana Avenue, Northwest
Washington, D.C. 20001 [ACACIA GROUP LOGO]

<TABLE>
=========================================================================================================================
<S> <C>
1. FULL NAME OF PROPOSED ANNUITANT Age Date of Birth Sex Social Security Number
____________________________________________________________________________
________________________________________ Birthplace State Occupation & Duties
/ | / Only
____________________________________________________________________________
________________________________________
Number & Street

________________________________________
City State Zip

=========================================================================================================================
2. FULL NAME OF PROPOSED JOINT ANNUITANT OR CONTINGENT ANNUITANT
(Immediate Annuity Only) (Deferred Annuity Only)

________________________________________

________________________________________ Age Date of Birth Sex Social Security Number
Number & Street ____________________________________________________________________________

Birthplace State Occupation & Duties
________________________________________ / | / Only
City State Zip ____________________________________________________________________________

=========================================================================================================================
3. FULL NAME OF OWNER Age Date of Birth Sex Social Security Number or Tax ID NO.
____________________________________________________________________________
________________________________________ OWNER IS: / / Individual
/ / Business or Corporation
/ / Trust
________________________________________ Date of Trust Agreement:_____________________________________
Number & Street
IF QUALIFIED BUSINESS, INDICATE TYPE AND PROVIDE THE FOLLOWING
________________________________________ INFORMATION:
City State Zip

/ / IRA / / HR-10 / / TSA / / Pension / / SEP IRA

Title of Plan:______________________________________________________________

Telephone: Home_____ __________________ Name of Any Trustee:________________________________________________________

Business_____ ________________ Percentage of Contribution to be made by: Employer _____%
Employee _____%

=========================================================================================================================
4. FULL NAME OF PAYEE Age Date of Birth Sex Social Security Number or TAX ID No.
(If annuity payments are not to go ____________________________________________________________________________
to Annuitant)

________________________________________

________________________________________
Number & Street

________________________________________
City State Zip
</TABLE>

Page 1

F-596 3-95
<PAGE> 4
DO NOT WRITE ON THIS PAGE!

This page has been left blank to facilitate data
transmission to National Headquarters.

<PAGE> 5
APPLICATION FOR AN ANNUITY NO. 72843
Please Print Using Dark Ink

<TABLE>
================================================================================================================
<S> <C>
5. BENEFICIARY DESIGNATION: (In the Event of the death of the Annuitant(s) and Contingent Annuitant)

CLASS FULL NAME SSN RELATIONSHIP TO ANNUITANT
(if individuals)
PRIMARY____________________ __________________ _______________________________

SECONDARY__________________ __________________ _______________________________
(Survivors of each class share equally)

/ / OR AS STATED IN AMENDMENT (attach amendment)

================================================================================================================
6. CONTINGENT OWNER: (Beneficiary in the Event of Owner's Death)

FULL NAME SSN RELATIONSHIP TO ANNUITANT
_____________________________ __________________ _____________________________

/ / OR AS STATED IN AMENDMENT (attach amendment)

================================================================================================================
7. PLAN (Choose one of plan types below)

/ / SINGLE PREMIUM IMMEDIATE

/ / FIXED PERIOD Payment guaranteed for _____ years certain

/ / INDIVIDUAL LIFE (Choose one payment option below)
/ / Non-Refund / / Cash Refund / / Installment Refund
/ / Payment guaranteed for _____ years

/ / JOINT LIVES (Choose one payment option below)
/ / Non-Refund / / Cash Refund / / Installment Refund
/ / Payment guaranteed for _____ years

Make payment to: / / Annuitants jointly and then to survivor
/ / Person named in 1 / / above or
2 / / for life and then to survivor

All life contingent immediate annuities require proof of birthdate
on all lives. Provide a copy of Birth Certificates, unless already
insured by Acacia.

Amount of Single Payment: $ | cents

Annuity Payments to be: / / Monthly
/ / Other___________________
(specify mode)

/ / FLEXIBLE PREMIUM DEFERRED

Deferred Until Age:____________________________________
(If no age is indicated, age 70 will be assumed for qualified plans
and age 85 for non-qualified plans)

PREMIUM PAYMENTS

Amount Per Mode Payment: $ | cents

Mode of Payment:

/ / Annual / / Monthly */ / Allot_____________
(Branch of Service)

/ / Semi-Annual / / New CAM */ / SSP

/ / Quarterly / / Existing CAM */ / SD

Amount of Premium (if any) in
addition to initial Mode Payment: $ | cents

/ / SINGLE PREMIUM DEFERRED

/ / Benefactor / / Provider

Initial Interest Guarantee / / 1 year / / 3 years / / 5 years

Deferred Until Age:____________________________________________
(If no age is indicated, age 70 will be assumed for qualified plans
and age 85 for non-qualified plans)

Minimum Deferral Period is 5 Years.

Amount of Single Premium: $ | cents
</TABLE>
================================================================================
8. STATE WHERE APPLICATION WAS COMPLETED: / | /

Page 2

F-596 3-95
<PAGE> 6
DO NOT WRITE ON THIS PAGE!

This page has been left blank to facilitate data
transmission to National Headquarters.

<PAGE> 7
APPLICATION FOR AN ANNUITY NO. 72843
Please Print Using Dark Ink
================================================================================
9. SPECIAL REQUESTS:___________________________________________________________

________________________________________________________________________________

10. REPLACEMENT:
Will this policy replace or change any existing life insurance or
annuity? / / Yes / / No

If yes, attach Replacement Report.
================================================================================
I represent, to the best of my knowledge and belief, statements made in this
application are complete, true and correctly recorded. I agree that:

1. This application and any required supplements shall be the application and
become part of the annuity policy applied for.

2. Upon Company approval of the application and payment of the premium, the
annuity policy shall immediately become effective and the payment will
become the absolute property of the Company. There shall be no refund of
the premium or any other payment made under the policy except in accordance
with its terms.

3. If proof of age is not given with this application, the Annuitant(s) will
furnish the Company with proof satisfactory to it, before annuity payments
begin.

4. No agent has the right to modify any policy issued on the basis of this
application or extend the time of payment for any premium. Notice to or
knowledge of the agent is not notice to or knowledge of the company.

5. As required by law under penalties of perjury, I certify that (1) the
Social Security or other Taxpayer Identification Number (TIN) provided on
this form is my correct TIN, and (2) that I am not subject to backup
withholding because (A) have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends,
or (B) IRS had notified me that I am no longer subject to backup
withholding. (Please strike out clause (2) if you are currently under
notification.)

<TABLE>
<S> <C>
Date:______________________________ Signed at:_______________________________________________
Month/Day/Year City State

Authorized Signature of Signature of
Individual Owner:______________________________________________ Proposed Annuitant:______________________________________
(If not Proposed Annuitant) (If over age 18)

Signature of Proposed
ACCOUNT MANAGER:_______________________________________________ Joint Annuitant:_________________________________________
(Witness to All Signatures)
</TABLE>

WARNING: Any person who knowingly, and with intent to injure, defraud or
deceive any insurer, makes any claim for the proceeds of an annuity
containing any false, incomplete or misleading information may be
guilty of a felony.

BANK AUTHORIZATION

I authorize the ACACIA MUTUAL LIFE INSURANCE COMPANY and/or the ACACIA NATIONAL
LIFE INSURANCE COMPANY (both hereinafter called Acacia) to charge my account in
the bank identified below. I understand and agree to the conditions shown on
the reverse side. The charge may be for the following purposes: (1) To pay
premiums on any policy (including any policy or rider resulting from a change
requested by me) that I request premiums be paid; the request may be in an
application for new insurance or by any other writing; and (2) To make payments
on any policy indebtedness I request be paid.

<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
NATIONAL HEADQUARTERS USE ONLY ACCOUNT NUMBER CAM #
GP___ __________ ___CK
_____________________________________________________________________________________________________________________________
A N
C A ____________________________________________________________________ Premium Loan Pymt.
C M Policy or Applicant Amount Amount
T E ____________________________________________________________________ --------------------------------------------------------

N ____________________________________________________________________
A
B M ____________________________________________________________________
A E --------------------------------------------------------
N ____________________________________________________________________
K A ________________________________________________________
D Signature of Payor
D

___________ ____________ ________________________________________
CAM NO DATE SIGNATURE(S) OF DEPOSITOR(S) DESIRED CAM DRAW DATE
(On or After)
/ / 7th of Month
/ / 14th of Month
/ / 21st of Month
</TABLE>

ATTACH VOID CHECK

Page 3

F-596 3-95
<PAGE> 8
CONDITIONS OF BANK AUTHORIZATION

1. Acacia will charge monthly for payment of premium and/or indebtedness for
all policies covered by this authorization.

2. Acacia will not be required to give notice of any premium becoming due.

3. Dividends, if any, cannot be applied in reduction of premiums.

4. Any increase or decrease in premiums as a result of a change in a policy
will automatically be reflected in the amount of the charge by Acacia.

5. The minimum amount of monthly indebtedness charge is $10.

6. This method of payment may be (a) revoked by Acacia if any charge is not
honored upon presentation to the bank, or (b) discontinued by the
policyowner or Acacia upon written notice.

7. This method of payment shall not be construed as a modification of any
policy provisions, except that while in effect, premium payments may be
made at the rates applicable to this method of payment. If this method of
payment terminates for any reason, the policy provisions relating to
premium payments and the grace period shall apply.

8. If any charge is dishonored by the bank, any premium due must be paid in
accordance with the policy provisions; otherwise the policy provisions
relating to premium payments and the grace period shall apply. Acacia may
make a new charge or redeposit once any charge is dishonored by the bank.
This charge will not change the status of the policy(ies) unless the
charge is paid upon presentation to the bank.

<PAGE> 9
APPLICATION FOR AN ANNUITY NO. 72843
Please Print Using Dark Ink

ACCOUNT MANAGER REPORT
================================================================================

1. If an address other than shown above is to be used for items
other than payment notices, specify below.

__________________________________________________________
Number & Street

__________________________________________________________
City State Zip

2. To the best of your knowledge does the policy applied for
involve replacement as defined under applicable state
regulation? / / Yes / / No

3. Deposit Amount: $ | cents

4. Is this personal business (account manager or immediate
family) for account receiving credit? / / Yes / / No

ACCOUNT
MANAGER'S SIGNATURE:_______________________________________________

5. Credit Business to:

- -------------------------------------------------------
Agency # Account Manager # Percent

- -------------------------------------------------------

6. Should all other policy records be changed to owner's
mailing address shown above? / / Yes / / No
================================================================================

Page 4

F-596 3-95
<PAGE> 10
DO NOT WRITE ON THIS PAGE!

This page has been left blank to facilitate data
transmission to National Headquarters.

<PAGE> 11
NO. 72843
================================================================================
ACACIA NATIONAL LIFE INSURANCE COMPANY

TEMPORARY RECEIPT -- To be given to Applicant for Payment Made to Account
Manager.

Received from ________________ the sum of $__________ as a deposit to be
transmitted to the Company's Principal Office in connection with an application
dated _____________ for an Annuity on the life or lives of
_____________________________________________. Should the application not be
approved by the Company, the deposit will be returned upon surrender of this
receipt.

This is a temporary receipt only. If you do not hear from the company in
relation to the proposed policy within thirty days, notify the Company at its
Principal Office at 51 Louisiana Avenue, Northwest, Washington, D.C. 20001.

If this deposit check is a draft, the amount of the deposit shall be considered
as paid only if such check or draft is honored in the usual course of
collection and such amount is unconditionally credited to the Company.

================================================================================

<PAGE> 12
[ACACOA GROUP LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY
(A Virginia Corporation)

Principal Office
51 Louisiana Avenue, Northwest
Washington, D.C. 20001

F-596 3-95
<PAGE> 13
SUPPLEMENT FOR

FLEXIBLE PREMIUM
VARIABLE LIFE AND
VARIABLE ANNUITY

[ALLOCATOR 2000 LOGO]
THE ACACIA GROUP(R)

ACACIA NATIONAL LIFE INSURANCE COMPANY
(A Virginia Corporation)

Principal Office
51 Louisiana Avenue, Northwest
Washington, D.C. 20001

SUPPLEMENT
F-423 9-95
<PAGE> 14
APPLICANT: ________________________ NO._______________________
(Print Name)

SUPPLEMENT FOR

FLEXIBLE PREMIUM VARIABLE LIFE AND VARIABLE ANNUITY
SUITABILITY QUESTIONNAIRE

REGISTERED REPRESENTATIVES ARE REQUIRED TO MAKE INQUIRIES RELATING TO THE
FINANCIAL CONDITION AND OTHER RETIREMENT PLANS OF APPLICANTS UNDER VARIABLE
CONTRACTS. YOU ARE URGED TO SUPPLY SUCH INFORMATION IN ORDER THAT THE
REGISTERED REPRESENTATIVE AND THE COMPANY MAY MAKE AN INFORMED JUDGMENT AS TO
THE SUITABILITY FOR YOU FOR THE FLEXIBLE PREMIUM VARIABLE LIFE AND/OR VARIABLE
ANNUITY. HOWEVER, YOU ARE NOT REQUIRED TO DIVULGE SUCH ITEMS OF INFORMATION.
IF YOU CHOOSE TO DO SO, YOU MAY SKIP ITEMS 1-8, BUT YOU MUST COMPLETE ITEMS
9-14 ON THE QUESTIONNAIRE AND SIGN ON OPPOSITE PAGE.

<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Other Family Members or Dependents: NAME RELATIONSHIP TO APPLICANT DATE OF BIRTH
________________________________________ _________________________ ______________________

________________________________________ _________________________ ______________________

________________________________________ _________________________ ______________________
- -----------------------------------------------------------------------------------------------------------------------------------
2. Annual Earned Income of Applicant:
________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
3. Other Income of Applicant: (Describe)
____________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------

4. Total Other Assets: Total:____________________

___________________________________________________________________________________________________________________________
Home Car(s) Stock(s) Bond(s) Money Market, Checking and Savings Acct. Life Insurance (Cash Value)
- -----------------------------------------------------------------------------------------------------------------------------------
5. Total Debts:
- -----------------------------------------------------------------------------------------------------------------------------------
6. Income of Other Family Members: (Describe)

- -----------------------------------------------------------------------------------------------------------------------------------
7. Are you eligible for Federal Social Security or Railroad Retirement Benefits? / / Yes / / No
- -----------------------------------------------------------------------------------------------------------------------------------
8. Other Retirement Resources: (Include annuities, permanent life insurance and pensions, indicating whether fixed,
variable or combinations)

- -----------------------------------------------------------------------------------------------------------------------------------
9. / / I understand that the Registered Representative is required to make inquiries in order that he may make an
informed judgment as to the suitability of the flexible premium variable life policy and/or the variable annuity, to
provide insurance protection for the beneficiary named herein. However, I do not wish to divulge this information.
- -----------------------------------------------------------------------------------------------------------------------------------
10. Have you received an Acacia National Flexible Premium Variable Life Insurance Policy and/or Variable Annuity
prospectus? / / Yes / / No
Date of Prospectus?__________________

HAVE YOU READ AND DO YOU UNDERSTAND THAT:

11. The policy's cash value in each sub-account of the Variable Account is based on investment experience and may
increase or decrease daily and is not guaranteed as to dollar amount? / / Yes / / No

12. The death benefit equals the policy's initial face amount during the first policy month. Afterwards, the death benefit
may increase or decrease on each monthly anniversary. Provided the policy is in force, the death benefit will never
be less than the face amount? / / Yes / / No

13. Surrender charges apply during the first nine years that coverage is effective? / / Yes / / No

14. Understanding the above and having read the prospectus, the policy meets my
financial objectives. / / Yes / / No
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

DEATH BENEFITS PROVIDED BY THIS POLICY, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THE VALUES OF THIS POLICY, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A VARIABLE ACCOUNT, MAY INCREASE OR DECREASE IN ACCORDANCE WITH
THE EXPERIENCE OF THE VARIABLE ACCOUNT.

Page 1

SUPPLEMENT
F-423 9-95
<PAGE> 15
NO.___________________

FLEXIBLE PREMIUM VARIABLE LIFE AND VARIABLE ANNUITY
ALLOCATION OF PREMIUM PAYMENTS

1. Please indicate ONE of the following:

Automatic Rebalance to the Allocation
Shown Below / / Yes / / No

Participate in Dollar Cost Averaging
/ / Yes / / No

Participate in Asset Allocation Program
/ / Yes / / No
If yes, please select ONE Portfolio A-J

Portfolio A Conservative (WITH International) _____
Portfolio B Conservative-Moderate (WITH International) _____
Portfolio C Moderate (WITH International) _____
Portfolio D Moderate-Aggressive (WITH International) _____
Portfolio E Aggressive (WITH International) _____
Portfolio F Conservative (WITHOUT International) _____
Portfolio G Conservative-Moderate (WITHOUT International) _____
Portfolio H Moderate (WITHOUT International) _____
Portfolio I Moderate-Aggressive (WITHOUT International) _____
Portfolio J Aggressive (WITHOUT International) _____

NOTE: There is no need to fill in the allocation percentages below when the
Asset Allocation Program is selected. As part of this option, funds
will be automatically rebalanced to the model portfolio allocation.

2. Please choose no more than 10 accounts. Each selection must be
allocated at least 5% of the total premium.

ACACIA:
_____ % General Account

ALGER:
_____ % Alger American Growth Portfolio
_____ % Alger American Mid Cap Growth Portfolio
_____ % Alger American Small Capitalization Portfolio

CALVERT:
_____ % Acacia Capital Corporation Calvert Responsibly Invested Money
Market Portfolio
_____ % Acacia Capital Corporation Calvert Responsibly Invested Balanced
Portfolio
_____ % Acacia Capital Corporation Calvert Responsibly Invested Strategic
Growth Portfolio

DREYFUS:
_____ % Dreyfus Stock Index Fund

NEUBERGER & BERMAN:
_____ % Neuberger & Berman Advisors Management Trust Limited Maturity
Bond Portfolio
_____ % Neuberger & Berman Advisors Management Trust Growth Portfolio

STRONG:
_____ % Strong Advantage Fund II
_____ % Strong Asset Allocation Fund II
_____ % Strong International Stock Fund II
_____ % Strong Discovery Fund II

VAN ECK:
_____ % Van Eck Worldwide Insurance Trust Gold and Natural Resources Fund
- -------------
_____ % TOTAL (MUST EQUAL 100%)

Date_____________________ Signature of Applicant(s)__________________________

Registered Representative__________________________

Page 2

SUPPLEMENT
F-423 9-95
<PAGE> 16
[THE ACACIA GROUP LOGO]

ACACIA NATIONAL LIFE INSURANCE COMPANY
(A Virginia Corporation)

Principal Office
51 Louisiana Avenue, Northwest
Washington, D.C. 20001

SUPPLEMENT
F-423 9-95

<PAGE> 1
EXHIBIT 99(6)(b)

BY-LAWS

ACACIA NATIONAL LIFE INSURANCE COMPANY
(amended January 19, 1982)

ARTICLE I

OFFICES

The principal office of the Company shall be located in the City of Washington,
District of Columbia. The registered office shall be as designated in the
Articles of Incorporation or as changed in accordance with State Law.

ARTICLE II

SHAREHOLDERS

Section 1. Annual Meetings.
The annual meeting of shareholders shall be held in the City of Washington,
District of Columbia on the third Tuesday of January in each year and every
year if not a legal holiday, and if a legal holiday then on the next work day.
At this meeting the shareholders shall elect, by a plurality vote, a Board of
Directors and transact such other business as may properly be brought before
the meeting.

Section 2. Special Meetings.
Special meetings of the shareholders, for any purpose or purposes, may at any
time be called by the Chairman of the Board at the direction of the Board of
Directors or by the holders of not less than 10% of all the outstanding shares
entitled to vote at the meeting. Special meetings of shareholders may be held
within or without the District of Columbia. The business transacted at any
special meeting of shareholders shall be limited to the purpose or purposes
stated in the notice of such special meeting.

Section 3. Notice of Meetings.
Written or printed notice of a shareholders' meeting stating the place, date
and hour of the meeting and,
<PAGE> 2
in the case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered either personally or by mail not less than ten
(10) nor more than thirty (30) days before the date of the meeting.

Section 4. Quorum.
The holders of a majority of the shares of stock issued and outstanding and
entitled to vote, represented in person or by proxy, shall constitute a quorum
at all meetings of the shareholders for the transaction of business. At any
meeting of shareholders at which a quorum is present, the affirmative vote of
the majority of the shares of the stock represented at a meeting shall be the
act of the shareholders, unless the vote of a greater or lesser number of
shares of stock is required by law. At any meeting of shareholders at which a
quorum is not present, the shareholders present or represented by proxy may
adjourn the meeting, from time to time, without notice other than announcement
at the meeting until a quorum is present. At such adjourned meeting at which a
quorum is present, any business may be transacted that may have been transacted
at the meeting as originally called.

Section 5. Voting.
Each outstanding share of stock having voting power shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders. A
shareholder may vote either in person or by proxy executed in writing by the
shareholder or such shareholder's duly authorized attorney-in-fact.

Section 6. Action Without a Meeting.
Whenever shareholders are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent, setting forth
the action so taken, signed by the holders of all outstanding shares entitled
to vote. Such consent shall be filed in the Minute Book of the Secretary and
shall have the same force and effect as a unanimous action of the shareholders.

- 2 -
<PAGE> 3
ARTICLE III

DIRECTORS

Section 1. Number, Term of Office, and Eligibility.
The number of Directors shall be set by the Board of Directors but such number
shall be at least three and not more than twelve. The Directors shall be at
least twenty-one (21) years of age and need not be residents of the District of
Columbia nor shareholders of the Company. Directors, other than the Directors
of the first Board of Directors, shall be elected at the annual meeting of the
shareholders, except as otherwise provided, to serve until their successors
shall have been qualified and elected. The first Board of Directors shall hold
office until the first annual meeting of shareholders.

Section 2. Election of the Chairman of the Board.
The Directors shall elect a Chairman of the Board at their first meeting and
annually thereafter at the regular meeting following the annual shareholder's
meeting to preside at future meetings of the Executive Committee, the Board of
Directors and the shareholders.

Section 3. Meetings.
Meetings of the Board of Directors, regular or special, may be held either
within or without the District of Columbia. Unless otherwise stated in the
notice for such meeting, the meeting shall be held at the principal office of
the Company. Regular meetings of the Board of Directors shall be held at such
time as shall be designated by the Chairman of the Board but not less than
twice a year. Officers shall be elected at the first regular meeting held
after the annual meeting of shareholders.

Special meetings of the Board of Directors may be called by the Chairman of the
Board or by a majority of the Directors.

- 3 -
<PAGE> 4
Section 4. Notice of Meetings.
Notice shall be given to each Director either personally, by telephone or in
writing. Attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting, except where such Director attends the meeting for the
express purpose of objecting to the transaction of any business because the
meeting was unlawfully called or convened. Neither the business to be
transacted nor the purpose of any regular or special meeting, need be specified
in a notice or waiver of notice of such meeting.

Section 5. Quorum and Vote.
A majority of the Directors shall constitute a quorum for the transaction of
business. The vote of a majority of the Directors present by person or
telephone shall be the act of the Board of Directors, unless the vote of a
greater number is required by these By-Laws or by statute. At any meeting of
Directors at which a quorum is not present, the Directors present may adjourn
the meeting without notice other than announcement at the meeting, until a
quorum shall be present. At such-adjourned meeting at which a quorum is
present, any business may be transacted that may have been transacted at the
meeting as originally called.

Section 6. Action Without a Meeting.
Whenever Directors are required or permitted to take any action at a meeting,
such action may be taken by the Board of Directors without a meeting on the
written consent of all the members of the Board, and shall be filed in the
Minute Book of the Secretary. Such action shall have the same force and effect
as a unanimous vote.

Section 7. Powers and Duties.
The business affairs of the Company shall be manages by the Board of Directors
which may exercise all such powers of the Company and do all such lawful acts
ant things as are not by statute or by these By-Laws directed or required to be
exercised or done by the shareholders.

- 4 -
<PAGE> 5
Section 8. Compensation of Directors.
The Board of Directors, pursuant to the affirmative vote of a majority of the
Board of Directors then in office, and irrespective of any personal interests
of any of its members, shall establish reasonable compensation of all Directors
for services rendered to the Company in their capacity as Director, officer or
otherwise.

Section 9. Removal of Directors.
Any and all of the Directors may be removed, with or without cause, at any time
by the vote of the shareholders at a special meeting called for that purpose.

Section 10. Vacancies.
A newly created vacancy resulting from an increase in the number of Directors
shall be filled by the Board of Directors and such Director shall serve until
the next succeeding annual meeting of shareholders or until such Director's
successor shall have been qualified and elected. Any other vacancy may be
filled by the affirmative vote of a majority of the remaining Directors,
although the number of remaining Directors is less than a quorum of the Board
of Directors, and such Director shall be elected for the unexpired portion of
the term of such Director's predecessor in office or until such Director's
successor shall have been qualified and elected.

ARTICLE IV

COMMITTEES

Section 1. Executive Committee.
The Executive Committee shall consist of the Chairman of the Board, who shall
be Chairman, the President (if a person other than the Chairman of the Board)
and not less than one other member of the Board of Directors to be designated
annually at the regular meeting following the annual shareholders' meeting, by
the Board of Directors. A majority of the members of the Committee shall
constitute a

- 5 -
<PAGE> 6
quorum for the transaction of business. Such Committee shall exercise general
supervision over the business of the Company during the intervals between
meetings of the Board of Directors; and shall have all of the authority vested
in the Board of Directors except as otherwise provided in these ByLaws or by
statute. The Committee shall keep regular minutes of its proceedings. If a
vacancy occurs on the Committee, the Board of Directors may designate another
Director to fill such vacancy. Whenever a member of the Committee is not
available for a meeting of such Committee, the Board may designate another
Director to serve in the member's place.

Section 2. Finance Committee.
The Finance Committee shall consist of the Chairman of the Board, who shall be
Chairman, the President (if a person other than the Chairman of the Board) and
not less than one other member of the Board of Directors to be designated
annually at the regular meeting following the annual shareholders' meeting, by
the Board of Directors. The majority of the members of the Committee shall
constitute a quorum for the transaction of business. If a vacancy occurs on
the Committee, the Board of Directors may designate another Director to fill
such vacancy. Whenever a member of the Committee is not available for a
meeting of such Committee, the Board may designate another Director to serve in
the member's place.

The Finance Committee, subject to the regulations prescribed by the Board of
Directors, shall have the control and management of the invested and other
funds and of all other property owned by the Company and of all business
pertaining to such control and management. It may make or authorize the
President, a Vice President, or the Treasurer, to make investments in bonds,
real estate, mortgages, securities, and other property and it may sell or
authorize the President, a Vice President or the Treasurer, to sell any of the
bonds, real estate, mortgages, securities, and other property owned by the
Company. The Committee shall keep regular minutes.

- 6 -
<PAGE> 7
Section 3. Other Committees.
The Board of Directors may from time to time create such other committees as it
deems necessary to the conduct of the business of the Company and may vest in
the other committees such power and authority as it deems necessary to carry
out the purposes for which the committees are created. The majority of the
members of any other committees shall constitute a quorum for the transaction
of business within that committee. If a vacancy occurs on any committee
formed, the Board of Directors may designate another Director to fill such
vacancy. Whenever a member of any other committee is not available for a
meeting of the committee, the Board may designate another Director to serve in
the member's place.

Section 4. Action Without a Meeting.
Whenever committees are permitted to take any action at a meeting, such action
may be taken by the committee without a meeting on the written consent of all
the members of the committee and shall be filed in the Minute Book of the
Secretary.

ARTICLE V

OFFICERS

Section 1. Elected Officers.
The elected officers of the Company shall be a President, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers as the Board may
from time to time deem necessary, each of whom shall be elected by the Board of
Directors at its initial meeting and thereafter at the first regular meeting of
the Board of Directors following the annual meeting of the shareholders of the
Company. The President shall be elected from among the Directors. Such
officers shall serve for one year or until their successors are elected. Any
person may hold at one time more than one office, except that no person shall
hold at one time the offices of President and Secretary.

- 7 -
<PAGE> 8
Section 2. Appointed Officers.
The President, with the approval of the Board of Directors, may appoint such
officers as may be deemed necessary to assist the elected officers of the
Company or to perform such other duties as may be required in carrying out the
Company's business. An appointed officer may be removed at any time by the
President.

Section 3. Duties.

(a) President.
The President shall be the chief executive officer of the
Company and, under the direction of the Board of Directors,
shall manage ant conduct the Company's business. In the
absence of the Chairman of the Board, the President shall
preside at all meetings of shareholders, the Board of
Directors, Executive Committee and Finance Committee.

(b) Vice Presidents.
Vice Presidents shall perform such duties as the Board of
Directors or the President may prescribe. In the absence of
the President, the Vice President designated by the Board of
Directors, shall perform the duties and exercise the powers of
the President.

(c) Secretary.
The Secretary shall record the proceedings of all meetings of
the Board of Directors, the Executive Committee, Finance
Committee and all meetings of the shareholders in a Minute
Book to be kept by the Secretary for that purpose. The
Secretary shall notify all shareholders of the annual meeting
and keep records of elections and votes. The Secretary shall
give, or cause to be given, all required notice of meetings of
the shareholders and of the Board of Directors and shall
perform such other duties as may be prescribed by the Board of
Directors or by the President. The Secretary shall have
custody of the Corporate Seal and shall have authority to
affix the same to any instrument requiring it, and, when so
affixed, it may be attested by the Secretary's signature. The

- 8 -
<PAGE> 9
Board of Directors may give authority to any other officer
other than the President to affix the seal of the Company and
to attest the affixing by the officer's signature.

(d) Treasurer
The Treasurer shall have the custody of all of the Company
funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the
Company and shall deposit all funds and other valuable effects
in the name and to the credit of the Company in such
depository as may be designated by the Board of Directors.
Under the direction of the Board of Directors or the
President, the Treasurer shall disburse funds of the Company,
taking proper voucher for such disbursement. The Treasurer
shall render to the Board of Directors whenever the Board of
Directors so requires, an account of all transactions as
Treasurer and of the financial condition of the Company.

Section 4. Compensation.
Compensation of officers, if any shall be fixed from time to time by the Board
of Directors.

Section 5. Removal.
Any officer elected by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors.

Section 6. Vacancies.
If any officer's position becomes vacant it may be filled by the Board of
Directors.

ARTICLE VI

AUDITOR

The Board of Directors shall appoint an Auditor who shall be responsible for
the auditing of the books

- 9 -
<PAGE> 10
and accounts of the Company annually or at any shorter interval prescribed by
the Board of Directors; make audits, appraisals and evaluations of the
Company's accounting and financial systems and supporting records and documents
to assure their adequacy and reliability and that Company assets are properly
accounted for and safeguarded from loss, and perform such other duties aa the
Board of Directors may prescribe. The Auditor shall make written reports of
audit examinations to the President as requested and a written report to the
Board of Directors annually or at any other interval prescribed by the Board.

ARTICLE VII

BONDING AND INDEMNIFICATION

Section 1. Bonding.
The President, the Vice Presidents, the Secretary, and the Treasurer shall be
bonded for the faithful performance of their respective duties with sufficient
sureties and in such amounts as shall be determined by the Board of Directors.
The Board of Directors may also require a bond of any other officer or employee
of the Company with such surety as it may deem proper.

Section 2. Indemnification.
In the event any action, suit or proceeding is brought against a present or
former Director, elected officer, appointed officer or other employee because
of any action taken by such person as a Director, officer or employee of the
Company or which he omitted to take as a Director, officer or employee of the
Company, the Company shall reimburse or indemnify him for all loss reasonably
incurred by him in connection with such action to the fullest extent permitted
by Section 13.1-3.1 of the Code of Virginia, as is now or hereafter amended,
except in relation to matters as to which such person shall have been finally
adjudged to be liable by reason of having been guilty of gross negligence or
willful misconduct in the performance of duties as such director, officer or
employee. In case any such suit, action or proceeding shall result in a
settlement prior to final judgment and if, in the judgment of the Board of
Directors, such person in taking the action or failing to take the action
complained of was not grossly negligent or guilty of willful

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<PAGE> 11
misconduct in the performance of his duty, the Company shall reimburse or
indemnify him for the amount of such settlement and for all expenses reasonably
incurred in connection with such action and its settlement. This right of
indemnification shall not be exclusive of any other rights to which any such
person may be entitled.

ARTICLE VIII

CERTIFICATION OF SHARES

Section 1. Shares Represented by Certificate.
The shares of the Company shall be represented by certificates signed by the
President and the Treasurer of the Company and shall contain the seal of the
Company or a facsimile of the seal. Each shareholder shall be entitled to a
certificate or certificates for shares of the Company owned by such
shareholder.

Section 2. Surrender of Certificates.
Upon surrender to the Company of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the person entitled
to such certificate, and the old certificate shall be cancelled and the
transaction recorded upon the books of the Company.

Section 3. Fixing a Record Date.
For the purpose of determining shareholders entitled to notice of, or to vote
at any meeting of shareholders, or for the purpose of determining shareholders
entitled to receive payment of any dividend or allotment of rights, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors of the Company may fix, in advance, a date as the record date for
any such determination of shareholders. Such date shall not be more than
thirty (30) days nor less than ten (10) days before the date of any such
meeting or the date of the particular action to be taken. When a determination
of shareholders of record entitled to notice of or to vote at any meeting of
shareholders has

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<PAGE> 12
been made as provided in this section, such determination shall apply to any
adjourned meeting unless the Board fixes a new record date for such adjourned
meeting.

ARTICLE IX

DIVIDENDS

Dividends to shareholders may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in shares
of the capital stock or in the Company's bonds or its property including the
shares or bonds of other companies, subject to any provisions of law. Before
payment of any dividend, there may be set aside out of any funds of the Company
available for dividends, such sum or sums as the Directors may from time to
time, in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for repairing or maintaining any property of the Company or
for such other purpose as the Directors shall find to be in the best interest
of the Company. The Directors may modify or abolish any such reserve.

ARTICLE X

CORPORATE SEAL

The Corporate Seal shall have inscribed on it the name of the Company, the year
of its organization and the words, "Corporate Seal, Commonwealth of Virginia."

ARTICLE XI

EXECUTION OF CONTRACTS AND OTHER DOCUMENTS

Section 1. Contracts.
The President, a Vice President, Treasurer or such other persons as may be
specified by the Board of Directors, are authorized on behalf of the Company to
sign all deeds, bonds, contracts, mortgages and other instruments or documents.

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<PAGE> 13
Section 2. Checks and Other Commercial Paper.
All checks, drafts, notes, bonds, bills of exchange or other orders,
instruments or obligations for the receipt of or the payment of money shall be
endorsed by or signed by either the President, the Treasurer, or such other
persons as may be designated by the Board of Directors.

ARTICLE XII

FISCAL YEAR

The fiscal year of the Company shall begin on the first day of January in each
year.

ARTICLE XIII

NOTICES AND WAIVER OF NOTICES

Whenever any notice required by these By-Laws or by statute is given by mail,
such notice shall be good ant sufficient if deposited in the United States
mail, addressed in the case of a shareholder, to the shareholder's address as
it appears on the record of the Company, or in the case of a Director, to the
Director at the Director's address as it appears on the records of the Company.

Whenever any notice is required to be given by these By-Laws or by statute, a
waiver of such notice given in writing signed by the person or persons entitled
to such notice, whether before or after the time stated in such By-Law or
Statute, shall be deemed equivalent to the giving of such notice.

ARTICLE XIV

MANAGEMENT OF COMPANY IN EVENT OF EMERGENCY

In the event of an emergency or a disaster of sufficient severity to prevent
the conduct of the business affairs of the Company by its Directors and
officers as contemplated by the Articles of Incorporation and By-Laws, any two
or more available members of the Executive Committee at the time of the
emergency shall constitute a quorum of that Committee for the full conduct and
management of the Company in

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<PAGE> 14
accordance with Article IV Section 1 of the By-Laws. In the event there are
not at least two members of the Executive Committee available at that time, the
available members of the Board of Directors shall elect an interim Executive
Committee consisting of any three members of the Board, whether or not they are
officers of the Company. Such three members shall constitute the Executive
Committee for the full conduct and management of the Company in accordance with
Article IV Section 1 of the By-Laws. This By-Law shall be subject to
implementation by resolutions of the Board of Directors passed from time to
time for that purpose, and any other provisions of these By-Laws and any other
Board resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementing resolutions, shall be suspend~d until
it shall be determined by such interim Executive Committee acting under this
Section that it shall be to the advantage of the Company to resume the conduct
and management of its affairs under all of the other provisions of these
By-Laws.

ARTICLE XV

AMENDMENTS

These By-Laws may be amended or repealed, or new By-Laws may be adopted by the
Board of Directors with a two-thirds vote of the Directors present at any
meeting of the Board of Directors.

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<PAGE> 15
ACACIA NATIONAL LIFE INSURANCE COMPANY
SECRETARY'S CERTIFICATION
MAY 6, 1996

I, W. Nicholas Goetz, the duly elected Assistant Secretary of the Acacia
National Life Insurance Company, a corporation organized in 1974 and operating
under the laws of the Commonwealth of Virginia, do hereby certify that the copy
of the Bylaws of the Company, herewith attached, is a true and exact copy as
amended by the Board of Directors January 19, 1982, and that the Bylaws are in
full force and effect this sixth day of May, 1996.

SEAL /s/ W. Nicholas Goetz
---------------------
W. Nicholas Goetz
Assistant Secretary