AUSA RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT, N-4 EL, 1996-08-29

AUSA RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
N-4 EL, 1996-08-29

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<PAGE>

As filed with the Securities and Exchange Commission on ______________. _______.

Registration No. 333 -
811 -
________________________________________________________________________________

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

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. _____

AUSA RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
------------------------------------------------
(Exact Name of Registrant)

AUSA LIFE INSURANCE COMPANY, INC.
---------------------------------
(Name of Depositor)

666 Fifth Avenue, 25th Floor, New York, New York, 10103
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, including Area Code

(212) 246-5234

Frank A. Camp, Esquire
AUSA Life Insurance Company, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
(Name and Address of Agent for Service)

Copy to:

Frederick R. Bellamy, Esquire
Sutherland, Asbill and Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
<PAGE>

DECLARATION PURSUANT TO RULE 24F-2

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

Approximate date of proposed offering:

As soon as practicable after effectiveness of the Registration Statement.

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>

CROSS REFERENCE SHEET
Pursuant to Rule 495

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

PART A
------

<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
- ---------------- ------------------
<S> <C>
1. Cover Page................................. Cover Page

2. Definitions................................ Definitions

3. Synopsis................................... Summary; Historical Performance
Data

4. Condensed Financial Information............ Condensed Financial Information;
....................................... Financial Statements

5. General Description of Registrant, Depositor
and Portfolio Companies
(a) Depositor............................. AUSA Life Insurance Company, Inc.
(b) Registrant............................ The Retirement Builder Accounts
(c) Portfolio Company..................... The Mutual Fund Account
(d) Fund Prospectus....................... Underlying Funds
(e) Voting Rights......................... Underlying Funds

6. Deductions and Expenses
(a) General............................... Charges and Deductions
(b) Sales Load %.......................... Surrender Charge
(c) Special Purchase Plan................. N/A
(d) Commissions........................... Distributor of the Policies
(e) Expenses - Registrant................. N/A
(f) Fund Expenses......................... Other Expenses including Investment
...................................... Advisory Fees
(g) Organizational Expenses............... N/A

7. Policies
(a) Persons with Rights................... The Policy; Election of Payment Option;
...................................... Annuity Payments; Annuity
...................................... Commencement Date; Voting Rights

(b) (i) Allocation of Premium
Payments........................ Allocation of Premium Payments
(ii) Transfers....................... Transfers
(iii) Exchanges....................... N/A

(c) Changes............................... Annuity Payment Options; Premium
...................................... Payments; Possible changes in taxation;
...................................... Addition, Deletion, or Substitution of
...................................... Investments
</TABLE>
<PAGE>

<TABLE>
<S> <C>
(d) Inquiries Summary

8. Annuity Period............................. Annuity Payment Options;
...................................... Annuity Commencement Date

9. Death Benefit.............................. Death Benefit

10. Purchases and Contract Value
(a) Purchases............................. Policy Application and Issuance of
...................................... Policies; Premium Payments
(b) Valuation............................. Policy Value; The Mutual Fund
...................................... Policy Value
(c) Daily Calculation..................... The Mutual Fund Policy Value
(d) Underwriter........................... Distributor of the Policies

11. Redemptions
(a) By Owners............................. Surrenders
By Annuitant.......................... N/A
(b) Texas ORP............................. Restrictions Under the Texas Optional
...................................... Retirement Program
(c) Check Delay........................... Payment Not Honored by Bank
(d) Lapse................................. N/A
(e) Free Look............................. Summary

12. Taxes...................................... Certain Federal Income Tax
...................................... Consequences

13. Legal Proceedings.......................... Legal Proceedings

14. Table of Contents for the
Statement of
Additional Information..................... Statement of Additional Information
</TABLE>

PART B
------

<TABLE>
<CAPTION>
Statement of Additional
Item of Form N-4 Information Caption
- ---------------- -------------------
<S> <C>
15. Cover Page................................. Cover Page

16. Table of Contents.......................... Table of Contents

17. General Information
and History................................ (Prospectus) AUSA Life Insurance
...................................... Company, Inc.

18. Services
(a) Fees and Expenses
of Registrant.......................... N/A
(b) Management Policies.................... N/A
(c) Custodian.............................. Custody of Assets
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Independent
Auditors.............................. Independent Auditors
(d) Assets of Registrant.................. Custody of Assets
(e) Affiliated Person..................... N/A
(f) Principal Underwriter................. Distribution of the Policies

19. Purchase of Securities
Being Offered.............................. Distribution of the Policies
Offering Sales Load........................ N/A

20. Underwriters............................... Distribution of the Policies; (Prospectus)
Distributor of the Policies

21. Calculation of Performance
Data....................................... Historical Performance Data

22. Annuity Payments........................... (Prospectus) Annuity Payment Options

23. Financial Statements....................... Financial Statements
</TABLE>

PART C -- OTHER INFORMATION
---------------------------

<TABLE>
<CAPTION>
Item of Form N-4 Part C Caption
- ---------------- --------------
<S> <C>
24. Financial Statements
and Exhibits
(a) Financial Statements.................. Financial Statements
(b) Exhibits.............................. Exhibits

25. Directors and Officers of
the Depositor.............................. Directors and Officers of the Depositor

26. Persons Controlled By or Under
Common Control with the
Depositor or Registrant.................... Persons Controlled By or Under Common
....................................... Control with the Depositor or Registrant

27. Number of Contractowners................... Number of Contractowners

28. Indemnification............................ Indemnification

29. Principal Underwriters..................... Principal Underwriters

30. Location of Accounts
and Records................................ Location of Accounts and Records

31. Management Services........................ Management Services

32. Undertakings............................... Undertakings

Signature Page............................. Signature Page
</TABLE>
<PAGE>

PROSPECTUS
----------

THE RETIREMENT INCOME BUILDER VARIABLE ANNUITY
Issued Through
AUSA RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT
by
AUSA LIFE INSURANCE COMPANY, INC.

This Prospectus describes the Retirement Income Builder Variable Annuity
(the "Policy"), a Flexible Premium Variable Annuity offered by AUSA Life
Insurance Company, Inc. ("AUSA Life") to individuals who wish to accumulate
capital on a tax-deferred basis for retirement or other long-term purposes. The
Policy provides for monthly annuity payments on a variable or fixed basis,
commencing at a future date selected by the Owner of the Policy (the "Annuity
Commencement Date"). The Policy may be purchased with a minimum initial Premium
Payment of $2,000. There is no minimum initial Premium Payment required if the
Policy is purchased and used in connection with a tax deferred 403(b) Annuity.
An Owner may make subsequent additional Premium Payments of at least $50 at any
time before the Annuity Commencement Date. The maximum total Premium Payments
allowed without prior approval of AUSA Life is $1,000,000.

The Owner may allocate Premium Payments to one or more Subaccounts of the
AUSA Retirement Builder Variable Annuity Account (the "Mutual Fund Account"), to
one or more options under a Fixed Account in which AUSA Life guarantees a
minimum fixed return (the "Fixed Account"), or to a combination of these. The
Mutual Fund Account is a separate investment account of AUSA Life that currently
has ten different Subaccounts (the "Subaccounts"). Assets of each Subaccount are
currently invested only in shares of a corresponding Portfolio of a mutual fund:
the portfolios of the Variable Insurance Products Fund and the Variable
Insurance Products Fund II (together, the "Underlying Funds"), managed by
Fidelity Management & Research Company ("FMR"), an affiliate of Fidelity
Investments. The Underlying Funds currently consist of ten Portfolios: Money
Market, High Income, Equity-Income, Growth, Overseas, Investment Grade Bond,
Asset Manager, Index 500, Asset Manager: Growth, and Contrafund. The Underlying
Funds are described in separate prospectuses that accompany this Prospectus. The
Policy Value will vary in accordance with the investment performance of the
Subaccounts selected by the Owner. THEREFORE, THE OWNER BEARS THE ENTIRE
INVESTMENT RISK FOR ALL AMOUNTS ALLOCATED TO THE MUTUAL FUND ACCOUNT, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. Amounts allocated to the Fixed
Account are guaranteed by AUSA Life and will earn a specified rate of interest
declared periodically which will never be less than an effective annual interest
rate of 3%.

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.

This prospectus must be accompanied or preceded by a current prospectus for the
Variable Insurance Products Fund and the Variable Insurance Products Fund II.
Certain portfolios may not be available in all states.

AN INVESTMENT IN THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION, AND IS NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

The date of this Prospectus is _______________, 1996.
<PAGE>

Prior to the Annuity Commencement Date, the Owner can transfer certain
amounts among the Guaranteed Period Options of the Fixed Account or between the
Fixed Account or Subaccounts of the Mutual Fund Account (some prohibitions and
restrictions apply). The Owner can also elect to surrender all or any portion of
the Cash Value in exchange for a payment from AUSA Life; however, any surrender
may be taxable, and subject to a Surrender Charge or a penalty tax or both. Full
surrenders or partial surrenders (also referred to as partial withdrawals) from
the Fixed Account may be subject to delay and adjustment related to changes in
interest rates declared by AUSA Life (an Excess Interest Adjustment). The
operation of the Excess Interest Adjustment may result in upward or downward
adjustments in the amount to be received on full surrender, or in the Policy
Value upon partial withdrawal.

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 Mutual Fund 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 dated_________, 1996, and a copy is available at no cost upon request by
writing AUSA Life at the Service Office or by calling 1-800-525-6205. The table
of contents of the Statement of Additional Information is included at the end of
the Prospectus. This Prospectus and the Statement of Additional Information
generally describe only the Policy and the Mutual Fund Account, except when the
Fixed Account is specifically mentioned.

Home Office:
4 Manhattanville Road
Purchase, NY 10577

Administrative Office:
AUSA Life Insurance Company, Inc.
666 Fifth Avenue, 25th Floor
New York, NY 10103

Any telephone requests and inquiries
may be made to 1-800-525-6205.

Any Written Notices or Written Requests
must be sent to the following address:

Service Office:
Financial Markets Division
Variable Annuity Dept.
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001

Please Read This Prospectus Carefully And Retain it For Future Reference.

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.

2
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS...............................................................
SUMMARY...................................................................
CONDENSED FINANCIAL INFORMATION...........................................
FINANCIAL STATEMENTS......................................................
HISTORICAL PERFORMANCE DATA...............................................
Standardized Performance Data..........................................
Subaccounts............................................................
Non-Standardized Performance Data......................................
PUBLISHED RATINGS.........................................................
AUSA LIFE INSURANCE COMPANY, INC..........................................
THE RETIREMENT BUILDER ACCOUNTS...........................................
The Mutual Fund Account................................................
Underlying Funds....................................................
Addition, Deletion or
Substitution of Investments........................................
The Fixed Account......................................................
Guaranteed Periods..................................................
Dollar Cost Averaging Fixed
Account Option.....................................................
Transfers..............................................................
Reinstatements.........................................................
Dollar Cost Averaging..................................................
Asset Rebalancing......................................................
THE POLICY................................................................
Policy Application and Issuance
of Policies...........................................................
Premium Payments.......................................................
Initial Premium Payment.............................................
Subsequent Additional Premium Payments..............................
Maximum Total Premium Payments......................................
Allocation of Premium Payments......................................
Payment Not Honored by Bank.........................................
Introductory Premium Credit............................................
Policy Value...........................................................
The Mutual Fund Policy Value........................................
Adjusted Policy Value..................................................
Non-participating Policy...............................................
DISTRIBUTIONS UNDER THE POLICY............................................
Surrenders.............................................................
Unemployment Waiver....................................................
Long Term Care Premium Discount........................................
Excess Interest Adjustment (EIA).......................................
Systematic Payout Option...............................................
Annuity Payments.......................................................
Annuity Commencement Date...........................................
Election of Payment Option..........................................
Premium Tax.........................................................
Supplementary Policy................................................
Annuity Payment Options................................................
Guaranteed Values...................................................
Option 1 - Interest Payments........................................
Option 2 - Income for a Specified Period............................
Option 3 - Life Income..............................................
</TABLE>

3
<PAGE>

<TABLE>
PAGE
----
<S> <C>
Option 4 - Income of a Specified Amount.............................
Option 5 - Joint and Survivor Annuity...............................
Variable Payment Options............................................
Determination of the First Variable Payment.........................
Option 3-V-Life Income..............................................
Option 5-V-Joint and Survivor Annuity...............................
Determination of Subsequent Variable Payments.......................
Transfers...........................................................
Adjustment of Annuity Payments......................................
Death Benefit..........................................................
Death of Annuitant Prior to Annuity Commencement Date...............
Adjusted Partial Withdrawal.........................................
Death On or After Annuity Commencement Date.........................
Beneficiary.........................................................
Death of Owner.........................................................
Restrictions Under the Texas Optional Retirement Program...............
Restrictions Under Section 403(b) Plans................................
Restrictions Under Qualified Policies..................................
CHARGES AND DEDUCTIONS....................................................
Surrender Charge.......................................................
Mortality and Expense Risk Fee.........................................
Administrative Charges.................................................
Premium Taxes..........................................................
Federal, State and Local Taxes.........................................
Transfer Fee...........................................................
Other Expenses Including Investment Advisory Fees......................
CERTAIN FEDERAL INCOME TAX CONSEQUENCES...................................
Tax Status of Policy...................................................
Taxation of Annuities..................................................
In General..........................................................
Aggregation Rules...................................................
Surrenders..........................................................
Annuity Payments....................................................
Taxation of Death Benefit Proceeds..................................
Penalty Taxes.......................................................
Withholding.........................................................
Qualified Policies..................................................
Individual Retirement Annuities.....................................
Section 403(b) Plans................................................
Corporate Pension and Profit Sharing Plans and H.R. 10
Plans..............................................................
Deferred Compensation Plans.........................................
Non-natural Persons.................................................
Possible Changes in Taxation........................................
DISTRIBUTOR OF THE POLICIES...............................................
VOTING RIGHTS.............................................................
LEGAL PROCEEDINGS.........................................................
STATEMENT OF ADDITIONAL INFORMATION.......................................
TABLE OF CONTENTS.........................................................
APPENDIX A................................................................
</TABLE>

4
<PAGE>

DEFINITIONS

Accumulation Unit--An accounting unit of measure used in calculating the
Policy Value in the Mutual Fund Account before the Annuity Commencement Date.

Adjusted Policy Value--An amount equal to the Policy Value increased or
decreased by any Excess Interest Adjustments.

Administrative Office--AUSA Life Insurance Company, Inc., 666 Fifth Avenue,
25th Floor, New York, NY 10103.

Annuitant--The person entitled to receive Annuity Payments after the
Annuity Commencement Date and during whose life any Annuity Payments involving
life contingencies will continue.

Annuity Commencement Date--The date upon which Annuity Payments are to
commence. The Annuity Commencement Date may not be later than the last day of
the Policy month starting after the Annuitant attains age 85, except as
expressly allowed by AUSA Life, but in no event later than the last day of the
Policy month following the month in which the Annuitant attains age 90. The
Annuity Commencement Date may be required to be earlier for Qualified Policies.

Annuity Payment Option or Payment Option--A method of receiving a stream of
Annuity Payments selected by the Owner.

Annuity Unit--An accounting unit of measure used in the calculation of the
amount of the second and each subsequent Variable Annuity Payment.

Beneficiary--The person who has the right to the death benefit set forth in
the Policy.

Business Day--A day when the New York Stock Exchange is open for business
and which is a regular business day of the Service Office.

Cash Value--The Adjusted Policy Value, less the Surrender Charge, if any.

Code--The Internal Revenue Code of 1986, as amended.

Cumulative Free Percentage--The percentage (as applied to the Policy Value)
which is available to the Owner free of any Surrender Charge. The Cumulative
Free Percentage accumulates at 10% per year beginning in the first Policy Year.
Unused Cumulative Free Percentage's are carried forward to each successive
Policy Anniversary and increase the Cumulative Free Percentage available at any
time. Previously taken Cumulative Free Percentage's, however, reduce the
Cumulative Free Percentage available.

Current Interest Rate--The interest rate or rates currently guaranteed to
be paid on amounts allocated to one or more options in the Fixed Account. This
interest rate will always be equal to or greater than an effective annual rate
of 3%.

5
<PAGE>

Dollar Cost Averaging--The process by which the Owner may elect to
liquidate a specified Fixed Account Option in order to purchase Mutual Fund
Account Accumulation Units on a systematic basis.

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 AUSA Life, will constitute Due Proof of Death.

Excess Interest Adjustment-- A positive or negative adjustment to amounts
withdrawn upon partial or full surrenders by the Owner from the Fixed Account
Guaranteed Period Options, or to amounts applied to Annuity Payment Options. The
adjustment reflects changes in the interest rates declared by AUSA Life since
the date any payment was received by or an amount was transferred to the
Guaranteed Period Option. The Excess Interest Adjustment (EIA) can either
decrease or increase the amount to be received by the Owner upon full surrender
or commencement of Annuity Payments, depending upon whether there has been an
increase or decrease in interest rates, respectively.

Excess Partial Surrender--The portion of a partial withdrawal (surrender)
that can be subject to a Surrender Charge.

Fixed Account--A group of Investment Options under the Policy, other than
the Mutual Fund Account, that are part of the general assets of AUSA Life that
are not in separate accounts.

Fixed Annuity Payments--Payments made pursuant to an Annuity Payment Option
which do not fluctuate in amount.

FMR--Fidelity Management & Research Company, the investment advisor to the
Underlying Funds.

Guaranteed Period Options--The various guaranteed interest rate periods of
the Fixed Account which may be offered by AUSA Life and into which Premium
Payments may be paid or amounts transferred.

Investment Options--Any of the Guaranteed Period Options of the Fixed
Account, the Dollar Cost Averaging Fixed Account Option, and any of the
Subaccounts of the Mutual Fund Account.

Mutual Fund Account--The AUSA Retirement Builder Variable Annuity Account,
a separate account established and registered as a unit investment trust under
the Investment Company Act of 1940 to which Premium Payments under the Policies
may be allocated.

Nonqualified Policy--A Policy other than a Qualified Policy.

Owner or Owners--The person who may exercise all rights and privileges
under the Policy. The Owner during the lifetime of the Annuitant and prior to
the Annuity Commencement Date is the person designated as the Owner or a
Successor Owner in the application.

6
<PAGE>

Policy Anniversary--Each anniversary of the Policy Date.

Policy Date--The Policy Date as shown on the Policy Data Page attached to
the Policy.

Policy Value--On or before the Annuity Commencement Date, the Policy Value
is equal to the Owner's:

(1) Premium Payments; minus
(2) Partial Withdrawals (including any applicable Excess Interest
Adjustments and/or Surrender Charges on such withdrawals); plus
(3) interest credited in the Fixed Account; plus
(4) accumulated gains or losses in the Mutual Fund Account; minus
(5) Service Charges, premium taxes and transfer fees, if any.

Policy Year--A Policy Year begins on the Policy Date and on each Policy
Anniversary.

Premium Payment--An amount paid to AUSA Life by the Owner or on the Owner's
behalf as consideration for the benefits provided by the Policy.

Qualified Policy--A Policy issued in connection with retirement plans that
qualify for special Federal income tax treatment under the Code.

Service Office--Financial Markets Division--Variable Annuity Dept., 4333
Edgewood Road NE, Cedar Rapids, Iowa 52499-0001.

Subaccount--A subdivision within the Mutual Fund Account, the assets of
which are invested in a specified Portfolio of the Underlying Funds.

Successor Owner--A person appointed by the Owner to succeed to ownership of
the Policy in the event of the death of the Owner who is not the Annuitant
before the Annuity Commencement Date.

Surrender Charge--The applicable contingent deferred sales charge, assessed
on certain full surrenders or partial withdrawals of Premium Payments to cover
expenses relating to the sale of the Policies.

Underlying Funds--The portfolios of the Variable Insurance Products Fund
and the Variable Insurance Products Fund II, managed by Fidelity Management &
Research Company, an affiliate of Fidelity Investments.

Valuation Period--The period of time from one determination of Accumulation
Unit and Annuity Unit values to the next subsequent determination of values.
Such determinations shall be made on each Business Day.

Variable Annuity Payments--Payments made pursuant to an Annuity Payment
Option which fluctuate as to dollar amount or payment term in relation to the
investment performance of the specified Subaccounts within the Mutual Fund
Account.

7
<PAGE>

Written Notice or Written Request--Written notice, signed by the Owner,
that gives AUSA Life the information it requires and is received at the Service
Office. For some transactions, AUSA Life may accept an electronic notice. Such
electronic notice must meet the requirements AUSA Life establishes for such
notices. Telephone instructions are not permitted.

8
<PAGE>

THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY

SUMMARY

The following summary is intended to provide a brief overview of the Policy.
More detailed information can be found in the sections of this Prospectus that
follow, all of which should be read in their entirety.

THE POLICY

The Retirement Income Builder Variable Annuity is a tax-deferred flexible
premium variable annuity Policy which can be purchased on a non-tax qualified
basis or with the proceeds from certain plans qualifying for favorable federal
income tax treatment. The Policy provides the Owner with the ability to
accumulate funds on a tax-deferred basis and to receive periodic annuity
payments on a variable basis, a fixed basis, or a combination of both. The Owner
allocates the Premium Payments among the various options available under the
Mutual Fund Account and the Fixed Account. The Policy is intended for long-term
purposes, such as retirement, and for persons who have maximized their use of
other retirement savings methods, such as 401(k) plans and individual retirement
accounts (IRAs).

THE ACCOUNTS

The Mutual Fund Account. The Mutual Fund Account is a separate account of AUSA
Life, which currently is divided into ten Subaccounts that invest exclusively in
shares of the ten portfolios of the Variable Insurance Products Fund and the
Variable Insurance Products Fund II (collectively, the "Underlying Funds").
Fidelity Management & Research Company ("FMR") provides investment advice and
administrative services to the Underlying Funds. The Variable Insurance Products
Fund currently offers five Portfolios: Money Market Portfolio; High Income
Portfolio; Equity-Income Portfolio; Growth Portfolio; and Overseas Portfolio.
The Variable Insurance Products Fund II currently offers five portfolios:
Investment Grade Bond Portfolio; Asset Manager Portfolio; Index 500 Portfolio;
Asset Manager: Growth Portfolio; and Contrafund Portfolio. Each of the ten
Subaccounts of the Mutual Fund Account invests solely in a corresponding
Portfolio of the Underlying Funds. Because the Policy Value may depend on the
investment experience of the selected Subaccounts, the Owner bears the entire
investment risk with respect to Premium Payments allocated to, and amounts
transferred to, the Mutual Fund Account. (See "THE RETIREMENT BUILDER ACCOUNTS--
The Mutual Fund Account" p. ___.)

The Fixed Account. AUSA Life guarantees return of principal and a minimum
annual return of 3% on: Premium Payments and transfers to, less partial
withdrawals or transfers from the Fixed Account. AUSA Life will always offer a
Current Interest Rate which will be guaranteed for at least one year from the
date of the Premium Payment or transfer. AUSA Life may, in its sole discretion,
declare a higher Current Interest Rate from time-to-time. AUSA Life may offer
optional guaranteed interest rate periods into which Premium Payments may be
made or amounts transferred. AUSA Life may

9
<PAGE>

also offer a Dollar Cost Averaging Fixed Account Option which will have a one-
year interest rate guarantee and which will require automatic periodic transfers
to the Mutual Fund Account. (See "THE RETIREMENT BUILDER ACCOUNTS--The Fixed
Account" p. ___.)

PREMIUM PAYMENTS

A Nonqualified or Qualified Policy may be purchased with an initial Premium
Payment of at least $2,000, but there is no minimum initial Premium Payment
required for a Policy purchased and used in connection with a tax deferred
403(b) Annuity. An Owner may make Subsequent Additional Premium Payments of at
least $50 each at any time before the Annuity Commencement Date. The maximum
total Premium Payments allowed without prior approval of AUSA Life is
$1,000,000. At the time of each Premium Payment no charges or fees are deducted,
so the entire Premium Payment is invested immediately, subject to the
restrictions below regarding the "Right to Cancel" period. (See "CHARGES AND
DEDUCTIONS--Surrender Charge," p. ___ and CHARGES AND DEDUCTIONS--Premium
Taxes," p. ___.)

The Owner must allocate the initial Premium Payment among the Investment
Options (that is, among the options available under the Fixed Account and/or the
Subaccounts of the Mutual Fund Account) according to allocation percentages in
the Policy application or transmittal form. Any allocation must be in whole
percents, and the total allocation must equal 100%. However, any amounts
allocated to Subaccounts of the Mutual Fund Account will be allocated entirely
to the Money Market Subaccount of the Mutual Fund Account for the Policy's
"Right-to-Cancel" Period. (See "Right to Cancel Period," below.) At the end of
this period, the amount in the Money Market Subaccount will then be allocated to
the Subaccount(s) of the Mutual Fund Account in accordance with the allocation
percentages specified by the Owner. Allocations specified by the Owner will be
used for Subsequent Additional Premium Payments unless the Owner requests a
change in allocation. Allocations for Subsequent Additional Premium Payments may
be changed by sending Written Notice to AUSA Life's Service Office. (See "THE
POLICY--Premium Payments," p. ___.)

INTRODUCTORY PREMIUM CREDIT

For Initial Premium Payments that are received on or before February 28,
1997, AUSA Life will credit an additional amount equal to three percent (3%) of
such Premium Payments to the Policy Value effective as of the Policy Date
provided, however, that the Policy is not canceled pursuant to the "Right to
Cancel" described below. The three percent credit will be entitled to the same
treatment as any other Premium Payment for all purposes under the Policy. This
offer may not be available in all states.

RIGHT TO CANCEL PERIOD

When the Owner receives the Policy, it should be reviewed carefully to make
sure it is what the Owner intended to purchase. The Owner may, until the end of
the period of time specified in the Policy (the Right to Cancel period), examine
the Policy and return it for a refund. The applicable period

10
<PAGE>

will depend on the state in which the Policy is issued. In New York it is twenty
(20) days (in other states it may be ten (10) days) after the Policy is
delivered to the Owner. The amount of the refund will be the greater of the
Premium Payments made under the Policy or the Policy Value. AUSA Life will pay
the refund within seven (7) days after it receives written notice of
cancellation and the returned Policy. The Policy will then be deemed void.

TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE

An Owner can transfer values from one Subaccount to another within the
Mutual Fund Account or from the Mutual Fund Account to the Guaranteed Period
Options of the Fixed Account, or from the Guaranteed Period Options of the Fixed
Account to the Mutual Fund Account within limits established by AUSA Life.
Transfers of funds from any of the Guaranteed Period Options of the Fixed
Account to any of the Subaccounts of the Mutual Fund Account are allowed only at
the end of the applicable Guaranteed Periods, and will not be subject to an
Excess Interest Adjustment at that time. AUSA Life may, at its discretion, offer
the Owner the option to transfer any or all of the interest credited in any of
the Guaranteed Period Options to any Subaccount(s) of the Mutual Fund Account
prior to the end of a specified Guaranteed Period. (See "THE RETIREMENT BUILDER
ACCOUNTS--Transfers.") Any transfers of interest which may be permitted from a
Guaranteed Period Option prior to the end of a Guaranteed Period will not be
subject to any Excess Interest Adjustment. (See "DISTRIBUTIONS UNDER THE POLICY-
Excess Interest Adjustments (EIA)" p.___.) Transfers from the Dollar Cost
Averaging Fixed Account Option (See "THE RETIREMENT BUILDER ACCOUNTS--Dollar
Cost Averaging Fixed Account Option," p. ___), except through a Dollar Cost
Averaging program, are not allowed. Transfers currently may be made by sending
Written Notice to AUSA Life's Service Office.

AUSA Life reserves the right to impose a $10 fee for each transfer in
excess of 12 transfers per Policy Year. At the present time, AUSA Life does not
charge for transfers. (See "THE RETIREMENT BUILDER ACCOUNTS--Transfers," p.___.)

SURRENDERS

The Owner may elect to surrender all or withdraw a portion of the Cash
Value ($500 minimum) in exchange for a payment from AUSA Life at any time prior
to the earlier of the Annuitant's death or the Annuity Commencement Date. The
Cash Value equals the Policy Value increased or decreased by any Excess Interest
Adjustments, less any applicable Surrender Charge (described below). A surrender
request must be made by Written Request, and a request for a partial withdrawal
must specify the Subaccounts or Guaranteed Period Options from which the
withdrawal is requested. There is currently no limit on the frequency or timing
of Policy withdrawals. (See "DISTRIBUTIONS UNDER THE POLICY--Surrenders," p.
___), although for Qualified Policies the retirement plan or applicable law may
restrict and/or penalize withdrawals. In addition to the Surrender Charge,
Service Charge, any applicable Excess Interest Adjustment, and any applicable
premium taxes, surrenders and partial withdrawals may be subject to income taxes
and a 10% Federal penalty tax.

11
<PAGE>

UNEMPLOYMENT WAIVER

The Owner may withdraw all or a portion of the Policy Value free of
Surrender Charges and free of Excess Interest Adjustments if the Owner or
Owner's spouse (Annuitant or Annuitant's spouse, if the Owner is not a natural
person) becomes unemployed. In order to qualify, the affected individual 1) must
have been employed full time for at least two years prior to becoming
unemployed, 2) must have been employed full time on the Policy Date, 3) must
have been unemployed for at least 60 consecutive days at the time of withdrawal,
and 4) must have a minimum Cash Value at the time of withdrawal of $5,000. Proof
of unemployment will consist of providing AUSA Life with a determination letter
from the applicable State's Department of Labor which verifies that the
individual qualifies for and is receiving unemployment benefits at the time of
withdrawal. The determination letter must be received by AUSA Life no later than
fifteen (15) days after the date of the withdrawal request.

LONG TERM CARE PREMIUM DISCOUNT

In certain states, during the first Policy Year the Owner, Owner's spouse,
and their parents or step-parents (similarly, the Annuitant or Annuitant's
spouse and their parents or step-parents if the Policy is owned by a non-natural
person) are each eligible to receive an eight percent (8%) premium discount on
the purchase of one of the long term care insurance policies issued by AUSA
Life, subject to certain limitations: (1) The long term care insurance policy
may be any of the policies AUSA Life offers to the general public in the state
of residence of the person to be insured at the time of application; (2) The
application for long term care insurance must be received by AUSA Life before
the first Policy Anniversary of the Policy; and (3) All normal underwriting
requirements must be met in order for a long term care insurance policy to be
issued. Therefore, there can be no assurance that any application for long term
care insurance will be accepted. Once a long term care insurance policy is
issued, however, the premium discount will apply to all eligible long term care
premiums paid, and will apply as long as the long term care insurance policy
remains in force. Since this benefit may not be available in all states, check
the Policy or endorsement for details.

CHARGES AND DEDUCTIONS

Surrender Charge. In order to permit investment of the entire Premium
Payment, AUSA Life does not deduct sales or other charges at the time of
investment. However, a Surrender Charge, which is a contingent deferred sales
charge, of up to 6% of the Premium Payment is imposed on certain full surrenders
or partial withdrawals of Premium Payments in order to cover expenses relating
to the distribution of the Policies. The applicable Surrender Charge is based on
the period of time elapsed since payment of the Premium Payment(s) being
withdrawn. There will be no Surrender Charge imposed five or more years after a
Premium Payment was paid. In any event, Surrender Charges will be waived after
the tenth Policy Year. For purposes of determining the applicable Surrender
Charge, Premium Payments are considered to be withdrawn on a "first-in, first-
out" basis. (See "CHARGES AND DEDUCTIONS--Surrender Charge," p. ___.) In each
Policy Year the

12
<PAGE>

Owner may request partial withdrawals ($500 minimum) of up to 10% of the Policy
Value free of Surrender Charges. The amount that may be taken free of Surrender
Charges each Policy Year is cumulative. This is referred to as the "Cumulative
Free Percentage." That is, Cumulative Free Percentages which are not taken are
carried forward and are available to be taken in the following Policy Year free
of Surrender Charges. Cumulative Free Percentage withdrawals previously taken
reduce the Cumulative Free Percentage that is available. (See "DISTRIBUTIONS
UNDER THE POLICY--Surrenders," p.___.) Amounts withdrawn in excess of the
available Cumulative Free Percentage will be subject to a Surrender Charge (up
to 6%).

Excess Interest Adjustment. Full surrenders, partial withdrawals from the
Guaranteed Period Options of the Fixed Account prior to the end of the
Guaranteed Period, and amounts applied to a Payment Option (prior to the end of
the Guaranteed Period) which are in excess of the cumulative interest credited
at the time of, but prior to, the withdrawal, are subject to an Excess Interest
Adjustment. Depending upon market rates of interest, the effect of an Excess
Interest Adjustment could eliminate all interest in excess of the minimum
guaranteed effective annual interest rate of 3%, or it could result in the
crediting of additional interest. (See "DISTRIBUTIONS UNDER THE POLICY--Excess
Interest Adjustment (EIA)," p. ___.)

Account Charges. AUSA Life deducts a daily charge equal to a percentage of
the net assets in the Mutual Fund Account for the mortality and expense risks
assumed by AUSA Life. For Guaranteed Minimum Death Benefit Option "A" (Return of
Premium Death Benefit), the effective annual rate of this charge is 1.10% of the
value of the Mutual Fund Account's net assets. For Guaranteed Minimum Death
Benefit Option "B" (Annual Step-Up Death Benefit), the effective annual rate of
this charge is 1.25% of the value of the Mutual Fund Account's net assets. (See
"CHARGES AND DEDUCTIONS--Mortality and Expense Risk Fee," p. ___ and
"DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p.___.)

AUSA Life also deducts a daily Administrative Charge from the net assets of
the Mutual Fund Account to partially cover expenses incurred by AUSA Life in
connection with the administration of the Mutual Fund Account and the Policies.
The effective annual rate of this charge is .15% of the value of the Mutual Fund
Account's net assets. (See "CHARGES AND DEDUCTIONS--Administrative Charges,"
p.___.)

AUSA Life guarantees that the account charges for mortality and expense
risks and administrative expenses will not exceed a total of 1.25% for Death
Benefit Option "A," and 1.40% for Death Benefit Option "B".

Service Charge. There is also an annual Service Charge on each Policy
Anniversary (and a charge at the time of surrender during any Policy Year) for
Policy maintenance and related administrative expenses. This annual charge is
the lesser of 2% of the Policy Value or $30 and is deducted from each Subaccount
and/or Guaranteed Period Option of the Fixed Account in proportion to each
Subaccount's/Guaranteed Period Option's percentage of the Policy Value in the
Subaccount/Guaranteed Period Option just prior to such charge. This charge is
waived if either the Policy Value or the sum of all

13
<PAGE>

Premium Payments less the sum of all partial withdrawals equals or exceeds
$50,000 on a Policy Anniversary (or date of surrender). AUSA LIFE GUARANTEES
THAT THIS CHARGE WILL NOT BE INCREASED IN THE FUTURE. (See "CHARGES AND
DEDUCTIONS--Administrative Charges," p. ___.)

Taxes. AUSA Life may incur premium taxes relating to the Policies. When
permitted by state law, AUSA Life will not deduct any premium taxes related to
particular Policy from the Policy Value until withdrawal of Policy Value,
payment of the death benefit or until the Annuity Commencement Date. (See
"CHARGES AND DEDUCTIONS--Premium Taxes," p. ___.)

No charges are currently made against any of the Accounts for federal,
state, or local income taxes. Should AUSA Life determine that any such taxes be
imposed with respect to any of the Accounts, AUSA Life may deduct such taxes
from amounts held in the relevant Account. (See "CHARGES AND DEDUCTIONS--
Federal, State and Local Taxes," p. ___.)

Charges Against the Underlying Funds. The value of the net assets of the
Subaccounts of the Mutual Fund Account will reflect the investment advisory fees
and other expenses incurred by the Underlying Funds.

Expense Data. The charges and deductions are summarized in the following
tables. This tabular information regarding expenses assumes that the entire
Policy Value is in the Mutual Fund Account.

14
<PAGE>

<TABLE>
<CAPTION>
Investment Asset
Money High Equity- Grade Asset Manager: Index

Market Income Income Growth Overseas Bond Manager Contrafund Growth 500

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Owner Transaction
Expenses (1)............
Sales Load on Premium
Payments............ 0 0 0 0 0 0 0 0 0 0

Maximum Surrender Charge
(as a % of Premium
Payment Surrendered) (2) 6% 6% 6% 6% 6% 6% 6% 6% 6% 6%

Surrender Fees.......... 0 0 0 0 0 0 0 0 0 0

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

Service Charge $30 Per Policy
----------------------------------------------------------------------------------------------------

Transfer Fee First 12 Transfers Per Year: NO FEE
More than 12 in One Year: Currently no fee

Mutual Fund Account Annual
Expenses
(as a percentage of account
value)
Mortality and Expense
Risk

Fees (3)........... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%

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

Administrative Charge.. 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%

Total Mutual Fund

Account
Annual Expenses.... 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%

Underlying Funds Annual
Expenses (4)
(as a percentage of
average net
assets)
Management Fees......... 0.24% 0.60% 0.51% 0.61% 0.76% 0.45% 0.71% 0.61% 0.71% 0.00%
Other Expenses.......... 0.09% 0.11% 0.10% 0.09% 0.15% 0.14% 0.08% 0.11% 0.29% 0.28%
Total Underlying Funds
Annual Expenses.... 0.33% 0.71% 0.61% 0.70% 0.91% 0.59% 0.79%(5) 0.72%(1) 1.00%(5,6) 0.28%(6)
</TABLE>

(1) The Surrender Charge and Transfer Fee, if any is imposed, apply to each
Policy, regardless of how Policy Value is allocated among the Mutual Fund
Account and the Fixed Account. The Service Charge applies to both the
Fixed Account and the Mutual Fund Account, and is assessed on a prorata
basis relative to each Account's Policy Value as a percentage of the
Policy's total Policy Value. Mutual Fund Account Annual Expenses do not
apply to the Fixed Account (See "CHARGES AND DEDUCTIONS--Other Expenses
Including Investment Advisory Fees," p. ___.)

(2) The Surrender Charge is decreased based on the number of years since the
Premium Payment was made, from 6% in the year in which the Premium Payment
was made to 0% in the sixth year after the Premium Payment was made.

(3) These Mortality and Expense Risk Fees are those for Guaranteed Minimum
Death Benefit Option "A". The corresponding Fees for Guaranteed Minimum
Death Benefit Option "B" are 1.10% for each Subaccount. (See
"DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p.___.)

(4) The fee table information relating to the Underlying Funds was provided to
AUSA Life by the Underlying Funds, and AUSA Life has not independently
verified such information.

(5) A portion of the brokerage commissions the fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been
as follows: for High Income: 0.71% [brokerage commissions were paid, but
such payment did not affect the ratio for this Portfolio]; for Asset
Manager: 0.81%; for Asset Manager: Growth: 1.13%; and for Contrafund:
0.73%.

(6) The fund's expenses were voluntarily reduced by the fund's investment
adviser. Absent reimbursement, management fee, other expenses, and total
expenses would have been (Index 500 Portfolio) 0.28%, 0.19% and 0.47%,
respectively; and (Asset Manager: Growth) 0.71%, 0.42% and 1.13%,
respectively.

15
<PAGE>

Examples

I. An Owner would pay the following expenses on a $1,000 investment, assuming
Death Benefit Option A, (Return of Premium Death Benefit) a hypothetical 5%
annual return on assets and assuming the entire Policy Value is in the
applicable Subaccount:

1. If the Policy is surrendered at the end of the applicable time
period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market Subaccount $71 $92
High Income Subaccount $74 $104
Equity-Income Subaccount $73 $101
Growth Subaccount $74 $104
Overseas Subaccount $76 $110
Investment Grade Bond Subaccount $73 $100
Asset Manager Subaccount $75 $106
Asset Manager: Growth Subaccount $77 $113
Contrafund Subaccount $74 $104
Index 500 Subaccount $70 $90
</TABLE>

2. If the Policy is annuitized at the end of the applicable time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market Subaccount $17 $52
High Income Subaccount $21 $64
Equity-Income Subaccount $20 $60
Growth Subaccount $20 $63
Overseas Subaccount $23 $70
Investment Grade Bond Subaccount $19 $60
Asset Manager Subaccount $21 $66
Asset Manager: Growth Subaccount $23 $72
Contrafund Subaccount $21 $64
Index 500 Subaccount $16 $50
</TABLE>

3. If the Policy is not surrendered or annuitized:

16
<PAGE>

II. An Owner would pay the following expenses on a $1,000 investment, assuming
Death Benefit Option B, (Annual Step-Up Death Benefit) a hypothetical 5% annual
return on assets and assuming the entire Policy Value is in the applicable
Subaccount:

1. If the Policy is surrendered at the end of the applicable time
period :

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market Subaccount $72 $97
High Income Subaccount $76 $108
Equity-Income Subaccount $75 $105
Growth Subaccount $76 $108
Overseas Subaccount $78 $115
Investment Grade Bond Subaccount $75 $105
Asset Manager Subaccount $77 $111
Asset Manager: Growth Subaccount $79 $117
Contrafund Subaccount $76 $109
Index 500 Subaccount $72 $95
</TABLE>

2. If the Policy is annuitized at the end of the applicable time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market Subaccount $18 $57
High Income Subaccount $22 $68
Equity-Income Subaccount $21 $65
Growth Subaccount $22 $68
Overseas Subaccount $24 $74
Investment Grade Bond Subaccount $21 $64
Asset Manager Subaccount $23 $70
Asset Manager: Growth Subaccount $25 $77
Contrafund Subaccount $22 $68
Index 500 Subaccount $18 $55
</TABLE>

3. If the Policy is not surrendered or annuitized:

The above tables are intended to assist the Owner in understanding the
costs and expenses that the Owner will bear, directly or indirectly. These

17
<PAGE>

include the 1995 expenses of the Underlying Funds. See "CHARGES AND DEDUCTIONS,"
p. ___, and the Underlying Funds' prospectuses. In addition to the expenses
listed above, premium taxes, currently ranging from 0% to 3.50% of Premium
Payments may be applicable.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS
THAN THE ASSUMED RATE. THE FIGURES AND DATA FOR UNDERLYING FUND ANNUAL EXPENSES
ARE FOR 1995 AND HAVE BEEN PROVIDED BY FMR, AND WHILE AUSA LIFE DOES NOT DISPUTE
THESE FIGURES, AUSA LIFE DOES NOT GUARANTEE THEIR ACCURACY.

In these examples, the $30 Service Charge is reflected as a charge of .064%
based on an anticipated average Policy Value of $46,590.

DEATH BENEFIT

In the event that the Annuitant who is not the Owner dies prior to the
Annuity Commencement Date, the Owner will become the Annuitant unless the Owner
specifically requests on the application or in a Written Request that the death
benefit be paid upon the Annuitant's death and AUSA Life agrees to such an
election. If the Annuitant is also the Owner, upon receipt of proof that the
Annuitant has died before the Annuity Commencement Date, the Death Benefit is
calculated and is payable to the Beneficiary when we receive an election of the
method of settlement and return of the Policy.

The amount of the Death Benefit will depend on the state where the Policy
is purchased and may depend on the death benefit option elected by the Owner.
However, the Death Benefit will always be at least equal to the greater of the
Policy Value or the Cash Value on the date Due Proof of Death and election of
the method of settlement are received by AUSA Life.

The Owner has the "one-time" option of choosing either a "Return of Premium
Death Benefit", (Death Benefit Option "A") or an "Annual Step-Up Death Benefit,"
(Death Benefit Option "B"). The Return of Premium Death Benefit is the return of
all Premium Payments less any Partial Withdrawals, as of the date of death. The
Annual Step-Up Death Benefit is equal to the largest Policy Value on the issue
date or on any Policy Anniversary prior to the earlier of the date of death or
the Owner's 81st birthday plus any premiums paid, less any partial withdrawals
taken, subsequent to the date of the largest anniversary Policy Value. If no
election is made by the Owner, the Return of Premium Death Benefit will be used
upon death of the Annuitant.

The Death Benefit provisions may vary depending on the state where the
Policy is issued. The Death Benefit may be paid as either a lump sum cash
benefit or as an annuity as permitted by federal or state law. (See
"DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p. ___.)

18
<PAGE>

The Death Benefit is not paid on the death of an Owner if the Owner is not
the Annuitant. If an Owner who is not the Annuitant dies before the Annuity
Commencement date, the amount payable under the Policy upon surrender will be
the Policy Value increased or decreased by an Excess Interest Adjustment.

VARIATIONS IN POLICY PROVISIONS

Certain provisions of the Policies may vary from the descriptions in this
Prospectus in order to comply with different state laws. See the Policy itself
for variations. Any such state variations will be included in the Policy itself
or in riders or endorsements attached to the Policy.

FEDERAL INCOME TAX CONSEQUENCES OF INVESTMENT IN THE POLICY

With respect to Owners who are natural persons, there should be no federal
income tax on increases in the Policy Value until a distribution under the
Policy occurs (e.g., a surrender 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 elects otherwise. In addition, a penalty tax may apply to certain
distributions or deemed distributions under the Policy. (See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES," p. ___.)

Note: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this Prospectus and in the Statement of
Additional Information and in the prospectuses for the Underlying Funds and in
the Policy, all of which should be referred to for more detailed information.
This Prospectus generally describes only the Policy and the Mutual Fund Account.
Separate prospectuses describe the Underlying Funds. (There is no prospectus for
the Fixed Account since interests in the Fixed Account are deemed not to be
securities. See "THE RETIREMENT BUILDER ACCOUNTS--The Fixed Account, " p.___.)

REQUESTS FOR INFORMATION

Any questions about procedures or the Policy, or any Written Notice or
Written Request required to be sent to AUSA Life, should be sent to AUSA Life's
Service Office, Financial Markets Division -- Variable Annuity Dept., 4333
Edgewood Road NE, Cedar Rapids, Iowa 52499-0001. Inquiries may be made by
calling 800-525-6205. All inquires, Written Notices and Written Requests should
include the Policy number, the Owner's name and the Annuitant's name.

19
<PAGE>

FINANCIAL STATEMENTS

The financial statements of AUSA Life and the independent auditors' report
thereon are contained in the Statement of Additional Information which is
available free upon request to AUSA Life's Service Office.

HISTORICAL PERFORMANCE DATA

STANDARDIZED PERFORMANCE DATA

From time to time, AUSA Life may advertise historical yields and total
returns for the Subaccounts of the Mutual Fund Account. These figures will be
calculated according to standardized methods prescribed by the Securities and
Exchange Commission ("SEC"). They will be based on historical earnings and are
not intended to indicate future performance.

The yield of a Subaccount of the Mutual Fund Account (other than the Money
Market Subaccount) for a Policy refers to the annualized income generated by an
investment under a Policy in the Subaccount over a specified thirty-day period.
The yield is calculated by assuming that the income generated by the investment
during that thirty-day period is generated each thirty-day period over a 12-
month period and is shown as a percentage of the investment.

The total return of a Subaccount of the Mutual Fund Account refers to
return quotations assuming an investment under a Policy has been held in the
Subaccount for various periods of time including, but not limited to, a period
measured from the date the Subaccount commenced operations. When a Subaccount
has been in operation for one, five, and ten years, respectively, the total
return for these periods will be provided. The total return quotations for a
Subaccount will represent the average annual compounded rates of return that
equate an initial investment of $1,000 in the Subaccount to the redemption value
of that investment as of the last day of each of the periods for which total
return quotations are provided.

The yield and total return calculations for a Subaccount do not reflect the
effect of any premium taxes that may be applicable to a particular Policy. The
yield calculations also do not reflect the effect of any Surrender Charge that
may be applicable to a particular Policy. To the extent that any or all of a
premium tax and/or Surrender Charge is applicable to a particular Policy, the
yield and/or total return of that Policy will be reduced. For additional
information regarding yields and total returns calculated using the standard
formats briefly summarized above, please refer to the Statement of Additional
Information, a copy of which may be obtained from AUSA Life's Service Office
upon request.

SUBACCOUNTS

The following performance data is for hypothetical Subaccounts which would
be subject to the same fees, charges and deductions as the

20
<PAGE>

Subaccounts of the Mutual Fund Account, but which are shown as if the
hypothetical Subaccounts actually commenced operations on the same date as the
underlying Portfolio. Accordingly, the following hypothetical performance data
is for periods before the Subaccounts actually commenced operations, and is
based on the performance of the Underlying Funds adjusted to reflect the Mutual
Fund Account charges.

The following information is also based on the method of calculation
described in the Statement of Additional Information. The average annual total
returns for periods ended December 31, 1995 were as follows:

AVERAGE ANNUAL TOTAL RETURNS
(ASSUMING SURRENDER CHARGE IMPOSED)

Return of Premium Death Benefit--Total Mutual Fund Account Annual Expenses
= 1.25%

<TABLE>
<CAPTION>
INCEPTION
---------
1 YEAR 3 YEAR 5 YEAR LIFE DATE
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Money Market * 2.22% 2.75% 3.31% 4.72%** 03/31/82
High Income 17.17% 11.09% 17.40% 10.02%** 09/11/85
Equity-Income 31.31% 17.90% 19.74% 11.86% 10/08/86
Growth 31.90% 15.78% 19.20% 13.34% 10/08/86
Overseas 5.01% 13.08% 6.69% 5.90% 01/27/87
Investment Grade Bond 12.19% 5.72% 7.78% 7.55% 06/05/89
Asset Manager 12.23% 7.96% 11.26% 10.77% 05/29/90
Asset Manager: Growth N/A N/A N/A 16.66% 01/03/95
Contrafund N/A N/A N/A 33.40% 01/03/95
Index 500 31.03% 12.73% N/A 13.41% 08/27/92
</TABLE>

Annual Step-Up Death Benefit--Total Mutual Fund Account Annual Expenses = 1.40%

<TABLE>
<CAPTION>
INCEPTION
---------
1 YEAR 3 YEAR 5 YEAR LIFE DATE
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Money Market * 2.01% 2.58% 3.15% 4.56%** 03/31/82
High Income 16.95% 10.91% 17.23% 9.86%** 09/11/85
Equity-Income 31.08% 17.71% 19.57% 11.69% 10/08/86
Growth 31.67% 15.60% 19.03% 13.17% 10/08/86
Overseas 4.80% 12.89% 6.52% 5.74% 01/27/87
Investment Grade Bond 11.99% 5.55% 7.62% 7.39% 06/05/89
Asset Manager 12.03% 7.78% 11.10% 10.60% 05/29/90
Asset Manager: Growth N/A N/A N/A 16.47% 01/03/95
Contrafund N/A N/A N/A 33.20% 01/03/95
Index 500 30.82% 12.56% N/A 13.24% 08/27/92
</TABLE>

This performance data is hypothetical for the Retirement Income Builder Variable
Annuity. For purposes of this calculation, the deductions for the Mortality and
Expense Risk Fee and Administrative Charge are made on a monthly basis, rather
than a daily basis. Accumulation Unit values and yields will fluctuate and there
is no guarantee the Owner will receive back the Owner's original principal.
Average Annual Total Returns and Yield include all insurance contract charges.

* The underlying Money Market Portfolio seeks to maintain a stable $1.00
share price, however, there is no assurance that it will be able to do so.
An investment in the Portfolio is not insured by the U.S. government.

** Figure for 10 years.

21
<PAGE>

NON-STANDARDIZED PERFORMANCE DATA

AUSA Life may from time to time also advertise or disclose average annual
total return or other performance data in non-standard formats for a Subaccount
of the Mutual Fund Account. The non-standard performance data may assume that no
Surrender Charge is applicable, and may also make other assumptions.

The following hypothetical non-standardized average annual total return
figures are based on the assumption that the Policy is not surrendered, and
therefore the following figures assume that the Surrender Charge is not imposed.

AVERAGE ANNUAL TOTAL RETURNS
(ASSUMING NO SURRENDER CHARGE)

Return of Premium Death Benefit--Total Mutual Fund Account Annual Expenses
= 1.25%

<TABLE>
<CAPTION>
INCEPTION
---------
1 YEAR 3 YEAR 5 YEAR LIFE DATE
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Money Market * 4.51% 3.10% 3.31% 4.72%** 03/31/82
High Income 19.04% 11.23% 17.40% 10.02%** 09/11/85
Equity-Income 33.35% 18.03% 19.74% 11.86% 10/08/86
Growth 33.62% 15.82% 19.20% 13.34% 10/08/86
Overseas 8.25% 13.76% 6.73% 5.90% 01/27/87
Investment Grade Bond 15.81% 6.41% 7.83% 7.55% 06/05/89
Asset Manager 15.44% 8.53% 11.29% 10.77% 05/29/90
Asset Manager: Growth N/A N/A N/A 22.01% 01/03/95
Contrafund N/A N/A N/A 38.63% 01/03/95
Index 500 35.52% 13.53% N/A 13.75% 08/27/92
</TABLE>

Annual Step-Up Death Benefit--Total Mutual Fund Account Annual Expenses = 1.40%

<TABLE>
<CAPTION>
INCEPTION
---------
1 YEAR 3 YEAR 5 YEAR LIFE DATE
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Money Market * 4.35% 2.94% 3.15% 4.56%** 03/31/82
High Income 18.87% 11.06% 17.23% 9.86%** 09/11/85
Equity-Income 33.16% 17.85% 19.57% 11.69% 10/08/86
Growth 33.43% 15.65% 19.03% 13.17% 10/08/86
Overseas 8.09% 13.59% 6.57% 5.74% 01/27/87
Investment Grade Bond 15.63% 6.25% 7.67% 7.39% 06/05/89
Asset Manager 15.27% 8.37% 11.13% 10.60% 05/29/90
Asset Manager: Growth N/A N/A N/A 21.83% 01/03/95
Contrafund N/A N/A N/A 38.43% 01/03/95
Index 500 35.32% 13.36% N/A 13.58% 08/27/92
</TABLE>

22
<PAGE>

** Figure for 10 years.

All non-standard performance data will be advertised only if the standard
performance data is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information, a copy of which may be obtained free from AUSA Life upon
request.

PUBLISHED RATINGS

AUSA Life may from time to time publish in advertisements, sales literature and
reports to Owners, the ratings and other information assigned to it by one or
more independent rating organizations such as A.M. Best Company, Standard &
Poor's, and Duff & Phelps. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of AUSA Life and they should not
be considered as bearing on the investment performance of assets held in the
Mutual Fund Account or of the safety or riskiness of an investment in the Mutual
Fund Account. Each year the A.M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of AUSA
Life as measured by Standard & Poor's Insurance Ratings Services or Duff &
Phelps may be referred to in advertisements or sales literature or in reports to
Owners. These ratings are opinions of an operating insurance company's financial
capacity to meet the obligations of its insurance policies in accordance with
their terms. Claims-paying ability ratings do not refer to an insurer's ability
to meet non-policy obligations such as debt or commercial paper obligations.

AUSA LIFE INSURANCE COMPANY, INC.

AUSA Life Insurance Company, Inc. ("AUSA Life"), 666 Fifth Avenue, New
York, New York 10103, is a stock life insurance company. It was incorporated
under the laws of the State of New York on October 3, 1947. It is principally
engaged in the sale of life insurance and annuity policies, and is licensed in
the District of Columbia, and in all states except Alabama, Arkansas, Hawaii,
Idaho, Montana and Oregon. As of December 31, 1995, AUSA Life had assets of
approximately $7.8 billion. AUSA Life is a wholly-owned indirect subsidiary
- --------------------------
of AEGON USA, Inc., which conducts substantially all of its operations through
subsidiary companies engaged in the insurance business or in providing non-
insurance financial services. All of the stock of AEGON USA, Inc. is indirectly
owned by AEGON n.v. of the Netherlands. AEGON n.v., a holding company, conducts
its business through subsidiary companies engaged primarily in the insurance
business.

23
<PAGE>

THE RETIREMENT BUILDER ACCOUNTS

Premium Payments made under a Policy may be allocated to the Mutual Fund
Account, to the Fixed Account, or to a combination of these Accounts.

THE MUTUAL FUND ACCOUNT

The Mutual Fund Account was established as a separate investment account of
AUSA Life under the laws of the State of New York on ________, ____. The Mutual
Fund Account receives and currently invests the Premium Payments under the
Policies that are allocated to it for investment only in shares of the Variable
Insurance Products Fund and the Variable Insurance Products Fund II, managed by
Fidelity Management & Research Company ("FMR"), an affiliate of Fidelity
Investments.

The Mutual Fund Account currently is divided into ten Subaccounts.
Additional Subaccounts may be established in the future at the discretion of
AUSA Life. Each Subaccount invests exclusively in shares of one of the
Portfolios of the Underlying Funds. Under New York law, the assets of the Mutual
Fund Account are owned by AUSA Life but they are held separately from the other
assets of AUSA Life. To the extent that these assets are attributable to the
Cash Value of the Policies, these assets are not chargeable with liabilities
incurred in any other business operation of AUSA Life. Income, gains, and losses
incurred on the assets in the Subaccounts of the Mutual Fund Account, whether or
not realized, are credited to or charged against that Subaccount without regard
to other income, gains or losses of any other Account or Subaccount of AUSA
Life. Therefore, the investment performance of any Subaccount should be entirely
independent of the investment performance of AUSA Life's general account assets
or any other Account or Subaccount maintained by AUSA Life.

The Mutual Fund Account is registered with the SEC under the Investment
Company Act of 1940 (the "1940 Act") as a unit investment trust and meets the
definition of a separate account under federal securities laws. However, the SEC
does not supervise the management or the investment practices or policies of the
Mutual Fund Account or AUSA Life.

Underlying Funds. The available Subaccounts of the Mutual Fund Account
currently invest exclusively in shares of the Underlying Funds. The Underlying
Funds are diversified, open-end management investment companies organized as
Massachusetts Business Trusts. The Variable Insurance Product Fund was
established on November 13, 1981, and was formerly known as Fidelity Cash
Reserves II. The Variable Insurance Products Fund II was established on March
21, 1988.

Certain information concerning the Underlying Funds is set forth below.
More detailed information may be found in the Underlying Funds' current
prospectuses, which accompany or precede this Prospectus, and the Underlying
Funds' current Statements of Additional Information. The following description
is qualified in its entirety by reference to each

24
<PAGE>

Underlying Fund's prospectus and Statement of Additional Information wherein
more detailed information may be found.

FMR provides investment advice and administrative services to the
Underlying Funds pursuant to an agreement under which each Portfolio pays FMR a
monthly fee. The Variable Insurance Product Fund currently offers five
Portfolios: Money Market; High Income; Equity-Income; Growth; and Overseas. The
Variable Insurance Products Fund II currently offers five Portfolios that are
available under the Policies: Investment Grade Bond; Asset Manager; Index 500,
Asset Manager: Growth; and Contrafund. The ten Portfolios offered by the
Underlying Funds provide a range of investment alternatives that vary according
to the different investment objectives described in the Underlying Funds'
prospectuses and summarized below. The assets of each Portfolio are separate
from the others, and each Portfolio has separate investment objectives and
policies. As a result, each Portfolio operates as a separate investment fund,
and the investment performance of one Portfolio has no effect on the investment
performance of any other Portfolio. Each of the Portfolios may not be available
for investment in every state.

MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The Portfolio
will invest only in high-quality short-term U.S. dollar-denominated money market
instruments of domestic and foreign issuers. The Portfolio seeks to maintain a
constant net asset value of $1.00 per share, although no assurances can be given
that such constant net asset value will be maintained. The Portfolio's shares
are neither insured nor guaranteed by the U.S. Government.

HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower rated, fixed-income securities. In
choosing these securities, growth of capital also will be considered. The fund
can also invest in common stocks, other equity securities, and debt securities
not currently paying interest but which are expected to do so in the future. The
Portfolio may invest without limitation in lower-quality debt securities,
sometimes called "junk bonds" which carry greater risk than other debt
securities. See the Fund's prospectus for a description of these risks.

EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the Portfolio
will also consider the potential for capital appreciation. The Portfolio seeks
to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.

GROWTH PORTFOLIO seeks to achieve capital appreciation through the purchase
of common stocks, although the Portfolio's investments are not restricted to any
one type of security. Capital appreciation may also be found in other types of
securities, including bonds and preferred stocks.

OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities. The Portfolio seeks to achieve its

25
<PAGE>

investment objective by investing at least 65% of the Portfolio's assets in
securities of companies from at least three different countries outside of North
America. The Overseas Portfolio expects to invest most of its assets in
securities of companies located in developed countries in these general areas:
The Americas (other than the United States), the Far East and Pacific Basin,
Scandinavia and Western Europe. Generally, the investment in securities of
foreign companies will involve greater risks than are present in domestic
investments.

INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing primarily in a broad
range of fixed-income securities. FMR normally invests at least 65% of the
Portfolio's total assets in investment-grade, fixed income securities. Its
dollar weighted average maturity will be generally five to ten years.

ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds and
short-term fixed income instruments.

INDEX 500 PORTFOLIO seeks to match the total return of the Standard &
Poor's Composite Index of 500 Stocks, while keeping transaction costs and other
expenses low.

ASSET MANAGER: GROWTH PORTFOLIO seeks to maximize total return by
allocating its assets among domestic and foreign stocks, bonds and short-term
instruments. The Portfolio's "neutral" mix is expected to be 65% stocks, 30%
bonds and 5% short-term instruments.

CONTRAFUND PORTFOLIO seeks capital appreciation by investing primarily in
equity securities of companies that are considered to be undervalued or out-of-
favor by the Portfolio's adviser.

THERE IS NO ASSURANCE THAT ANY OF THE UNDERLYING FUNDS' PORTFOLIOS WILL ACHIEVE
ITS INVESTMENT OBJECTIVE.

The Underlying Funds' prospectuses should be read carefully before any
decision is made concerning the allocation of Premium Payments to a particular
Subaccount. The Underlying Funds are not limited to selling their shares to the
Mutual Fund Account and are permitted to accept investments from any separate
account of an insurance company. Since the Portfolios of the Underlying Funds
are available to registered separate accounts offering variable annuity products
of the Company, as well as variable annuity and variable life products of other
insurance companies, there is a possibility that a material conflict may arise
between the interests of the Mutual Fund Account and one or more of the separate
accounts of another participating insurance company. In the event of a material
conflict, the affected insurance companies, including AUSA Life, agree to take
any necessary steps, including removing their separate accounts from the
Underlying Funds, to resolve the matter. See the Underlying Funds' prospectuses
for further details.

26
<PAGE>

An investment in the Mutual Fund Account, or in any Portfolio, including
the Money Market Portfolio is not insured or guaranteed by the U.S. government
or any government agency.

Addition, Deletion, or Substitution of Investments. AUSA Life cannot and
does not guarantee that any of the Subaccounts will always be available for
Premium Payments, allocations, or transfers. AUSA Life retains the right,
subject to any applicable law, to make certain changes in the Mutual Fund
Account and its investments. AUSA Life reserves the right to eliminate the
shares of any Portfolio held by a Subaccount and to substitute shares of another
Portfolio of the Underlying Funds, or of another registered open-end management
investment company for the shares of any Portfolio, if the shares of the
Portfolio are no longer available for investment or if, in AUSA Life's judgment,
investment in any Portfolio would be inappropriate in view of the purposes of
the Mutual Fund Account. To the extent required by the 1940 Act, substitutions
of shares attributable to an Owner's interest in a Subaccount will not be made
without prior notice to the Owner and the prior approval of the SEC. Nothing
contained herein shall prevent the Mutual Fund Account from purchasing other
securities for other series or classes of variable annuity policies, or from
effecting an exchange between series or classes of variable annuity policies on
the basis of requests made by Owners.

New Subaccounts may be established when, in the sole discretion of AUSA
Life, marketing, tax, investment or other conditions warrant. Any new
Subaccounts may be made available to existing Owners on a basis to be determined
by AUSA Life. Each additional Subaccount will purchase shares in a mutual fund
portfolio or other investment vehicle. AUSA Life may also eliminate one or more
Subaccounts if, in its sole discretion, marketing, tax, investment or other
conditions warrant such change. In the event any Subaccount is eliminated, AUSA
Life will notify Owners and request a reallocation of the amounts invested in
the eliminated Subaccount. If no such reallocation is provided by the Owner,
AUSA Life will reinvest the amounts invested in the eliminated Subaccount in the
Subaccount that invests in the Money Market Portfolio (or in a similar portfolio
of money market instruments) or in another Subaccount, if appropriate.

In the event of any such substitution or change, AUSA Life may, by
appropriate endorsement, make such changes in the Policies as may be necessary
or appropriate to reflect such substitution or change. Furthermore, if deemed to
be in the best interests of persons having voting rights under the Policies, the
Mutual Fund Account may be (i) operated as a management company under the 1940
Act or any other form permitted by law, (ii) deregistered under the 1940 Act in
the event such registration is no longer required or (iii) combined with one or
more other separate accounts. To the extent permitted by applicable law, AUSA
Life also may (1) transfer the assets of the Mutual Fund Account associated with
the Policies to another account or accounts, (2) restrict or eliminate any
voting rights of Owners or other persons who have voting rights as to the Mutual
Fund Account, (3) create new mutual fund accounts, (4) add new Subaccounts to or
remove existing Subaccounts from the Mutual Fund Account, or combine
Subaccounts, or (5) add new underlying funds, or substitute a new fund for an
existing fund.

27
<PAGE>

THE FIXED ACCOUNT

This Prospectus is generally intended to serve as a disclosure document
only for the Policy and the Mutual Fund 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 of AUSA Life, which supports insurance and
annuity obligations. 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 AUSA Life has been advised that the
staff of the SEC has not reviewed the disclosures in this Prospectus which
relate to the fixed portion.

The Fixed Account is made up of all the general assets of AUSA Life, other
than those in the Mutual Fund Account or in any other segregated asset account.
The Policy Owner may allocate Premium Payments to the Fixed Account at the time
of Premium Payment or by subsequent transfers from the Mutual Fund Account.
Rather than the Policy Owner bearing the investment risk, as is the case for
Policy Value allocated to the Mutual Fund Account, AUSA Life bears the full
investment risk for all Policy Value allocated to the Fixed Account. AUSA Life
has sole discretion to invest the assets of its general account, including the
Fixed Account, subject to applicable law.

Premium Payments applied to, and any amounts transferred to, the Fixed
Account will reflect a fixed interest rate. The interest rates AUSA Life sets
will be credited for increments of at least one year measured from each Premium
Payment or transfer date. These rates will never be less than an effective
annual interest rate of 3%.

Guaranteed Periods. AUSA Life may offer optional guaranteed interest rate
periods ("Guaranteed Period Options") into which Premium Payments may be paid or
amounts transferred. For example, AUSA Life may offer Guaranteed Period Options
for 1, 3, 5, or 7 years duration from time to time. The Current Interest Rate
AUSA Life sets for funds placed in each Guaranteed Period Option will be
guaranteed until the end of the applicable Guaranteed Period. At the end of the
Guaranteed Period, the Policy Value for the Guaranteed Period Option will be
rolled into a new Guaranteed Period Option(s) or may be transferred to any
Subaccount(s) within the Mutual Fund Account.

The Owner may choose the Guaranteed Period Option(s) in which to place the
Policy Value by giving AUSA Life notice within 30 days before the end of the
expiring Guaranteed Period. In the absence of such election, the new Guaranteed
Period Option will be the same as the expiring Guaranteed Period Option unless
that Guaranteed Period Option is no longer offered, in which case, the next
shorter Guaranteed Period Option offered will be used. AUSA Life reserves the
right, for new Premium Payments, transfers, or rollovers, to offer or not to
offer any Guaranteed Period Option. AUSA Life will, however, always offer at
least a one-year Guaranteed Period Option.

28
<PAGE>

Surrenders or partial withdrawals from a Guaranteed Period Option prior to
the end of the Guaranteed Period and which are in excess of the cumulative
interest credited at the time of, but prior to, the withdrawal are subject to an
Excess Interest Adjustment on the amount withdrawn. See "DISTRIBUTIONS UNDER THE
POLICY--Excess Interest Adjustment," p.___.) No transfers from any Guaranteed
Period Option to any other Investment Option will be allowed prior to the end of
the Guaranteed Period. (See "Transfers," below.)

AUSA Life guarantees that, at any time prior to the Annuity Commencement
Date, the amount in the Fixed Account allocable to a particular Policy will be
not less than the amount of the Premium Payments or transfers to, less
withdrawals or transfers from, the Fixed Account, plus interest at the effective
annual rate of 3% per year, plus any excess interest credited to amounts in the
Fixed Account, less any applicable Surrender Charge or premium or other taxes
allocable to the Fixed Account. Upon full surrender, the Owner will always
receive at least the Premium Payments applied to, less prior partial withdrawals
and transfers from, the Fixed Account plus interest at the effective annual rate
of 3%, less any applicable Surrender Charges.

Current Interest Rates will be determined by AUSA Life in its sole
discretion.

For purposes of crediting interest, the oldest Premium Payment or transfer
into a Guaranteed Period Option within the Fixed Account, plus interest
allocable to that Premium Payment or transfer, is considered to be withdrawn
first; the next oldest Premium Payment or transfer plus interest is considered
to be withdrawn next, and so on (this is a "first-in, first-out" procedure). The
Owner bears the risk that AUSA Life will not credit interest in excess of 3% per
year.

Dollar Cost Averaging Fixed Account Option. AUSA Life may offer a Dollar
Cost Averaging Fixed Account Option separate from the Guaranteed Period
Option(s). This option will have a one-year interest rate guarantee and will
only be available under a Dollar Cost Averaging (DCA) program.

Prior to the Annuity Commencement Date, no transfers, except through a
Dollar Cost Averaging program, will be allowed from the Dollar Cost Averaging
Fixed Account. Dollar Cost Averaging transfers to Subaccounts of the Mutual Fund
Account must begin within 30 days after the Premium Payment or transfer to the
Dollar Cost Averaging Fixed Account. Transfers must be scheduled for at least
six but not more than 24 months, or for at least four, but not more than eight
calendar quarters. No changes to the amount transferred will be allowed, but
changes can be made to the Subaccounts to which these transfers are allocated.
Transfers under a Dollar Cost Averaging program will not be subject to an Excess
Interest Adjustment. (See "THE RETIREMENT BUILDER ACCOUNTS--Dollar Cost
Averaging" p.___.)

Dollar cost averaging requires regular investment regardless of fluctuating
prices and does not guarantee profits nor prevent losses in a

29
<PAGE>

declining market. Before electing this option, individuals should consider their
financial ability to continue purchases through periods of both high and low
price levels.

TRANSFERS

An Owner can transfer Policy Value from one Investment Option to another
within certain limits.

Subject to the limitations and restrictions described below, transfers from
an Investment Option may be made, up to thirty days prior to the Annuity
Commencement Date, by sending Written Notice, signed by the Owner, to the
Service Office. The minimum amount which may be transferred from a Subaccount of
the Mutual Fund Account is the lesser of $500 or the entire Subaccount value. If
the Subaccount value remaining after a transfer is less than $500, AUSA Life
reserves the right, at its discretion, to include that amount as part of the
transfer.

Transfers currently may be made without charge as often as the Owner
wishes, subject to the minimum dollar amounts specified above. AUSA Life
reserves the right to limit these transfers to no more than 12 per Policy Year
in the future or to charge up to $10 per transfer in excess of 12 per Policy
Year.

Transfers of funds from any of the Guaranteed Period Option(s) of the Fixed
Account to any Subaccount(s) of the Mutual Fund Account are allowed only at the
end of the Guaranteed Period(s), except that AUSA Life may, at its discretion,
offer the Owner the option to transfer the interest credited in any of the
Guaranteed Period Option(s) to any Subaccount(s) of the Mutual Fund Account
prior to the end of the Guaranteed Period. The maximum transfer permitted from
any Guaranteed Period Option before the end of the Guaranteed Period will be the
cumulative amount of interest credited for the Guaranteed Period Option at the
time of, but prior to, the transfer. No Excess Interest Adjustment will apply to
such transfers of interest.

Transfers out of the Dollar Cost Averaging Fixed Account, except through a
Dollar Cost Averaging program, are not allowed. (See "Dollar Cost Averaging,"
below.)

After the Annuity Commencement Date, transfers out of the Fixed Account are
not permitted. (See "DISTRIBUTIONS UNDER THE POLICY--Annuity Payment Options,"
p. ___.)

REINSTATEMENTS

Requests are occasionally received by AUSA Life to reinstate funds which
had been transferred to another life insurance company pursuant to a Code
Section 1035 exchange or trustee-to-trustee transfer. In this situation AUSA
Life will require the Owner to replace the same total dollar amount of funds in
the applicable Subaccounts and/or Fixed Accounts as was taken from them to
effect the exchange. The total dollar amount of funds reapplied to the Mutual
Fund Account will be used to purchase a number of Accumulation

30
<PAGE>

Units available for each Subaccount based on the Accumulation Unit values at the
date of reinstatement (within two days of the date the funds are received by
AUSA Life). It should be noted that the number of Accumulation Units available
on the Reinstatement date may be more or less than the number surrendered for
the exchange. Amounts reapplied to the Fixed Account will be entitled to receive
the interest rate they would otherwise have received had they not been
withdrawn. However, an adjustment will be made to the amount reapplied to
compensate AUSA Life for the additional interest credited during the period of
time between the withdrawal and the reapplication of the funds. Owners should
consult a qualified personal tax adviser concerning the tax consequences of any
Code Section 1035 exchanges or reinstatements.

DOLLAR COST AVERAGING (DCA)

Under the Dollar Cost Averaging program, prior to the Annuity Commencement
Date, the Owner can instruct AUSA Life to automatically transfer a dollar amount
specified by the Owner from the DCA Fixed Account Option to any other Subaccount
or Subaccounts of the Mutual Fund Account. The automatic transfers can occur
monthly or quarterly and will occur on the 28th day of the month. If the DCA
request is received prior to the 28th day of any month, the first transfer will
occur on the 28th day of that month. If the DCA request is received on or after
the 28th day of any month, the first transfer will occur on the 28th day of the
following month. The amount transferred each time must be at least $500. A
minimum of six monthly or four quarterly transfers are required and a maximum of
24 monthly or eight quarterly transfers are allowed from the DCA Fixed Account.

Dollar Cost Averaging results in the purchase ofmore Accumulation Units
when the Accumulation Unit value is low, and fewer Accumulation Units when the
Accumulation Unit value is high. However, there is no guarantee that the Dollar
Cost Averaging program will result in higher Policy Values or will otherwise be
successful.

The Policy Owner may request Dollar Cost Averaging when purchasing the
Policy or later. The program will terminate when the amount in the DCA Fixed
Account is insufficient for the next transfer, at which time the entire
remaining balance is transferred.

The Owner may discontinue the program after satisfying the required minimum
number of transfers at any time by sending a Written Notice to the Service
Office. The required minimum number of transfers (6 monthly or 4 quarterly) must
be satisfied each time the DCA program is restarted following termination of the
program for any reason. There is no charge for participation in this program.

ASSET REBALANCING

Prior to the Annuity Commencement Date the Owner may instruct AUSA Life to
automatically transfer amounts among the Subaccounts of the Mutual Fund Account
on a regular basis to maintain a desired allocation of the Policy Value among
the various Subaccounts offered. Rebalancing will occur on a monthly, quarterly,
semi-annual, or annual basis based on the

31
<PAGE>

Policy Date, and beginning on a date selected by the Owner. The Owner must
select the percentage of the Policy Value desired in each of the various
Subaccounts offered (totaling 100%). Any amounts in the Fixed Account are
ignored for purposes of asset rebalancing. Rebalancing may be started, stopped,
or changed at any time, except that rebalancing will not be available when a
Dollar Cost Averaging program is in effect; or any other transfer is requested.
There is no charge for participation in this program.

THE POLICY

The Retirement Income Builder Variable Annuity Policy is a flexible premium
variable annuity policy. The rights and benefits under the Policy are summarized
below; however, the description of the Policy contained in this Prospectus is
qualified in its entirety by reference to the Policy itself, a copy of which is
available upon request from AUSA Life. The Policy may be purchased on a non-tax
qualified basis ("Nonqualified 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").

POLICY APPLICATION AND ISSUANCE OF POLICIES

Before it will issue a Policy, AUSA Life must receive a completed Policy
application or transmittal form and a minimum initial Premium Payment of $2,000
for a Nonqualified or Qualified Policy. There is no minimum initial Premium
Payment required for tax deferred 403(b) annuities. A Policy ordinarily will be
issued only in respect of Annuitants Age 0 through 80. Acceptance or declination
of an application shall be based on AUSA Life's underwriting standards, and AUSA
Life reserves the right to reject any application or Premium Payment based on
those underwriting standards.

If the application or transmittal form can be accepted in the form
received, the initial Premium Payment will be credited to the Policy Value
within two Business Days after the later of receipt of the information needed to
issue the Policy or receipt of the initial Premium Payment. 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 and the initial Premium
Payment will be returned at that time unless the applicant consents to AUSA
Life's retaining the initial Premium Payment and crediting it as soon as the
necessary requirements are fulfilled.

AUSA Life may, if the application or transmittal form can be accepted
in the form received, credit the initial Premium Payment to the Policy Value
within one Business Day after the later of receipt by AUSA Life's agent of
the information needed or the Premium Payment.

The date on which the initial Premium Payment is credited to the Policy
Value is the Policy Date. The Policy Date is the date used to determine
Policy Years and Policy Anniversaries.

32
<PAGE>

PREMIUM PAYMENTS

All initial Premium Payment checks or drafts should be made payable to
AUSA Life Insurance Company, Inc. and sent to the Service Office. Subsequent
Additional Premium Payments should also be sent to the Service Office. The Death
Benefit will not take effect until the check or draft for the Premium Payment is
honored.

Initial Premium Payment. The minimum initial Premium Payment that AUSA
Life currently will accept under a Policy is $2,000 under a Nonqualified or
Qualified Policy. There is no minimum initial Premium Payment required for tax
deferred 403(b) annuity purchases. AUSA Life reserves the right to increase or
decrease this amount for a class of Policies issued after some future date. The
initial Premium Payment is the only Premium Payment required to be paid under a
Policy.

Subsequent Additional Premium Payments. While the Annuitant is living
and prior to the Annuity Commencement Date, the Owner may make Subsequent
Additional Premium Payments at any time, and in any frequency. The minimum
Subsequent Additional Premium Payment under both a Nonqualified Policy and a
Qualified Policy is $50. Subsequent Additional Premium Payments will be credited
to the Policy and added to the Policy Value as of the Business Day when the
premium and required information are received.

Maximum Total Premium Payments. The maximum total Premium Payments
allowed without prior approval of AUSA Life is $1,000,000.

Allocation of Premium Payments. An Owner must allocate Premium
Payments to one or more of the Investment Options. THE OWNER MUST SPECIFY THE
INITIAL ALLOCATION IN THE POLICY APPLICATION OR TRANSMITTAL FORM. THIS
ALLOCATION WILL BE USED FOR SUBSEQUENT ADDITIONAL PREMIUM PAYMENTS UNLESS THE
OWNER REQUESTS A CHANGE OF ALLOCATION. All allocations must be made in whole
percentages and must total 100%. However, the portion of the initial Premium
Payment which is allocated to the Mutual Fund Account will be temporarily
allocated entirely to the Money Market Portfolio of the Mutual Fund Account only
for a period of time equal to the Polics's "Right to Cancel" Period. (See
"SUMMARY--Right to Cancel Period," p. ___.) At the end of that period, the
Policy Value in the Money Market Portfolio will then be allocated to the
Subaccount(s) of the Mutual Fund Account in accordance with the allocation
percentages specified by the Owner. If Premium Payments are allocated to the
Dollar Cost Averaging Fixed Account, directions regarding the Subaccount(s) to
which transfers are to be made must be specified on the application or other
proper Written Request. If the Owner fails to specify how Premium Payments are
to be allocated, the Premium Payment(s) cannot be accepted.

The Owner may change the allocation instructions for future Subsequent
Additional Premium Payments by sending a Written Notice, signed by the Owner, to
AUSA Life's Service Office. The allocation change

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<PAGE>

will apply to Premium Payments received after the date the Written Notice is
received.

Payment Not Honored by Bank. Any payment due under the Policy which is
derived, all or in part, from any amount paid to AUSA Life by check or draft may
be postponed until such time as AUSA Life determines that such instrument has
been honored.

INTRODUCTORY PREMIUM CREDIT

For Initial Premium Payments that are received on or before February
28, 1997, AUSA Life will credit an additional amount equal to three percent (3%)
of such Premium Payments to the Policy Value effective as of the Policy Date
provided, however, that the Policy is not canceled pursuant to the "Right to
Cancel" described on page 10. The three percent credit will be entitled to the
same treatment as any other Premium Payment for all purposes under the Policy.
This offer may not be available in all states.

POLICY VALUE

On or before the Annuity Commencement Date, the Policy Value is equal
to the Owner's:

The Policy Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected
Subaccount(s), as well as the deductions for charges. A Valuation Period is the
period between successive Business Days. It begins at the close of business on
each Business Day and ends at the close of business on the next succeeding
Business Day. A Business Day is each day that both the New York Stock Exchange
and AUSA Life's Service Office is open for business. Holidays are generally not
Business Days.

The Mutual Fund Policy Value. When a Premium Payment is allocated or
an amount is transferred to a Subaccount of the Mutual Fund Account, it is
credited to the Policy Value in the form of Accumulation Units. Each Subaccount
of the Mutual Fund Account has a distinct Accumulation Unit value. The number of
units credited is determined by dividing the Premium Payment or amount
transferred to the Subaccount by the Accumulation Unit value of the Subaccount
as of the end of the Valuation Period during which the allocation is made. When
amounts are transferred out of, or fully surrendered or partially withdrawn from
a Subaccount, Accumulation Units are canceled or redeemed in a similar manner.

For each Subaccount, the Accumulation Unit Value for a given Business
Day is based on the net asset value of a share of the corresponding
Portfolio of the Underlying Funds less any applicable charges or fees.

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<PAGE>

Therefore, the Accumulation Unit Values will fluctuate from day to day based
on the investment experience of the corresponding Portfolio. The
determination of Subaccount Accumulation Unit Values is described in detail
in the Statement of Additional Information.

ADJUSTED POLICY VALUE (APV)

The Adjusted Policy Value is the Policy Value increased or decreased by
any Excess Interest Adjustment.

The Adjusted Policy Value will be used on the Annuity Commencement Date
to provide the amount of annuity payments under a Policy.

NON-PARTICIPATING POLICY

The Policy does not participate or share in the profits or surplus
earnings of AUSA Life. No dividends are payable on the Policy.

DISTRIBUTIONS UNDER THE POLICY

SURRENDERS

Prior to the Annuity Commencement Date, the Owner may surrender all or
a portion of the Cash Value in exchange for a payment from AUSA Life. The Cash
Value is the Adjusted Policy Value, less the Surrender Charge, if any. (See
"DISTRIBUTIONS UNDER THE POLICY--Annuity Payment Options," p. ___.) The Policy
cannot be surrendered after the Annuity Commencement Date. (See "DISTRIBUTIONS
UNDER THE POLICY--Annuity Payments," p. ___.)

When requesting a partial withdrawal ($500 minimum), the Owner must
instruct AUSA Life how the amount withdrawn is to be allocated among various
Guaranteed Period Options of the Fixed Account and/or the Subaccount(s) of the
Mutual Fund Account. If the Owner's request for a partial withdrawal from a
Guaranteed Period Option of the Fixed Account is greater than the Cash Value of
that Guaranteed Period Option, AUSA Life will pay the Owner the amount of the
Cash Value of that Guaranteed Period Option. If no allocation instructions are
given, the withdrawal will be deducted from each Investment Option in the same
proportion that the Owner's interest in each Investment Option bears to the
total Policy Value. AUSA Life reserves the right to defer payment of the Cash
Value from the Fixed Account for up to six months.

In each Policy Year the Owner may request partial surrenders ($500
minimum) of up to 10% of the Policy Value free of Surrender Charges. The amount
that may be taken free of Surrender Charges each Policy Year is cumulative. This
is referred to as the Cumulative Free Percentage. That is, Cumulative Free
Percentages which are not taken are carried forward and are available to be
taken in the following Policy Year free of Surrender Charges. Cumulative Free
Percentage withdrawals previously taken reduce the Cumulative Free Percentage
that is available. (See "DISTRIBUTIONS UNDER THE POLICY--Surrenders," p.___.)
Amounts withdrawn in excess

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<PAGE>

of the available Cumulative Free Percentage will be subject to a Surrender
Charge (up to 6%). Neither a Surrender Charge nor an Excess Interest Adjustment
will be assessed if the withdrawal is necessary to meet the minimum distribution
requirements for that Policy specified by the IRS for tax qualified plans.

Upon full surrender or partial withdrawal, the cumulative interest
credited at the time of, but prior to, the surrender or withdrawal will not
be subject to an Excess Interest Adjustment.

Surrenders or partial withdrawals that are allowed free of Surrender
Charges will reduce the Policy Value by the amount withdrawn. Surrendered or
partially withdrawn amounts in excess of the portion that is free of Surrender
Charges are Excess Partial Withdrawals. Excess Partial Withdrawals will reduce
the Policy Value by an amount equal to (X - Y + Z) where:

X = Excess Partial Withdrawal
A = Amount of Partial Withdrawal subject to Excess Interest
Adjustment.
Y = Excess Interest Adjustment = (A) x (G - C) x (M/12) where G, C, and M
are defined in the Excess Interest Adjustment Section (see below), with
"A" substituted for "S" in the definitions of G and M.
Z = Surrender Charge on X - Y.

For a discussion of the Surrender Charge, see "CHARGES AND DEDUCTIONS--
Surrender Charge," p. ___. For a discussion of the Excess Interest Adjustment,
see Appendix "A" and "DISTRIBUTIONS UNDER THE POLICY--Excess Interest
Adjustment," p. ___.

Since the Owner assumes the investment risk with respect to all Premium
Payments allocated to the Mutual Fund Account, and because withdrawals may be
subject to an Excess Interest Adjustment and to a Surrender Charge, and possibly
premium taxes, the total amount paid upon total surrender of the Cash Value
(taking any prior surrenders into account) may be more or less than the total
Premium Payments made. Following a surrender of the total Cash Value, or at any
time the Policy Value is zero, all rights of the Owner and Annuitant will
terminate.

In addition to the Excess Interest Adjustment and Surrender Charge and
any applicable premium taxes, surrenders and partial withdrawals may be
subject to income taxes and, if taken prior to age 59-1/2, a ten percent
penalty tax. (See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," p. ___.)

UNEMPLOYMENT WAIVER

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<PAGE>

becoming unemployed, 2) must have been employed full time on the Policy Date, 3)
must have been unemployed for at least 60 consecutive days at the time of
withdrawal, and 4) must have a minimum Cash Value at the time of withdrawal of
$5,000. Proof of unemployment will consist of providing AUSA Life with a
determination letter from the applicable State's Department of Labor which
verifies that the individual qualifies for and is receiving unemployment
benefits at the time of withdrawal. The determination letter must be received by
AUSA Life no later than fifteen (15) days following the date AUSA Life receives
the withdrawal request. (This benefit may not be available in all states--see
the Policy for details.)

LONG TERM CARE PREMIUM DISCOUNT

In certain states, during the first Policy Year the Owner, Owner's
spouse, and their parents or step-parents (similarly, the Annuitant or
Annuitant's spouse and their parents or step-parents if the Policy is owned by a
non-natural person) are each eligible to receive an eight percent (8%) premium
discount on the purchase of one of the long term care insurance policies issued
by AUSA Life, subject to certain limitations: (1) The long term care insurance
policy may be any of the policies AUSA Life offers to the general public in the
state of residence of the person to be insured at the time of application; (2)
The application for long term care insurance must be received by AUSA Life
before the first Policy Anniversary; and (3) All normal underwriting
requirements must be met in order for a long term care insurance policy to be
issued. Therefore, there can be no assurance that any application for long term
care insurance will be accepted. Once a long term care insurance policy is
issued, however, the premium discount will apply to all eligible long term care
premiums paid, and will apply as long as the long term care insurance policy
remains in force. Since this benefit may not be available in all states, check
the Policy or endorsement for details.

EXCESS INTEREST ADJUSTMENT (EIA)

Full surrenders, partial withdrawals, and amounts applied to an Annuity
Payment Option (prior to the end of any Guaranteed Period) from the Fixed
Account Guaranteed Period Options will be subject to an Excess Interest
Adjustment except as provided for under "Surrenders" above or "Systematic
Payout Option," below.

Excess Interest Adjustment = S x (G-C) x (M/12)

where: S is the gross amount (i.e. before Surrender Charges and premium
taxes, if any) being surrendered, partially withdrawn, or applied to
an Annuity Payment Option that is subject to the Excess Interest
Adjustment.

G is the guaranteed interest rate applicable to S.

C is the current guaranteed interest rate then being offered on new
Premium Payments for the next longer Guaranteed Period Option than
"M". If this Policy form or such a Guaranteed Period Option is no
longer offered, "C" will be the U.S. Treasury rate for the next

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<PAGE>

longer maturity (in whole years) than "M" on the 25th day of the
previous calendar month, plus up to 2%.

M is the number of months remaining in the Guaranteed Period Option
for S, rounded up to the next higher whole number of months.

Generally, if G (the guaranteed interest rate applicable to the amount
surrendered) is lower than C (the current guaranteed interest rate offered on
new Premium Payments), the application of the EIA (a negative EIA) will result
in a lower payment upon a full surrender, or a reduction in the Policy Value
which is larger than the amount of a requested partial surrender. Conversely, if
G is higher than C, the application of the EIA (a positive EIA) will result in a
higher payment upon full surrender, or a reduction in the Policy Value which is
smaller than the amount of a requested partial withdrawal

Upon taking a partial withdrawal from any Guaranteed Period Option, or
upon full surrender of the Policy, the EIA for each Guaranteed Period Option
will not reduce the Adjusted Policy Value for that Guaranteed Period Option
below the amount paid into, less any prior withdrawals and transfers from that
Guaranteed Period Option, plus interest at the 3% guaranteed effective annual
interest rate.

The formula for calculating the EIA and examples of the application of
the EIA are set forth in Appendix A to this Prospectus.

SYSTEMATIC PAYOUT OPTION

Under the Systematic Payout Option, Owners can instruct AUSA Life to
make automatic payments to them monthly, quarterly, semi-annually or annually
from a specified Subaccount. Monthly and quarterly payments can only be
accomplished by electronic funds transfer directly to a checking or savings
account. The minimum payment is $50. The maximum payment is 10% of the Policy
Value at the time the Systematic Payout is made divided by the number of
payments made per year (e.g. 12 for monthly). If this requested amount is below
the minimum distribution requirements for that Policy specified by the IRS for
tax qualified plans, the maximum payment will be increased to this minimum
required distribution amount. Only partial withdrawal requests which are in
excess of the minimum required distribution will be subject to any applicable
Surrender Charge and/or Excess Interest Adjustment. The "Request for Systematic
Payout" form must specify a date for the first payment, which must be at least
30 days but not more than one year after the form is submitted (i.e., Systematic
Payouts will start at the end of the payment mode selected, but not earlier than
30 days from the date of request).

The Surrender Charge and Excess Interest Adjustment will be waived for
Owners under age 59-1/2 on Qualified Policies if they take Systematic Payouts
using one of the payout methods described in I.R.S. Notice 89-25, Q&A-12 (the
Life Expectancy Recalculation Option, Amortization, or Annuity Factor) which
generally requires payments for life or life expectancy. These payments must be
continued until the later of age

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<PAGE>

59-1/2 or five years from commencement of the payments. No additional
withdrawals may be taken during the time these payments are made. For Qualified
Policies, Owners age 59-1/2 or older, the Surrender Charge and Excess Interest
Adjustment will be waived if payments are made using the Life Expectancy
Recalculation Option.

In addition, for either Qualified or Nonqualified Policies, the Surrender
Charge will not be imposed on Systematic Payouts. Only Systematic Payouts in
excess of the cumulative interest credited at the time of, but prior to, the
payout will be subject to an Excess Interest Adjustment.

Qualified Policies are subject to complex rules with respect to
restrictions on and taxation of distributions, including the applicability of
penalty taxes. In addition, the tax treatment of systematic payouts from
Nonqualified Policies has had an unfavorable ruling regarding the ability to
avoid the 10% penalty tax. Therefore, the Owner should consult a qualified tax
adviser before requesting a Systematic Payout. In certain circumstances
withdrawn amounts may be included in the Owner's gross income. (See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES," p. ___.)

ANNUITY PAYMENTS

Annuity Commencement Date. Unless the Annuity Commencement Date is
changed, Annuity Payments under a Policy will begin on the Annuity Commencement
Date which is selected by the Owner at the time the Policy is applied for. The
Annuity Commencement Date may be changed from time to time by the Owner by
Written Notice to AUSA Life, provided that notice of each change is received by
AUSA Life at its Service Office at least thirty (30) days prior to the then
current Annuity Commencement Date. Except as otherwise permitted by AUSA Life, a
new Annuity Commencement Date must be a date which is: (1) at least thirty (30)
days after the date notice of the change is received by AUSA Life and (2) not
later than the last day of the Policy month starting after the Annuitant attains
age 85. In no event will an Annuity Commencement Date be permitted to be later
than the last day of the Policy month following the month in which the Annuitant
attains age 90. The Annuity Commencement Date may also be changed by the
Beneficiary's election of the Annuity Option after the Annuitant's death.

Election of Payment Option. During the lifetime of the Annuitant and
prior to the Annuity Commencement Date, the Owner may choose a Payment Option or
change the election, but Written Notice of any election or change of election
must be received by AUSA Life at its Service Office at least thirty (30) days
prior to the Annuity Commencement Date. If no election is made prior to the
Annuity Commencement Date, Annuity Payments will be made under (i) Option 3,
life income with level payments for 10 years certain, using the existing
Adjusted Policy Value of the Fixed Account, or (ii) under Option 3-V, life
income with variable payments for 10 years certain using the existing Policy
Value of the Mutual Fund Account, or (iii) in a combination of (i) and (ii). If
the Adjusted Policy Value on the Annuity Commencement Date is less than $2000,
AUSA Life reserves the right to pay it in one lump sum in lieu of applying it
under a Payment Option.

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<PAGE>

Prior to the Annuity Commencement Date, the Beneficiary may elect to
receive the Death Benefit in a lump sum or under one of the Payment Options, to
the extent allowed by law and subject to the terms of any settlement agreement.
(See "Death Benefit," p. ___.) Annuity Payments will be made on either a fixed
basis or a variable basis as selected by the Owner (or the Beneficiary, after
the Annuitant's death).

The person who elects a Payment Option can also name one or more
successor payees to receive any unpaid amount AUSA Life has at the death of
a payee. Naming these payees cancels any prior choice of a successor payee.

A payee who did not elect the Payment Option does not have the right to
advance or assign payments, take the payments in one sum, or make any other
change. However, the payee may be given the right to do one or more of these
things if the person who elects the option tells AUSA Life in writing and AUSA
Life agrees.

Unless the Owner specifies otherwise, the payee shall be the Annuitant,
or, after the Annuitant's death, the Beneficiary. AUSA Life may require
written proof of the age of any person who has an annuity purchased under
Option 3, 3-V, 5 or 5-V.

Premium Tax. AUSA Life may be required by state law to pay premium tax
on the amount applied to a payment option or upon withdrawal. If so, AUSA
Life will deduct the premium tax before applying or paying the proceeds.

Supplementary Policy. Once proceeds become payable and a Payment
Option has been selected, the Policy will terminate and AUSA Life will issue
a Supplementary Policy to reflect the terms of the option selected. The
Supplementary Policy will name the payees and will describe the payment
schedule.

ANNUITY PAYMENT OPTIONS

The Policy provides five Payment Options which are described below.
Two of these are offered as either "Fixed Payment Options" or "Variable Payment
Options," and three are only available as Fixed Payment Options. The Owner may
elect a Fixed Payment Option, a Variable Payment Option, or a combination of
both. If the Owner elects a combination, he must specify what part of the Policy
proceeds are to be applied to the Fixed and Variable Payment Options (and he
must also specify which Subaccounts for the Variable Payment Options).

NOTE CAREFULLY: Under Payment Options 3(l) and 5 (including 3-V(l) and
5-V), it would be possible for only one Annuity Payment to be made if the
Annuitant(s) were to die before the due date of the second Annuity Payment;
only two Annuity Payments if the Annuitant(s) were to die before the due
date of the third Annuity Payment; and so forth.

On the Annuity Commencement Date, the Adjusted Policy Value will be applied
to provide for Annuity Payments under the selected Annuity

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<PAGE>

Option as specified. The Adjusted Policy Value is the Policy Value for the
Valuation Period which ends immediately preceding the Annuity Commencement Date,
including the effect of any applicable Excess Interest Adjustment, and reduced
by any applicable taxes.

The effect of choosing a Fixed Payment Option is that the amount of
each payment will be set on the Annuity Commencement Date and will not change.
If a Fixed Payment Option is selected, the Adjusted Policy Value will be
transferred to the general account of AUSA Life, and the Annuity Payments will
be fixed in amount by the fixed annuity provisions selected and the age and sex
(if consideration of sex is allowed) of the Annuitant. For further information,
contact AUSA Life at its Service Office.

Guaranteed Values. There are five Fixed Payment Options. Options 1, 2
and 4 are based on a guaranteed interest rate of 3%. Options 3 and 5 are based
on a guaranteed interest rate of 3% using the "1983 Table a" (male, female, and
unisex if required by law) mortality table improved to the year 2000 with
projection scale G. ("The 1983 Table a" mortality rates are adjusted based on
improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.)

Option 1-Interest Payments. The Adjusted Policy Value may be left with
AUSA Life for any agreed-upon term. AUSA Life will pay the interest in
equal payments or it may be left to accumulate. Withdrawal rights will be
agreed upon by the Owner and AUSA Life when the option is elected.

Option 2-Income for a Specified Period. Level payments of the proceeds
with interest are made for the fixed period elected, at which time the funds
are exhausted.

Option 3-Life Income. An election may be made between:

1. "No Period Certain"--- Level payments will be made during the
lifetime of the Annuitant.

2. "10 Years Certain"---Level Payments will be made for the
longer of the Annuitant's lifetime or ten years.

3. "Guaranteed Return of Policy Proceeds"---Level payments will be
made for the longer of the Annuitant's lifetime or until the
total dollar amount of payments made equals the proceeds applied
to the income option.

Option 4-Income of a Specified Amount. Payments are made for any
specified amount until the proceeds with interest are exhausted.

Option 5 ---Joint and Survivor Annuity. Payments are made during the
joint lifetime of the payee and a joint payee of the Owner's selection.
Payments will be made as long as either person is living.

For Options 2, 3, and 4, in the event of the death of the person
receiving payments prior to the end of the Guaranteed Period, payments will

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<PAGE>

be continued to that person's beneficiary or their present value may be paid
in a single sum.

Other options may be arranged by agreement with AUSA Life. Certain
options may not be available in some states.

Current immediate annuity rates for the same class of annuities will be
used if higher than the guaranteed rates (guaranteed rates are based upon the
mortality tables and/or guaranteed interest rates specified in the Policy under
the section entitled "Annuity Payments"). Current amounts may be obtained from
AUSA Life.

Variable Payment Options. The dollar amount of the first Variable
Annuity Payment will be determined in accordance with the annuity payment rates
set forth in the applicable table contained in the Policy. The tables are based
on a 5% effective annual Assumed Investment Return and the "1983 Table a" (male,
female, and unisex if required by law) mortality table improved to the year 2000
with projection Scale G. ("The 1983 Table a" mortality rates are adjusted based
on improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.) The dollar amount of subsequent Variable Annuity
Payments will vary based on the investment performance of the Subaccount(s) of
the Mutual Fund Account selected by the Annuitant or Beneficiary. If the actual
investment performance exactly matched the Assumed Investment Return of 5% at
all times, the amount of each Variable Annuity Payment would remain equal. If
actual investment performance exceeds the Assumed Investment Return, the amount
of the Variable Annuity Payments would increase. Conversely, if actual
investment performance is lower than the Assumed Investment Return, the amount
of the Variable Annuity Payments would decrease.

Determination of the First Variable Payment. The amount of the first
variable payment depends upon the sex (if consideration of sex is allowed
under state law) and adjusted age of the Annuitant. The adjusted age is the
Annuitant's actual age nearest birthday, on the Annuity Commencement Date,
adjusted as follows:

<TABLE>
<CAPTION>
ANNUITY COMMENCEMENT DATE ADJUSTED AGE
- ------------------------- ------------
<S> <C>
Before 2001 Actual Age
2001-2010 Actual Age minus 1
2011-2020 Actual Age minus 2
2021-2030 Actual Age minus 3
2031-2040 Actual Age minus 4
After 2040 As determined by AUSA Life
</TABLE>

This adjustment assumes an increase in life expectancy, and therefore
it results in lower payments than without such an adjustment.

The following Variable Payment Options generally are available:

Option 3-V-Life Income. An election may be made between:

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<PAGE>

1. "No Period Certain"---Payments will be made during the
lifetime of the Annuitant.

2. "10 Years Certain"---Payments will be made for the longer of
the Annuitant's lifetime or ten years.

Option 5-V---Joint and Survivor Annuity. Payments are made as long as
either the Annuitant or the joint Annuitant is living.

Certain options may not be available in some states.

Determination of Subsequent Variable Payments. All Variable Annuity
Payments other than the first are calculated using "Annuity Units" which are
credited to the Policy. The number of Annuity Units to be credited in respect of
a particular Subaccount is determined by dividing that portion of the first
Variable Annuity Payment attributable to that Subaccount by the Annuity Unit
Value of that Subaccount on the Annuity Commencement Date. The number of Annuity
Units of each particular Subaccount credited to the Policy then remains fixed,
assuming no transfers to or from that Subaccount occur. The dollar value of
variable Annuity Units in the chosen Subaccount will increase or decrease
reflecting the investment experience of the chosen Subaccount. The dollar amount
of each Variable Annuity Payment after the first may increase, decrease or
remain constant, and is equal to the sum of the amounts determined by
multiplying the number of Annuity Units of each particular Subaccount credited
to the Policy by the Annuity Unit value for the particular Subaccount on the
date the payment is made.

Transfers. A Policy Owner may transfer the value of the Annuity Units
from one Subaccount to another within the Mutual Fund Account or to the Fixed
Account. However, after the Annuity Commencement Date no transfers may be made
from the Fixed Account to the Mutual Fund Account. The minimum amount which may
be transferred is the lesser of $10 of monthly income or the entire monthly
income of the variable Annuity Units in the Subaccount from which the transfer
is being made. The remaining Annuity Units in the Subaccount must provide at
least $10 of monthly income. If, after a transfer, the monthly income of the
remaining Annuity Units in a Subaccount would be less than $10, AUSA Life
reserves the right to include those Annuity Units as part of the transfer. AUSA
Life reserves the right to limit transfers between Subaccounts or from the
Mutual Fund Account to the Guaranteed Period Options of the Fixed Account to
once per Policy Year.

A portion or the entire amount of the Annuity Payments may be taxable
as ordinary income. If, at the time the Annuity Payments begin, the Owner has
not provided AUSA Life with a written election not to have federal income taxes
withheld, AUSA Life must by law withhold such taxes from the taxable portion of
such annuity payments and remit that amount to the federal government.
Withholding is mandatory for certain qualified Policies. (See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES," p.___)

Adjustment of Annuity Payments. Payments will be made at 1, 3, 6, or
12 month intervals. If the individual payments provided for would be or

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<PAGE>

become less than $50, AUSA Life may change, at its discretion, the frequency of
payments to such intervals as will result in payments of at least $50. If the
Adjusted Policy Value on the Annuity Commencement Date is less than $2,000, AUSA
Life may pay such value in one sum in lieu of the payments otherwise provided
for.

DEATH BENEFIT

Death of Annuitant Prior to Annuity Commencement Date. A Death Benefit will
be paid to the Beneficiary if the Owner, who is the Annuitant, dies prior to the
Annuity Commencement Date. The amount of the Death Benefit will be the greatest
of a) the Policy Value on the date proof of the Owner's death and an election of
the method of settlement are received by AUSA Life's Service Office, b) the Cash
Value on the date AUSA Life receives due proof of death and an election of a
method of settlement, or c) the Guaranteed Minimum Death Benefit ("GMDB")
described below.

There are two Guaranteed Minimum Death Benefit options available, (A)
the "Return of Premium Death Benefit," and (B) the "Annual Step-Up Death
Benefit."

The "Return of Premium Death Benefit" is the total Premium Payments
less any Adjusted Partial Withdrawals (defined below), as of the date of
death.

The "Annual Step-Up Death Benefit" is equal to the largest Policy Value
on the Policy Date or on any Policy Anniversary prior to the earlier of the date
of death or the Owner's 81st birthday plus any Premium Payments paid, less any
partial withdrawals taken, subsequent to the date of the largest anniversary
Policy Value. There is an extra charge for this Death Benefit (see "Charges and
Deductions--Mortality and Expense Risk Fee," p. ___.)

Under both Death Benefit Options, if the surviving spouse elects to
continue the Policy in lieu of receiving the Death Benefit, an amount equal to
the excess, if any, of the Guaranteed Minimum Death Benefit (i.e., either the
"Annual Step-Up Death Benefit" or the "Return of Premium Death Benefit") over
the Policy Value, will then be added to the Policy Value. This amount will be
added only once, at the time of such election.

If no choice of Guaranteed Minimum Death Benefit is made in the Policy
application, the "Return of Premium Death Benefit" will apply.

After the Policy Date, an election cannot be made and the Death Benefit
option cannot be changed.

Adjusted Partial Withdrawal. To determine the Guaranteed Minimum Death
Benefit for each partial withdrawal, the Adjusted Partial Withdrawal is the
sum of (1) and (2), where

(1) The Surrender-charge-free withdrawal amount taken and,

(2) (X-Y+Z) as defined in "DISTRIBUTIONS UNDER THE POLICY--Surrenders",
times

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<PAGE>

(a) the amount of the Death Benefit on the date of, but prior to, the
Excess Partial Withdrawal, divided by

(b) the Policy Value on the date of, but prior to, the Excess Partial
Withdrawal.

If a partial withdrawal is taken when the Guaranteed Minimum Death
Benefit exceeds the Policy Value, then the partial withdrawal amount used to
determine the Guaranteed Minimum Death Benefit will exceed the amount of the
partial withdrawal. In that case, the total proceeds of a partial withdrawal
followed by a Death Benefit could be less than total Premium Payments.

If the Annuitant who is not the Owner dies, the Owner will become the
Annuitant and no Death Benefits are payable unless the Owner specifically
requests on the Policy application or in writing that the Death Benefit be paid
upon the Annuitant's death and AUSA Life agrees to such election. See your
Policy's provisions.

Due Proof of Death of the Annuitant is proof that the Annuitant who is
the Owner died prior to the commencement of Annuity Payments. Upon receipt of
this proof and an election of a method of settlement and return of the Policy,
the Death Benefit generally will be paid within seven days, or as soon
thereafter as AUSA Life has sufficient information about the Beneficiary to make
the payment. The Beneficiary may receive the amount payable in a lump sum cash
benefit, or, subject to any limitation under any state or federal law, rule, or
regulation, under one of the Payment Options described above, unless a
settlement agreement is effective at the death of the Owner preventing such
election.

If the Annuitant was the Owner, and the Beneficiary was not the
Annuitant's spouse, the Death Benefit must (1) be distributed within five years
of the date of the deceased Owner's death, or (2) payments under a Payment
Option must begin within one year of the deceased Owner's death and must be made
for the Beneficiary's lifetime or for a period certain (so long as any certain
period does not exceed the Beneficiary's life expectancy). Death Proceeds which
are not paid to or for the benefit of a natural person must be distributed
within five years of the date of the deceased Owner's death. If the sole
Beneficiary is the deceased Owner's surviving spouse, such spouse may elect to
continue the Policy as the new Annuitant and Owner instead of receiving the
Death Benefit. (See "Federal Tax Matters" in the Statement of Additional
Information.)

If the Annuitant is not the Owner, and the Owner dies prior to the
Annuity Commencement Date, a Successor Owner may surrender the Policy at any
time for the amount of the Adjusted Policy Value. If the successor owner is not
the Owner's spouse, however, the Adjusted Policy Value must be distributed
within five years after the date of death of the Owner.

Death On or After Annuity Commencement Date. The Death Benefit payable
on or after the Annuity Commencement Date depends on the Payment Option
selected. If any Owner dies on or after the Annuity

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<PAGE>

Commencement Date, but before the entire interest in the Policy is distributed,
the remaining portion of such interest in the Policy will be distributed at
least as rapidly as under the method of distribution being used as of the date
of that Owner's death.

Beneficiary. The Beneficiary designation in the application will remain in
effect until changed. The Owner may change the designated Beneficiary by sending
Written Notice to AUSA Life. The Beneficiary's consent to such change is not
required unless the Beneficiary was irrevocably designated or consent is
required by law. (If an irrevocable Beneficiary dies, the Owner may then
designate a new Beneficiary.) The change will take effect as of the date the
Owner signs the Written Notice, whether or not the Owner is living when the
Notice is received by AUSA Life. AUSA Life will not be liable for any payment
made before the Written Notice is received. If more than one Beneficiary is
designated, and the Owner fails to specify their interests, they will share
equally.

DEATH OF OWNER

Federal tax law requires that if any Owner (including any joint Owner or
any Successor Owner who has become a current Owner) dies before the Annuity
Commencement Date, then the entire value of the Policy must generally be
distributed within five years of the date of death of such Owner. Certain rules
apply where 1) the spouse of the deceased Owner is the sole beneficiary, 2) the
Owner is not a natural person and the primary Annuitant dies or is changed, or
3) any Owner dies after the Annuity Commencement Date. See "Federal Tax Matters"
in the Statement of Additional Information for a detailed description of these
rules. Other rules may apply to Qualified Policies. (See also "Death Benefit"
above.)

RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM

Section 36.105 of the Texas Educational Code permits participants in the
Texas Optional Retirement Program (ORP) to withdraw their interest in a variable
annuity policy 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.

RESTRICTIONS UNDER SECTION 403(B) PLANS

Section 403(b) of the Internal Revenue Code 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 403(b) plan will prohibit distributions of elective contributions and
earnings on elective contributions except 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.

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<PAGE>

RESTRICTIONS UNDER QUALIFIED POLICIES

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

CHARGES AND DEDUCTIONS

No deductions are made from Premium Payments when made, so that the full
amount of each Premium Payment is invested in one or more of the Accounts. AUSA
Life will make certain charges and deductions in connection with the Policy in
order to compensate it for incurring expenses in distributing the Policy,
bearing mortality and expense risks under the Policy, and administering the
Accounts and the Policies. Charges may also be made for premium taxes, federal,
state or local taxes, or for certain transfers or other transactions. Charges
and expenses are also deducted from the Underlying Funds.

SURRENDER CHARGE

AUSA Life will incur expenses relating to the sale of Policies, including
commissions to registered representatives and other promotional expenses. AUSA
Life may apply a Surrender Charge, which is a contingent deferred sales charge,
to any amount surrendered (i.e., withdrawn) in connection with a full or partial
Policy surrender in order to cover distribution expenses. A Surrender Charge, if
applicable, will only be applied to withdrawals which exceed the Cumulative Free
Percentage at the time of, but prior to, the withdrawal. (See "DISTRIBUTIONS
UNDER THE POLICY--Surrenders" p.___.)

Subject to certain conditions, a Surrender Charge is not imposed for full or
partial surrenders if the Owner or Owner's spouse becomes unemployed. (See
"DISTRIBUTIONS UNDER THE POLICY--Unemployment Waiver," p.___.) A Surrender
Charge will also not be applied if the withdrawal is necessary to meet the
minimum distribution requirements for that policy specified by the IRS for tax
qualified plans. The Surrender Charge is also waived upon certain Systematic
Payouts. (See "DISTRIBUTIONS UNDER THE POLICY--Systematic Payout Option," p.
___.).

The amount of the Surrender Charge is determined by multiplying the amount
of the Premium Payment withdrawn by the applicable Surrender Charge Percentage.
The applicable Surrender Charge Percentage will depend upon the number of years
that have elapsed since the Premium Payment that is being withdrawn was made.
For this purpose, surrenders are allocated to Premium Payments on a "first-in,
first-out" basis, i.e., first to the oldest Premium Payment, then to the next
oldest Premium Payment and so on. Premium Payments are deemed to be withdrawn
before earnings, and after all Premium Payments have been withdrawn, the
remaining Adjusted Policy Value may be withdrawn without any Surrender Charge.
The following is the table of Surrender Charge Percentages:

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<PAGE>

<TABLE>
<CAPTION>
APPLICABLE SURRENDER CHARGE
PERCENTAGE
NUMBER OF YEARS SINCE (AS PERCENTAGE OF
PREMIUM PAYMENT PREMIUM PAYMENT WITHDRAWN)
--------------- --------------------------
<S> <C>
Less than 1 6%
At least 1 and less than 2 6%
At least 2 and less than 3 6%
At least 3 and less than 4 4%
At least 4 and less than 5 2%
5 or more 0%
</TABLE>

No Surrender Charge will be applied after the tenth Policy Year.

AUSA Life anticipates that the Surrender Charge will not generate
sufficient funds to pay the cost of distributing the Policies. If this charge is
insufficient to cover the distribution expenses, the deficiency will be met from
AUSA Life's general funds, which will include amounts derived from the fee for
mortality and expense risks.

MORTALITY AND EXPENSE RISK FEE

AUSA Life imposes a daily charge as compensation for bearing certain
mortality and expense risks in connection with the Policies. For Guaranteed
Minimum Death Benefit Option A (Return of Premium Death Benefit), this charge is
equal to an effective annual rate of 1.10% of the daily net asset value in the
Mutual Fund Account for each Subaccount. For Guaranteed Minimum Death Benefit
Option B (Annual Step-Up Death Benefit), the corresponding charge is equal to
1.25% of the daily net asset value in the Mutual Fund Account for each
Subaccount. The Mortality and Expense Risk Fee is reflected in the Accumulation
or Annuity Unit values for the Policy for each Subaccount.

Policy Values and Annuity Payments are not affected by changes in actual
mortality experience nor by actual expenses incurred by AUSA Life. The mortality
risks assumed by AUSA Life arise from its contractual obligations to make
Annuity Payments (determined in accordance with the Annuity tables and other
provisions contained in the Policy) and to pay Death Benefits prior to the
Annuity Commencement Date. Thus, Owners are assured that neither an Annuitant's
own longevity nor an unanticipated improvement in general life expectancy will
adversely affect the periodic Annuity Payments that the Annuitant will receive
under the Policy.

AUSA Life also bears substantial risk in connection with the Death Benefit
Guarantee since AUSA Life will pay a Death Benefit equal to the Guaranteed
Minimum Death Benefit (i.e., Annual Step-Up Death Benefit or Return of Premium
Death Benefit) if that amount is higher than the greater of the Policy Value or
the Cash Value.

The expense risk assumed by AUSA Life is the risk that AUSA Life's actual
expenses in administering the Policy and the Accounts will

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<PAGE>

exceed the amount recovered through the Administrative and Service Charges.

If the Mortality and Expense Risk Fee is insufficient to cover AUSA Life's
actual costs, AUSA Life will bear the loss; conversely, if the charge is more
than sufficient to cover costs, the excess will be profit to AUSA Life. AUSA
Life expects a profit from this charge. To the extent that the Surrender Charge
is insufficient to cover the actual cost of Policy distribution, the deficiency
will be met from AUSA Life's general corporate assets, which may include
amounts, if any, derived from the Mortality and Expense Risk Fee. A Mortality
and Expense Risk Fee is assessed during the annuity phase for all Variable
Annuity Options.

ADMINISTRATIVE CHARGES

In order to cover the costs of administering the Policies, AUSA Life
deducts a Service Charge from the Policy Value of each Policy.

The annual Service Charge is deducted from the Policy Value of each Policy
on each Policy Anniversary prior to the Annuity Commencement Date. AUSA Life
also reserves the right to charge up to $30 at the time of surrender during any
Policy Year. After the Annuity Commencement Date, the charge is not deducted.
This annual Service Charge is the lesser of 2% of the Policy Value or $30 and it
will not be increased in the future. This charge is waived if either the Policy
Value or the sum of all Premium Payments less the sum of all partial surrenders
equals or exceeds $50,000 on a Policy Anniversary (or date of surrender). AUSA
Life does not anticipate realizing any profit from this charge. The Service
Charge will be deducted from the Guaranteed Period Option(s) of the Fixed
Account and from the Subaccount(s) in the Mutual Fund Account, in the same
proportion that the Owner's interest in each Guaranteed Period Option/Subaccount
bears to the Owner's total Policy Value.

AUSA Life also deducts a daily Administrative Charge from the net assets of
the Mutual Fund Account to partially cover expenses incurred by AUSA Life in
connection with the administration of the Account and the Policies. The
effective annual rate of this charge is .15% of the value of the Mutual Fund
Account's net assets. (See "CHARGES AND DEDUCTIONS--Administrative Charges,"
p.___.)

PREMIUM TAXES

AUSA Life currently makes no deduction from the Premium Payments for any
state premium taxes AUSA Life pays in connection with Premium Payments under the
Policies. However, AUSA Life will deduct the aggregate premium taxes paid on
behalf of a particular Policy from the Policy Value on (i) the Annuity
Commencement Date (thus reducing the Policy Value), (ii) the total surrender of
a Policy, or (iii) payment of the death proceeds of a Policy.

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<PAGE>

FEDERAL, STATE AND LOCAL TAXES

No charges are currently made for federal, state, or local taxes other than
premium taxes. However, AUSA Life reserves the right to deduct charges in the
future for any taxes or other economic burden resulting from the application of
any tax laws that AUSA Life determines to be attributable to the accounts or the
policies.

TRANSFER FEE

There is no charge for the first 12 allowable transfers among Investment
Options in each Policy Year. AUSA Life reserves the right to impose a $10 charge
for the thirteenth and each subsequent transfer request made by the Owner during
a single Policy Year. For the purpose of determining whether a Transfer Fee is
payable, Premium Payment allocations are not considered transfers. All transfer
requests made simultaneously will be treated as a single request. No Transfer
Fee will be imposed for any transfer which is not at the Owner's request.

OTHER EXPENSES INCLUDING INVESTMENT ADVISORY FEES

Each of the Portfolios of the Underlying Funds is responsible for all of
its expenses. In addition, charges will be made against each of the Portfolios
of the Underlying Funds for investment advisory services provided to the
Portfolio. The net assets of each Portfolio of the Underlying Funds will reflect
deductions in connection with the investment advisory fee and other expenses.

For more information concerning the investment advisory fee and other
charges against the Portfolios, see the prospectuses for the Underlying Funds,
current copies of which accompany this Prospectus.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following summary does not constitute tax advice. It is a general
discussion of certain of the expected federal income tax consequences of
investment in and distributions with respect to a Policy, based on the Internal
Revenue Code of 1986, as amended (the "Code"), proposed and final Treasury
Regulations thereunder, judicial authority, and current administrative rulings
and practice. This summary discusses only certain federal income tax
consequences to "United States Persons," and does not discuss state, local, or
foreign tax consequences. United States Persons means citizens or residents of
the United States, domestic corporations, domestic partnerships and trusts or
estates that are subject to United States federal income tax regardless of the
source of their income.

At the time the initial Premium Payment is paid, a prospective purchaser
must specify whether he is purchasing a Nonqualified Policy or a Qualified
Policy. If the initial Premium Payment is derived from an exchange or surrender
of another annuity policy, AUSA Life may require that the prospective purchaser
provide information with regard to the federal income

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<PAGE>

tax status of the previous annuity policy. AUSA Life will require that persons
purchase separate Policies if they desire to invest monies qualifying for
different annuity tax treatment under the Code. Each such separate Policy would
require the minimum initial Premium Payment stated above. Subsequent Additional
Premium Payments under a Policy must qualify for the same federal income tax
treatment as the initial Premium Payment under the Policy; AUSA Life will not
accept a Subsequent Additional Premium Payment under a Policy if the federal
income tax treatment of such Premium Payment would be different from that of the
initial Premium Payment.

The Qualified Policies were designed for use by retirement plans and
individual retirement accounts that qualify for special federal income tax
treatment under Sections 401(a), 403(b), or 408(a), or 457 of the Code and
individuals purchasing individual retirement annuities that qualify for special
federal income tax treatment under Section 408(b) of the Code. Certain
requirements must be satisfied in purchasing a Qualified Policy in order for the
plan, account or annuity to retain its special tax treatment. This summary is
not intended to cover such requirements, and assumes that Qualified Policies are
purchased pursuant to retirement plans or individual retirement accounts, or are
individual retirement annuities, that qualify for such special tax treatment.
This summary was prepared by AUSA Life after consultation with tax counsel, but
no opinion of tax counsel has been obtained.

THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. EACH
POTENTIAL PURCHASER IS URGED TO CONSULT HIS/HER OWN TAX ADVISER AS TO THE
CONSEQUENCES OF INVESTMENT IN A POLICY UNDER FEDERAL AND APPLICABLE STATE, LOCAL
AND FOREIGN TAX LAWS.

TAX STATUS OF THE POLICY

The following discussion is based on the assumption that the Policy
qualifies as an annuity contract for federal income tax purposes. The Statement
of Additional Information discusses the tax requirements for qualifying as an
annuity contract.

TAXATION OF ANNUITIES

The discussion below applies only to those Policies owned by natural
persons, and that qualify as annuity contracts for federal income tax purposes.
With respect to Owners who are natural persons, the Policy should be treated as
an annuity contract for federal income tax purposes.

In General. Except as described below with respect to Owners who are not
natural persons, an Owner who holds a Policy satisfying the diversification and
distribution requirements described in the Statement of Additional Information
should not be taxed on increases in the Policy Value until an amount is received
or deemed received, e.g., upon a partial or full surrender, assignment, or as
Annuity Payments under the Annuity Option selected. Generally, any amount
received or deemed received under a Nonqualified Annuity Contract prior to the
Annuity Commencement Date is deemed to come first from any "Income on the
Contract" and then from the "Investment in the Contract." The "Investment in the
Contract" generally

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<PAGE>

equals total premium payments less amounts received which were not includable in
gross income. To the extent that the Policy Value (ignoring any surrender
charges except on a full surrender) exceeds the "Investment in the Contract,"
such excess constitutes the "Income on the Contract." For these purposes such
"Income on the Contract" shall be computed by reference to the aggregation rules
described below, and the amount includable in gross income will be taxable as
ordinary income. If at the time that any amount is received or deemed received
there is no "Income on the Contract" (e.g., because the gross Policy Value does
not exceed the "Investment in the Contract" and no aggregation rule applies),
then such amount received or deemed received will not be includable in gross
income, and will simply reduce the "Investment in the Contract."

For this purpose, the assignment, pledge or agreement to assign or pledge
any portion of the Policy Value (including assignment of Owner's right to
receive Annuity Payments prior to the Annuity Commencement Date) generally will
be treated as a distribution in the amount of such portion of the Policy Value.
Additionally, if an Owner designates a new Owner prior to the Annuity
Commencement Date without receiving full and adequate consideration, the old
Owner generally will be treated as receiving a distribution under the Policy in
an amount equal to the Policy Value. A transfer of ownership or an assignment of
a Policy, or designation of an Annuitant or Beneficiary who is not also the
Owner, as well as the selection of certain Annuity Commencement Dates, may
result in certain tax consequences to the Owner that are not discussed herein.
An Owner contemplating any such transfer, designation, selection or assignment
of a Policy should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.

Aggregation Rules. Generally all Nonqualified deferred annuity contracts
issued by the same company (or an affiliated company) to the same owner during
any calendar year shall be treated as one annuity contract, and "aggregated" for
purposes of determining the amount includable in gross income. In addition, for
such purposes all individual retirement annuities and accounts under Section 408
of the Code for an individual are aggregated, and generally all distributions
therefrom during a calendar year are treated as one distribution made as of the
end of such year.

Surrenders. In the case of a partial surrender (including systematic
payouts) under a Nonqualified Policy, the amount received generally will be
includable in gross income to the extent that it does not exceed the "Income on
the Contract" which is generally equal to the excess of the Policy Value
immediately before the partial surrender over the "Investment in the Contract"
at that time. However, for these purposes the Policy Value immediately before a
partial surrender may have to be increased by any positive Excess Interest
Adjustment which results from such a partial surrender or which could result
from a simultaneous full surrender, and may need further adjustments if the
aggregation rules apply. There is, however, no definitive guidance on the proper
tax treatment of Excess Interest Adjustments, and the Owner should contact a
competent tax adviser with respect to the potential tax consequences of an
Excess Interest Adjustment. In the case of a partial surrender (including
systematic payouts) under a Qualified Policy, a ratable portion of the amount
received is generally

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<PAGE>

excludable from gross income, based on the ratio of the "Investment in the
Contract" to the individual's total account balance or accrued benefit under the
retirement plan at the time of each such payment. For a Qualified Policy, the
"Investment in the Contract" can be zero, and generally any distribution would
therefore be fully taxable. Special tax rules may be available for certain
distributions from a Qualified Policy. In the case of a full surrender under a
Nonqualified Policy or a Qualified Policy, the amount received generally will be
taxable only to the extent it exceeds the "Investment in the Contract, unless
the aggregation rules apply.

Annuity Payments. Although the tax consequences may vary depending on the
Annuity Payment Option elected under the Policy, in general, for Nonqualified
and certain Qualified Polices, only a portion of the Annuity Payments received
after the Annuity Commencement Date will be includable in the gross income of
the recipient.

For Fixed Annuity Payments, in general the excludable portion of each
payment is determined by dividing the "Investment in the Contract" on the
Annuity Commencement Date by the total expected value of the Annuity Payments
for the term of the payments. The remainder of each Annuity Payment is
includable in gross income. Once the "Investment in the Contract" has been fully
recovered, the full amount of any additional Annuity Payments is includable in
gross income.

For Variable Annuity Payments, the includable portion is generally
determined by an equation that establishes a specific dollar amount of each
payment that is excludable from gross income. This dollar amount is determined
by dividing the "Investment in the Contract" on the Annuity Commencement Date by
the total number of expected periodic payments. The remainder of each Annuity
Payment is includable in gross income. Once the "Investment in the Contract" has
been fully recovered, the full amount of any additional Annuity Payments is
includable in gross income.

If, after the Annuity Commencement Date, Annuity Payments cease by reason
of the death of the Annuitant, the excess (if any) of the "Investment in the
Contract" as of the Annuity Commencement Date over the aggregate amount of
Annuity Payments received on or after the Annuity Commencement Date that was
excluded from gross income is allowable as a deduction for the last taxable year
of the Annuitant.

Taxation of Death Benefit Proceeds. Amounts may be distributed from the
Policy because of the death of an Owner or the 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, as described above, or (2) if distributed under an Annuity Option,
they are taxed in the same manner as Annuity Payments, as described above. For
these purposes, the "Investment in the Contract" is not affected by the Owner's
or Annuitant's death. That is, the "Investment in the Contract" remains
generally the total premium payments less amounts received which were not
includable in gross income.

Penalty Taxes. In the case of any amount received or deemed received from
the Policy, e.g., upon a surrender of a Policy or a deemed

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<PAGE>

distribution under a Policy resulting from a pledge, assignment or agreement to
pledge or assign or an Annuity Payment with respect to a Policy, there may be
imposed on the recipient a federal penalty tax equal to 10% of the amount
includable in gross income. The penalty tax generally will not apply to any
distribution: (i) made on or after the date on which the taxpayer attains age
59-1/2; (ii) made as a result of the death of the holder (generally the Owner);
(iii) attributable to the disability of the taxpayer, or (iv) which is part of a
series of substantially equal periodic payments made (not less frequently than
annually) for the life (or life expectancy) of the taxpayer or the joint lives
(or joint life expectancies) of such taxpayer and the taxpayer's beneficiary.
Other rules may apply to Qualified Policies.

Withholding. The portion of any distribution under a Policy that is
includable in gross income will be subject to federal income tax withholding
unless the recipient of such distribution elects not to have federal income tax
withheld. Election forms will be provided at the time distributions are
requested or made. For certain Qualified Policies, certain distributions are
subject to mandatory withholding.

Qualified Policies. The Qualified Policy is designed for use with several
types of tax-qualified retirement plans. The tax rules applicable to
participants and beneficiaries in tax-qualified retirement plans 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
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. Some retirement plans are
subject to distribution and other requirements that are not incorporated into
AUSA Life's Policy administration procedures. Owners, participants and
beneficiaries are responsible for determining that contributions, distributions
and other transactions with respect to the Policies comply with applicable law.

AUSA Life makes no attempt to provide more than general information about
use of the Policy with the various types of retirement plans. Purchasers of
Policies for use with any retirement plan should consult their legal counsel and
tax adviser regarding the suitability of the Policy.

Individual Retirement Annuities. In order to qualify as an individual
retirement annuity under Section 408(b) of the Code, a Policy must contain
certain provisions: (i) the Owner must be the Annuitant; (ii) the Policy may not
be transferable by the Owner, e.g., the Owner may not designate a new Owner,
designate a Contingent Owner or assign the Policy as collateral security; (iii)
the total Premium Payments for any calendar year on behalf of any individual may
not exceed $2,000, unless the portion of such Premium Payments in excess of
$2,000 qualifies as a rollover amount or contribution under Sections 402(c) or
408(d)(3) of the Code; (iv) Annuity Payments or withdrawals must begin no later
than April 1 of the calendar year following the calendar year in which the
Annuitant attains age 70 1/2; (v) an Annuity Payment Option with a Period
Certain that will guarantee Annuity Payments beyond the life expectancy of the
Annuitant and the Beneficiary may not be

54
<PAGE>

selected; (vi) certain payments of Death Benefits must be made in the event the
Annuitant dies prior to the distribution of the Policy Value; and (vii) the
entire interest of the Owner is non-forfeitable. Policies intended to qualify as
individual retirement annuities under Section 408(b) of the Code contain such
provisions.

Section 408 of the Code also indicates that no part of the funds for an
individual retirement account or annuity may be invested in a life insurance
contract, but the regulations thereunder allow such funds to be invested in an
annuity policy that provides a death benefit that equals the greater of the
premiums paid or the cash value for the contract. The Policy provides an
enhanced death benefit that could exceed the amount of such a permissible death
benefit, but it is unclear to what extent such an enhanced death benefit could
disqualify the Policy under Section 408 of the Code. The Internal Revenue
Service has not reviewed the Policy for qualification as an IRA, and has not
addressed in a ruling of general applicability whether an enhanced death benefit
provision, such as the provision in the Policy, comports with IRA qualification
requirements.

Section 403(b) Plans. Under Section 403(b) of the Code, payments made by
public school systems and certain tax exempt organizations to purchase Policies
for their employees are excludable from the gross income of the employee,
subject to certain limitations. However, such payments may be subject to FICA
(Social Security) taxes. Additionally, in accordance with the requirements of
the Code Section 403(b) annuities generally may not permit distribution of (i)
elective contributions made in years beginning after December 31, 1988, and (ii)
earnings on those contributions and (iii) earnings on amounts attributed to
elective contributions held as of the end of the last year beginning before
January 1, 1989. Distributions of such amounts will be allowed only upon the
death of the employee, on or after 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.

Corporate Pension and Profit Sharing Plans and H.R 10 Plans. Sections
401(a) and 403(a) of the Code permit corporate employers to establish various
types of retirement plans for employees and self-employed individuals to
establish qualified plans for themselves and their employees. Such retirement
plans may permit the purchase of the Policies to accumulate retirement savings.
Adverse tax consequences to the plan, the participant or both may result if the
Policy is assigned or transferred to any individual as a means to provide
benefit payments.

Deferred Compensation Plans. Section 457 of the Code, while not actually
providing for a qualified plan (as that term is not used in the Code), provides
for certain deferred compensation plans with respect to service for state
governments, local governments, political sub-divisions, agencies,
instrumentalities and certain affiliates of such entities and tax exempt
organizations which enjoy special treatment. The Policies can be used with such
plans. Under such plans a participant may specify the form of investment in
which his or her participation will be made. All such investments, however, are
owned by, and are subject to, the claims of the general creditors of the
sponsoring employer. Depending on the terms of the

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<PAGE>

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.

Non-natural Persons. Pursuant to Section 72(u) of the Code, an annuity
contract held by a taxpayer other than a natural person generally will not be
treated as an annuity contract under the Code; accordingly, an Owner who is not
a natural person will recognize as ordinary income for a taxable year the excess
of (i) the sum of the Cash Value as of the close of the taxable year and all
previous distributions under the Policy over (ii) the sum of the Premium
Payments paid for the taxable year and any prior taxable year and the amounts
includable in gross income for any prior taxable year with respect to the
Policy. For these purposes, the Policy Value at year end may have to be
increased by any positive Excess Interest Adjustment which could result from a
full surrender at such time. There is, however, no definitive guidance on the
proper tax treatment of Excess Interest Adjustments and the Owner should contact
a competent tax adviser with respect to the potential tax consequences of an
Excess Interest Adjustment. Notwithstanding the preceding sentences in that
paragraph, Section 72(u) of the Code does not apply to (i) a Policy the nominal
Owner of which is not a natural person but the beneficial Owner of which is a
natural person, (ii) a Policy acquired by the estate of a decedent by reason of
such decedent's death, (iii) a Qualified Policy (other than one qualifying under
Section 457) or (iv) a single-payment annuity the Commencement Date for which is
no later than one year from the date of the single Premium Payment; such
Policies are taxed as described above under the heading "Taxation of Annuities."

Possible Changes in Taxation. In past years, legislation has been proposed
in the U.S. Congress that would have adversely modified 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 was not actively considering any
legislation regarding the taxation of annuities, there is always the possibility
that the tax treatment of annuities could change because of legislation or other
means (such as IRS regulations, revenue rulings, judicial decisions, etc.).
Moreover, it is also possible that any change could be retroactive (that is,
effective prior to the date of the change).

DISTRIBUTOR OF THE POLICIES

AEGON USA Securities, Inc., an affiliate of AUSA Life, located at 4333
Edgewood Road N.E., Cedar Rapids, Iowa, 52499-0001, is the principal underwriter
of the Policies. AEGON USA Securities, Inc. was incorporated under the laws of
the State of Iowa in 1959 and is registered as a broker/dealer under the
Securities Exchange Act of 1934. It is a member of the National Association of
Securities Dealers, Inc. ("NASD").

Policies are sold by registered representatives of AEGON USA Securities,
Inc. or of broker/dealers who have entered into written sales agreements with
the principal underwriter, who are also licensed through various affiliated or
unaffiliated agencies as insurance agents for AUSA Life.

56
<PAGE>

AUSA Life has entered into a distribution agreement with AEGON USA Securities,
inc. and companion sales agreements with agencies and/or agents through which
agreements the Polices are sold and the registered representatives are
compensated by the agencies and/or AEGON USA Securities, Inc. Broker/dealers
will generally receive sales commissions of up to 5% of Premium Payments. These
commissions are not deducted from Premium Payments, they are paid by AUSA Life.
In addition, certain production, persistency and managerial bonuses may be paid.
Subject to applicable Federal and State laws and regulations, AUSA Life may also
pay compensation to banks and other financial institutions for their services in
connection with the sale and servicing of the Policies. The level of such
compensation will not exceed that paid to broker/dealers for their sale of the
Policies. No amounts will be retained by AEGON USA Securities, Inc. for acting
as principal underwriter for the Policies. The offering of Policies will be made
on a continuing basis.

VOTING RIGHTS

To the extent required by law, AUSA Life will vote the Underlying Fund
shares held by the Mutual Fund Account at regular and special shareholder
meetings of the Underlying Funds in accordance with instructions received from
persons having voting interests in the portfolios. If, however, the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result AUSA Life determines that it is permitted
to vote the Underlying Funds' shares in its own right, it may elect to do so.

Before the Annuity Commencement Date, the Owner holds voting interest in
the selected Portfolios. The number of votes that an Owner has the right to
instruct will be calculated separately for each Subaccount. The number of votes
that an Owner has the right to instruct for a particular Subaccount will be
determined by dividing the Owner's Policy Value in the Subaccount by the net
asset value per share of the corresponding Portfolio in which the Subaccount
invests. Fractional shares will be counted.

After the Annuity Commencement Date, the person receiving Annuity Payments
has the voting interest, and the number of votes decreases as Annuity Payments
are made and as the reserves for the Policy decrease. The person's number of
votes will be determined by dividing the reserve for the Policy allocated to the
applicable Subaccount by the net asset value per share of the corresponding
Portfolio. Fractional shares will be counted.

The number of votes that the Owner or person receiving income payments has
the right to instruct will be determined as of the date established by the
Underlying Funds for determining shareholders eligible to vote at the meeting of
the Underlying Funds. AUSA Life will solicit voting instructions by sending
Owners or other persons entitled to vote written requests for instructions prior
to that meeting in accordance with procedures established by the Underlying
Funds. Portfolio shares as to which no timely instructions are received and
shares held by AUSA Life in which Owners or other persons entitled to vote have
no beneficial interest will be voted in proportion to the voting instructions
that are received with respect to all Policies participating in the same
Subaccount.

57
<PAGE>

Each person having a voting interest in a Subaccount will receive proxy
material, reports, and other materials relating to the appropriate Portfolio.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Mutual Fund Account is a party
or to which the assets of the Account are subject. AUSA Life is not involved in
any litigation that is of material importance in relation to its total assets or
that relate to the Mutual Fund Account.

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information is available (at no cost) which
contains more details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:

58
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
The Policy-General Provisions.............................................
Owner................................................................
Entire Policy........................................................
Deferment of Payment and Transfers...................................
Misstatement of Age or Sex...........................................
Reallocation of Policy Values After the Annuity
Commencement Date..................................................
Assignment...........................................................
Evidence of Survival.................................................
Amendments...........................................................
Non-Participating....................................................
Federal Tax Matters.......................................................
Tax Status of the Policy.............................................
Taxation of AUSA Life................................................
Investment Experience.....................................................
State Regulation of AUSA Life.............................................
Administration............................................................
Records and Reports.......................................................
Distribution of the Policies..............................................
Custody of Assets.........................................................
Historical Performance Data...............................................
Money Market Yields..................................................
Other Subaccount Yields..............................................
Total Returns........................................................
Other Performance Data...............................................
Hypothetical Performance Data........................................
Legal Matters.............................................................
Independent Auditors......................................................
Other Information.........................................................
Financial Statements......................................................
</TABLE>

59
<PAGE>

APPENDIX A

EXCESS INTEREST ADJUSTMENT

The formula which will be used to determine the Excess Interest Adjustment (EIA)
is:

S*(G - C)* (M/12)

S = Gross amount being withdrawn that is subject to the EIA

G = Guaranteed Interest Rate applicable to S.

C = Current Guaranteed Interest Rate then being offered on new Premium Payments
for the next longer Guaranteed Period than "M". If this policy form or such a
Guaranteed period is no longer offered, "C" will be the U.S. Treasury rate for
the next longer maturity (in whole years) than "M" on the 25th day of the
previous calendar month, plus up to 2%.

M = Number of months remaining in the current Guaranteed Period, rounded up to
the next higher whole number of months.

EXAMPLE 1 (FULL SURRENDER, RATES INCREASE BY 3%):

Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3

Policy Value ("PV")
at middle of Contract Year 3 = 50,000 * (1.055) 2.5 = 57,161.18
Surrender Charge Free Amount at
middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle of
Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Amount Subject to EIA = 57,161.18 - 7,161.18 = 50,000.00
EIA Floor = 50,000 * (1.03) 2.5 = 53,834.80

Excess Interest Adjustment
G = .055
C = .085
M = 30

Excess Interest Adjustment = S* (G - C)* (M/12)
= 50,000.00* (.055 - .085) * (30/12)
= (3,750.00), but Excess Interest
Adjustment cannot cause the
Adjusted Policy Value to fall below
the floor, so the adjustment is
limited to 53,834.80 - 57,161.18 =
(3,326.38)

Adjusted Policy Value = PV + EIA = 57,161.18 + (3,326.38)
= 53,834.80

Surrender Charge = (50,000 - 17,148.35) * .06
= 1,971.10

A-1

60
<PAGE>

Cash Value at middle of
Policy Year 3 = PV + EIA - Surrender Charge
= 57,161.18 + (-3,326.38) - 1,971.10
= 51,863.70

EXAMPLE 2 (FULL SURRENDER, RATES DECREASE BY 1%):

Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3

Policy Value at middle
of Policy Year 3 = 50,000 * (1.055) 2.5 = 57,161.18
Surrender Charge Free Amount at
middle of Policy Year 3 = 57,161.18 * .30 = 17,148.35
EIA Free Amount at middle of
Policy Year 3 = 57,161.18 - 50,000 = 7,161.18
Amount Subject to EIA = 57,161.18 - 7,161.18 = 50,000.00
EIA Floor = 50,000 * (1.03) 2.5 = 53,834.80

Excess Interest Adjustment
G = .055
C = .045
M= 30

Excess Interest Adjustment = S * (G-C) * (M/12)
= 50,000 * (.055 - .045) * (30/12)
= 1,250.00

Adjusted Policy Value = PV + EIA
= 57,161.18 + 1,250.00
= 58,411.18

Surrender Charge = (50,000 - 17,148.35) * .06
= 1,971.10

Cash Value at middle of
Policy Year 3 = PV + EIA - Surrender Charge
= 57,161.18 + (1,250) - 1,971.10
= 56,440.08

On a partial withdrawal, AUSA Life will pay the Owner the full amount of
withdrawal requested (as long as the Policy Value is sufficient). Surrender
Charge - Free withdrawals will reduce the Policy Value by the amount withdrawn.
Amounts withdrawn in excess of the Surrender Charge - Free amount will reduce
the Policy Value by an amount equal to:

X-Y+Z

A-2

61
<PAGE>

X = Excess Partial Withdrawal = Requested withdrawal less Surrender Charge -
Free amount
A = Amount of Partial Withdrawal which is subject to Excess Interest Adjustment
= Requested withdrawal - EIA - Free Amount, where EIA - Free Amount
= Cumulative interest credited at time of, but prior to, withdrawal.
Y = Excess Interest Adjustment = (A)*(G-C)*(M/12) where G, C, and M are defined
above, with "A" substituted for "S" in the definition of G and M.
Z = Surrender Charge on X minus Y.

EXAMPLE 3 (PARTIAL WITHDRAWAL, RATES INCREASE BY 1%):

Single Premium: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Partial Surrender: $30,000; Middle of Contract Year 3

Excess Interest Adjustment/Surrender Charge
X = 30,000 - 17,148.35 = 12,851.65
A = 30,000 - 7,161.18 = 22,838.82
G = .055
C = .065
M = 30
Y = 22,838.82 * (.055 - .065) * (30/12) = -570.97
Z = .06 * [12,851.65 - (-570.97)] = 805.36

Reduction to Policy Value due to
Surrender Charge - Free withdrawal: = 17,148.35

Reduction to Policy Value due to
Excess Withdrawal = X - Y + Z
= 12,851.65 - (-570.97) + 805.36
= 14,227.98

Policy Value after withdrawal
at middle of Policy Year 3 = 57,161.18 - [17,148.35 + 14,227.98]
= 57,161.18 - [17,148.35 + 12,851.65
- (-570.97) + 805.36]
= 57,161.18 - [30,000 - (-570.97)
+ 805.36]
= 57,161.18 - 31,376.33
= 25,784.85

A-3

62
<PAGE>

EXAMPLE 4 (PARTIAL WITHDRAWAL, RATES DECREASE BY 1%):

Single Premium: $50,000
Guarantee Period: 5 Years
Guaranteed Rate: 5.50% per annum
Partial Surrender: $30,000; Middle of Contract Year 3

Excess Interest Adjustment/Surrender Charge
X = 30,000 - 17,148.35 = 12,851.65
A = 30,000 - 7,161.18 = 22,838.82
G = .055
C = .045
M = 30
Y = 22,838.82 * (.055 - .045) * (30/12) = 570.97
Z = .06 * [12,851.65 - ( 570.97)] = 736.84

Reduction to Policy Value due to
Surrender Charge - Free Withdrawal: = 17,148.35

Reduction to Policy Value due to
Excess Withdrawal: = X-Y+Z
= 12,851.65 - (570.97) + 736.84
= 13,017.52

Policy Value after withdrawal
at middle of Policy Year 3 = 57,161.18 - [17,148.35 + 13,017.52]
= 57,161.18 - [17,148.35 + 12,851.65
-(570.97) + 736.84]
= 57,161.18 - [30,000 - (570.97)
+ 736.84]
= 57,161.18 - 30,165.87
= 26,995.31

(1) * represents multiplication;
represents exponentiation.

A-4

63
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY
Issued through
AUSA RETIREMENT BUILDER VARIABLE
ANNUITY ACCOUNT

Offered by
AUSA LIFE INSURANCE COMPANY, INC.

Home Office:
4 Manhattanville Road
Purchase, New York 10577

Administrative Office:
666 Fifth Avenue
New York, NY 10103

Service Office:
Financial Markets Division
Variable Annuity Department
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001

This Statement of Additional Information expands upon subjects discussed in
the current Prospectus for the Retirement Income Builder Variable Annuity (the
"Policy") offered by AUSA Life Insurance Company, Inc. ("AUSA Life"). You may
obtain a copy of the Prospectus dated ____________ by calling 1-800-525-6205, or
by writing to the Service Office, Financial Markets Division-Variable Annuity
Dept., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. The Prospectus
sets forth information that a prospective investor should know before investing
in a Policy. Terms used in the current Prospectus for the Policy are
incorporated in this Statement of Additional Information.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY AND THE AUSA
RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT.

Dated:
<PAGE>

TABLE OF CONTENTS

Page
The Policy--General Provisions.......................................
Owner...............................................................
Entire Policy.......................................................
Deferment of Payment and Transfers..................................
Misstatement of Age or Sex..........................................
Reallocation of Policy Values After the
Annuity Commencement Date..........................................
Assignment..........................................................
Evidence of Survival................................................
Amendments..........................................................
Non-Participating...................................................
Federal Tax Matters...................................................
Tax Status of the Policy............................................
Taxation of AUSA Life...............................................
Investment Experience.................................................
State Regulation of AUSA Life.........................................
Administration........................................................
Records and Reports...................................................
Distribution of the Policies..........................................
Custody of Assets.....................................................
Historical Performance Data...........................................
Money Market Yields.................................................
Other Subaccount Yields.............................................
Total Returns.......................................................
Other Performance Data..............................................
Hypothetical Performance Data.......................................
Legal Matters.........................................................
Independent Auditors..................................................
Other Information.....................................................
Financial Statements..................................................

(Numbers in parenthesis indicate corresponding pages of the Prospectus).

2
<PAGE>

In order to supplement the description in the Prospectus, the
following provides additional information about AUSA Life and the Policy which
may be of interest to a prospective purchaser.

THE POLICY-GENERAL PROVISIONS

OWNER

The Policy shall belong to the Owner upon issuance of the Policy after
completion of an application and delivery of the initial Premium Payment. While
the Annuitant is living, the Owner may: (1) assign the Policy; (2) surrender the
Policy; (3) amend or modify the Policy with AUSA Life's consent; (4) receive
annuity payments or name a Payee to receive the payments; and (5) exercise,
receive and enjoy every other right and benefit contained in the Policy. The
exercise of these rights may be subject to the consent of any assignee or
irrevocable Beneficiary; and of the Owner' s spouse in a community or marital
property state.

A Successor Owner can be named in the Policy application or in a
Written Notice. The Successor Owner will become the new Owner upon the Owner's
death, if the Owner predeceases the Annuitant. If no Successor Owner survives
the Owner and the Owner predeceases the Annuitant, the Owner's estate will
become the Owner.

The Owner may change the ownership of the Policy in a Written Notice.
When this change takes effect, all rights of ownership in the Policy will pass
to the new Owner. A change of ownership may have tax consequences.

When there is a change of Owner or Successor Owner, the change will
take effect as of the date the Owner signs the Written Notice, subject to any
payment AUSA Life has made or action AUSA Life has taken before recording the
change. Changing the Owner or naming a new Successor Owner cancels any prior
choice of Successor Owner, but does not change the designation of the
Beneficiary or the Annuitant.

If ownership is transferred (except to the Owner's spouse) because the
Owner dies before the Annuitant, the Adjusted Policy Value generally must be
distributed to the Successor Owner within five years of the Owner's death, or if
the first payment begins within one year of the Owner's death, payments must be
made for a period certain which does not exceed that Successor Owner's life
expectancy.

ENTIRE POLICY

The Policy and any endorsements thereon and the Policy application
constitute the entire contract between AUSA Life and the Owner. All statements
in the application are representations and not warranties. No statement will
cause the Policy to be void or to be used in defense of a claim unless contained
in the application.

DEFERMENT OF PAYMENT AND TRANSFERS

Payment of any amount due from the Mutual Fund Account in respect of a
surrender, the Death Benefit or the death of the Owner of a Nonqualified Policy
generally will occur within seven business days from the date the Written Notice
(and any other required documentation or information) is received, except that
AUSA Life may be permitted to defer such payment from the Mutual Fund Account
if: (1) the New York Stock Exchange is closed for other than usual weekends or
holidays or trading on the Exchange is otherwise restricted; or (2) an emergency
exists as defined by the SEC or the

3
<PAGE>

SEC requires that trading be restricted; or(3) the SEC permits a delay for the
protection of Owners. In addition, transfers of amount the Subaccounts may be
deferred under these circumstances.

Certain delays and restrictions apply to transfers of amounts out of
---------
the Fixed Account. See p.___ of the Policy Prospectus.

MISSTATEMENT OF AGE OR SEX

If the age or sex of the Annuitant has been misstated, AUSA Life will
change the annuity benefit payable to that which the Premium Payments would have
purchased for the correct age or sex. The dollar amount of any underpayment
made by AUSA Life shall be paid in full with the next payment due such person or
the Beneficiary. The dollar amount of any overpayment made by AUSA Life due to
any misstatement shall be deducted from payments subsequently accruing to such
person or Beneficiary. Any underpayment or overpayment will include interest at
5% per year, from the date of the wrong payment to the date of the adjustment.
The age of the Annuitant may be established at any time by the submission of
proof satisfactory to AUSA Life.

REALLOCATION OF POLICY VALUES AFTER THE ANNUITY COMMENCEMENT DATE

After the Annuity Commencement Date, the Owner may reallocate the
value of a designated number of Annuity Units of a Subaccount of the Mutual Fund
Account then credited to a Policy into an equal value of Annuity Units of one or
more other Subaccounts of the Mutual Fund Account, or the Fixed Account. The
reallocation shall be based on the relative value of the Annuity Units of the
Account(s) or Subaccount(s) at the end of the Business Day on the next payment
date. The minimum amount which may be reallocated is the lesser of (1) $10 of
monthly income or (2) the entire monthly income of the Annuity Units in the
Account or Subaccount from which the transfer is being made. If the monthly
income of the Annuity Units remaining in an Account or Subaccount after a
reallocation is less than $10, AUSA Life reserves the right to include the value
of those Annuity Units as part of the transfer. The request must be in writing
to AUSA Life's Service Office. There is no charge assessed in connection with
such reallocation. AUSA Life reserves the right to limit the number of times a
reallocation of Policy Value may be made in any given Policy Year.

After the Annuity Commencement Date, no transfers may be made from the
Fixed Account to the Mutual Fund Account.

ASSIGNMENT

During the lifetime of the Annuitant the Owner may assign any rights
or benefits provided by a Nonqualified Policy. An assignment will not be binding
on AUSA Life until a copy has been filed at its Service Office. The rights and
benefits of the Owner and Beneficiary are subject to the rights of the assignee.
AUSA Life assumes no responsibility for the validity or effect of any
assignment. Any claim made under an assignment shall be subject to proof of
interest and the extent of the assignment. An assignment may have tax
consequences.

Unless the Owner so directs by filing Written Notice with AUSA Life's
Service Office, no Beneficiary may assign any payments under the Policy before
they are due. To the extent permitted by law, no payments will be subject to
the claims of any Beneficiary's creditors.

Ownership under Qualified Policies is restricted to comply with the
Internal Revenue Code.

4
<PAGE>

EVIDENCE OF SURVIVAL

AUSA Life reserves the right to require satisfactory evidence that a
person is alive if a payment is based on that person being alive. No payment
will be made until AUSA Life receives such evidence.

AMENDMENTS

No change in the Policy is valid unless made in writing by AUSA Life
and approved by one of AUSA Life' s officers. No Registered Representative has
authority to change or waive any provision of the Policy.

AUSA Life reserves the right to amend the Policies to meet the
requirements of the Code, regulations or published rulings. An Owner can refuse
such a change by giving Written Notice, but a refusal may result in adverse tax
consequences.

NON-PARTICIPATING

The Policy will not share in AUSA Life's surplus earnings; no dividends
will be paid.

FEDERAL TAX MATTERS

TAX STATUS OF THE POLICY

Diversification Requirements. Section 817(h) of the Code provides that
in order for a variable contract which is based on a segregated asset account to
qualify as an annuity contract under the Code, the investments made by such
account must be "adequately diversified" in accordance with Treasury
regulations. The Treasury regulations issued under Section 817(h) (Treas. Reg.
(S) 1.817-5) apply a diversification requirement to each of the Subaccounts of
the Mutual Fund Account. The Mutual Fund Account, through the Underlying Funds
and their Portfolios, intends to comply with the diversification requirements of
the Treasury. AUSA Life has entered into agreements regarding participation in
the Retirement Income Builder that require the Underlying Funds and their
Portfolios to be operated in compliance with the Treasury regulations.

Owner Control. In connection with the issuance of temporary
regulations on diversification requirements, the Treasury also announced that
such regulations do not provide guidance concerning the extent to which Owners
may direct their investments to the Subaccounts of the Mutual Fund Account. It
is not clear whether additional guidance in this regard will be provided nor
whether, if provided, it will be prospective only. It is possible that any such
guidance could treat an Owner as the owner of the assets of the Mutual Fund
Account if a Subaccount is too narrow in its investment strategy (e.g., a fund
that invests only in gold or stock of gold mining companies) or if Owners have
too many Subaccount options to select, even though it technically meets the
diversification requirements. It is possible that if any guidance is provided
then the Mutual Fund Account may not be in compliance. AUSA Life can provide no
assurances that any such guidance will not adversely affect the tax treatment of
existing Policies. For these reasons, AUSA Life reserves the right to modify the
Policy as necessary to prevent the Owner from being considered the owner of the
assets of the Mutual Fund Account or otherwise to qualify the Policy for
favorable tax treatment.

Distribution Requirements. The Code also requires that Nonqualified
Policies contain specific provisions for distribution of Policy proceeds upon
the death of the Owner. In order to be treated as an annuity contract for
federal income tax purposes, the Code requires that such Policies provide that
if any Owner dies on or after the Annuity Commencement Date and before the
entire interest in the Policy has been distributed, the remaining portion must
be distributed at least as rapidly as under the method in

5
<PAGE>

effect on such Owners death. If any Owner dies before the Annuity Commencement
Date, the entire interest in the Policy must generally be distributed within 5
years after such Owner's date of death or be used to purchase an immediate
annuity under which payments will begin within one year of such Owner's death
and will be made for the life of the Beneficiary or for a period not extending
beyond the life expectancy of the Beneficiary. However, if such Owner's death
occurs prior to the Annuity Commencement Death, and such Owner's surviving
spouse is named beneficiary , then the Policy may be continued with the
surviving spouse as the new Owner. If any Owner is not a natural person, then
for purposes of these distribution requirements, the primary Annuitant shall be
treated as the Owner and any death or change of such primary Annuitant shall be
treated as the Death of the Owner. The Policy contains provisions intended to
comply with these requirements of the Code. No regulations interpreting these
requirements of the Code have yet been issued and thus no assurance can be given
that the provisions contained in the Policies satisfy all such Code
requirements. The provisions contained in the Policies will be reviewed and
modified if necessary to assure that they comply with the Code requirements when
clarified by regulation or otherwise.

TAXATION OF AUSA LIFE

AUSA Life at present is taxed as a life insurance company under part I
of Subchapter L of the Code. The Mutual Fund Account is treated as part of AUSA
Life and, accordingly, will not be taxed separately as a "regulated investment
company" under Subchapter M of the Code. AUSA Life does not expect to incur any
federal income tax liability with respect to investment income and net capital
gains arising from the activities of the Mutual Fund Account retained as part of
the reserves under the Policy. Based on this expectation, it is anticipated that
no charges will be made against the Mutual Fund Account for federal income
taxes. If, in future years, any federal income taxes are incurred by AUSA Life
with respect to the Mutual Fund Account, AUSA Life may make a charge to the
Mutual Fund Account.

INVESTMENT EXPERIENCE

A "Net Investment Factor" is used to determine the value of
Accumulation Units and Annuity Units, and to determine annuity payment rates.

ACCUMULATION UNITS

Upon allocation to the selected Subaccount of the Mutual Fund Account,
Premium Payments are converted into Accumulation Units of the Subaccount. The
number of Accumulation Units to be credited is determined by dividing the dollar
amount allocated to each Subaccount by the value of an Accumulation Unit for
that Subaccount as next determined after the Premium Payment is received at the
Administrative and Service Office or, in the case of the initial Premium
Payment, when the Policy application is completed, whichever is later. The
value of an Accumulation Unit was arbitrarily established at $1.000000 at the
inception of each Subaccount. Thereafter, the value of an Accumulation Unit is
determined as of the close of trading on each day the New York Stock Exchange
and AUSA Life's Service Office are open for business.

An index (the "Net Investment Factor") which measures the investment
performance of a Subaccount during a Valuation Period, is used to determine the
value of an Accumulation Unit for the next subsequent Valuation Period. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of an Accumulation Unit may increase, decrease or remain the same from one
Valuation Period to the next. The Owner bears this investment risk. The net
investment performance of a Subaccount and deduction of certain charges affect
the Accumulation Unit Value.

6
<PAGE>

The Net Investment Factor for any Subaccount for any Valuation Period
is determined by dividing (a) by (b) and subtracting (c) from the result, where:

(a) is the net result of:

(1) the net asset value per share of the shares held in the
Subaccount determined at the end of the current Valuation Period,
plus

(2) the per share amount of any dividend or capital gain
distribution made with respect to the shares held in the
Subaccount if the ex-dividend date occurs during the current
Valuation Period, plus or minus (3) a per share charge or credit
for any taxes determined by AUSA Life to have resulted from the
investment operations of the Subaccount;

(b) the net asset value per share of the shares held in the Subaccount
determined as of the end of the immediately preceding Valuation
Period; and

(c) is the charge for mortality and expense risk during the Valuation
Period (equal on an annual basis to 1.10% for Death Benefit Option A
and 1.25% for Death Benefit Option B) of the daily net asset value of
the Subaccount, plus the .15% administrative charge for both Death
Benefit Options.

ILLUSTRATION OF ACCUMULATION UNIT VALUE CALCULATIONS

FORMULA AND ILLUSTRATION FOR DETERMINING
THE NET INVESTMENT FACTOR

ASSUME DEATH BENEFIT OPTION A IS IN EFFECT.

Investment Experience Factor = A + B - C - F
---------
D - E

Where: A = The Net Asset Value of an Underlying Fund share as of the end of
the current Valuation Period.
Assume........................A = $11.57

B = The per share amount of any dividend or capital gains
distribution since the end of the immediately preceding Valuation
Period. Assume............................B = 0

C = The per share charge or credit for any taxes reserved for at the
end of the current Valuation Period.
Assume............................C = 0

D = The Net Asset Value of an Underlying Fund share at the end of the
immediately preceding Valuation Period.
Assume............................D = $11.40

E = The per share amount of any taxes reserved for at the end of the
immediately preceding Valuation Period.
Assume............................E = 0

7
<PAGE>

F = The daily deduction for Mortality and Expense Risk Fee and
Administrative Charges, which totals 1.25% on an annual basis.
On a daily basis.............= .000034035

Then, the Investment Experience Factor = 11.57 - 0 - 0 - .000034035 = Z =
-------------
1.014878246 11.40 - 0

FORMULA AND ILLUSTRATION FOR DETERMINING ACCUMULATION UNIT VALUE

Accumulation Unit Value = A x B

Where: A = The Accumulation Unit Value for the immediately preceding
Valuation Period.
Assume.........................= $ X

B = The Net Investment Factor for the current Valuation Period.
Assume.........................= Y

Then, the Accumulation Unit Value = $ X x Y = $ Z

ANNUITY UNIT VALUE AND ANNUITY PAYMENT RATES

The amount of Variable Annuity Payments will vary with Annuity Unit
Values. Annuity Unit Values rise if the net investment performance of the
Subaccount exceeds the assumed interest rate of 5% annually. Conversely, Annuity
Unit Values fall if the net investment performance of the Subaccount is less
than the assumed rate. The value of a variable Annuity Unit in each Subaccount
was established at $1.00 on the date operations began for that Subaccount. The
value of a variable Annuity Unit on any subsequent Business Day is equal to (a)
multiplied by (b) multiplied by (c), where:

(a) is the variable Annuity Unit Value for that Subaccount on the
immediately preceding Business Day;
(b) is the net investment factor for that Subaccount for the valuation
period; and
(c) is the investment result adjustment factor for the valuation period.

The investment result adjustment factor for the valuation period is
the product of discount factors of .99986634 per day to recognize the 5%
effective annual Assumed Investment Return. The valuation period is the period
from the close of the immediately preceding Business Day to the close of the
current Business Day.

The net investment factor for the Policy used to calculate the value
of a variable Annuity Unit in each Subaccount for the valuation period is
determined by dividing (i) by (ii) and subtracting (iii) from the result, where:

(i) is the result of:

(1) the net asset value of a fund share held in that Subaccount
determined at the end of the current valuation period; plus

(2) the per share amount of any dividend or capital gain
distributions made by the fund for shares held in that Subaccount if
the ex-dividend date occurs during the valuation period; plus or minus

(3) a per share charge or credit for any taxes reserved for, which
AUSA Life determines to have resulted from the investment operations
of the Subaccount.

8
<PAGE>

(ii) is the net asset value of a fund share held in that Subaccount
determined as of the end of the immediately preceding valuation
period.

(iii) is a factor representing the Mortality and Expense Risk Fee and
Administrative Charge. This factor is equal, on an annual basis, to
1.25% (for Death Benefit Option A) or 1.40% (for Death Benefit Option
B) of the daily net asset value of a fund share held in that
Subaccount.

The dollar amount of subsequent Variable Annuity Payments will depend
upon changes in applicable Annuity Unit Values.

The annuity payment rates vary according to the Annuity Option elected
and the sex and adjusted age of the Annuitant at the Annuity Commencement Date.
The Policy also contains a table for determining the adjusted age of the
Annuitant.

ILLUSTRATION OF CALCULATIONS FOR ANNUITY UNIT VALUE
AND VARIABLE ANNUITY PAYMENTS

FORMULA AND ILLUSTRATION FOR DETERMINING ANNUITY UNIT VALUE

Annuity Unit Value = A x B x C

Where: A = Annuity Unit Value for the immediately preceding Valuation
Period.
Assume.....................= $ X

B = Investment Experience Factor for the Valuation Period for which
the Annuity Unit Value is being calculated.
Assume.....................= Y

C = A factor to neutralize the assumed interest rate of 5% built into
the Annuity Tables used.
Assume.....................= Z

Then, the Annuity Unit Value is:
$ X x Y x Z = $ Q

FORMULA AND ILLUSTRATION FOR DETERMINING AMOUNT OF FIRST MONTHLY
VARIABLE ANNUITY PAYMENT

First Monthly Variable Annuity Payment = A x B
------
$1,000

Where: A = The Policy Value as of the Annuity Commencement Date.
Assume........................= $ X

B = The Annuity purchase rate per $1,000 based upon the option
selected, the sex and adjusted age of the Annuitant according to
the tables contained in the Policy.
Assume........................= $ Y

Then, the first Monthly Variable Annuity Payment
= $ X x $ Y = $ Z
------
1,000

9
<PAGE>

FORMULA AND ILLUSTRATION FOR DETERMINING THE NUMBER OF ANNUITY
UNITS REPRESENTED BY EACH MONTHLY VARIABLE ANNUITY PAYMENT

Number of Annuity Units = A
-
B

Where: A = The dollar amount of the first monthly Variable Annuity Payment.
Assume.............................= $ X

B = The Annuity Unit Value for the Valuation Date on which the first
monthly payment is due.
Assume.............................= $ Y

Then, the number of Annuity Units = $ X = Z
---
$ Y

STATE REGULATION OF AUSA LIFE

AUSA Life is subject to the laws of New York governing insurance
companies and to regulation by the New York Department of Insurance. An annual
statement in a prescribed form is filed with the Department of Insurance each
year covering the operation of AUSA Life for the preceding year and its
financial condition as of the end of such year. Regulation by the Department of
Insurance includes periodic examination to determine AUSA Life's contract
liabilities and reserves so that the Department may determine the items are
correct. AUSA Life's books and accounts are subject to review by the Department
of Insurance at all times and a full examination of its operations is conducted
periodically by the National Association of Insurance Commissioners. In
addition, AUSA Life is subject to regulation under the insurance laws of other
jurisdictions in which it may operate.

ADMINISTRATION

AUSA Life performs administrative services for the Policies. These
services include issuance of the Policies, maintenance of records concerning the
Policies, and certain valuation services.

RECORDS AND REPORTS

All records and accounts relating to the Mutual Fund Account will be
maintained by AUSA Life. As presently required by the Investment Company Act of
1940 and regulations promulgated thereunder, AUSA Life will mail to all Policy
Owners at their last known address of record, at least annually, reports
containing such information as may be required under that Act or by any other
applicable law or regulation. Policy Owners will also receive confirmation of
each financial transaction and any other reports required by law or regulation.

DISTRIBUTION OF THE POLICIES

The Policies are offered to the public through brokers licensed under
the federal securities laws and state insurance laws. The offering of the
Policies is continuous and AUSA Life does not anticipate discontinuing the
offering of the Policies. However, AUSA Life reserves the right to discontinue
the offering of the Policies.

10
<PAGE>

AEGON USA Securities, Inc., an affiliate of AUSA Life, will be the
principal underwriter of the Policies. AEGON USA Securities, Inc. may enter
into agreements with broker-dealers for the distribution of the Policies.

CUSTODY OF ASSETS

The assets of each of the Subaccounts of the Mutual Fund Account are held
by AUSA Life. The assets of each of the Subaccounts of the Mutual Fund Account
are segregated and held separate and apart from the assets of the other
Subaccounts and from AUSA Life's general account assets. AUSA Life maintains
records of all purchases and redemptions of shares of the Underlying Funds held
by each of the Subaccounts. Additional protection for the assets of the Mutual
Fund Account is afforded by AUSA Life's fidelity bond, presently in the amount
of $5,000,000, covering the acts of officers and employees of AUSA Life.

HISTORICAL PERFORMANCE DATA

MONEY MARKET YIELDS

AUSA Life may from time to time disclose the current annualized yield
of the Money Market Subaccount for a 7-day period in a manner which does not
take into consideration any realized or unrealized gains or losses on shares of
the portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) at the end of the 7-
day period in the value of a hypothetical account having a balance of 1 unit at
the beginning of the 7-day period, dividing such net change in 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 account value reflects (i) net income from the Portfolio attributable to the
hypothetical account; and (ii) charges and deductions imposed under a Policy
that are attributable to the hypothetical account. The charges and deductions
include the per unit charges for the hypothetical account for (i) the
Administrative Charges; and (ii) the Mortality and Expense Risk Fee. Current
Yield will be calculated according to the following formula:

Current Yield = ((NCS-ES)/UV)x(365/7)

Where:

NCS = The net change in the value of the Portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation
and depreciation) for the 7-day period attributable to a hypothetical
account having a balance of 1 Subaccount unit.

ES = Per unit expenses of the Subaccount for the 7-day period.

UV = The unit value on the first day of the 7-day period.

Because of the charges and deductions imposed under a Policy, the
yield for the Money Market Subaccount will be lower than the yield for the Money
Market Portfolio. The yield calculations do not reflect the effect of any
premium taxes or Surrender Charges that may be applicable to a particular
Policy. Surrender Charges range from 6% to 0% of the amount of Premium Payments
withdrawn based on the number of years since the Premium Payment was made.
However, Surrender Charges will not be assessed after the tenth Policy Year.

11
<PAGE>

AUSA Life may also disclose the effective yield of the Money Market
Subaccount for the same 7-day period, determined on a compounded basis. The
effective yield is calculated by compounding the base period return according to
the following formula:

Effective Yield = (1 +((NCS - ES)/ UV)/365/7/-1

Where:

NCS = The net change in the value of the account (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation
and depreciation) for the 7-day period attributable to a hypothetical
account having a balance of 1 Subaccount unit.

ES = Per unit expenses of the Subaccount for the 7-day period.

LTV = The unit value on the first day of the 7-day period.

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

OTHER SUBACCOUNT YIELDS

AUSA Life may from time to time advertise or disclose the current
annualized yield of one or more of the Subaccounts of the Mutual Fund Account
(except the Money Market Subaccount) for 30-day periods. The annualized yield
of a Subaccount refers to income generated by the Subaccount over a specific 30-
day period. Because the yield is annualized, the yield generated by a
Subaccount during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is computed by: (i) dividing the net
investment income of the Subaccount less Subaccount expenses for the period, by
(ii) the maximum offering price per unit on the last day of the period times the
daily average number of units outstanding for the period, compounding that yield
for a 6-month period, and (iv) multiplying that result by 2. Expenses
attributable to the Subaccount include (i) the Administrative Charge and (ii)
the Mortality and Expense Risk Fee. The 30-day yield is calculated according to
the following formula:

Yield=2x((((NI-ES)/(U x UV))+1)/6/-1)

Where:

NI = Net investment income of the Subaccount for the 30-day period
attributable to the Subaccount's unit.

ES = Expenses of the Subaccount for the 30-day period.

U = The average number of units outstanding.

UV = The unit value at the close (highest) of the last day in the 30-day
period.

Because of the charges and deductions imposed by the Mutual Fund
Account, the yield for a Subaccount of the Mutual Fund 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 Charges that may be
applicable to a particular Policy. Surrender Charges range from 6% to 0% of the
amount of Premium

12
<PAGE>

Payments withdrawn based on the number of years since the Premium
Payment was made. However, Surrender Charges will not be assessed after the
tenth Policy Year.

The yield on amounts held in the Subaccounts of the Mutual Fund
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 Subaccount's actual yield is affected by the types and
quality of its investments and its operating expenses.

TOTAL RETURNS

AUSA Life may from time to time also advertise or disclose total
returns for one or more of the Subaccounts of the Mutual Fund Account for
various periods of time. One of the periods of time will include the period
measured from the date the Subaccount commenced operations. When a Subaccount
has been in operation for 1, 5 and 10 years, respectively, the total return for
these periods will be provided. Total returns for other periods of time may from
time to time also be disclosed. Total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000 to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month end practicable, considering the type
and media of the communication and will be stated in the communication.

Total returns will be calculated using Subaccount Unit Values which
AUSA Life calculates on each Business Day based on the performance of the
Subaccount's underlying Portfolio, and the deductions for the Mortality and
Expense Risk Fee and the Administrative Charges. Total return calculations will
reflect the effect of Surrender Charges that may be applicable to a particular
period. The total return will then be calculated according to the following
formula:

P(1 + T)/n/=ERV

Where: T = The average annual total return net of Subaccount recurring
charges.

ERV= The ending redeemable value of the hypothetical account at the
end of the period.

P= A hypothetical initial payment of $1,000.

N = The number of years in the period.

OTHER PERFORMANCE DATA

AUSA Life may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard format
described above. The non-standard format will be identical to the standard
format except that the Surrender Charge percentage will be assumed to be 0%.

AUSA Life may from time to time also disclose cumulative total returns
in conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the Surrender
Charge percentage will be 0%.

CTR=(ERV/P)-1

Where:
CTR = The cumulative total return net of Subaccount recurring
charges for the period.

ERV = The ending redeemable value of the hypothetical investment at
the end of the period.

13
<PAGE>

P = A hypothetical initial payment of $1,000.

All non-standard performance data will only be advertised if the
standard performance data for the same period, as well as for the required
period, is also disclosed.

HYPOTHETICAL PERFORMANCE DATA

From time to time, sales literature or advertisements may quote
average annual total returns for periods prior to the date the Mutual Fund
Account commenced operations. Such performance information for the Subaccounts
will be calculated based on the performance of the various Portfolios and the
assumption that the Subaccounts were in existence for the same periods as those
indicated for the Portfolios, with the level of Policy charges that were in
effect at the inception of the Subaccounts.

LEGAL MATTERS

Legal advice relating to certain matters under the federal securities
laws applicable to the issue and sale of the Policies has been provided to AUSA
Life by Sutherland, Asbill & Brennan, of Washington D.C.

INDEPENDENT AUDITORS

The Financial Statements of AUSA Life as of December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
included in this Statement of Additional Information have been audited by Ernst
& Young LLP, Independent Auditors, Des Moines, Iowa.

OTHER 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 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 the Prospectus or this Statement of
Additional Information. Statements contained in the Prospectus and 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 Securities and Exchange Commission.

FINANCIAL STATEMENTS

The values of the interest of Owners in the Mutual Fund Account will
be affected solely by the investment results of the selected Subaccount(s). The
Financial Statements of AUSA Life, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
AUSA Life to meet its obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Mutual Fund Account.

<PAGE>

SIGNATURES

As required by State the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Cedar Rapids and of Iowa, on this 27th day of
August, 1996.

AUSA RETIREMENT BUILDER
VARIABLE ANNUITY ACCOUNT

AUSA LIFE INSURANCE
COMPANY, INC.
Depositor

/s/ Tom A. Schlossberg
_________________________________
Tom A. Schlossberg
President

As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.

Signatures Title Date
- ---------- ----- ----

/s/ William Brown, Jr.
- ------------------------- Director August 27, 1996
William Brown, Jr.

/s/ Larry G. Brown
- ------------------------- Director August 27, 1996
Larry G. Brown

/s/ William L. Buster
- ------------------------- Director August 27, 1996
William L. Busler

/s/ Jack R. Dykhouse
- ------------------------- Director August 27, 1996
Jack R. Dykhouse

/s/ Steven E. Frushtick
- ------------------------- Director August 27, 1996
Steven E. Frushtick

/s/ Carl T. Hanson
- ------------------------- Director August 27, 1996
Carl T. Hanson

/s/ B. Larry Jenkins
- ------------------------- Director August 27, 1996
B. Larry Jenkins

/s/ Colette Vargas
- ------------------------- Director August 27, 1996
Colette Vargas
<PAGE>

/s/ Vera F. Mihaic-Rosic
- ------------------------- Director August 27, 1996
Vera F. Mihaic-Rosic

/s/ Peter P. Post
- ------------------------- Director August 27, 1996
Peter P. Post

/s/ Tom A. Schlossberg
- ------------------------- Director August 27, 1996
Tom A. Schlossberg (Principal Executive Officer)

/s/ Cor H. Verhagen
- ------------------------- Director August 27, 1996
Cor H. Verhagen

/s/ E. Kirby Warren
- ------------------------- Director August 27, 1996
E. Kirby Warren

/s/ Robert J. Kontz
- ------------------------- Controller August 27, 1996
Robert J. Kontz

/s/ Brenda Clancy
- ------------------------- Treasurer August 27, 1996
Brenda Clancy
<PAGE>

PART C OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

All required financial statements are included in Part B of this
Registration Statement. Note 2

(b) Exhibits:

(1) (a) Resolution of the Board of Directors of AUSA Life Insurance
Company, Inc. authorizing establishment of the Mutual Fund
Account. Note 1.

(2) Not Applicable.

(3) (a) Form of Principal Distribution Agreement by and between AUSA
Life Insurance Company, Inc. on its own behalf and on the
behalf of the Mutual Fund Account, and AEGON USA Securities,
Inc. Note 1.

(b) Form of Broker/Dealer Supervision and Sales Agreement by and
between AEGON USA Securities, Inc. and the Broker/Dealer.
Note 1.

(4) Form of Policy for the Retirement Income Builder Variable
Annuity. Note 1

(5) Form of Application for the Retirement Income Builder
Variable Annuity. Note 1

(6) (a) Articles of Incorporation of AUSA Life Insurance Company,
Inc. Note 1.

(b) ByLaws of AUSA Life Insurance Company, Inc. Note 1.

(7) Not Applicable.

(8) Participation Agreement by and between AUSA Life Insurance
Company, Inc. and Fidelity Distributors Corporation and
Addendum thereto. Note 2
<PAGE>

(9) (a) Opinion and Consent of Counsel. Note 2

(b) Consent of Counsel. Note 2

(10) Consent of Independent Auditors. Note 2

(11) Not applicable.

(12) Not applicable.

(13) Performance Data Calculations. Note 2

(14) Powers of Attorney. Note 1. (William Brown, Jr., Larry G.
Brown, William L. Busler, Jack R. Dykhouse, Steven E.
Frushtick, Carl T. Hanson, B. Larry Jenkins, Colette Vargas,
Vera F. Mihaic-Rosic, Peter P. Post, Tom A. Schlossberg, Cor
H. Verhagen, E. Kirby Warren, Robert J. Kontz, Brenda
Clancy)

________________________

Note 1. Filed herewith.

Note 2. To be filed by amendment.
<PAGE>

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Principal Positions
Name and and Offices with
Business Address Depositor
- ---------------- ---------

Larry G. Brown Director and Chairman of the Board
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001

Tom A. Schlossberg Director and President
4 Manhattanville Road
Purchase, New York 10577

Craig D. Vermie Secretary
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001

Patrick S. Baird Vice President and
4333 Edgewood Road N.E. Chief Financial Officer
Cedar Rapids, Iowa 52499-0001

Colette Vargas Director and
4 Manhattanville Road Chief Actuary
Purchase, New York 10577

Robert J. Kontz Controller
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001

Brenda Clancy Treasurer
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001

William Brown, Jr. Director
Three West Main Street
Elmsford, New York 10523-2414

William L. Busler Director
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
<PAGE>

Jack R. Dykhouse Director
2705 Brown Trail, Suite 302
Bedford, TX 76021

Steven E. Frushtick Director
500 Fifth Avenue
New York, NY 10110

Carl T. Hanson Director
900 Birdseye Road, PO Box 112
Orient, NY 11957-0112

B. Larry Jenkins Director
2 East Chase Street
Baltimore, MD 21202

Vera F. Mihaic-Rosic Director
666 Fifth Avenue
New York, NY 10103-0001

Peter P. Post Director
415 Madison Avenue
New York, NY 10017-1163

Cor H. Verhagen Director
51 JFK Parkway
Short Hills, NJ 07078

E. Kirby Warren Director
116th Street & Broadway
New York, NY 10027

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

AEGON USA, Inc. - Holding Company

Life Investors Insurance Company of America - Insurance

PFL Life Insurance Company - Insurance

Transunion Casualty Company - Insurance

Investors Warranty of America, Inc. - Provider of automobile extended
maintenance contracts
<PAGE>

Supplemental Insurance Division, Inc. - Insurance

Creditor Resources, Inc. - Credit Insurance

AEGON USA Investment Management, Inc. - Investment Advisor

AEGON USA Realty Advisors, Inc. - Provides real estate administrative and real
estate investment services

AEGON USA Realty Management, Inc. - Real Estate Management

AEGON USA Securities, Inc. - Broker-Dealer

AEGON USA Managed Portfolios, Inc. - Mutual Fund

USP Real Estate Investment Trust - Real Estate Investment Trust

Cedar Income Fund, Ltd. - Real Estate Investment Trust

First AUSA Life Insurance Company - Insurance

Bankers United Life Assurance Company - Insurance

Universal Benefits Corporation - Third party administrator

Massachusetts Fidelity Trust Company - Trust company

Money Services, Inc. - Provides financial counseling for employees and agents of
affiliated companies

Zahorik Company, Inc. - Broker-Dealer

Cadet Holding Corp. - Holding company

ISI Insurance Agency, Inc. - Broker/Dealer

Southwest Equity Life Insurance Company - Insurance

Iowa Fidelity Life Insurance Company - Insurance

The Whitestone Corporation - Insurance agency

Monumental Life Insurance Company - Insurance

United Financial Services, Inc. - General agency

Monumental General Insurance Group, Inc. - Holding company

Monumental General Administrators, Inc. - Provides management services to
unaffiliated third party administrator

Executive Management and Consultant Services, Inc. - Provides actuarial
consulting services
<PAGE>

Monumental General Mass Marketing, Inc. - Marketing arm for sale of mass
marketed insurance coverages

Bankers Financial Life Insurance Company - Insurance

Monumental General Casualty Company - Insurance

AUSA Holding Company - Holding company

JLW Financial Management Systems, Inc. - Management and Administrative Services

ZCI, Inc. - Insurance agency

AUSA Financial Markets, Inc. - Marketing

CRC Creditor Resources Canadian Dealer Network Inc. - Insurance agency

American Forum For Fiscal Fitness, Inc. - Marketing

Western Reserve Life Assurance Co. of Ohio - Insurance

Landauer Realty Advisors, Inc. - Real estate counseling

Landauer Associates, Inc. - Real estate counseling

WRL Series Fund, Inc. - Mutual fund

Intersecurities, Inc. - Broker-dealer

Idex Investor Services, Inc. - Shareholder services

Idex Management, Inc. - Investment advisor

Idex Total Income Trust - Mutual fund

Idex Fund - Mutual fund

Idex II Series Fund - Mutual fund

Idex Fund 3 - Mutual fund

AUSA Life Insurance Company, Inc. - Insurance

Diversified Investment Advisors, Inc. - Registered Investment Advisor

Diversified Investors Securities Corp. - Broker-Dealer

International Life Investors Insurance Company - Insurance

Associated Mariner Financial Group, Inc. - Holding company management
services

Mariner Financial Services, Inc. - Broker/Dealer
<PAGE>

Mariner/ISI Planning Corporation - Financial planning

Associated Mariner Agency, Inc. - Insurance agency

Mariner Mortgage Corp. - Mortgage origination

AUSA Institutional Marketing Group, Inc. - Insurance agency

Colorado Annuity Agency, Inc. - Insurance agency

Realty Information Systems, Inc. - Information Systems for real estate
investment management

Melson and Associates, Inc. - Real estate financial management consulting

ITEM 27. NUMBER OF POLICYOWNERS

As of June 1, 1996, there were 0 Owners of the Policies.

ITEM 28. INDEMNIFICATION

The New York Code (Sections 721 et. seq.) provides for permissive
--------
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code also
specifies procedures for determining when indemnification payments can be made.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Depositor of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Depositor 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.
<PAGE>

ITEM 29. PRINCIPAL UNDERWRITERS

AEGON USA Securities, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001

The directors and officers of
AEGON USA Securities, Inc.
are as follows:

Patrick E. Falconio Charles G. Bennett
Director Vice President

William L. Busler Thomas K. Walsh
Director Vice President

Brenda K. Clancy Donna M. Craft
Director Vice President

Robert A. Thelen Frank A. Camp
Senior Vice President Secretary

Lorri E. Mehaffey
President and Treasurer

Billy J. Berger
Vice President and Assistant Treasurer

_____________________
The principal business address of each person listed is AEGON USA Securities,
Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001.

Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------

AEGON USA Securities, Inc. and/or the broker-dealers received $0 from the
Registrant during the last fiscal year for its services in distributing the
Policies. No other commission or compensation was received by the principal
underwriter, directly or indirectly, from the Registrant during the fiscal year.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
AUSA Life Insurance Company, Inc. at 666 Fifth Avenue, New York, New York 10103,
or its Service Office, Financial Markets Division - Variable Annuity Department,
4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001.

ITEM 31. MANAGEMENT SERVICES.

All management Contracts are discussed in Part A or Part B.
<PAGE>

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 Premiums under the Policy may be
accepted.

(b) Registrant undertakes that it will include either (i) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information or
(ii) a space in the Policy application that an applicant can check to
request 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 AUSA Life at the address or phone
number listed in the Prospectus.

SECTION 403(B) REPRESENTATIONS
- ------------------------------

AUSA Life 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.
<PAGE>

REGISTRATION NO.
333-

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

EXHIBITS

FORM N-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FOR

AUSA RETIREMENT BUILDER VARIABLE ANNUITY ACCOUNT

_______________
<PAGE>

EXHIBIT INDEX
-------------

<TABLE>
<CAPTION> *
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
- ----------- ---------------------- --------
<S> <C> <C>
(1)(a) Resolution of Board of Directors of AUSA Life
Insurance Company, Inc. authorizing establishment the
of the Mutual Fund Account.

(3)(a) Form of Principal Distribution Agreement by and between
AUSA Life Insurance Company, Inc. on its own behalf
on the behalf of the Mutual Fund Account, and
AEGON USA Securities, Inc.

(3)(b) Form of Broker/Dealer Supervision and Sales Agreement
by and between AEGON USA Securities, Inc. and the
Broker/Dealer

(4) Form of Policy for the Retirement Income Builder
Variable Annuity.

(5) Form of Application for the Retirement Income Builder
Variable Annuity.

(6)(a) Articles of Incorporation of AUSA Life Insurance
Company, Inc.

(6)(b) Bylaws of AUSA Life Insurance Company, Inc.

(14) Powers of Attorney
</TABLE>

_______________________________
/*/ Page numbers include only in manually executed original.

<PAGE>

EXHIBIT (1)(A)
--------------

RESOLUTION OF THE BOARD OF DIRECTORS
OF AUSA LIFE INSURANCE COMPANY, INC. AUTHORIZING
ESTABLISHMENT OF THE MUTUAL FUND ACCOUNT.
<PAGE>

CERTIFICATION
-------------

I, Craig D. Vermie, being the duly constituted Secretary of AUSA Life Insurance
Company, Inc., a New York corporation, hereby certify that the following is a
true and correct copy of a resolution adopted by the Board of Directors of said
corporation at a meeting held on August 13, 1996, and that said resolution is
still in full force and effect:

RESOLVED, that the officers of the Company be and they hereby are
authorized to establish the "Retirement Builder Variable Annuity
Account," a separate account for the purpose of selling approved
variable insurance contracts;

BE IT FURTHER RESOLVED, that the officers of this company be and
they hereby are authorized and instructed to take any and all
actions necessary in order to carry out the powers hereby
conferred, including but not limited to, the filing of any
statement and amendments thereto with the Securities and Exchange
Commission, execution of any and all required underwriting
agreements, state regulatory filings, Blue Sky filings, policy
filings, and to execute any and all other documents that may be
required by any Federal, state or local regulatory agency in
order to operate the separate account.

Dated at Cedar Rapids, Iowa, this 19th day of August, 1996.
---- ------

(SEAL)

BY: /s/ Craig D. Vermie
-----------------------------
Craig D. Vermie

<PAGE>

EXHIBIT (3)(A)
--------------

FORM OF PRINCIPAL DISTRIBUTION AGREEMENT BY AND BETWEEN AUSA LIFE INSURANCE
COMPANY, INC. ON ITS OWN BEHALF AND ON THE BEHALF OF THE MUTUAL FUND ACCOUNT,
AND AEGON USA SECURITIES, INC.

<PAGE>

EXHIBIT (3)(B)
--------------

FORM OF BROKER/DEALER SUPERVISION AND SALES AGREEMENT BY
AND BETWEEN AEGON USA SECURITIES, INC. AND THE
BROKER/DEALER
<PAGE>

SELECTED BROKER AGREEMENT

AGREEMENT dated______________,19____, by and between AEGON USA Securities,
Inc. (Distributor), an Iowa corporation and____________________________________
(Broker), a __________________________________corporation. This Agreement
supersedes and replaces any prior Selected Broker Agreement regarding the
subject matter between the parties hereto.

WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:

A. Definitions
-----------

(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by AUSA
Life Insurance Company, Inc. ("Company") and for which Distributor has
been appointed the principal underwriter pursuant to Distribution
Agreements, copies of which have been furnished to Broker.

(2) Accounts--Separate accounts established and maintained by Company
pursuant to the laws of Iowa, as applicable, to fund the benefits
under the Contracts.

(3) The Funds--The Variable Insurance Products Fund and the Variable
Insurance Products Fund II, open-end management investment companies
registered under the 1940 Act, shares of which are sold to the
Accounts in connection with the sale of the Contracts.

(4) Registration Statement--The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Funds,
including financial statements and all exhibits.

(5) Prospectus--The prospectuses included within the Registration
Statements.

(6) 1933 Act--The Securities Act of 1933, as amended.

(7) 1934 Act--The Securities Exchange Act of 1934, as amended.

(8) 1940 Act--The Investment Company Act of 1940, as amended.

(9) SEC--The Securities and Exchange Commission.

(10) NASD--The National Association of Securities Dealers, Inc.

B. Agreements of Distributor
-------------------------

(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there
is an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.

(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
Contracts in any state or jurisdiction.

(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.

C. Agreements of Broker
--------------------

(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the NASD and that the agents or
representatives of Broker who will be soliciting applications for the
Contracts also will be duly registered representative of Broker.

(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use commercially reasonable efforts to find
purchasers for the Contracts acceptable to Company. In meeting its
obligation to use its commercially reasonable efforts to solicit
applications for Contracts, Broker shall, during the term of this
Agreement, engage in the following activities:

(a) Regularly utilize only training, sales and promotional materials
relating to the Contracts which have been approved by Company.

(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may be
requested on the results of such inspections and the compliance with
such procedures.
<PAGE>

(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an
applicant to purchase a Contract in the absence of reasonable grounds
to believe that the purchase of the Contract is suitable for such
applicant. While not limited to the following, a determination of
suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant concerning
the applicant's insurance and investment objectives, financial
situation and needs, and, if applicable, the likelihood that the
applicant will make the premium payments contemplated by the Contract.

(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or money orders in payment of initial premiums
shall be drawn to the order of "AUSA Life Insurance Company, Inc."
Broker acknowledges that the Company retains the ultimate right to
control the sale of the Contracts and that the Distributor or Company
shall have the unconditional right to reject, in whole or part, any
application for the Contract. In the event Company or Distributor
rejects an application, Company immediately will return all payments
directly to the purchaser and Broker will be notified of such action.
In the event that any purchaser of an Contract elects to return such
Contract pursuant to the free look right, the purchaser will receive a
refund of the greater of premium payments or the value of the invested
portion of such premiums. The Broker will be notified of any such
action.

(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with solicitation of applications for Contracts. Broker,
its agents or representatives, and its employees shall not hold
themselves out to be employees of Company or Distributor in this
connection or in any dealings with the public.

(5) Broker agrees that any material, including material it develops,
approves or uses for sales, training, explanatory or other purposes in
connection with the solicitation of applications for Contracts
hereunder (other than generic advertising materials which do not make
specific reference to the Company or the Contracts) will only be used
after receiving the written consent of Distributor to such material
and, where appropriate, the endorsement of Company to be obtained by
Distributor.

(6) Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the contracts
until duly licensed and appointed by Company (such appointment not to
be unreasonably withheld by the Company) as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed and that such agents or representatives are properly
supervised and controlled pursuant to the rules and regulations of the
SEC and the NASD. Broker shall certify agents' and representatives'
qualifications to the satisfaction of Distributor, including
certifying a General Letter of Recommendation set forth in Exhibit A
hereto. Broker understands and acknowledges that neither it nor its
agents or representatives is authorized by Distributor or Company to
give any information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material authorized
in writing by Distributor or Company.

(7) Broker shall not have authority on behalf of Distributor or Company
to: make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.

(8) Broker shall have the responsibility for maintaining the records of
its representatives licensed, registered and otherwise qualified to
sell the Contracts. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books, accounts
and records of the Company, the Account, Distributor and Broker
relating to the sale of the Contracts shall be maintained so as to
clearly and accurately disclose the nature and details of the
transactions. All records maintained by the Broker in connection with
this Agreement shall be the property of the Company and shall be
returned to the Company upon termination of this Agreement, free from
any claims or retention of rights by the Broker. Nothing in this
Section C(8) shall be interpreted to prevent the Broker from retaining
copies of any such records which the Broker, in its discretion, deems
necessary or desirable to keep. The Broker shall keep confidential any
information obtained pursuant to this Agreement and shall disclose
such information only if the Company has authorized such disclosure or
if such disclosure is expressly required by applicable federal or
state regulatory authorities.

D. Compensation
------------

(1) Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for the sale of each contract
sold by an agent or representative of Broker. Such amounts shall be
paid to Broker or its subsidiary insurance agency,
<PAGE>

whichever is authorized to receive insurance commissions under
applicable insurance laws, in accordance with the schedules attached
hereto, the General Agent Agreement, and the commission schedules
attached thereto. All terms and conditions of the General Agent
Agreement not otherwise conflicting with the terms herein, shall be
incorporated by reference herein. Company shall identify to Broker
with each such payment the name of the agent or representative of
Broker who solicited each Contract covered by the payment.

(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive
for purposes of payment of commission or otherwise. Neither Broker nor
any of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder.

E. Complaints and Investigations
-----------------------------

(1) Broker and Distributor jointly agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts marketed
under this Agreement. Broker, upon receipt, will notify Distributor of
any customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding in connection with the Contracts.
Broker and Distributor further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial
proceeding with respect to Broker, Distributor, their affiliates and
their agents or representatives to the extent that such investigation
or proceeding is in connection with Contracts marketed under this
Agreement. Broker shall furnish applicable federal and state
regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may
request in order to ascertain whether the Company's operations are
being conducted in a manner consistent with any applicable law or
regulation. Each party shall bear its own costs and expenses of
complying with any regulatory requests, subject to any right of
indemnification that may be available pursuant to Section G of this
Agreement.

F. Term of Agreement
-----------------

(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.

(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section
E hereof; (b) the indemnity set forth in Section G hereof; and (c) the
obligations to settle accounts hereunder, including commission
payments on premiums subsequently received for Contracts in effect at
the time of termination or issued pursuant to applications received by
Broker prior to termination.

(3) Distributor and Company reserve the right, without notice to Broker,
to suspend, withdraw or modify the offering of the Contracts or to
change the conditions of their offering.

G. Indemnity
---------

(1) Broker shall be held to the exercise of reasonable care in carrying
out the provisions of this Agreement.

(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liability, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact, required to be stated
therein or necessary to make the statements therein not misleading,
contained in any Registration Statement or any post-effective
amendment thereto or in the Prospectus or any amendment or supplement
to the Prospectus, or any sales literature provided by the Company or
by the Distributor.

(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Company or Distributor
and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:

(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers, its agents, employees or representatives; or

(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other
compensation or remuneration of any type;

(c) The failure of Broker, its officers, employees, or agents to
comply with the provisions of this Agreement; and Broker will
reimburse Company and Distributor and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, Distributor, or such director, officer
of controlling person in connection with investigating or defending
any such loss, claims, damage, liability or action. This indemnity
agreement will be in addition to any liability which Broker may
otherwise have.

H. Assignability
-------------
<PAGE>

This Agreement shall not be assigned by either party without the
written consent of the other.

I. Governing Law
-------------

This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.

J. Notices
-------

All communications under the Agreement shall be in writing and shall
be deemed delivered when mailed by certified mail, postage prepaid.
Alternatively, communications shall be deemed delivered by timely
transmission of the writing, delivery charges prepaid, to a third
party company or governmental entity providing delivery services in
the ordinary course of business, which guarantees delivery to the
other party on the next business day. Notices shall be sent to the
following addresses unless and until the addressee notifies the other
party of a change in address according to the terms of this Section:

<TABLE>
<S> <C>
(1) if to Broker, to: (2) if to the Distributor, to:
_____________________________ AEGON USA Securities, Inc.
________________________ 4333 Edgewood Road NE
________________________ (street address) Cedar Rapids, Iowa52499-0001
________________________ (telephone no.) (319) 369-2345 (telephone no.)
________________________ (fax no.) (319) 369-2591 (fax no.)
Attention: _____________ Attention: Lorri E Mehaffey,
____________ President
</TABLE>

In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

_____________________________________
(Broker Name)

By:__________________________________

Title:_______________________________

AEGON USA SECURITIES, INC.
(Distributor)

By:__________________________________
President
<PAGE>

EXHIBIT A

GENERAL LETTER OF RECOMMENDATION

BROKER-DEALER hereby certifies to the Company that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of the Company
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to the Company in a timely manner.

1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known to us,
has been examined by us, is known to be of good moral character, has a
good business reputation, is reliable, is financially responsible and
is worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for the Company to hold himself out in
good faith to the general public.

2. We have on file a U-4 form which was completed (and has been amended,
as required) by each applicant. We have fulfilled all the necessary
investigative requirements for the registration of each applicant as a
registered representative through our NASD member firm, including but
not limited to: (i) checking for and investigating criminal arrest and
conviction records available to Broker-Dealer on the CRD system; and
(ii) communicating with each employer of the applicant for 3 years
prior to the applicant's registration with our firm. Each applicant is
presently registered as an NASD registered representative.

The above information in our files indicates no fact or condition
which would disqualify the applicant from receiving a license and all
the findings of all investigative information is favorable.

At the time of application, in those states required by the Company,
we shall provide the Company with a copy of the entire U-4 form, or
designated pages, thereof, completed by each applicant, including any
amendments or updates thereto, and we certify those items are true
copies of the original.

3. We certify that all educational requirements have been met for the
specified state each applicant is requesting a license in, and that
all such persons have fulfilled the appropriate examination, education
and training requirements.

4. If the applicant is required to submit picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to the Company are
those of the applicant and the securities registration ia a true copy
of the original.

5. We hereby warrant that the applicant is not applying for a license
with the Company in order to place insurance chiefly and solely on his
life or property, or lives or property of his relatives, or property
or liability of his associates.

6. We will not permit any applicant to transact insurance in a state as
an agent until duly licensed and appointed therefor with the
appropriate State Insurance Department. No applicants have been given
a contract or furnished supplies, nor have any applicants been
permitted to write, solicit business, or act as an agent in any
capacity, and they will not be so permitted until the certificate of
authority or license applied for is received.

<PAGE>

EXHIBIT (4)
-----------

FORM OF POLICY FOR THE RETIREMENT INCOME BUILDER
VARIABLE ANNUITY.
<PAGE>

AUSA LIFE INSURANCE COMPANY, INC.
A Stock Company Home Office located at: 4 Manhattanville Road,
Purchase, New York Adm. Office located at: 4333 Edgewood Road N.E.,
Cedar Rapids, Iowa 52499 (800) 553-5957 (Hereafter called the
Company, we, our or us)

================================================================================

ANNUITANT: JOHN DOE

OWNER(S): PRUDENTIAL SECURITIES CUST FBO
JOHN DOE

POLICY NUMBER: 10 - 000001

POLICY DATE: January 10, 1995

WE AGREE

.To provide annuity payments as set forth in this policy;

.Or to pay withdrawal benefits in accordance with Section 5 of this policy;

.Or to pay death proceeds in accordance with Section 9 of this policy.

Variable account annuity payments based on a 5% assumed investment return will
not decrease so long as the value of the variable annuity units increases by at
least 5% per year. Accumulation and annuity unit values reflect a Mortality and
Expense Risk Fee and Administrative Charge of 1.25% per year for Death Benefit
Option A or 1.40% per year for Death Benefit Option B.

Withdrawals may be subject to an Excess Interest Adjustment reflecting changes
in interest rates in accordance with Section 5 of this policy.

These agreements are subject to the provisions of this policy. This policy is
issued in consideration of any application and payment of the initial premium.

This policy may be applied for and issued to qualify as a tax-qualified annuity
under the applicable sections of Internal Revenue Code.

20 DAY RIGHT TO CANCEL

You may cancel this policy by returning it to us or to your agent. You must
return the policy before midnight of the tenth day after the day you receive it.
Notice given by mail and return of the policy by mail are effective on being
postmarked, properly addressed and postage prepaid.

We will pay you an amount equal to the greater of:

.the premium payments made; and

.the Policy Value.

The initial premium payment which you designate to the Separate Account will be
allocated entirely to the Money Market Portfolio of the Separate Account only
for a period of time equal to the policy's Right To Cancel period.

Signed for us at our home office.

/s/ Craig D. Vermie /s/ Tom Schlossberg
SECRETARY PRESIDENT

This policy is a legal contract between the policyowner and the company.
READ YOUR POLICY CAREFULLY

Flexible Premium Variable Annuity
Income Payable At Annuity Commencement Date
Benefits Based On The Performance Of The Separate Account
Are Variable And Are Not Guaranteed As To Dollar Amount (See Sections 6 and 1OC)
AV286 101 94 696 Non-Participating
<PAGE>

SECTION 1
DEFINITIONS

ANNUITANT

The person to whom annuity payments will be made.

ANNUITY COMMENCEMENT DATE

Date the annuitant will begin receiving payments from this policy, which may not
be later than the last day of the policy month starting after the Annuitant
attains age 85, except as expressly allowed by us, but in no event later than
the last day of the month following the month in which the Annuitant attains age
90.

ADJUSTED POLICY VALUE

Amount defined in Section 4, that can be used to fund one of the Payment
Options.

CASH VALUE

Amount defined in Section 5, that can be withdrawn if the annuity is
surrendered.

CUMULATIVE FREE PERCENTAGE (CFP)

The percentage (as applied to the Policy Value) which is available to you free
of any Surrender Charge. The CFP is 10% as of the Policy Date and accumulates at
10% on each successive Policy Anniversary. The unused portion of the CFP in any
Policy Year will be carried forward at each successive Policy Anniversary. Any
portion of the CFP previously taken will reduce the CFP currently available.

DISTRIBUTION

A withdrawal or disbursement of funds from the Policy Value or Cash Value.

PAYMENT OPTIONS

Options through which the distribution of the Adjusted Policy Value can be
directed.

POLICY ANNIVERSARY

The anniversary of the Policy Date for each year the policy remains in force.

POLICY DATE

The date shown on page 3 of this policy and the date on which this policy
becomes effective.

POLICY YEAR

The 12 month periods following the Policy Date shown on the Policy Data page.
The first Policy Year starts on the Policy Date. Each subsequent year starts on
the anniversary of the Policy Date.

SEPARATE ACCOUNT

The separate investment account established by us, as described in Section 6.

SUB-ACCOUNT

A division of the Separate Account as described in Section 6.

SURRENDER

A partial or full withdrawal of funds from the Policy Value or Cash Value.

WITHDRAWAL

A distribution of funds from the Policy Value or Cash Value.

YIELD

The effective annual interest rate applicable to the Fixed Account.

YOU, YOUR

The owner of this policy. Unless otherwise specified on the Policy Data page,
the annuitant and the owner shall be one and the same person.

AVB286 PAGE 2
<PAGE>

SECTION 2 - POLICY DATA

POLICY NUMBER: 10- 000001 ANNUITANT: JOHN DOE

INITIAL
PREMIUM: $2,000.00 ISSUE AGE/SEX: 35 / MALE

POLICY DATE: January 10, 1995 OWNER(S): PRUDENTIAL SECURITIES CUST FBO
JOHN DOE

ANNUITY
COMMENCEMENT DEATH BENEFIT
DATE: March 9, 2018 OPTION: B

Death Benefit Option A -

Mortality and Expense Risk Fee and Administrative Charge: 1.25%

Death Benefit Option B -

Mortality and Expense Risk Fee and Administrative Charge: 1.40%

AV286 101 94 696 SP PAGE 3
<PAGE>

SECTION 3 - PREMIUM PAYMENTS

PAYMENT OF PREMIUMS

Premium payments may be made any time while this policy is in force before the
Annuity Commencement Date. You may start or stop, increase or decrease, or skip
any premium payments.

MAXIMUM AND MINIMUM PREMIUM PAYMENT

The premium payments may not be more than the amount permitted by law if this is
a tax-qualified annuity. The minimum initial premium payment is $2,000, except
that no minimum initial premium payment will be required for 403(b) annuities.
The minimum subsequent premium payment we will accept is $50. The maximum total
premium payments which we will accept without prior Company approval is
$1,000,000.

PREMIUM PAYMENT DATE

The premium payment date is the date on which the premium payment is credited to
the policy. The initial premium payment less any premium taxes will be credited
to the policy within two business days of receipt of the premium payment and the
information needed. Subsequent additional premium payments will be credited to
the policy as of the business day when the premium payment and required
information are received. A business day is any day on which the New York Stock
Exchange is open for trading.

ALLOCATION OF PREMIUM PAYMENTS

Premium payments may be applied to various Guaranteed Period Options of the
Fixed Account and/or to one or more of the Subaccounts which we make available.
You must indicate what percent of each premium payment to allocate to various
Guaranteed Period Options of the Fixed Account and/or among one or more of the
Subaccounts (making a total of 100%). Each percent may be either zero or any
whole number.

We will use the allocation percentages you choose for all premium payments until
you change the allocation percentages. However, the initial premium payment
which you designate to the Separate Account will be allocated entirely to the
Money Market Portfolio of the Separate Account only for a period of time equal
to the greater of the policy's Right To Cancel period, or 14 days following the
Policy Date. At the end of this period of time, the Policy Value in the Money
Market Portfolio will then be allocated to the Subaccount(s) of the Separate
Account in accordance with the allocation percentages specified by the Owner.

CHANGE OF ALLOCATION

You may change the allocation of premium payments to various Guaranteed Period
Options of the Fixed Account and/or among the Subaccounts. You must tell us in a
notice you sign which gives us the facts that we need. Premium payments received
after the date on which we receive your notice will be applied on the basis of
the new allocation.

SECTION 4 - POLICY VALUE

POLICY VALUE

On or before the Annuity Commencement Date, the Policy Value is equal to your:

(a) premium payments; minus

(b) partial withdrawals; plus

(d) accumulated gains or losses in the Separate Account; minus

(e) service charges, premium taxes and transfer fees, if any.

ADJUSTED POLICY VALUE

The Adjusted Policy Value is the Policy Value increased or decreased by any
Excess interest Adjustment

You may only use the Adjusted Policy Value on the Annuity Commencement Date to
provide lifetime income or income for a period of five or more years under the
Payment Options in Section 10.

SERVICE CHARGE

On each Policy Anniversary and at the time of surrender during any Policy Year
before the Annuity Commencement Date, we reserve the right to charge up to $30
for policy administration expenses. It will be deducted from each Subaccount
and/or Guaranteed Period Option (GPO) in proportion to the portion of policy
Value (prior to such charge) in each Subaccount and/or GPO on that Policy
Anniversary. In no event will the Service Charge exceed 2% of the Policy Value
on that Policy Anniversary or at the time of surrender.

The Service Charge will not be deducted on a Policy Anniversary (or at the time
of surrender) if either (1) or (2) equals or exceeds $50,000 on that Policy
Anniversary (or at the time of surrender), where (1) equals the sum of all
premium Payments made less sum of all withdrawals taken and (2) equals the
Policy Value.

M709 PAGE 4
<PAGE>

SECTION 5 - CASH VALUE AND PARTIAL WITHDRAWALS

CASH VALUE

The cash Value may be partially withdrawn or will be paid in the event of a full
surrender of the policy. We must receive your written withdrawal or surrender
request before the Annuity Commencement Date.

On or before the Annuity Commencement Date, the Cash Value is equal to the
Adjusted Policy Value less any surrender charges. There is no Cash Value after
the Annuity Commencement Date. The current amount of your policy's Cash Value
is available upon request

EXCESS INTEREST ADJUSTMENT

Full Surrenders and Partial Withdrawals and amounts applied to a Payment Option
(prior to the end of any Guaranteed Period) from the Fixed Account Guaranteed
Period Options described in Section 7, and amounts applied to a Payment Option
will be subject to an Excess Interest Adjustment except as provided for in the
Partial Withdrawals provision below.

Excess Interest Adjustment = S x (G-C) x (M/ 12)

where: S is the gross (i.e. before surrender charges and premium taxes, if
any) amount being surrendered or withdrawn or applied to a Payment
Option that is subject to the Excess Interest Adjustment

G is the guaranteed interest rate applicable to S.

C is the current guaranteed interest rate then being offered on new
premium payments for the next longer Guaranteed Period than "M". If
this policy form or such a Guaranteed Period is no longer offered,
"C" will be the US Treasury rate for the next longer maturity (in
whole years) than "M" on the 25th day of the previous calendar month,
plus up to 2%.

M is the number of months remaining in the Guaranteed Period for S,
rounded up to the next higher whole number of months.

Upon partial or full surrender, the Excess Interest Adjustment (EIA) for each
Guaranteed Period Option will not reduce the Adjusted Policy Value for that
Period Option below the amount paid into, less any Prior withdrawals and
transfers from that Guaranteed Period Option, plus interest at the 3% guaranteed
effective annual interest rate. Upon full surrender the cumulative interest
credited at the time of surrender will not be subject to an EIA.

PARTIAL WITHDRAWALS

We will pay you a portion of or all of the Cash Value as a lump sum Partial
Withdrawal provided we receive your written request while the policy is in
effect and before the Annuity Commencement Date. When you request a Partial
Withdrawal you must tell us how it is to be allocated among the various
Guaranteed Period Options of the Fixed Account and/or the Subaccounts. If your
request for a Partial Withdrawal from any Guaranteed Period Option of the Fixed
Account and/or a Subaccount is greater than the Cash Value in that account we
will pay you the Cash Value of that account.

Partial Withdrawals may be made with no Excess Interest Adjustment and free of
Surrender Charges in four different ways:

1. LUMP SUM

At any time, you may withdraw free of Surrender Charges an amount ($500
minimum) up to the Cumulative Free Percentage (CFP) times the Policy Value
at the time of, but prior to, the withdrawal. On the Policy Date the CFP is
10%. Thereafter, 10% will be added to the CFP on each Policy Anniversary.
Any Partial Withdrawals will reduce the CFP by the ratio of the amount
withdrawn to the Policy Value at the time of, but prior to, the Partial
withdrawal. The CFP will not be in excess of 100% nor less than zero.

2. SYSTEMATIC PAYOUT OPTION

During any Policy Year, including the first, a Systematic Payout Option
(SPO) is available on a monthly, quarterly, semi-annual or annual basis.
SPO payouts must be at least $50 and may not exceed 10% of the Policy Value
at the time a SPO payout is made divided by the number of payouts made per
year (eg. 12 for monthly). No Surrender Charges will apply to the SPO
payout SPO payouts from the Guaranteed Period Options of the Fixed Account
which are in excess of the interest credited to the applicable Guaranteed
Period Options at the time of SPO payout will be subject to an EIA. Monthly
and quarterly payouts must be sent through electronic funds transfer
directly to your checking or savings account. You may start or stop SPO
payouts at any time; however, 30 days written notice is required to stop
SPO Payouts.

Once you have elected a SPO, you must wait a minimum time before the first
SPO payment: one month for a monthly SPO, three months for quarterly, six
months for semi-annual, or twelve months for annual.

U709 PAGE 5
<PAGE>

SECTION 5 - CONT

3. MINIMUM REQUIRED DISTRIBUTION

For tax-qualified plans, Partial Withdrawals taken to satisfy minimum
distribution requirements under Section 401 (a)(9) of the Internal Revenue
Code (IRC) are available with no Surrender Charges and no EIA. The amount
available from this policy with respect to the minimum distribution
requirement is based solely on this policy.

The owner must be at least 70 1/2 years old in the calendar year of
distribution, must submit a written request to us and must take the
contribution before year end. If the Owner attains age 70 1/2 in the
calendar year of distribution, a written request which is postmarked no
later must be submitted to us.

Any amount requested in excess of the IRC minimum required distribution
will have the appropriate Surrender Charges and EIA applied, unless the
distribution qualifies as Surrender Charge free or EIA free under 1. or 2.
above, or 4. below.

4. UNEMPLOYMENT WAIVER

Beginning in the first Policy Year, you may withdraw all or a portion of
the Policy Value free of Surrender Charges and free of any EIA if the owner
or owner's spouse (annuitant or annuitant's spouse, if the owner is not a
natural person) becomes unemployed. In order to qualify, you 1) must have
been employed full time for at least two years prior to your becoming
unemployed, 2) must have been employed full time on your Policy Date, 3)
must have been unemployed for at least 60 consecutive days at the time of
withdrawal, and 4) must have a minimum Cash Value at the time of withdrawal
of $5000. Proof of unemployment will consist of providing us with a
determination letter from the applicable State Department of Labor which
verifies that you qualify for and are receiving unemployment benefits at
the time of withdrawal. The determination letter must be received by us no
later than 15 days following the date of the withdrawal request.

Partial Withdrawals in the amount of the cumulative interest credited in the
GPO(S) of the Fixed Account at the time of withdrawal may be withdrawn from the
Guaranteed Period Option(s) of the Fixed Account free of any Excess Interest
Adjustment Surrender Charges may be waived as described under 1-4 above.

Surrender Charge free Withdrawals will reduce the Policy Value by the amounts
withdrawn.

Excess Partial Withdrawals are withdrawal amounts in excess of the Surrender
Charge free portion. Excess Partial Withdrawals will reduce the Policy Value by
an amount equal to (X-Y+Z) where:

X = Excess Partial Withdrawal

A = Amount of Partial Withdrawal subject to Excess Interest Adjustment

Y = Excess Interest Adjustment = (A) x (G-C) x (M/ 1 2) where G, C and M are
defined in the Excess Interest Adjustment provision above, with "A"
substituted for "S" in the definitions of G and M.

Z = Surrender Charge on X minus Y.

If any Partial Withdrawal reduces the Cash Value below $500, we
reserved the right to pay the full cash Value and terminate this policy. We may
delay payment of the Cash Value from the Fixed Account for up to 6 months after
we receive your request.

Premium payments withdrawn five or more years after their payment date are not
subject to Surrender Charges. In any event, Partial Withdrawals made after the
tenth Policy Year are not subject to a Surrender Charge.

SURRENDER CHARGES

Amounts withdrawn in excess of the Surrender Charge free withdrawal provisions
above are subject to a Surrender Charge. The amount of this charge, if any, will
be a percentage, as shown in the table below, of the amount of premium
withdrawn:

<TABLE>
<CAPTION>
Number of Years
Since Premium Percentage of
Payment Date Premium Withdrawn
<S> <C>
0-1 6%
1-2 6%
2-3 6%
3-4 4%
4-5 2%
5 or more 0%
</TABLE>

In any event Surrender Charges will be waived after the tenth Policy Year.

For Surrender Charge purposes, the oldest premium is considered to be withdrawn
exceeds this, the next oldest premium payment is considered to be withdrawn, and
so on until the most recent premium payment is considered to be withdrawn.
Premium payments are deemed to be withdrawn before earnings.

After all premium payments are considered to be withdrawn, the remaining
Adjusted Policy Value may be withdrawn free of any Surrender Charge.

GUARANTEED RETURN OF FIXED ACCOUNT PREMIUM PAYMENTS

Upon full surrender of the policy, you will always receive at least the premium
payments made to, less prior withdrawals and transfers from, the Fixed Account.

P882 PAGE 6
<PAGE>

SECTION 6 - SEPARATE ACCOUNT

SEPARATE ACCOUNT

We have established and will maintain a Separate Account under the laws of the
state of New York. Any realized or unrealized income, net gains and losses from
the assets of the Separate Account are credited to or charged against it without
regard to our other income, gains or losses. Assets are put in the Separate
Account for this policy, as well as for other variable life insurance and
annuity policies. The Separate Account may invest assets in shares of one or
more funds. Fund shares are purchased, redeemed and valued on behalf of the
Separate Account.

The Separate Account is divided into Subaccounts. Each Subaccount invests
exclusively in shares of one of the portfolios of an underlying fund. We reserve
the right to add or remove any Subaccount of the Separate Account.

The assets of the Separate Account are our property. These assets will equal or
exceed the reserves and other contract liabilities of the Separate Account.
These assets will not be chargeable with liabilities arising out of any other
business we conduct. We reserve the right to transfer assets of a Subaccount in
excess of the reserves and other contract liabilities with respect to that
Subaccount, to another Subaccount or to our General Account.

We will determine the fair market value of the assets of the Separate Account in
accordance with a method of valuation which we establish in good faith.
Valuation Period means the period of time from one determination of the value of
each Subaccount to the next. Such determinations are made when the value of the
assets and liabilities of each Subaccount is calculated. This is generally each
day on which the New York Stock Exchange is open.

We also reserve the right to transfer assets of the Separate Account which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the term
"Separate Account", as used in this policy, shall then mean the separate account
to which the assets were transferred.

We also reserve the right, when permitted by law, to:

(a) deregister the Separate Account under the Investment Company Act of 1940;

(b) manage the Separate Account under the direction of a Committee at any time;

(c) restrict or eliminate any voting rights of policyowners or other persons
who have voting rights as to the Separate Account; and

(d) combine the Separate Account with one or more other separate accounts;

(e) create new Separate Accounts;

(f) add new Subaccounts to or remove existing Subaccounts from the Separate
Account, or combine Subaccounts;

(g) add new underlying mutual funds, remove existing mutual funds, or
substitute a new fund for an existing fund.

CHANGE IN INVESTMENT OBJECTIVE OR POLICY OF A MUTUAL FUND

If required by law or regulation, an investment policy of the Separate Account
will only be changed if approved by the appropriate insurance official of the
State of New York or deemed approved in accordance with such law or regulation.
If so required, the process for obtaining such approval is filed with the
insurance official of the state or district in which this policy is delivered.

ACCUMULATION UNITS

The Policy Value in the Separate Account before the Annuity Commencement Date is
represented by accumulation units. The dollar value of accumulation units for
each Subaccount may change from day to day reflecting the investment experience
of the Subaccount.

Premium payments allocated to and any amounts transferred to the Subaccounts
will be applied to provide accumulation units in those Subaccounts. The number
of accumulation units purchased in a Subaccount will be determined by dividing
the premium payment allocated to or any amount transferred to the Subaccount by
the value of an accumulation unit for that Subaccount on the premium payment or
transfer date.

The number of accumulation units withdrawn or transferred from the Subaccounts
will be determined by dividing the amount withdrawn or transferred by the value
of an accumulation unit for that Subaccount on the withdrawal or transfer date.

P8882 PAGE 7
<PAGE>

SECTION 6 - SEPARATE ACCOUNT - CONT

The value of an accumulation unit on any business day is determined by
multiplying the value of that unit at the end of the immediately preceding
valuation period by the net investment factor for the valuation period.

The net investment factor used to calculate the value of an accumulation unit in
each Subaccount for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result where:

(a) is the result of:

(1) the net asset value of a fund share hold in that Subaccount 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 fund for shares held in that Subaccount if the ex-dividend date
occurs during the valuation period, plus or minus

(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of that
Subaccount

(b) is the net asset value of a fund share held in that Subaccount determined
as of the end of the immediately preceding valuation period.

(c) is a factor representing the Mortality and Expense Risk Fee and
Administrative Charge. This factor is less than or equal to, on an annual
basis, the percentage shown on page 3 of the daily net asset value of a
fund share held in that Subaccount.

Since the net investment factor may be greater or less than one, the
accumulation unit value may increase or decrease.

SECTION 7 - FIXED ACCOUNT
FIXED ACCOUNT

Premium payments applied to and any amounts transferred to the Fixed Account
will reflect a fixed interest rate. The interest rates we set will be credited
for increments of at least one year measured from each premium payment or
transfer date. These rates will never be less than an effective annual interest
rate of 3%.

GUARANTEED PERIODS

We may offer optional Guaranteed Periods, i.e. Guaranteed Period Option(s), into
which premium payments may be paid or amounts transferred. The current interest
rate we set for funds entering each Guaranteed Period Option (GPO) is guaranteed
until the end of that option's Guaranteed Period. At that time, the premium
payment made or amount transferred into the GPO less any withdrawals or
transfers from that GPO, plus accrued interest will be rolled into a new GPO or
may be transferred to any Subaccount(s) within the Separate Account.

You may choose the GPO(S) or Subaccount(s) you want the funds rolled into by
giving us notice within 30 days before the end of the expiring option's
Guaranteed Period. In the absence of such election, the funds will be rolled
into a new GPO which is the same as the expiring GPO unless that GPO is no
longer offered, in which case, the next shorter GPO offered will be used.

We reserve the right for new premium payments, transfers, or rollovers to offer
or not to offer any GPO, except that we will always offer at least a one year
GPO.

For purposes of crediting interest when funds are withdrawn from or transferred
into a Guaranteed Period Option, the amount of the oldest premium payment or
rollover into that Guaranteed Period Option is considered to be withdrawn first.
If the amount withdrawn exceeds this amount, the next oldest premium payment or
rollover is considered to be withdrawn next, and so on until the most recent
premium payment or rollover is considered to be withdrawn (this is a "First-In,
First-Out" or FIFO procedure). Premium payment(s) or rollover(s) are deemed to
be withdrawn first, then interest credited.

Partial withdrawals and Surrenders from a Guaranteed Period Option which occur
prior to the end of that option's Guaranteed Period are subject to an Excess
interest Adjustment as described in Section 5.

DOLLAR COST AVERAGING FIXED ACCOUNT OPTION

We may offer a Dollar Cost Averaging (DCA) Fixed Account Option separate from
the Guaranteed Period Options. The DCA Option will only be available under a
Dollar Cost Averaging program as described in Section 8.

V893 PAGE 8
<PAGE>

SECTION 8 - TRANSFERS

A. TRANSFERS BEFORE THE ANNUITY COMMENCEMENT DATE

Prior to the Annuity Commencement Date, you may transfer the value of the
accumulation units from one another within the Separate Account or Guaranteed
Period Option (GPO) of the Fixed Account. If you want to transfer, you must tell
us in a notice that you sign or through an electronic notice which gives us the
facts that we need.

Transfers of funds from any of the GPO's of the Fixed Subaccount(s) of the
Separate Account are allowed at the end of the applicable Guaranteed Period(s).
However, prior to the end of the applicable period, we may at our discretion,
offer you the option to transfer interest credited in any of the GPO's. No
Excess Interest Adjustment will apply to such transfers of interest. The maximum
transfer permitted from any GPO before the end of the Guaranteed Period will be
the cumulative interest credited for that GPO at the time of, but prior to, the
transfer. No Excess Adjustment will apply to fund transfers at the end of the
applicable Guaranteed Period. You may choose which Guaranteed Period Option(s)
to transfer to or from. No transfers will be allowed out of the Dollar Cost
Averaging Fixed Account Option except through dollar cost averaging.

The minimum amount which may be transferred from the Separate Account is the
lesser of $500 or the entire Subaccount value. However, if the remaining
Subaccount value is less than $500, we have the right to include that amount as
part of the transfer.

We reserve the right to limit transfers to no more than 12 in any Policy Year.
Any transfers in excess of 12 per Policy Year may be charged a $10 per transfer
fee.

DOLLAR COST AVERAGING OPTION

Prior to the Annuity Commencement Date, you may instruct us to automatically
transfer a specified amount from the Dollar Cost Averaging Fixed Account Option
to any other Subaccount or Subaccounts of the Separate Account. The automatic
transfers can occur monthly or quarterly and will occur on the 28th day of the
month. If the Dollar Cost Averaging request is received prior to the 28th day of
any month, the first transfer will occur on the 28th day of that month. If the
Dollar Cost Averaging request is received on or after the 28th day of any month,
the first transfer will occur on the 28th following month.

You may elect Dollar Cost Averaging at any time. Transfers will continue until
the DCA Fixed Account value is depleted. The amount transferred each time must
be at least $500. A minimum of 6 monthly or 4 quarterly transfers are required
each time the Dollar Cost Averaging program is started or restarted following
termination of the program for any reason.

You may discontinue Dollar Cost Averaging after satisfying the minimum number of
required transfers by sending written notice to us.

DOLLAR COST AVERAGING FIXED ACCOUNT OPTION

Prior to the Annuity Commencement Date, no transfers, except through Dollar Cost
Averaging (DCA) will be allowed from the DCA Fixed Account. DCA transfers must
begin within 30 days after the premium payment or transfer to the DCA Fixed
Account. Transfers must be scheduled for at least 6 but not more than 24 months
or for at least 4, but not more than 8 quarters. This option will have a one
year interest rate guarantee. No changes to the amount transferred will be
allowed, but changes can be made to the Subaccounts to which these transfers are
allocated. DCA transfers from the DCA Fixed Account will not be subject to an
Excess Interest Adjustment

ASSET REBALANCING

Prior to the Annuity Commencement Date, you may instruct us to automatically
transfer amounts among the Subaccounts of the Separate Account on a regular
basis to maintain a desired allocation of the Policy Value among the various
Subaccounts offered. Rebalancing will occur on a monthly, quarterly, semi-annual
or annual basis, beginning on a date you select. You must select the percentage
of the Policy Value you desire in each of the various Subaccounts offered
(totaling 100%). Any amounts in the Fixed Account are ignored for the purposes
of asset rebalancing. Rebalancing can be started, stopped or changed at any
time, except that rebalancing will not be available when:

1) Dollar Cost Averaging is in effect, or

2) any other transfer is requested

B. TRANSFERS AFTER THE ANNUITY COMMENCEMENT DATE

After the Annuity Commencement Date, you may transfer the value of the variable
annuity units from one Subaccount to another within the Separate Account or to
the Guaranteed Period Options of the Fixed Account. If you want to transfer the
value of the variable annuity units, you must tell us in a notice you sign or
through an electronic notice which gives us the facts that we need.

The minimum amount which may be transferred is the lesser of $10 monthly income
or the entire monthly income of the variable annuity units in the Subaccount
from which the transfer is being made. If the monthly income of the remaining
units in a Subaccount is less than $10, we have the right to include the value
of those variable annuity units as part of the transfer.

After the Annuity Commencement Date, no transfers may be made from the Fixed
Account to the Separate Account.

We reserve the right to limit transfers between the Subaccounts or to the Fixed
Account to once per Policy Year except under the Dollar Cost Averaging Option.

VB893 PAGE 9
<PAGE>

SECTION 9 - DEATH PROCEEDS

A. DEATH PROCEEDS PRIOR TO ANNUITY COMMENCEMENT DATE

The amount of death proceeds will be the greatest of (a), (b) or (c) where:

(a) is the Policy Value on the date we receive due proof of death and an
election of a method of settlement

(b) is the Cash Value on the date we receive due proof of death and an election
of a method of settlement, and;

If you have not selected a payment option by the date of death, the beneficiary
may make such election within 60 days of the date we receive due proof of death.
The beneficiary may elect to receive the death proceeds as a lump sum payment or
may use the death proceeds to provide any of the annuity payment options
described in Section 10. Interest on death proceeds will be paid as required by
law.

B. GUARANTEED MINIMUM DEATH BENEFIT

The amount of the Guaranteed Minimum Death Benefit depends on the option shown
on page 3. You may not change the Guaranteed Minimum Death Benefit option after
the policy is issued

Option A: Return of Premium Death Benefit

The Guaranteed Minimum Death Benefit is equal to the total premiums paid
for this policy, less any partial withdrawals, as of the date of death.

Option B: Annual Step-Up Death Benefit

The Guaranteed Minimum Death Benefit is equal to the largest Policy Value
on the issue date or on any Policy Anniversary prior to the earlier of the
date of death or prior to the owner's 81st birthday plus any premiums paid,
less any partial withdrawals taken, subsequent to the date of the largest
anniversary Policy Value.

Each Partial Withdrawal as used in the above GMDB definition is the sum of
(1) and (2) where:

1) = The Surrender Charge free withdrawal, as described in Section 5 (Partial
Withdrawals), and

(2) = (X-Y+Z) as defined in Section 5 (Partial Withdrawals), times a) the
amount of the death proceeds on the date of, but prior to the Excess
Partial Withdrawal, divided by b) the Policy Value on the date of, but
prior to the Excess Partial Withdrawal.

C. DEATH PRIOR TO ANNUITY COMMENCEMENT DATE

Death proceeds are payable contingent upon the relationships between the owner,
successor owner and beneficiary as outlined below. The policy must be
surrendered upon settlement or on proof of death.

I. Annuitant and owner are the same

When we have due proof that the owner died before the Annuity Commencement
Date, we will provide the death proceeds to the beneficiary.

(a) Beneficiary is the deceased owner's surviving spouse. The beneficiary
may elect to continue this policy rather than receiving the death
proceeds. If the policy is continued, an amount to the excess, if any,
of the Guaranteed Minimum Death Benefit over the Policy Value will
then be added to the Policy Value. This amount will be added only
once, at the time of such election.

If this beneficiary elects to have the death proceeds paid, the death
proceeds must be distributed:

(1) by the end of 5 years after the date of the deceased owner's
death, or

(2) payments must begin no later than one year after the deceased
owner's death and must be made for a period certain or for this
beneficiary's lifetime, so long as any period certain does not exceed
this beneficiary's life expectancy.

S867 PAGE 10
<PAGE>

SECTION 9 - CONT

(b) Beneficiary is not the deceased owner's surviving spouse. The death
proceeds must be distributed as provided in I.a)(1) or I.a(2) above.

(c) Death proceeds which are not paid to or for the benefit of a natural
person must be distributed by the end of 5 years after the date of the
deceased owner's death.

II. Annuitant and owner are different and the annuitant dies.

When we have due proof that the annuitant died prior to the Annuity
Commencement Date, the owner will become the new annuitant and no death
proceeds are payable.

However, the owner may elect to have the death proceeds paid upon the
annuitant's death if we agree to such an election. In such case, when we
have due proof that the annuitant died prior to the Annuity Commencement
Date, we will provide the death proceeds to the beneficiary.

a) Beneficiary is the deceased annuitants surviving spouse. The
beneficiary may elect to continue this policy rather than receiving
the death proceeds. If the policy is continued, an amount to the
excess, if any, of the Guaranteed Minimum Death Benefit over the
Policy Value will then be added to the Policy Value. This amount will
be added only once, at the time of such election.

If this beneficiary elects to have the death proceeds paid, the death
proceeds must be distributed as provided in I.a)(1) or I.a)(2) above.

b) Beneficiary is not the deceased annuitants surviving spouse. The death
proceeds must be distributed as provided in I.a)(1) or I.a)(2) above.

c) Death proceeds which are not paid to or for the benefit of a natural
person must be distributed by the end of 5 years after the date of the
annuitant's death.

III. Annuitant and owner are different and the owner dies.

If the owner dies prior to the Annuity Commencement Date and before the
entire interest in the policy is distributed, the successor owner will
become the new owner. The remaining portion of any interest in the policy
must be distributed to the extent provided below in III.a), III.b) or
III.c).

a) Successor owner is the deceased owner's surviving spouse. The
successor owner may elect to continue this policy rather than receive
the Adjusted Policy Value. If the successor owner elects to receive
the Adjusted Policy Value, the Adjusted Policy Value must be
distributed.

(1) by the end of 5 years after the date of the deceased owner's
death, or

(2) payments must begin no later than one year after the deceased
owner's death and must be made for a period certain or for the
successor owner's lifetime, so long as any period certain does not
exceed the successor owner's life expectancy.

b) Successor owner is not the deceased owner's surviving spouse. The
Adjusted Policy Value must be distributed as provided in III.a)(1) or
III.a(2) above.

c) Successor owner is not a natural person. The Adjusted Policy Value
must be distributed as provided in III.a)(1) above.

d) No successor owner survives the deceased owner. The deceased owner's
estate will become the new owner and the Adjusted Policy Value must be
distributed by the end of 5 years after the date of the deceased
owner's death.

IV. More than one Owner.

If there is more than one owner, then the death of any owner will be
treated the same as the death of the owner.

D. DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE

The death proceeds on or after the Annuity Commencement Date depend on the
payment option selected. If any owner dies on or after the Annuity Commencement
Date, but before the entire interest in the policy is distributed, the remaining
portion of such interest in the policy will be distributed at least as rapidly
as under the method of distribution being used of the date of the owner's death.

E. AN OWNER IS NOT AN INDIVIDUAL

In the case of a non tax-qualified annuity, if any owner or beneficial owner, is
not an individual, then for purposes of the federal income tax mandatory
distribution provisions in subsection C or D above, (1) the primary annuitant
will be treated as the owner of the policy, and (2) if there is any change in
the primary such a change will be treated as the death of the owner.

SB867 PAGE 11
<PAGE>

SECTION 10 - ANNUITY PAYMENTS

A. GENERAL PAYMENT PROVISIONS

PAYMENT

If this policy is in force on the Annuity Commencement Date, we will use the
Fixed Account portion and/or the Separate Account portion of the Adjusted Policy
Value to make annuity payments to the Payee under Option 3 and/or 3-V,
respectively, with 10 years certain, or if elected, under one or more of the
other options described in this section. You may become the annuitant at the
Annuity Commencement Date, or the prior annuitant may continue as the annuitant
Payments will be made at 1, 3, 6 or 12 month intervals. We reserve the right to
change the frequency of payments to avoid making payments of less than $50.00.
Before to Annuity Commencement Date, if the death proceeds become payable or if
you surrender this policy, we will pay any proceeds in one sum, or if elected,
all or part of these proceeds may be placed under one or more of the options
described in this section. If we agree, the proceeds may be placed under some
other method of payment instead.

ELECTION OF OPTIONAL METHOD OF PAYMENT

Before the Annuity Commencement Date you can elect or change a payment option
You may elect, in a notice you sign which gives us the facts that we need,
annuity payments that may be either variable, fixed, or a combination of both.
If you elect a combination, you must also tell us what part of the policy
proceeds on the Annuity Commencement Date are to be applied to provide each type
of payment (You must also specify which Subaccounts.) The amount of a combined
payment will be the sum of the variable and fixed payments. Payments under a
variable payment option will reflect the investment performance of the selected
Subaccount of the Separate Account.

PAYEE

Unless you specify otherwise, the payee shall be the annuitant, or the
beneficiary as specified in the Beneficiary provision.

FACILITY OF PAYMENT

No payment will be made to any payee who, in our opinion, is not capable of
giving valid receipt and discharge for the payment. We may make payment, in
increments of not more than $50 per month, to the persons who, in our opinion,
are owing for and supporting such payee. Such payment will be made until claim
is made by a legal representative of such payee. Payment to such persons will
discharge our liability to the extent of such payment. We will not be
responsible for the proper use of the payments.

PROOF OF AGE

We may require proof of the age of any person who has an annuity purchased under
Options 3, 3-V, 5 and 5-V of this section before we make the first payment.

MINIMUM PROCEEDS

If the proceeds are less than $2,000, we reserve the right to pay them out as a
lump sum instead of applying them to a payment option.

PREMIUM TAX

We may be required by law to pay premium tax on the amount applied to a payment
option. If so, we will deduct the premium tax before applying the proceeds.

SUPPLEMENTARY CONTRACT

Once proceeds become payable and a payment option has been selected, this policy
will terminate and we will issue a supplementary contract to reflect the terms
of the selected option. The contract will name the payees and will describe the
payment schedule.

B. FIXED ACCOUNT PAYMENTS

GUARANTEED PAYMENT OPTIONS

The fixed account payment is determined by multiplying each $1,000 of policy
proceeds allocated to a fixed payment option by the amounts shown on page 12 for
the option you select. Options 1, 2 and 4 are based on a guaranteed interest
rate of 3%. Options 3 and 5 are based on a guaranteed interest rate of 3% and
the "1983 Table a" (male, female, and unisex if required by law) mortality table
improved to the year 2000 with projection scale G (The "1983 Table a" mortality
rates are adjusted based on improvements in mortality since 1983 to more
appropriately reflect increased longevity. This is accomplished using a set of
improvement factors referred to as projection scale G.)

Option 1 - Interest Payments

The Adjusted Policy Value may be left with us for any term agreed to. We will
pay the interest in periodic payments or it may be left to accumulate.
Withdrawal rights will be agreed upon by you and us when the option is elected.

Option 2 - Income for a Specified Period

Payments are made for the fixed period elected. In the event of the death of the
person receiving payments prior to the end of the guaranteed period payments
will be continued to that person's beneficiary or their present value may be
paid in a single sum.

Option 3 - Life Income

An election may be made between "No Period Certain", "10 Years Certain", or
"Guaranteed Return of Policy Proceeds". In the event of the death of the person
receiving payments prior to the end of the guaranteed period, payments will be
continued to that person's beneficiary or their present value may be paid in a
single sum.

Option 4 - Income of a Specified Amount

Payments are made for any specified amount until the proceeds with interest are
exhausted. In the event of the death of the person receiving payments prior to
the end of the guaranteed period, payments will be continued to that person's
beneficiary or their present value may be paid in a single sum.

Option 5 - Joint and Survivor Annuity

Payments are made during the joint lifetime of the payee and a nominee of your
selection. Payments will be made as long as either person is living.

S868 PAGE 11(A)
<PAGE>

SECTION 10 - CONT

CURRENT PAYMENT OPTIONS

The amounts shown in the tables on page 12 are the guaranteed amounts. Current
amounts may be obtained from us.

C. VARIABLE ACCOUNT PAYMENT OPTIONS

VARIABLE ANNUITY UNITS

The policy proceeds you tell us to apply to a variable payment option will be
used to purchase variable annuity units in your chosen Subacccounts. The dollar
value of variable annuity units in your chosen Subaccounts will increase or
decrease reflecting the investment experience of your chosen Subaccounts. The
value of a variable annuity unit in a particular Subaccount on any business day
is equal to (a) multiplied by (b) multiplied by (c), where:

(a) is the variable annuity unit value for that Subaccount on the immediately
preceding business day;

(b) is the net investment factor for that Subaccount for the Valuation Period;
and

The Assumed Investment Return adjustment factor for the valuation period is the
product of discount factors of .99986634 per day to recognize the 5.0% effective
annual Assumed Investment Return.

The net investment factor used to calculate the value of a variable annuity unit
in each Subaccount for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result, where:

(a) is the net result of:

(1) the net asset value of a fund share held in that Subaccount 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 fund for shares held in that Subaccount if the ex-dividend
date occurs during the Valuation Period; plus or minus

(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the investment operations of the
Subaccount.

(b) is the nest asset value of a fund share held in that Subaccount determined
as of the end of the immediately preceding Valuation Period.

Neither expenses actually incurred, other than taxes on the investment return,
nor mortality actually experienced, shall adversely affect the dollar amount of
variable annuity payments that have commenced.

DETERMINATION OF THE FIRST VARIABLE PAYMENT

The amount of the first variable payment is determined by multiplying each
$1,000 of policy proceeds allocated to a variable payment option by the amounts
shown on page 13 for the variable option you select. The tables are based on a
5% effective annual Assumed Investment Return and the "1983 Table a" (male,
female, and unisex if required by law) mortality table improved to the year 2000
with projection scale G. (The "1983 Table a" mortality rates are adjusted based
on improvements in mortality since 1983 to more appropriately reflect increased
longevity. This is accomplished using a set of improvement factors referred to
as projection scale G.)

The amount of the first payment depends upon the adjusted age of the annuitant.
The adjusted age is the annuitant's actual age on the annuitant's nearest
birthday, at the Annuity Commencement Date, adjusted as follows:

<TABLE>
Annuity
Commencement Date Adjusted Age
----------------- ------------
<S> <C>
Before 2001 Actual Age
2001-2010 Actual Age minus 1
2011-2020 Actual Age minus 2
2021-2030 Actual Age minus 3
2031-2040 Actual Age minus 4
</TABLE>

After 2040 as determined by us.

Option 3 - V - Life Income
An election may be made between:

1. "No Period Certain" - Payments will be made during the lifetime of the
annuitant.

2. "10 Years Certain" - Payments will be made for the longer of the
annuitant's lifetime or 10 years.

Option 5 - V - Joint and Survivor Annuity

Payments are made as long as either the annuitant or the joint annuitant is
living.

DETERMINATION OF SUBSEQUENT VARIABLE PAYMENTS

The amount of each variable annuity payment after the first will increase or
decrease according to the value of the variable annuity units which reflect the
investment experience of the selected Subaccounts. Each variable annuity payment
after the first will be equal to the number of variable annuity units in the
selected Subaccounts multiplied by the variable annuity unit value on the date
the payment is made. The number of variable annuity units in each selected
Subaccount is determined by dividing the first variable annuity payment
allocated to the Subaccount by the variable annuity unit value of that
Subaccount on the Annuity Commencement Date.

SB868 PAGE 11(B)
<PAGE>

GUARANTEED FIXED ACCOUNT PAYMENT OPTIONS

The amounts shown in these tables are the guaranteed amounts for each $1,000 of
the policy proceeds. Higher current amounts may be available at the time of
settlement.

<TABLE>
<CAPTION>
Option 2, Table 1 Option 3, Table II Option 3, Table III Option 3, Table IV
- ------------------------------------------------------------------------------------------------------------------------------------

Number Amount of Monthly Installment For Life Monthly Installment for Life Monthly Installment For Life
of Years Monthly No Period Certain 10 Years Certain Guaranteed Return Of
Payable Installment Policy Proceeds
---------------------------------------------------------------------------------------------------------

Age Male Female Unisex Male Female Unisex Male Female Unisex
- ------------------------------------------------------------------------------------------------------------------------------------

OPTION 5, TABLE V
- --------------------------------------------------------------------------------
MONTHLY INSTALLMENT FOR JOINT AND FULL SURVIVOR

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

Age of Age of Female Annuitant
Male
-------------------------------------------------------------------------------------------------------------------

Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Male Male Male Male Male Male Male

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

MONTHLY INSTALLMENT FOR UNISEX JOINT AND FULL SURVIVOR

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

Age of Age of Joint Annuitant *
First
-------------------------------------------------------------------------------------------------------------------

Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
First First First First First First First
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
50 $3.04 $3.09 $3.15 $3.21 $3.27 $3.33 $3.39
55 3.17 3.24 3.32 3.40 3.48 3.58 3.63
60 3.34 3.44 3.54 3.84 3.75 3.85 3.95
65 3.57 3.70 3.83 3.97 4.11 4.26 4.39
70 3.84 4.04 4.22 4.42 4.82 4.82 5.01
- ------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

Age nearest birthday
- --------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments under Option 2 shall be the
monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and
for Options 3 and 5 the monthly installment shown multiplied by 11.80, 5.95 or
2.99 respectively.
- --------------------------------------------------------------------------------
Dollar amounts of monthly installments not shown in the above tables will be
calculated on the same basis as those shown and may be obtained from the
Company.

T819 PAGE 12
<PAGE>

VARIABLE PAYMENT OPTIONS
BASED ON ASSUMED INVESTMENT RETURN

The amounts shown in these tables are the initial payment amounts based on a
5.0% Assumed Investment Return for each $1,000 of the policy proceeds.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Option 3 - V, Table II Option 3 - V, Table III
- ---------- --------------------------------------------------------------------------------------------------------
Monthly Installment for Life Monthly Installment For Life
No Period Certain 10 Years Certain
------------------------------------------------------------------------------------------------------------
Age Male Female Unisex Male Female Unisex
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 $5.11 $4.81 $4.96 $5.07 $4.79 $4.94
51 5.17 4.85 5.02 5.13 4.83 4.99
52 5.24 4.90 5.07 5.19 4.88 5.04
53 5.31 4.95 5.13 5.25 4.93 5.10
54 5.38 5.01 5.20 5.32 4.98 5.16
55 5.46 5.06 5.26 5.39 5.04 5.22
56 5.54 5.12 5.34 5.47 5.09 5.28
57 5.63 5.19 5.41 5.54 5.16 5.36
58 5.72 5.26 5.49 5.63 5.22 5.43
59 5.82 5.34 5.58 5.72 5.29 5.51
60 5.93 5.42 5.68 5.81 5.37 5.60
61 6.04 5.50 5.78 5.91 5.44 5.69
62 6.17 5.60 5.89 6.02 5.53 5.78
63 6.30 5.69 6.00 6.13 5.62 5.88
64 6.44 5.80 6.13 6.25 5.71 5.99
65 6.60 5.91 6.26 6.37 5.82 6.10
66 6.76 6.04 6.40 6.50 5.92 6.22
67 6.94 6.17 6.56 6.63 6.04 6.35
68 7.13 6.31 6.72 6.77 6.16 6.48
69 7.33 6.46 6.90 6.92 6.29 6.62
70 7.55 6.63 7.09 7.07 6.43 6.76
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

OPTION 5V, TABLE V
- --------------------------------------------------------------------------------
MONTHLY INSTALLMENT FOR JOINT AND FULL SURVIVOR

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------

Age of Age of Female Annuitant
Male
-----------------------------------------------------------------------------------------------------

Annuitant* 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Male Male Male Male Male Male Male

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

MONTHLY INSTALLMENT FOR UNISEX JOINT AND FULL SURVIVOR

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------

Age of Age of Joint Annuitant *
First
-----------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
The annual, semi-annual or quarterly installments under Option 2 shall be the
monthly installment shown multiplied by 11.84, 5.96 or 2.99 respectively, and
for Options 3-V and 5-V the monthly installment shown multiplied by 11.80,
5.95 or 2.99 respectively.
- --------------------------------------------------------------------------------
Dollar amounts of monthly installments not shown in the above tables will be
calculated on the same basis as those shown and may be obtained from the
Company.

TB819 PAGE 13

<PAGE>

SECTION 11 - GENERAL PROVISIONS

THE CONTRACT

The entire contract consists of this policy, endorsements, if any, and any
application.

MODIFICATION OF POLICY

No change in this policy is valid unless made in writing by us and approved by
one of our officers. No Registered Representative has authority to change or
waive any provision of your policy.

TAX QUALIFICATION

This policy is intended to qualify as an annuity contract for federal income tax
purposes. The provisions of this policy are to be interpreted to maintain such
qualification, notwithstanding any other provisions to the contrary. To maintain
such tax qualification, we reserve the right to amend this policy to reflect any
clarifications that may be needed or are appropriate to maintain such tax
qualification or to conform this policy to any applicable changes in the tax
qualification requirements. We will send you a copy in the event of any such
amendment. If you refuse such an amendment it must be by giving us written
notice, and your refusal may result in adverse tax consequences.

NON-PARTICIPATING

This policy will not share in our surplus earnings.

AGE OR SEX CORRECTIONS

If the age or sex of the annuitant has been misstated, the benefits will be
those which the premiums paid would have purchased for the correct age and sex.
If required by law to ignore differences in the sex of the annuitant the payment
options will be determined using the unisex factors in Section 10.

Any underpayment made by us will be paid with the payment. Any overpayment made
by us will be deducted from future payments. Any underpayment or overpayment
will include interest at 5% per year, from the date of the wrong payment to the
date of the adjustment.

INCONTESTABILITY

This policy shall be incontestable from the policy date.

EVIDENCE OF SURVIVAL

We have the right to require satisfactory evidence that a person was alive if a
payment is based on that person being alive. No payment will be made until we
receive the evidence.

SETTLEMENT

Any payment by us under this policy is payable at our Home Office.

PREMIUM TAXES

Your state may impose a premium tax. It may be imposed when a premium payment is
made, or on the Annuity Commencement Date, date of death, or date of withdrawal.
When permitted by state law, we will not deduct the tax until the Annuity
Commencement Date, date of death, or date of withdrawal.

RIGHTS OF OWNER

The owner may, while the annuitant is living:

1. Assign this policy.

2. Surrender the policy to us.

3. Amend or modify the policy with our consent

4. Receive annuity payments or name a Payee to receive the payments.

5. Exercise, receive and enjoy every other right and benefit contained in the
policy.

The use of these rights may be subject to the consent of any assignee or
irrevocable beneficiary; and of the spouse in a community or marital property
state.

SUCCESSOR OWNER

A successor owner can be named in any application, or in a notice you sign which
gives us the facts we need. The successor owner will become the new owner when
you die, if you die before the annuitant. If no successor owner survives you and
you die before the annuitant, your estate will become the new owner.

CHANGE OF OWNERSHIP

In the case of a non-tax qualified annuity, you can change the owner of this
policy, from yourself to a new owner, in a notice you sign which gives us the
facts that we need. When this change takes effect, all rights of ownership in
this policy will pass to the new owner.

A change of owner or successor owner will not be effective until it is recorded
in our records. After it has been so recorded, the change will take effect as of
the date you signed the notice. However, if the annuitant dies before the notice
has been so recorded, it will not be effective as to those proceeds we have paid
before the change was recorded in our records. We may require that the change be
endorsed in the policy. Changing the owner or naming a new successor owner
cancels any prior choice of successor owner, but does not change the beneficiary
or the annuitant.

OPTION TO CHANGE ANNUITY COMMENCEMENT DATE

You may change the Annuity Commencement Date at any time before the Annuity
Commencement Date. You must give us 30 days written notice. However, the Annuity
Commencement Date may not be later than the last day of the policy month
starting after the Annuitant attains age 85, except as expressly allowed by us,
but in no event later than the last day of the policy month following the month
in which the Annuitant attains age 90.

H509 PAGE 14
<PAGE>

SECTION 11 - CONT

ASSIGNMENT

(a) In the case of a non-tax qualified annuity, this policy may be assigned.
The assignment must be in writing and filed with us.

(b) We assume no responsibility for the validity of any assignment. Any claim
made under an assignment shall be subject to proof of interest and the
extent of the assignment.

(c) This policy may be applied for and issued to qualify as a tax-qualified
annuity under certain sections of the Internal Revenue Code. Ownership of
this policy then is restricted so that it will comply with provisions of
the Internal Revenue Code.

BENEFICIARY

Death proceeds, when payable in accordance with Section 9, are payable to the
designated beneficiary or beneficiaries. Such beneficiary(ies) must be named in
any application and may be changed without consent (unless irrevocably
designated or required by law) by notifying us in writing on a form acceptable
to us. The change will take effect upon the date you sign it, whether or not you
are living when we receive it. The notice must have been postmarked (or show
other evidence of delivery that is acceptable to us) on or before the date of
death. Your most recent change of beneficiary notice will replace any prior
beneficiary designations. No change will apply to any payment we made before the
written notice was received. If an irrevocable beneficiary dies, you may
designate a new beneficiary.

You may direct that the beneficiary shall not have the right to withdraw, assign
or commute any sum payable under an option. In the absence of such election or
direction, the beneficiary may change the manner of payment or make an election
of any option.

If any primary or contingent beneficiary dies before the annuitant, that
beneficiary's interest in this policy ends with that beneficiary's death. Only
those beneficiaries living at the time of the annuitant's death will be eligible
to receive their share of the Death Proceeds. In the event no contingent
beneficiaries have been named and all primary beneficiaries have died before the
death proceeds become payable, the owner will become the beneficiary unless
elected otherwise in accordance with Section 9. If both primary and contingent
beneficiaries have been named, payment will be made to the named primary
beneficiaries living at the time the death proceeds become payable. If there is
more than one beneficiary and you failed to specify their interest they will
share equally. Payment will be made to the named contingent beneficiary(ies)
only if all primary beneficiaries have died before the death proceeds become
payable. If any primary beneficiary is alive at the time the death proceeds
become payable, but dies before receiving their payment their share will be paid
to their estate.

In cases where the annuitant dies and the owner (who is not the annuitant)
elected to receive the death benefit in accordance with Section 9, if the
annuitants estate has been named as beneficiary, then payment will be made to
the owner.

PROTECTION OF PROCEEDS

Unless you so direct by filing written notice with us, no beneficiary may assign
any payments under this policy before the same are due. To the extent permitted
by law, no payments under this policy will be subject to the claims of creditors
of any beneficiary.

DEFERMENT

We will pay any partial withdrawals or surrender proceeds within 7 days after we
receive all requirements that we need. However, it may happen that the New York
Stock Exchange is closed for trading (other than the usual weekend or holiday
closings), or the Securities and Exchange Commission restricts trading or
determines that an emergency exists. If so, it may not be practical for us to
determine the investment experience of the Separate Account. In that case, we
may defer transfers among the Subaccounts and to the Fixed Account, and
determination or payment of partial withdrawals or surrender proceeds.

When permitted by law, we may defer paying any partial withdrawals or surrender
proceeds from the Fixed Account for up to 6 months from the withdrawal or
surrender date. Interest will be paid on any amount deferred for 30 days or
more. This rate will be 3% per year unless otherwise required by law.

REPORTS TO OWNER

We will give you an annual report at least once each Policy Year. This report
will show the number and value of the accumulation units held in each of the
Subaccounts as well as the value of the Fixed Account. It will also give you any
other facts required by law or regulation.

MINIMUM VALUES

Benefits available under this policy are not less than those required by any
statute of the state in which the policy is delivered.

J509 PAGE 15
<PAGE>

AUSA Life Insurance Company
Home Office located at 4 Manhattanville Road, Purchase, New York 10577

<TABLE>
<CAPTION>
INDEX
Page
<S> <C>
Accumulation Units..................................................... 7
Age or Sex Corrections................................................. 14
Annuity Payments....................................................... 11(A)
Adjusted Policy Value.................................................. 4
Assignment............................................................. 15
Beneficiary............................................................ 15
Cash Value............................................................. 5
Contract............................................................... 14
Death Proceeds......................................................... 10
Definitions............................................................ 2
Dollar Cost Averaging.................................................. 9
Evidence of Survival................................................... 14
Excess Interest Adjustment............................................. 5, 6
Fixed Account.......................................................... 8
Guaranteed Minimum Death Benefit....................................... 10
Guaranteed Return of Fixed Account Premium Payments.................... 6
Guaranteed Periods..................................................... 8
Incontestability....................................................... 14
Modification of Policy................................................. 14
Nonparticipation....................................................... 14
Option to Change Annuity Commencement Date............................. 14
Owner.................................................................. 14
Partial Withdrawals.................................................... 5, 6
Payee.................................................................. 11(A)
Payment Option Tables.................................................. 12, 13
Policy Data Page....................................................... 3
Policy Value........................................................... 4
Premium Payments....................................................... 4
Proof of Age........................................................... 11(A)
Protection of Proceeds................................................. 15
Separate Account....................................................... 7
Service Charge......................................................... 4
Settlement............................................................. 14
Surrender Charges...................................................... 6
Ten Day Right To Cancel................................................ 1
Transfers.............................................................. 9
</TABLE>

Y465

<PAGE>

EXHIBIT (5)
-----------

FORM OF APPLICATION FOR THE
RETIREMENT INCOME BUILDER VARIABLE ANNUITY
<PAGE>

RETIREMENT INCOME BUILDER VARIABLE ANNUITY

Issued by AUSA Life Insurance Company, Inc. (AUSA Life) Home Office: 4
Manhattanville Road, Purchase, New York 10577 * Policyholder Service: 800-
525-6205 Mail the application a and check payable to: AUSA Life Insurance
Company, Inc. * 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001,
Attn: Variable Annuity Dept.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C>
1. OWNER(S) Name___________________________________________________ [_] M [_] F Birthdate ______/ ______/ ______

Address ___________________________________________________________________________________________________
Street City State Zip

Soc. Sec. No. _________________________________________ Phone No. _____________________________________

Name __________________________________________________ [_] M [_] F Birthdate ______/ ______/ ______

Address ___________________________________________________________________________________________________
Street City State Zip

Soc. Sec. No. _________________________________________ Phone No. _____________________________________
....................................................................................................................................

ANNUITANT Name __________________________________________________ [_] M [_] F Birthdate ______/ ______/ ______
Leave blank if
Annuitant is same Address____________________________________________________________________________________________________
as sole Owner Street City State Zip

Soc. Sec. No. ________________________________________ Relationship to Owner _________________________

. If you, the policyowner, have named someone other than yourself as the annuitant please select one of the
following regarding payment of the death proceeds. If neither is selected, the first option will be deemed
in effect:
[_] At the named annuitant's death, I wish to become the annuitant and defer payment of death proceeds
until my death
[_] At the named annuitant's death, I wish to have the death proceeds paid to the named beneficiary.

Policy Owner Signature Required: ________________________________________________________________________
....................................................................................................................................

BENEFICIARY(IES) Primary ___________________________________________ Relationship to Owner _____________ Percentage ____

Contingent ________________________________________ Relationship to Owner _____________ Percentage ____
____________________________________________________________________________________________________________________________________

2. PREMIUM Initial Premium $ ____________________ (Min:$2000) Investment Allocation (whole % only, no fractions)
PAYMENT / Variable Options: AUSA Life Fixed Options:
PLAN OPTIONS ----------------- ------------------------
Fidelity VIP Options: [_] 1 Year for DCA only (must
[_] VIP II Asset Manager .0% [_] VIP Equity-Income .0% complete DCA form) .0%
----- ------ -----

[_] VIP II Asset Manager - .0%
Growth .0% [_] VIP Overseas .0% AUSA Life Guarantee Periods: -----
----- ------
[_] VIP Growth .0% [_] VIP High Income .0% [_] 1 Year
----- ------
[_] VIP II Contrafund [_] VIP II Investment [_] 3 Year
.0% Grade Bond .0% .0%
----- ------ -----
[_] VIP II Index 500 .0% [_] VIP Money Market .0% [_] 5 Year .0%
-----

[_] 7 Year .0%
-----
Note: Initial variable premium payments will be invested in the Total (variable and fixed) 100%
VIP Money Market Option for at least 14 days, or longer,
based on your state's "Right to Cancel" period. See your policy
for details.

ENHANCED DEATH BENEFIT OPTION (Select only one):
-----------------------------
Your selection cannot be changed after the policy has been issued. If no option has been specified, the
contract will be issued with the option for return of premium less distributions (second option below).

[_] Return of premiums paid less distributions taken: Annual M&E risk fee and administrative charge is 1.25%.
[_] Annual Step-up Death Benefit. Annual Mortality and Expense (M&E) risk fee and administrative charge is
1.40%.
....................................................................................................................................

REPLACEMENT Will this annuity replace or change any existing annuity or life insurance? [_] Yes [_] No (If Yes,
INFORMATION complete the following.)

Company ____________________________________________________ Policy No. _________________________________

TAX QUALIFIED [_] Yes [_] No (If Yes, Complete the following.) [_] Other Tax Qualified Plan _______ (type)
PLAN
[_] IRA Rollover: $ _______ [_] IRA: $ _______ Yr. of Contribution: ___ [_] IRA Transfer [_] Qualified
Plan
Rollover

____________________________________________________________________________________________________________________________________

3. . IRS disclosure regarding distributions from this policy: Under penalties of perjury, I hereby certify (1)
that the Social Security or Taxpayer I.D. number listed in Section 1 of this application is correct and (2)
that I am currently not subject to withholding. (Cross out (2) if NOT correct.) See reverse for an
explanation of this disclosure.

The Internal Revenue Service does not require your consent to any provision of this document other than the
certifications required to avoid backup withholding. Signature Required _________________________________

______________________________________________________________________________________________________________

. I understand that Policy Values, when allocated to any of the variable options above are not guaranteed as
to a fixed dollar amount.

. When funds are allocated to the Fixed Account guarantee Periods, Policy Values under the policy may increase
or decrease in accordance with the Excess Interest Adjustment prior to the end of the Guarantee Period.

. I have reviewed my existing Insurance coverage and find this policy suitable for my needs.

. To the best of my knowledge and belief, my answers to the questions on this application are correct and
true, and I agree that this application becomes a part of the annuity policy when issued to me. If this
application is part of an instant issue policy, I acknowledge that I am in receipt of a complete copy of the
policy provisions herewith.

. This application is subject to acceptance by AUSA Life. If this application is rejected for any reason, AUSA
Life will be liable only for return of premiums paid.

. Send me a copy of the Statement of Additional Information. [_]

. I am in receipt of a current prospectus for this variable annuity.
....................................................................................................................................

SIGNATURE(S) Signed at _________________________________________________________________ Date ______/ ______/ ______
City State

Owner(s) _____________________________ Annuitant (if not Owner) _______________________________________
....................................................................................................................................

AGENT USE Do you have reason to believe the annuity applied for will replace or change any existing annuity or life
ONLY insurance? [_] Yes [_] No

Registered Rep/Agent (Please print) ___________________________ Signed __________________________________

Phone No. __________________________ Soc. Sec. No. ___________________ AUSA Agent # __________________

....................................................................................................................................

SEE YOUR PROSPECTUS AND POLICY PROVISIONS FOR TERM EXPLANATIONS.
</TABLE>
<PAGE>

**PURPOSE OF STATEMENT. This statement is for the payer (Insurance Company) of
interest, dividends, and certain other payments so that you will not be subject
to the 20% backup withholding that became effective January 1, 1984.

This statement is used to report and certify your taxpayer identification
number (TIN) to the payer, to certify that you are not subject to backup
withholding because of underreporting interest and dividends on your tax return,
and to claim exemption from backup withholding if you are an exempt payee.

If you do not certify your TIN, the payer may be required to withhold 20%
of payments made to you.
WHAT IS BACKUP WITHHOLDING. The Interest and Dividend Tax Compliance Act of
1983 requires payers to withhold and pay to IRS 20% Of payments of interest,
dividends, and certain other payments under certain conditions. This is called
"backup withholding." If you give your correct TIN, certify your TIN when
required, and report all your taxable interest and dividends on your tax return,
your payments will not be subject to backup withholding.
Payments you receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the payer, or

(2) IRS notifies the payer that you furnished an incorrect TIN, or

(3) You are notified by IRS that you are subject to backup withholding because
you failed to report all your interest and dividends on your tax return
(for interest and dividend accounts only), or

(4) You fail to certify to the payer that you are not subject to backup
withholding under (3) above (for interest and dividend accounts opened
after 1983 only), or

(5) You fail to certify your TIN. This applies only to interest, dividend
broker, or barter exchange accounts opened after 1983, or broker accounts
considered inactive in 1983.

For other payments, you are subject to backup withholding only if (1) or (2)
above applies.

<PAGE>

EXHIBIT (6)(A)
--------------

ARTICLES OF INCORPORATION
OF AUSA LIFE INSURANCE COMPANY, INC.
<PAGE>

SHORT CERTIFICATE
STATE OF NEW YORK

INSURANCE DEPARTMENT

EDWARD J. MUHL
SUPERINTENDENT OF INSURANCE

It is hereby certified that the annexed copy of Certificate of Amendment of
Certificate of Incorporation of AUSA LIFE INSURANCE COMPANY, INC., of New York,
New York, to change the location of the principal office to Purchase, New York,
as approved by this Department February 14, 1995 pursuant to Section 1206 of the
New York Insurance Law,

has been compared with the original on file in this Department and that it is a
correct transcript therefrom and of the whole of said original.

In Witness Whereof, I have here-
unto set my hand and affixed the
(SEAL) official seal of this Department
at the City of Albany, this
14th day of February, 1995.

Robert A. Ginnelly

Special
Deputy Superintendent of Insurance
<PAGE>

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

AUSA LIFE INSURANCE COMPANY, INC.

(Under Section 805 of the Business Corporation Law)

We, the undersigned, being the President and Secretary of AUSA LIFE
INSURANCE COMPANY, INC., do hereby certify as follows:

1. The name of the Corporation is AUSA LIFE INSURANCE COMPANY, INC. The
Corporation was originally incorporated under the name of ZURICH LIFE INSURANCE
COMPANY, and its name was thereafter changed to DREYFUS LIFE INSURANCE COMPANY,
and then to AUSA LIFE INSURANCE COMPANY, INC., the Corporation's present name.

2. The Certificate of Incorporation was filed in the Office of the
Department of Insurance of the State of New York on the 3rd day of October,
1947.

3. As authorized by Section 801(b) (3) of the Business Corporation
Law, the Certificate of Incorporation is amended to change the location of the
principal office of the corporation to Purchase, New York.

4. To accomplish the foregoing, the first sentence of Article II of
the Certificate of Incorporation is amended to read as follows:
<PAGE>

"The principal office of the Company is to be located in the
Town of Purchase, County of Westchester, State of New York,
and it shall have power to conduct its business wherever
authorized by laws."

5. The amendment to the Certificate of Amendment was authorized by
resolution of the Board of Directors of the Corporation at a meeting held on
December 6, 1994 and by Written Consent of the Sole Shareholder of the
Corporation dated December 6, 1994.

IN WITNESS WHEREOF, we have made, subscribed and acknowledged this
Certificate this 19th day of December, 1994.
----
/s/ Tom Schlossberg
----------------------------------
President

/s/ Larry G. Brown
----------------------------------
Secretary

VERIFICATION

State of New York )
) ss:
County of Westchester )
-----------

On the 19th day of December, 1994, before me personally came Tom
---- ---
Schlossberg and ______________ known to me to be the persons who executed the
- -----------
foregoing instrument, and they duly acknowledged before me that they executed
the same.

/s/ Catherine A. Mohr
---------------------
Notary Public

(SEAL)
<PAGE>

SHORT CERTIFICATE
STATE OF NEW YORK

INSURANCE DEPARTMENT

SALVATORE R. CURIALE
SUPERINTENDENT OF INSURANCE

It is hereby certified that the annexed copy of Certificate of Amendment of
Certificate of Incorporation of DREYFUS LIFE INSURANCE COMPANY, of New York, New
York, to change the name of the corporation to AUSA Life Insurance Company,
Inc., as approved by this Department September 27, 1993 pursuant to Section 1206
of the New York Insurance Law,

HAS BEEN COMPARED WITH THE ORIGINAL ON FILE IN THIS DEPARTMENT AND THAT IT IS A
CORRECT TRANSCRIPT THEREFROM AND OF THE WHOLE OS SAID ORIGINAL.

IN WITNESS WHEREOF, I have here
unto set my hand and affixed
(SEAL) the official seal of this Department
at the City of Albany, this
10th day of November, 1993.

/s/ James W. Clyne
DEPUTY SUPERINTENDENT OF INSURANCE
<PAGE>

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

DREYFUS LIFE INSURANCE COMPANY

(Under section 805 of the Business Corporation Law)

We, the undersigned, being the President and Secretary of DREYFUS LIFE
INSURANCE COMPANY, do hereby certify as follows:

1. The name of the Corporation is DREYFUS LIFE INSURANCE COMPANY. The
Corporation was originally incorporated under the name of ZURICH LIFE INSURANCE
COMPANY, and its name was thereafter changed to DREYFUS LIFE INSURANCE COMPANY,
the Corporation's present name.

2. The Certificate of Incorporation was filed in the Office of the
Department of Insurance of the State of New York on the 3rd day of October,
1947.

3. As authorized by Section 801(b) (1) of the Business Corporation Law,
the Certificate of Incorporation is amended to change the name of the
corporation to "AUSA Life Insurance Company, Inc.".

4. To accomplish the foregoing, Article I of the Certificate of
Incorporation is amended to read as follows:

"The name of this Corporation is AUSA Life Insurance Company, Inc."
<PAGE>

5. The amendment to the Certificate of Amendment was authorized by
unanimous Written Consent of the Board of Directors of the Corporation dated
September 24, 1993 and by Written consent of the Sole Shareholder of the
--
Corporation dated September 24, 1993.
--

IN WITNESS WHEREOF, we have made, subscribed and acknowledged this
Certificate this 24th day of September, 1993.
---- ---------

/s/ Tom Schlossberg
------------------------------------
President

/s/ Larry G. Brown
------------------------------------
Secretary

VERIFICATION

State of New York )
) ss:
County of Queens )

On the 24th day of September, 1993, before me personally came
----
Tom Schlossberg and Larry G. Brown known to me to be the persons who executed
- --------------- --------------
the foregoing instrument, and they duly acknowledged before me that they
executed the same.

/s/ Carole Anne Biumi
------------------------------------
Notary Public

(SEAL)
<PAGE>

[LOGO OF STATE OF NEW YORK OF INSURANCE DEPARTMENT APPEARS HERE]

STATE OF NEW YORK

INSURANCE DEPARTMENT

AGENCY BUILDING ONE
THE GOVERNOR NELSON A. ROCKEFELLER
EMPIRE STATE PLAZA
ALBANY, NEW YORK 12257
James P. Corcoran
Superintendent of Insurance

The attached Certificate of Amendment of Certificate of Incorporation of
DREYFUS LIFE INSURANCE COMPANY, of New York, New York, filed pursuant to Section
805 of the Business Corporation Law to effect the following:

1. To increase the capital stock from $2,000,000 comprised of 20,000
shares with a par value of $100.00 per share to $2,500,000
comprised of 20,000 shares with a par value of $125.00 per share.

2. To amend Article IV of the Certificate of Incorporation regarding
the limiting of personal liability of directors.

IS HEREBY APPROVED pursuant to Section 1206 of the New York Insurance Law.

In Witness Whereof, I have hereunto
set my hand and affixed the
(SEAL) official seal of this Department
at the City of Albany, this
11th day of August, 1989.

JAMES P. CORCORAN
Superintendent of Insurance

By /s/ Robert A. Ginnelly

Special Deputy Superintendent
<PAGE>

================================================================================

ORIGINAL

STATE OF NEW YORK-INSURANCE DEPARTMENT
_________

$ 250.00 Albany, NY August 11, 1989
-------- --------------------------------
RECEIVED from DREYFUS LIFE INSURANCE COMPANY
------------------------------------------------------------------
Two Hundred Fifty and 00/100 -----------------------------------Dollars,
- ----------------------------------------------------------------
in payment of tax provided by Section 180. Tax Law, as amended by Chapter 794,
Laws of 1923. One-twentieth of one per centum upon $ 500,00. of shares with par
--------
value ...........................................................$ 250.00
----------
Five cents per share upon __________ shares without par value ...$__________
----------

Total .......................$ 250.00
----------

SUPERINTENDENT OF INSURANCE

By /s/ Robert A. Ginnelly
--------------------------------------
================================================================================
Special Deputy Superintendent of Insurance

<PAGE>

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION
----------------------------

DREYFUS LIFE INSURANCE COMPANY
------------------------------

(Pursuant to Section 805 of the Business Corporation Law)

We, the undersigned, being the President and Secretary of DREYFUS LIFE
INSURANCE COMPANY, do hereby certify as follows:

2 The Certificate of Incorporation was filed in the Office of the
Department of Insurance of the State of New York on the 3rd day of October,
1947.

3. As authorized by Section 801(b) (9) of the Business Corporation Law,
the Certificate of Incorporation is amended to increase the authorized capital
from 20,000 shares, par value $100 each, to 20,000 shares, par value $125 each.

4. To accomplish the foregoing, Article VIII of the Certificate of
Incorporation is amended to read as follows:

"The capital stock of the Company shall be two million five hundred
thousand dollars ($2,500,000) divided into twenty thousand (20,000)
shares of the par value of one hundred twenty-five dollars ($125)
each."
<PAGE>

5. As authorized by Section 801(b) (14) of the Business Corporation
Law, the Certificate of Incorporation is amended to add a provision limiting
personal liability of directors of the corporation.

6. To accomplish the foregoing, Article IV of the Certificate of
Incorporation is amended to add a fifth paragraph thereto to read as follows:

"No director shall be personally liable to the Corporation or any
of its shareholders for damages for any breach of duty as a
director; provided, however, that the foregoing provision shall
not eliminate or limit (1) the liability of a director if a
judgment or other final adjudication adverse to him or her
establishes that his or her acts or omissions were in bad faith
or involved intentional misconduct or any violation of the-
Insurance Law or a knowing violation of any other law or that he
or she personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled; or (2) the
liability of a director for any act or omission prior to the
adoption of this amendment by the shareholders of the
Corporation."

7. The amendment to the Certificate of Amendment was authorized by
vote of the holdings of a majority of the outstanding share of the Corporation
at a meeting duly held on the 7th day of June, 1989.
--- ----
IN WITNESS WHEREOF, we have made, subscribed and acknowledged this
Certificate this 19th day of June, 1989.
---- ----

/S/ Howard Stein
----------------------------------
President

/S/ Mark N. Jacobs
-----------------------------------
Secretary
<PAGE>

VERIFICATION

State of New York )
) ss:
County of New York )

Mark N. Jacobs, being first duly sworn deposes and says that he is
--------------
Secretary of Dreyfus Life Insurance Company, that he has read the foregoing
Certificate of Amendment and knows the contents thereof, and the statements
contained therein are true.

/S/ Mark N. Jacobs
----------------------------------
Mark N. Jacobs, Secretary
--------------

Sworn to before me
this day of June 19, 1989
-------
/S/ Charles J. DeMarco
- ----------------------
Notary
(SEAL)

State of New York )
) ss:
County of New York )

On the 19th of June, 1989, before me personally came Howard Stein and Mark
---- ---- ------------ ----
N. Jacobs known to me to be the persons who executed the foregoing instrument,
- ---------
and they duly acknowledged before me that they executed the same.

/S/ Charles J. DeMarco
----------------------------------
Notary Public

<PAGE>
STATE OF NEW YORK INSURANCE DEPARTMENT LOGO APPEARS HERE

ALBERT S. LEWIS
Superintendent of Insurance

The attached Certificate of Amendment of the Charter of ZURICH LIFE
INSURANCE COMPANY, of New York, New York, to effect the following:

1. To increase the capital stock from $1,100,000 comprised of 11,000
shares with a par value of $100.00 per share to $2,000,000
comprised of 20,000 shares with a par value of $100.00 per share.

2. To change the name of the Company from ZURICH LIFE INSURANCE
COMPANY to DREYFUS LIFE INSURANCE COMPANY.

IS HEREBY APPROVED pursuant to Section 53 of the New York Insurance Law.

IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the
(SEAL) official seal of this Department
at the City of Albany, New York,
this lst day of December, 1982.

ALBERT B. LEWIS
Superintendent of Insurance

By James W. Clyne
Deputy Superintendent
<PAGE>

================================================================================

ORIGINAL
STATE OF NEW YORK--INSURANCE DEPARTMENT
--------
$ 450.00 NY December 1, 1982
- --------- Albany,-------------------------------
RECEIVED from ZURICH LIFE INSURANCE COMPANY
-----------------------------------------------------------------
Four Hundred Fifty and 00/100 --------------------------------------Dollars,
- ------------------------------------------------------------------------------
in payment of tax provided by Section 180, Tax Law, as amended by Chapter 794,
aws of 1923.

One-twentieth of one per centum upon $ 900,000. of shares with
---------
par value ...................................................... $ 450.00
----------
Five cents per share upon _______ shares without par value .... $__________
----------
TOTAL ...................... $ 450.00
----------

SUPERINTENDENT OF INSURANCE

By /S/ James W. Clyne
-------------------------------------------
================================================================================
Deputy Superintendent of Insurance
<PAGE>

CERTIFICATE OF AMENDMENT OF THE CHARTER

ZURICH LIFE INSURANCE COMPANY

pursuant to

Section 53 of the Insurance Law of

the State of New York

________

We, the undersigned, HOWARD STEIN and MARK JACOBS, being the President
and the Secretary respectively of ZURICH LIFE INSURANCE COMPANY (hereinafter
sometimes called "the Company"), for the purpose of amending certain provisions
of the Charter of the Company pursuant to Section 53 of the Insurance Law of the
State of New York, do hereby make, subscribe and acknowledge this certificate
and do hereby certify as follows:

1. That the Charter of the Company was filed in the office of the
Insurance Department of the State of New York on October 3, 1947.

2. That the Company has an authorized capital of one million one
hundred thousand dollars ($1,100,000.00) divided into eleven thousand
(11,000) shares of the par value of one hundred dollars ($100.00) each.

3. That Article I of the Charter of the Company is hereby amended to
read as follows:
<PAGE>

"ARTICLE I.

"The name of this company is:

DREYFUS LIFE INSURANCE COMPANY."

4. That ARTICLE VIII of the Charter of the Company is hereby amended
to read as follows:

"ARTICLE VIII.

The capital stock of the company shall be two million dollars
($2,000,000.00) divided into twenty thousand (20,000) shares of the
par value of one hundred dollars ($100.00) each."

5. This certificate (a) has been approved by the Board of Directors
of the Company at a meeting thereof duly held at 767 Fifth Avenue, New
York, N.Y., on November 30, 1982, at which a quorum was present and voted,
and (b) has been consented to by the holder of all of the outstanding
shares of capital stock of the Company on November 30, 1982.

-2-
<PAGE>

IN WITNESS WHEREOF, we have made, subscribed and acknowledged this
certificate this 30th day of November, 1982.

/s/ Howard Stein
--------------------------------------
(Howard Stein) President
(Corporate Seal)
/s/ Mark Jacobs
--------------------------------------
(Mark Jacobs) Secretary

STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )

On this 30th day of November, 1982, before me personally came HOWARD STEIN
and MARK JACOBS, to me known and known to me to be the individuals described in
and who executed the foregoing certificate, and they severally and duly
acknowledged to me that they have been duly authorized to execute, and have
executed, the same.

(Notarial Seal) /s/ Ann M. Ippolito
--------------------------------------
Notary Public

-3-
<PAGE>

[LOGO OF STATE OF NEW YORK INSURANCE DEPARTMENT APPEARS HERE]

STATE OF NEW YORK
INSURANCE DEPARTMENT

AGENCY BUILDING ONE
THE GOVERNOR NELSON A. ROCKEFELLER
ALBERT B, LEWIS EMPIRE STATE PLAZA
SUPERINTENDENT OF INSURANCE ALBANY, NEW YORK 12257

The attached Certificate of Amendment of the Certificate of Incorporation
of ZURICH LIFE INSURANCE COMPANY, of New York, New York, filed pursuant to
Section 805 of the Business Corporation Law to effect the following:

To amend Article IV by replacing paragraph 1
regarding the number of directors.

IS HEREBY APPROVED August 28, 1980 pursuant to Section 53 of the New York
Insurance Law.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
this Department at the City of Albany, New York, this 28th day of August, 1980.

[SEAL]
ALBERT B. LEWIS
Superintendent of Insurance

By /s/ Robert A. Ginnelly
Special Deputy Superintendent

<PAGE>

CERTIFICATE OF AMENDMENT

THE CERTIFICATE OF INCORPORATION OF

ZURICH LIFE INSURANCE COMPANY
-----------------------------

UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW

THE UNDERSIGNED, being the holder of record of all of the outstanding
shares of Zurich Life Insurance Company entitled to vote with relation to the
proceedings provided for in this certificate, hereby certifies:

1. The name of the corporation is Zurich Life Insurance Company.

2. The Certificate of Incorporation of said corporation was filed
with the office of the Superintendent of Insurance on the 3rd day of October,
1947.

3. The Certificate of Incorporation is amended to authorize the
board of directors to fix from time to time the number of directors of the
company.

4. Article IV of the Certificate of Incorporation is amended by
replacing paragraph 1 of such Article and substituting therefor the following:

"The corporate powers of the company shall be exercised by a board of
directors, and through such officers and agents as said board shall
empower. The number of directors of the company may be fixed from time
to time by the directors in accordance with the ByLaws, but at no time
shall the number of directors be less than thirteen nor more than
twenty one. At all times a majority of the directors shall be citizens
and residents of the State of New York, or of adjoining states, and
not less than three of such directors shall be residents of the State
of New York. Each director shall be at least eighteen years of age.
The directors shall not be required to own any shares of stock in the
company."
<PAGE>

5. The above amendment was authorized by unanimous written consent
setting forth the action taken, signed by the holder of all outstanding shares
entitled to vote thereon.

IN WITNESS WHEREOF, we have signed this certificate on the 13 day of
--
August, 1980 and we affirm the statements contained therein as true under
- ------
penalties of perjury.

BANKERS TRUST COMPANY
Trustee under a Deed of Trust
for the time being in the
United States of America of
Zurich Insurance Company

By /s/ James F. Barrett
--------------------------------

James F. Barrett, Assistant Vice
President
<PAGE>

STATE OF ILLINOIS )
) ss:
COUNTY OF COOK )

C. M. George being duly sworn, deposes and says:
------------------,

That he is the Secretary of Zurich Life Insurance Company and that the
persons who have executed the foregoing certificate in person or by proxy
constitute the holders of record of all of the outstanding shares of the
corporation entitled to vote with relation to the proceedings provided for in
the certificate.

Subscribed and sworn to
before me this 13th day
----
of August, 1980. /s/ C.M.George
------ -- -------------------------------

/s/ Verda Wille
- --------------------------
Notary Public

(SEAL)
<PAGE>

================================================================================
ORIGINAL
STATE OF NEW YORK INSURANCE DEPARTMENT

__________

$ 200.00 Albany, September 13, 1972
-------- ----------------------------
ZURICH LIFE INSURANCE COMPANY
RECEIVED from--------------------------------------------------------------
TWO-HUNDRED ------------------------------------------------------Dollars,
- ---------------------------------------------------------------------------
in payment of tax provided by Section 180, Tax Law, as amended by
Chapter 794, Laws of 1923.

One-twentieth of one per centum upon $ 400,000 of shares with
--------
par value . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200.00
----------
Five cents per share upon _______ shares without par value . . $_________

Total . . . . . . . . . . . $ 200.00
----------
BENJAMIN R. SCHENCK
SUPERINTENDENT OF INSURANCE
By /s/ [SIGNATURE ILLEGIBLE]
-------------------------------
================================================================================
Robert J. Bertrand, Deputy Superintendent of Insurance

<PAGE>

[LOGO OF STATE OF NEW YORK INSURANCE DEPARTMENT APPEARS HERE]

STATE OF NEW YORK
INSURANCE DEPARTMENT
324 STATE STREET
BENJAMIN R. SCHENCK ALBANY 12210
Superintendent of Insurance

The attached Certificate of Amendment of Charter of ZURICH LIFE INSURANCE
COMPANY, of New York, New York to effect the following:

To increase authorized capital from $700,000
comprised of 7,000 shares with par value of
$100 per share to $1,100,000 comprised of
11,000 shares with par value of $100 per
share,

IS HEREBY APPROVED September 13, 1972 pursuant to Section 53 of the New
York Insurance Law.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
this Department at the City of Albany, New York, this 13th day of September,
1972.

[SEAL]

BENJAMIN R. SCHENCK
Superintendent of Insurance

By /s/ Robert J. Bertrand
Robert J. Bertrand
Deputy Superintendent
<PAGE>

CERTIFICATE OF AMENDMENT OF CHARTER

ZURICH LIFE INSURANCE COMPANY

Under Section 805 of the Business Corporation Law

1. The name of the corporation is Zurich Life Insurance Company.

2. The charter of said life insurance company was filed with the
Insurance Department of the State of New York on the 3rd day of October, 1947.

3. (a) The purpose of this certificate of amendment is to increase the
authorized capital stock of the company from seven hundred thousand dollars
($700,000.00) to one million one hundred thousand dollars ($1,100,000.00).

(b) To effect the foregoing, ARTICLE VIII of the charter is hereby
amended so that it -shall now read as follows:

"ARTICLE VIII.

The capital stock of the company shall be one million one hundred
thousand dollars ($1,100,000.00) divided into eleven thousand (11,000)
shares of the par value of one hundred dollars ($100.00) each."
<PAGE>

3. This amendment of the charter is being authorized by the execution
of this certificate by the holder of record of all the outstanding shares of
Zurich Life Insurance Company.

IN WITNESS WHEREOF, the undersigned has made, subscribed and
acknowledged this certificate this 11th day of August, 1972.

BANKERS TRUST COMPANY,
Trustee under a deed of trust for the time being
in the United States of America of Zurich
Insurance Company

[SIGNATURE ILLEGIBLE]
By ______________________________

-2-
<PAGE>

STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )

On this 11th day of August, 1972, before me personally came GEORGE E.
MAIER, to me known, who, being by me duly sworn, did depose and say that he
resides at 2018 Hoyt Avenue, Fort Lee, New Jersey; that he is Vice President of
BANKERS TRUST COMPANY, the corporation described in and which executed the above
instrument that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by older of the
board of directors of said corporation; and that he signed his name thereto by
like order.

/s/Lyle Temple
------------------
Notary Public

LYLE TEMPLE
NOTARY PUBLIC STATE OF NEW YORK
NO. 30-3948960
QUALIFIED IN NASSAU COUNTY
CERTIFICATE FILED IN NEW YORK COUNTY
COMMISSION EXPIRES MARCH 30, 1973
-3-
<PAGE>

STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )

THOMAS PARSONS III, being duly sworn, deposes and says that he is the
Secretary of Zurich Life Insurance Company; and that BANKERS TRUST COMPANY,
which executed the foregoing certificate, constitutes the holder of record of
all of the outstanding shares of the corporation entitled to vote with relation
to the proceedings provided for in the certificate.

/s/ Thomas Parsons III
----------------------
Thomas Parsons III

Sworn to before me this
14th day of August, 1972.

/s/ Ruth Stark
- ----------------------
Notary Public

RUTH STARK
NOTARY PUBLIC. STATE OF NEW YORK
NO. 24-3814050
QUALIFIED IN KINGS COUNTY
CART FILED IN NEW YORK COUNTY
COMMISSION EXPIRES MARCH 30, 1973

-4-
<PAGE>

CERTIFICATE OF AMENDMENT OF CHARTER

ZURICH LIFE INSURANCE COMPANY

Pursuant to Section Thirty-Six of the Stock Corporation Law.

THE UNDERSIGNED, being the holder of record of all of the outstanding
shares of Zurich Life Insurance Company entitled

STATE OF NEW YORK
[LOGO OF THOMAS THACHER] INSURANCE DEPARTMENT

324 STATE STREET
ALBANY- 10

CERTIFICATE OF AMENDMENT OF CHARTER

ZURICH LIFE INSURANCE COMPANY

of New York, N. Y.

APPROVED June 22, 1959 pursuant to Section 38 of
the Stock Corporation Law.

THOMAS THACHER
Superintendent of Insurance

By /s/ John F. Joyce
Acting Deputy Superintendent

<PAGE>

CERTIFICATE OF AMENDMENT OF CHARTER

ZURICH LIFE INSURANCE COMPANY

Pursuant to Section Thirty-Six of the Stock Corporation Law.

THE UNDERSIGNED, being the holder of record of all. of the outstanding
shares of Zurich Life Insurance Company entitled to vote with relation to the
proceedings provided for in this certificate, hereby certifies:

1. The name of the corporation is Zurich Life Insurance Company.

2. The Charter of said life insurance company was filed with the
Insurance Department of the State of New York on the 3rd day of October, 1947.

3. The purpose of this certificate of amendment is to conform
paragraph 3(a) of Article 3 of the Charter to the provisions of subparagraph
3(a) of Section 46 of the Insurance Law, as amended, and to add to the Charter a
provision authorizing the company to transact the kind of insurance provided for
in subparagraph 3(b) of said Section 46.

4. Article 3 of the Charter is hereby amended by adding to paragraph
3(a) thereof the words "including insurance providing disability benefits
pursuant to article nine of the workmens compensation law" so as to conform said
paragraph to section 46 (3) (a) of the Insurance Law as amended, and by adding
thereto a further provision which shall be paragraph 3(b) of said Article, and
said Article shall now read as follows:

"ARTICLE 3

The company is authorized to transact the kinds of insurance
specified in paragraphs 1, 2 and 3 of Section 46 of the Insurance Law,
as follows:

1. "Life insurance," meaning every insurance upon
<PAGE>

the lives of human beings and every insurance appertaining thereto.
The business of life insurance shall be deemed to include the granting
of endowment benefits; additional benefits in the event of death by
accident or accidental means; additional benefits operating to
safeguard the contract from lapse, or. to provide a special surrender
value, in the event of total and permanent disability of the insured,,
and optional modes of settlement of proceeds;

2. "Annuities," meaning all agreements to make periodical payments
where the making or continuance of all or of some of a series of such
payments, or the amount of any such payment, is dependent upon the
continuance of human life, except payments made under the authority of
the previous paragraph;

3. "Accident and health insurance," meaning (a) insurance against
death or personal injury by accident or by any specified kind or kinds
of accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article
nine of the workmen's compensation law, except as specified in
subparagraph (b) following; and

(b) non-cancelable disability insurance, meaning insurance against
disability resulting from sickness, ailment or bodily injury, (but not
including insurance Solely against accidental injury) under any
contract which does not give the insurer the option to cancel
otherwise terminate the contract at or after one year from its
effective date or renewal date.

IN WITNESS WHEREOF, the undersigned has made, subscribed and
acknowledged this certificate this 15th day of June, 1959.

BANKERS TRUST COMPANY,
Trustee under a deed of trust
for the time being in the
United States of America of
Zurich Insurance Company

By /s/ J.C. Kennedy
----------------
J.C. Kennedy
Vice President
<PAGE>

STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )

On this 15th day of June , 1959, before me personally came J.
C. Kennedy to me known, who, being by me duly sworn, did nd say:
That he resides in 73 Gates Avenue, Montclair, New Jersey; that he is the Vice
President of BANKERS TRUST COMPANY, the corporation
described in and which executed the above instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that he signed his name thereto by like order.

Aloyse A. Stephens
------------------
Notary Public

ALOYSE A. STEPHENS
NOTARY PUBLIC STATE OF NEW YORK
NO.0.1.3835150
QUALIFIED IN ???? COUNTY
CERTIFICATE FILED WITH
NEW YORK COUNTY CLERKS & REGISTERS
BRONX COUNTY CLERKS & REGISTERS
TERM EXPIRES MARCH 30, 1961
<PAGE>

STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )

THOMAS PARSONS III being duly sworn, deposes and says that he is the
Secretary of Zurich Life Insurance Company; and that BANKERS TRUST COMPANY,
which executed the foregoing certificate, constitutes the holder of record of
all of the outstanding shares of the corporation entitled to vote with relation
to the proceedings provided for in the certificate.

Sworn to before me this /s/ Thomas Parsons III
----------------------

15th day of June, 1959.

/s/ LEOPOLD MISCIONE

LEOPOLD MISCIONE
NOTARY PUBLIC STATE OF NEW YORK
NO. 24-7971500
QUALIFIED IN KINGS COUNTY
CART FILED IS NEW YORK COUNTY
COMMISSION EXPIRES MARCH 30, 1960

<PAGE>

[LOGO OF STATE OF NEW YORK DEPARTMENT OF LAW APPEARS HERE]

STATE OF NEW YORK

DEPARTMENT OF LAW

ALBANY
NATHANIEL L. GOLDSTEIN
ATTORNEY GENERAL

October 2, 1947

I, NATHANIEL L. GOLDSTEIN, Attorney General of the State of New York, do
hereby certify that I have examined the annexed proposed Declaration and Charter
of the ZURICH LIFE INSURANCE COMPANY, of New York, N.Y., organized pursuant to
the Provisions of the Insurance Law of the State of New York, for the purpose of
transacting the kinds of insurance business authorized by Paragraphs 1, 2 and
3(a) of Section 46, and also reinsurances as specified in Section 60, of the
Insurance Law, together with proof of publication of notice of intention to form
such corporation, and I am of the opinion that the instruments submitted conform
to the Insurance Law of the State of New York.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of my office the day and year first above written.

NATHANIEL L. GOLDSTEIN,
Attorney General

[SIGNATURE ILLEGIBLE]
----------------------
Solicitor General

[SEAL]
<PAGE>

STATE OF NEW YORK )
) ss:
City and County of New York )

JOHN E. TITTMANN of the City of New York, being duly sworn, says that he is the
Principal Clerk of the Publisher of

THE JOURNAL OF COMMERCE
AND COMMERCIAL

a daily newspaper printed and published in the City of New York, and that the
Notice, of which the annexed is a printed copy, has been regularly published in
the said

----------------
NOTICE OF INTENTION

NOTICE HEREBY IS GIVEN that the undersigned, all of whom are natural person of
full age and at lest a majority of whom are citizens and residents of the State
of New York or of adjoining States and not less than three of whom are residents
of the State of, New York instead to form a stock corporation pursuant to the
provisions of the Insurance Law of the State of New York for the purpose of
transacting a Life Insurance Business as specified in paragraph 1, 2 and 3(a) of
Section Forty-Six and also reinsurances as specified in Section Sixty of such
law, with the name of ZURICH LIFE INSURANCE COMPANY who principal office to be
located in the City and County of New York, and whose purpose initial capital is
Seven Hundred Thousand Dollars ($700,000).

NAMES. ADDRESS.
Caryl A. Barnett. 266 Main Street, East Rockaway, New York.
Robert Y. Branion. 13 Collinwood Road, Mapplewood, New Jersey.
John S. Breckinridge. 11 ???? Avenue, Larchmont New York.
Alfred W. Andrews. 96 Edgewood AVe, Larchmont New York
Arthur W. Collins T34 Clinton Place, Evanston Illinois.
Samuel Sloan Duryee. 33 East ??th Street New York.
Harry H. Fuller. 1400 Lake Shore Drive Chicago. Illinois.
William H. Hotchkiss. 60 Lake Road, Rye New York.
George N. Lindsay. Oyster Bay, Long Land. New York
William G. Minner. Roundhill Road, Greenwich, Connecticut
Neville Pilling. 2123 Central Park, Evanston. Illinois.
Rolin E. Talbert. 180 Sherman Ave, ??? ???? New Jersey.
Walter Reid Wolf. Millbreak New York.

THE JOURNAL OF COMMERCE
AND COMMERCIAL

6
............................... times as follows: ..............................

Sept. 10 - 12 - 17 - 19 - 24 - 26 ------- 1947
................................................................................

John E. Tittmann
.......................

Sworn to before me this 26th day
.....
of September, 1947.
...................

/s/ Dorothy V. Frese
---------------------------------
Notary Public

DOROTHY V FRESE
NOTARY PUBLIC in the State of New York
Residing in Bronx County
Bronx Co. Clk's No.128, Reg. No.234-F-9
N.Y.Co Clk's No 597, Reg. No.645-F-9
Commission expires March 30, 1949
<PAGE>

ORIGINAL
STATE OF NEW YORK--INSURANCE DEPARTMENT
___________
$ 350.00
------

Albany October 3, 1947
-----------------------------
RECEIVED from-------ZURICH LIFE INSURANCE COMPANY-------------------------------
- --------------------------------------------------------------------------------
- ---------------------THREE HUNDRED FIFTY DOLLARS ---------------------- Dollars,
- --------------------------------------------------------------------------------
in payment of tax provided by Section 180, Tax Law, as amended by Chapter 794,
Laws of 1923.
One-twentieth of one per centum upon $ 700,000 of shares with par value . . . .
-------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350.00
-------------
Five cents per share upon _______________ shares without par value $ xxxxxxxxx
-------------

$ 350.00
TOTAL . . . . . . . . -------------
ROBERT E DINEEN
SUPERINTENDENT OF INSURANCE

By /s/ Raymond Harris
------------------
Deputy Superintendant
<PAGE>

DECLARATION AND CHARTER

ZURICH LIFE INSURANCE COMPANY

__________

DECLARATION.

We the undersigned, all of whom are natural persons of full age, and
at least a majority of whom are citizens and residents of the State of New York
or of adjoining States, and not less than three of whom are residents of the
State of New York, hereby declare our intention to form a stock corporation,
pursuant to the provisions of the Insurance Law of the State of New York, for
the purpose of transacting a life insurance business as specified in paragraphs
1, 2 and 3 (a) of Section 46 of such law, and do hereby make, sign, acknowledge
and file this Declaration for that purpose and adopt the following as our
Charter:

CHARTER.

Article 1.
----------

The name of this Company is:

ZURICH LIFE INSURANCE COMPANY.

Article 2.
----------

The principal office of the company is to be located in the City,
County and State of New York, and it shall have power to conduct its business
wherever authorized by law. The company may establish other offices, agencies or
branches outside the State of New York and in any part of the world.

Article 3.
---------
The company is authorized to transact the kinds of insurance specified
in paragraphs 1, 2 and 3 (a) of Section 46 of the Insurance Law, as follows:

1. "Life insurance," meaning every insurance upon the lives of human
beings and every insurance appertaining thereto. The business of life insurance
shall be deemed to include the granting of endowment benefits; additional
benefits in the event of death by accident or accidental means; additional
benefits operating to safeguard the contract from lapse, or to provide a
<PAGE>
-2-

special surrender value, in the event of total and permanent disability of the
insured; and optional modes of settlement of proceeds;

2. "Annuities," meaning all agreements to make periodical payments where
the making or continuance of all or of some of a series of such payments, or the
amount of any such payment, is dependent upon the continuance of human life,
except payments made under the authority of the previous paragraph;

3. "Accident and health insurance," meaning insurance against death or
personal injury by accident or by any specified kind or kinds of accident and
insurance against sickness, ailment or bodily injury; except as specified in
sub-paragraph (b) of paragraph 3 of Section 46 of the Insurance Law;

As well as to effect reinsurance of all risks taken by it and to assume
reinsurance of similar risks taken by other insurers and reinsurers;

And to transact such other insurance or other business as a stock life
insurance company now is or hereafter may be permitted to transact under the
Insurance Law and for which the company shall have the required capital and
surplus.

Article 4.
----------

The corporate powers of the company shall be exercised by a board of
directors, consisting of thirteen (13) persons, a majority of whom shall be
citizens and residents of the State of New York or of adjoining States, and not
less than three (3) of whom shall be residents of the State of Now York. number
of directors shall in no case be less than thirteen. The directors: not be
required to own any share of stock in the company.

The directors shall be elected at the annual meeting of the
stockholders. The directors shall hold office for one year and until their
successors are elected, and any vacancy in the board of directors, due to death,
resignation, removal or otherwise, shall be filled by a new incumbent elected
for the balance of the unexpired term of the outgoing director by the remaining
members of the board at any regular or special meeting, and any person so
elected shall serve until his successor has been elected at the next annual
meeting of the stockholders. If because of such vacancy or vacancies in the
<PAGE>
-3-

board of directors the number of directors shall be less than thirteen, the
company shall not for that reason be dissolved, but the vacancy or vacancies
shall be filled as herein provided. The stockholders, by a majority vote at any
meeting, may remove any director.

The officers of the company shall be elected at a meeting of the
directors held immediately after the annual meeting of stockholders. Any vacancy
may be filled and additional officers may be elected or appointed at any meeting
of the directors.

The board of directors shall have power to make such by-laws not
inconsistent with the Constitution or laws of the state of New York or of the
United States or with this Charter, as may be necessary for the management of
the company's property, the government of its officers, the regulation and
conduct of its affairs and the transfer of its capital stock, and shall have
power to alter, amend, suspend or add to the same.

Article 5.
------------

There shall be an annual meeting of the stockholders of the company on
the fourth Tuesday in the month of March of each year, or on such other day as
the directors may by resolution or by-law prescribe. Should the day designated
fall upon a legal holiday, then such annual meeting shall be held on the next
full business day following. At such annual meeting there shall be elected a
full board of directors. Each election of directors shall be by ballots and a
plurality of votes shall elect. At all stockholders' meetings, each stockholder
shall be entitled to one vote, either in person or by proxy, for each share of
stock owned by him and standing in his name on the books of the company not less
than thirty (30) days immediately preceding such meeting.

Article 6.
----------

The following directors shall hold office until the first annual
meeting of the stockholders:

C. A. Barnett, 266 Main Street, East Rockaway, New York
John S. Breckinridge, 11 Iden Avenue, Larchmont, New York
Lawrence M. Cathles, 12 Fenimore Road, Scarsdale, New York
Arthur W. Collins, 734 Clinton Place, Evanston, Illinois
Samuel S. Duryee, 333 East 68th Street, New York, New York
Harry H. Fuller, 1400 Lake Shore Drive, Chicago, Illinois
William H. Hotchkiss, 60 Lake Road, Rye, New York

<PAGE>

George N. Lindsay, Oyster Bay, Long Island, New 'fork
William G. Minner, Roundhill Road, Greenwich, Connecticut
Robert M. Naef, Zurich, Switzerland
Neville Pilling, 2123 Central Park, Evanston, Illinois
William Schweizer, Zurich, Switzerland
Walter Reid Wolf, Millbrook, New York

Article 7.
----------

The fiscal year of the company shall begin on the first day of January
and shall terminate on the thirty-first day of December in each year.

Article 8.
----------

The capital stock of the company shall be seven hundred thousand
dollars ($700,000.00) divided into seven thousand (7,000) shares of the par
value of one hundred dollars ($100.00) each.

Article 9.
----------

The duration of the company shall be perpetual.

IN WITNESS WHEREOF, we have hereunto set our hands and seals this 11th day
of September, 1947.

[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
[SIGNATURE ILLEGIBLE]
--------------------------------- (L.S.)
<PAGE>

STATE OF ILLINOIS :
COUNTY OF COOK : SS.
CITY OF CHICAGO :

On this 11th day of September, 1947, before me personally came Arthur W.
---- ---------
Collins, Neville, Pilling and Harry II. Fuller, to me known and known to me to
be the individuals described in and who executed the foregoing instruments and
they severally duly acknowledged to me that they had executed the same.

[SIGNATURE ILLEGIBLE]
------------------------------------
My Commission expires March 14, 1948

STATE OF NEW YORK :
: SS.
CITY AND COUNTY OF NEW YORK :

On this 15th day of September, 1947, before me personally came
---- ---------
Walter Reid Wolf, Samuel S. Duryee, William H. Hotchkiss, John S. Breckinridge
- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------
to me known and known to me to be the individuals described in and who executed
the foregoing instruments and they severally duly acknowledged to me that they
had executed the same.

/s/ G S ALLEN
------------------------------------
GEO S. ALLEN
NOTARY PUBLIC STATE OF NEW YORK
RESIDING IN WESTCHESTER COUNTY
CERTIFICATE FILED IN
N.Y. CO CLK. NO211.REG.NO.159.A9
KINGS CO.CLK.NO.21.REG.NO.121-A9
COMMISSION EXPIRIES MARCH 30 1994

STATE OF NEW YORK :
: SS.
CITY AND COUNTY OF NEW YORK :

On this 16th day of September, 1947, before me personally came
---- ---------
Caryl A. Barnett, William G. Minner, Alfred W. Andrews, Rollin E. Talbert,
- --------------------------------------------------------------------------
Robert V Branion
- --------------------------------------------------------------------------

- --------------------------------------------------------------------------
to me known and known to me to be the individuals described in and who executed
the foregoing instrument, and they severally duly acknowledged to me that they
had executed the same.
/s/ GEO S. ALLEN
------------------------------------
GEO S. ALLEN
NOTARY PUBLIC STATE OF NEW YORK
RESIDING IN WESTCHESTER COUNTY
CERTIFICATE FILED IN
N.Y. CO CLK. NO211.REG.NO.159.A9
KINGS CO.CLK.NO.21.REG.NO.121-A9
COMMISSION EXPIRIES MARCH 30 1994

<PAGE>

STATE OF NEW YORK :
-------- : SS.
COUNTY OF NEW YORK :
--------
On this 18th day of September, 1947, before me personally came George N.
---- --------- ---------
Lindsay, to me known and known to me to be the individual described in and who
- -------
executed the foregoing instrument, and he duly acknowledged to me that he had
executed the same.

/s/ GEO S. ALLEN
----------------------------------
GEO S. ALLEN
NOTARY PUBLIC STATE OF NEW YORK
RESIDING IN WESTCHESTER COUNTY
CERTIFICATE FILED IN
N.Y.CO.CLK.NO.211.REG.NO.159-A-9
KINGS CO.CLK.NO.21.REG.NO.121-A-9
COMMISSION EXPIRES MARCH 30,1994
STATE OF __________ :
: SS.
COUNTY OF _________ :

On this ________ day of ______________, 1947, before me personally came

______________________ , to me known and known to me to be the individual
described in and who executed the foregoing instrument, and he duly
acknowledged to me that he had executed the same.

____________________________________

STATE OF __________ :
: SS.
COUNTY OF _________ :

On this ________ day of _______________, 1947, before me personally

came ________________ , to me known and known to me to be the individual
described in and who executed the foregoing instrument, and he duly
acknowledge to me that he had executed the same.

____________________________________
<PAGE>

NOTICE OF INTENTION

________

NOTICE HEREBY IS GIVEN that the undersigned, all of whom are natural
persons of full age and at least a majority of whom are citizens and residents
of the State of New York or of adjoining States and not less than three of whom
are residents of the State of New York, intend to form a stock corporation
pursuant to the provisions of the Insurance Law of the State of New York, for
the purpose of transacting a life insurance business as specified in paragraphs
1, 2 and 3(a) of Section Forty-Six, and also reinsurances as specified in
Section Sixty of such law, with the name of ZURICH LIFE INSURANCE COMPANY, whose
principal office is to be located in the City and County of New York, and whose
proposed initial capital is Seven Hundred Thousand Dollars ($700,000).

Dated, New York, N.Y., September 8, 1947.

[SIGNATURE ILLEGIBLE] 266 Main Street, East Rockaway, New York
- ---------------------- --------------------------------------------
/s/ Robert V Branion 13 Collinwood Road, Maplewood, New Jersey
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 11 Iden Avenue, Larchmont, New York
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 94 Edgewood Ave., Larchmont, New York
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 734 Clinton Place, Evanston, Illinois
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 333 East 68th Street, New York, New York
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 1400 Lake Shore Drive, Chicago, Illinois
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 60 Lake Road, Rye, New York
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] Oyster Bay, Long Island, New York
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] Roundhill Road, Greenwich, Connecticut
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 2123 Central Park, Evanston, Illinois
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] 180 Sherman Avenue, Teaneck, New Jersey
- ---------------------- --------------------------------------------
[SIGNATURE ILLEGIBLE] Millbrook, New York
- ---------------------- --------------------------------------------

<PAGE>

EXHIBIT (6)(B)
--------------

BYLAWS OF AUSA LIFE INSURANCE COMPANY, INC.
<PAGE>

AUSA LIFE INSURANCE COMPANY, INC.

AMENDED AND RESTATED

BY-LAWS

AS OF SEPTEMBER 1, 1995

ARTICLE I

LOCATION

SECTION 1. The principal office of the corporation shall be in the county of
Westchester and State of New York. The Corporation may, in addition to the
principal office, establish and maintain such other office or offices, within or
without the State of New York, as the Board of Directors may from time to time
designate or the business of the Corporation may require.

ARTICLE II

CORPORATE SEAL

SECTION 1. The Corporation shall have a seal. The corporate seal shall have
inscribed thereon the name of the Corporation. The corporate seal shall be in
seal form and have inscribed thereon such additional words and symbols as the
Board of Directors may from time to time prescribe. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.

-1-
<PAGE>

ARTICLE III

MEETING OF SHAREHOLDERS

SECTION 1. Time and Place. All meetings of the shareholders for the election
--------------
of directors and all meetings of shareholders for that or any other purpose may
be held at such place within or without the State of New York, and at such time
as may be designated in the notice of meeting.

SECTION 2. Annual Meetings. The annual meeting of shareholders shall be held
---------------
in March of each year, or at such other time as may be designated by the Board
of Directors.

SECTION 3. Special Meetings. Except as otherwise provided by statute, special
----------------
meetings of shareholders may be called for any purpose or purposes at any time
by the Chairman of the Board of Directors, the President, the Board of
Directors, or by the President and Secretary upon the written request of one or
more shareholders holding a majority in interest of the stock of the Corporation
issued and outstanding and entitled to vote at such meeting. Any such request
shall state the purpose or purposes of the proposed meeting.

-2-
<PAGE>

SECTION 4. Notice of Meetings. Notice of the time and place of holding each
------------------
annual and special meeting of the shareholders shall be in writing and signed by
the President or a Vice President or the Secretary or an Assistant Secretary and
a copy thereof shall be served, either personally, or by mail, upon each
shareholder entitled to vote at such a meeting, not less than ten (10) nor more
than fifty (50) days before the meeting, and if mailed, it shall be directed to
such shareholder at such shareholder's address as it appears on the books of the
Corporation unless a written request be given that notices intended for such
shareholder be mailed to some other address, in which case it shall be mailed to
the address designated in such request. The notice of every special meeting,
besides stating the time and place of such meeting, shall state the purpose or
purposes thereof, and no business other than that specified in such notice or
germane thereto shall be transacted at the meeting.

SECTION 5. Waiver of Notice. Notice of meeting need not be given (1) to any
----------------
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting, or (2) to any shareholder who is in
attendance at any meeting, in person or by proxy, without protesting prior to
the conclusion of the meeting the lack of notice of such meeting.

-3-
<PAGE>

SECTION 6. Quorum. At every meeting of the shareholders of the Corporation,
------
except as otherwise provided by law, the holders of a majority of the issued and
outstanding shares of capital stock of the Corporation, present in person or by
proxy and entitled to vote thereat, shall constitute a quorum for the
transaction of business. In the absence of a quorum, a majority in interest of
the shareholders so present or represented and entitled to vote thereat may
adjourn the meeting from time to time and place to place until a quorum is
obtained, and the meeting may be held as adjourned without further notice. At
any such adjourned meeting at which a quorum is present any business may be
transacted which might have been transacted at the meeting as originally called.
The shareholders present at duly called or held meeting at which a quorum is
present may continue to transact business until a final adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.

SECTION 7. Voting. At all meetings of shareholders every shareholder entitled
------
to vote thereat shall be entitled to one (1) vote, in person or by proxy, for
each share of stock outstanding in such shareholder's name on the books of the
Corporation on the date for the determination of shareholders entitled to vote
at such meeting. Every proxy must be executed in writing by the shareholder or
by his duly authorized attorney and must be delivered to the Secretary of the
meeting. No proxy shall be valid after the expiration of eleven months from the
date of its execution unless the shareholder executing it shall have specified
therein a longer duration. At all meetings of the shareholders, a quorum being
present, all matters except as otherwise provided by law, or the Charter of the
Corporation, or these By-Laws shall be decided by a majority in interest of the
shareholders of the Corporation present in person or by proxy and entitled to
vote. All elections of directors may, but need not be, held by ballot.

-4-
<PAGE>

SECTION 8. Organization. Meetings of the shareholders shall be presided over
------------
by the Chairman of the Board of Directors, or, if he is not present, by the
President, and if the President is not present, by a Vice President in the order
determined by the President, or, if none of the foregoing is present, by a
chairman to be chosen by a majority of the shareholders entitled to vote who are
present in person or by proxy at the meeting. The Secretary of the Corporation,
or in his absence an Assistant Secretary, shall act as Secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary is present, the
meeting shall choose any person present to act as Secretary of the meeting.

SECTION 9. Consents. Whenever by any provision of law or of the Charter of
--------
this Corporation, the vote of shareholders at a meeting thereof is required or
permitted to be taken in connection with any corporate action, the meeting and
vote of shareholders may be dispensed with, if all the shareholders who would
have been entitled to vote upon the action if such meeting were held, shall
consent in writing to such action being taken. However, this section shall not
be construed to alter or modify any provision of law or of the Charter under
which the written consent of the holders of less than all outstanding shares is
sufficient for corporate action.

ARTICLE IV

BOARD OF DIRECTORS

SECTION 1. Election and Qualification of Directors. Directors shall be elected
---------------------------------------
at the annual meeting of shareholders by plurality of the votes cast and shall
hold office for one year and until their respective successors shall have been
elected and shall have qualified.

-5-
<PAGE>

All directors shall be at least eighteen (18) years of age and at least a
majority shall be citizens and residents of the United States and at least three
residents of the State of New York, if required by law or regulations.
Directors need not be shareholders.

SECTION 2. Number of Directors. The number of directors shall not be less than
-------------------
thirteen (13) nor more than twenty-one (21). Subject to change by action of the
shareholders or by resolution of the Board of Directors, the number of directors
of the Corporation shall be thirteen (13). Any change in the number of
directors made by resolution of the Board of Directors shall require the
affirmative vote of a majority of all directors then in office but no decrease
in the number of directors so made shall shorten the term of any incumbent
director.

SECTION 3. Composition of Board. Not less than one-third of the directors
--------------------
shall be persons who are not officers or employees or officers or employees of
any entity controlling or controlled by, or under common control with AUSA LIFE
INSURANCE COMPANY, INC. and who are not beneficial owners of a controlling
interest in the voting stock of AUSA LIFE INSURANCE COMPANY, INC. or any such
entity, if required by law or regulations. At least one such person must be
included in any quorum for the transaction of business at any meeting of the
Board of Directors, if required by law or regulations.

-6-
<PAGE>

SECTION 4. Vacancies. A vacancy or vacancies in the Board resulting from
---------
death, resignation or removal of any director or from the increase in the number
of directors, or for any other cause, may be filled for the remainder of the
term by majority vote of the remaining directors at any regular meeting of the
Board or at any special meeting called for that purpose. A director so elected
shall not take office or exercise the duties thereof until ten (10) days after
written notice of his election shall have been filed in the office of the
Superintendent of Insurance of the State of New York.

SECTION 5. Duties and Powers. The Board of Directors shall have control and
-----------------
management of the affairs and property of the Corporation and may adopt such
rules and regulations for the conduct of their meetings and the management of
the Corporation as they deem proper not inconsistent with law or with the
Charter of the Corporation or with these By-Laws.

SECTION 6. Meetings. Meetings of the Board of Directors shall be held at such
--------
a place within or without the State of New York as may from time to time be
fixed by resolution of the Board of Directors, or as may be specified in the
notice of the meeting. Regular meetings of the Board of Directors shall be held
four (4) times a year as may be fixed by resolution of the Board of Directors.
One such meeting shall be held on the date of the regular annual shareholders
meeting. Special meetings may be held at any time upon the call of the Chairman
of the Board of Directors, the President or any Vice President or the Secretary
or an Assistant Secretary or any two directors by oral, telegraphic or written
notice duly served on or sent or mailed to each director, not less than two (2)
days before such meeting.

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A meeting of the Board of Directors may be held without notice immediately after
the annual meeting of shareholders. Notice need not be given of regular
meetings of the Board of Directors. Meetings may be held at any time if all the
directors are present, or if at any time before or after the meeting, those not
present waive notice of the meeting in writing. Any one or more members of the
Board of Directors or any committee thereof may participate in a meeting of such
Board of Directors or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.

SECTION 7. Quorum. A majority of the Board of Directors then in office at a
------
meeting duly assembled shall be necessary to constitute a quorum for the
transaction of business. Except as otherwise provided by law or by the Charter
of the Corporation, the act of a majority of directors present at such meeting
shall be the act of the Board.

SECTION 8. Resignations. Any director of the Corporation may resign at any
------------
time by giving written notice to the Board or to the President or to the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective.

SECTION 9. Removal. Any one or more of the directors may be removed either
-------
with or without cause at any time by a vote of a majority of the shares issued
and outstanding and entitled to vote.

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Notwithstanding Section 5 of this Article, not less than one-third of the
directors may call a special meeting for the purpose of removing for cause any
other director and at such special meeting so called, such director may be
removed by the affirmative vote of a majority of the remaining directors present
at such meeting. Immediately following each vote by which a director is removed
the Board of Directors shall declare the office of the removed director to be
vacant.

SECTION 10. Compensation of Directors. Directors may, by resolution of the
-------------------------
Board of Directors, be allowed a fixed sum for serving as directors and expenses
for attendance at regular or special meetings of the Board of Directors.
Members of special or standing committees, and others who attend pursuant to
direction, may, by vote of the Board of Directors, be allowed a fixed sum and
expenses for attending committee meetings.

SECTION 11. Chairman of the Board. The Board of Directors shall, immediately
---------------------
after the organization of the Corporation, and thereafter at their first meeting
following the annual election of directors, elect from among their number a
Chairman of the Board who shall preside at all meetings of the shareholders and
of the Board of Directors. He shall have other powers and perform such other
duties as may be assigned to him by the Board of Directors.

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ARTICLE V

COMMITTEES

SECTION 1. Executive Committee. The Board of Directors may, by resolution
-------------------
adopted by a majority of the entire Board, designate an Executive Committee from
among its members consisting of five (5) or more directors as it may, in its
discretion, think proper and shall so designate by resolution, subject to
Section 2 and Section 3 of this Article. Subject to Section 3 of this Article,
the Executive Committee shall have and may exercise, when the Board is not in
session, so far as may be permitted by law, all of the rights and powers of the
Board of Directors in the management of the business and affairs of the
Corporation except to the extent such powers of the Board are by resolution of
the Board or by these By-Laws reserved to the Board or to other committees of
the Board, and shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it; but the Executive Committee shall
not have power to fill vacancies in the Board, or to change the membership of,
or to fill vacancies in any committee of the Board, or to make or amend the By-
Laws of the Corporation.

The Board shall have the power at any time to fill vacancies in, to change the
membership of, to change the number of members of, designate one or all
alternate members of, or to dissolve the Executive Committee. The Executive
Committee may make rules for the conduct of its business and may appoint such
committees and assistants as it shall from time to time deem necessary.

The Committee shall keep a record of its proceedings and shall adopt its own
rules of procedure except that a quorum shall consist of at least three (3)
members, at least one (1) of whom must not be an officer or salaried employee of
the Corporation, its parent or any affiliated Corporation, if required by law or
regulations.

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SECTION 2. Composition of Committees. If required by law or regulations, not
-------------------------
less than one third of the members of each committee of the Board of Directors
shall be persons who are not officers or employees of AUSA LIFE INSURANCE
COMPANY, INC. or of any entity, controlling, controlled by, or under common
control with AUSA LIFE INSURANCE COMPANY, INC. and who are not beneficial owners
of a controlling interest in the voting stock of AUSA LIFE INSURANCE COMPANY,
INC. or any such entity. At least one (1) such person must be included in any
quorum, if required by law or regulations, for the transaction of business at
any meeting of any committee of the Board of Directors.

SECTION 3. Oversight Committee. If required by law or regulation, the Board of
-------------------
Directors shall establish one (1) or more committees comprised solely of
directors who are not officers or employees of AUSA LIFE INSURANCE COMPANY, INC.
or of any entity controlling, controlled by, or under common control with AUSA
LIFE INSURANCE COMPANY, INC. and who are not beneficial owners of a controlling
interest in the voting stock of AUSA LIFE INSURANCE COMPANY, INC. or any such
entity. Such committee or committees shall have responsibility for recommending
the selection of independent certified public accountants, reviewing the
company's financial condition, the scope and results of the independent audit
and any internal audit, nominating candidates for director for election by
shareholders or policyholders, and evaluating the performance of officers deemed
to be principal officers of the company and recommending to the Board of
Directors the selection and compensation of such principal officers.

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<PAGE>

SECTION 4. Investment Committee. The investments of the Corporation shall be
--------------------
managed and controlled by an Investment Committee. The Investment Committee
shall consist of at least five (5) members who shall be appointed by the Board
of Directors from its own membership at the annual meeting of the Board of
Directors to serve until the next succeeding annual meeting and until their
successors on the Committee have been appointed. The Board shall have the power
subject to Section 2 and 3 of this Article at any time to fill vacancies in, to
change the membership of, to change the number of members of, to designate one
(1) or more alternate members of, or to dissolve the Investment Committee.

The Investment Committee, subject to Sections 2 and 3 of this Article, shall
have and may exercise, when the Board is not in session, all the rights and
powers of the Board of Directors to make, supervise, and control the investments
of the Corporation, inclusive of all real and personal property acquired by
virtue of or incidental to any investment, to sell, assign, exchange, lease or
otherwise dispose of such investments and property, and to do and perform all
things deemed necessary and proper in relation to such investments and property.

The Committee shall keep a record of its proceedings and shall adopt its own
rules of procedure except that a quorum shall consist of at least three (3)
members, at least one (1) of whom may not be an officer or salaried employee of
the Corporation, its parent or any affiliated Corporation, if required by law or
regulations.

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<PAGE>

SECTION 5. Other Committees. The Board of Directors may from time to time by
----------------
resolution create such other committee or committees of Directors, officers,
employees, or other persons designated by the Board, to advise with the Board,
the Executive Committee and the officers and employees of the Corporation in all
such matters as the Board shall deem advisable, and with such functions and
duties as the Board shall by resolution prescribe subject to Section 2 and
Section 3 of this Article. A majority of all members of any such committee may
determine its action and fix the time and place of its meetings, unless the
Board of Directors shall otherwise provide. The Board of Directors shall have
power to change the members of any such committee at any time, and to discharge
any such committee, either with or without cause at any time.

ARTICLE VI

OFFICERS

SECTION 1. Officers. The Board of Directors shall, immediately after the
--------
organization of the Corporation, and thereafter at their first meeting following
the annual election of directors, elect from among their number a President, and
shall also elect a Secretary and a Treasurer, who need not be members of the
Board of Directors. The Board may, at any time also elect one (1) or more Vice
Presidents, and such Assistant Treasurers or Assistant Secretaries, or other
officers, as it may deem proper. More than one (1) office may be held by the
same person, except that the offices of President and Secretary may not be held
by the same person.

SECTION 2. Term. Each officer of the Corporation elected by the Board of
----
Directors shall hold office until his successor is chosen and qualified, or
until he shall have died or resigned or shall have been removed as hereinafter
provided. A vacancy in any office arising from any cause may be filled by the
Board of Directors.

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<PAGE>

SECTION 3. Duties of the President. The President shall be Chief Executive
-----------------------
Officer of the Corporation. He shall have general and active supervision and
direction over the business offices of the Corporation. Subject to the control
of the Board of Directors whose policies he shall execute. He shall see that
all orders and resolutions of the Board of Directors are carried into effect and
shall, in the absence of the Chairman of the Board, preside at all meetings of
shareholders and of the Board of Directors. Except when inconsistent with the
Corporation's Charter, these By-Laws, or with the orders and resolutions of the
Board of Directors, he shall have the power to employ, fix the duties, and
discharge such employees as he may deem necessary and proper. The President
shall make such reports to the Board of Directors as it may require.

SECTION 4. Duties of Vice President. Each Vice President shall undertake such
------------------------
of the duties of the President, or such other duties, as may be delegated to him
from time to time by the President or the Board of Directors.

SECTION 5. Duties of Secretary. The Secretary shall attend all meetings of the
-------------------
shareholders, of the Board of Directors, and of the Executive Committee of the
Board, and record their proceedings in a book kept for that purpose. He shall
perform other duties incident to his office and such other duties as may be
delegated to him by the Board of Directors or the President. He shall see that
proper notice is given of all meetings of the shareholders of the Corporation
and the Board of Directors, and he shall have charge of the Corporate Seal, the
minute books, and such other corporate records as are not otherwise provided
for. He shall affix the seal to any instrument requiring the same. Any
Assistant Secretary may perform the duties of the Secretary in his absence, and
such other duties of the Secretary as may be delegated to him by that officer or
by the Board of Directors or the President.

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<PAGE>

SECTION 6. Duties of the Treasurer. The Treasurer shall be charged with the
-----------------------
supervision of the keeping of the funds and books of account of the Corporation
and with their safekeeping, shall carry out such duties as are incident to his
office and shall further perform such other duties as may be delegated to him by
the Board of Directors or by the President. Any Assistant Treasurer may perform
the duties of the Treasurer in his absence, and such of the duties of the
Treasurer as may be delegated to him by that officer or by the Board of
Directors or by the President.

SECTION 7. Removal. Any officer may be removed either with or without cause at
-------
any time by a vote of a majority of the directors.

ARTICLE VII

SHARE CERTIFICATES

SECTION 1. Form of Certificates. The shares of the Corporation shall be
--------------------
represented by certificates, in such form as the Board of Directors may from
time to time prescribe, signed by the Chairman of the Board of Directors, the
President or a Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and sealed with the seal of the
Corporation. Such seal may be a facsimile, engraved or printed. Where any such
certificate is signed by a transfer agent or transfer clerk and by a registrar,
the signatures of any such Chairman of the Board of Directors, President, Vice
President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer
upon such certificates may be facsimiles, engraved or printed. In case any such
officer who has signed or whose facsimile signature has been placed upon such
certificates shall have ceased to be such before such certificate is issued, it
may be issued by the Corporation with the same effect as if such officer had not
ceased to be such at the date of its issue.

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Every certificate representing shares issued by the Corporation shall plainly
state upon the face thereof the number, kind and class of shares which it
represents.

SECTION 2. Transfers Transfers of shares shall be made only upon the books of
---------
the Corporation by the registered holders in person or by power of attorney duly
executed and acknowledged and filed with the Secretary of the Corporation, or
with a duly appointed Transfer Agent acting for an on behalf of the Secretary,
and upon the surrender of the certificate or certificates for such shares.

SECTION 3. Lost Certificates. If any certificate or shares shall be lost, the
-----------------
holder thereof shall forthwith notify the Corporation of the facts and the Board
of Directors or the Executive Committee may then authorize a new certificate to
be issued to him. The Board of Directors or the Executive Committee may in its
discretion require, as a condition precedent, deposit of a bond in such amounts
and in such form and with surety or sureties as the Board or the said Committee
may direct.

SECTION 4. Closing Share Books. The Board of Directors or the Executive
-------------------
Committee may by resolution prescribe a period not less than ten (10) nor more
than fifty (50) days prior to any meeting of shareholders during which no
transfer of shares on the books of the Corporation may be made; or in lieu of
prohibiting the transfer of shares may fix a day and hour not less than ten (10)
nor more than fifty (50) days prior to the holding of any meeting of
shareholders as the time as of which shareholders entitled to notice of and to
vote at such meeting shall be determined or for the taking of a dividend list.
The share books may also be closed for the payment of dividends for such like
period, if any, as may be prescribed by resolution of the Board of Directors or
the Executive Committee.

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SECTION 5. Transfer Agents and Registrar. The Board of Directors may appoint
-----------------------------
one (1) or more transfer clerks or one (1) or more transfer agents and one (1)
or more registrars, and may require all certificates for shares to bear the
signature or signatures of any of them.

ARTICLE VIII

INDEMNIFICATION OF OFFICERS AND DIRECTORS

SECTION 1. To the extent permitted by law:

(a) The Corporation shall indemnify any person made a party to an action or
proceeding by or in the right of the Corporation to procure a judgment in its
favor, by reason of the fact that he, his testator or intestate, is or was a
director or officer or employee of the Corporation against the reasonable
expenses, including attorney's fees, actually and necessarily incurred by him in
connection with the defense of such action or proceeding, or in connection with
an appeal therein, except in relation to matters as to which such person is
adjudged to have breached his duty or acted outside the scope of his duties to
the corporation; and

(b) The Corporation shall indemnify any person made or threatened to be made a
party to an action or proceeding other than one by or in the right of the
Corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, which any director or officer or employee of the
Corporation served in any capacity at the request of the Corporation by reason
of the fact that he, his testator or intestate, was a director or officer or
employee of the Corporation, or served such other corporation in any capacity
against judgments, fines, amounts paid in settlement and reasonable expenses,

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including attorneys' fees, actually and necessarily incurred as a result of such
action or proceedings, or any appeal therein, if such person acted in good
faith, for a purpose which he reasonably believed in the best interest of the
Corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.

(c) The Corporation may purchase insurance in accordance with the provisions of
Section 727 of the New York Business Corporation Law to indemnify officers and
directors in instances where they may not otherwise be indemnified.

ARTICLE IX

CONFLICT OF INTERESTS

No director or officer of the Corporation shall receive, in addition to his
fixed salary or compensation, any money or valuable thing, either directly or
indirectly or through any substantial interest in any other corporation or
business unit, for negotiating, procuring, recommending or aiding in any
purchase or sale of property, or loan, made by the Corporation or any affiliate,
either as principal, co-principal, agent or beneficiary, either directly or
indirectly or through any substantial interest in any other corporation or
business unit, in any such purchase, sale or loan.

ARTICLE X

DIVIDENDS

SECTION 1. Dividends. Dividends on the issued and outstanding stock from the
---------
profits made by the Corporation, not including the surplus arising from the sale
of stock, may be declared by the Board of Directors from time to time. The
Board of Directors shall

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the date of payment of dividends and the record date of stock entitled thereto,
provided that no dividends shall be issued within the first two (2) years of the
company's existence without the approval of the Department of Insurance.

ARTICLE XI

MISCELLANEOUS

SECTION 1. Execution of Contracts and other Instruments. The President, any
--------------------------------------------
Vice President, the Secretary, and the Treasurer shall each have general
authority to execute contracts, bonds, deeds and powers of attorney in the name
and on behalf of the Corporation. Any contract, bond, deed or power of attorney
may also be executed in the name of and on behalf of the Corporation by such
other officer or such other agents as the Board of Directors may from time to
time direct. The provisions of this Section 1 are supplementary to any other
provision of these By-Laws.

SECTION 2. Shares of other Corporations. The President and any Vice President,
----------------------------
is authorized to vote, represent and exercise on behalf of the Corporation, all
rights incident to any and all shares of any other corporation or corporations
standing in the name of the Corporation. The authority herein granted to said
officer to vote or represent on behalf of the Corporation any and all shares
held by the Corporation in any other corporation or corporations may be
exercised either by said officer in person or by any person authorized so to do
by proxy or power of attorney duly executed by said officer. Notwithstanding
the above, however, the Board of Directors in its discretion, may designate by
resolution the person to vote or represent said shares of other corporations.

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ARTICLE XII

AMENDMENTS

SECTION 1. Power to Amend. These By-Laws may be altered, repealed, or amended
--------------
in whole or in part by the Board of Directors at any regular meeting of the
Board of Directors, or at a special meeting called for that purpose, provided
that notice of the proposed change is incorporated in the notice of such special
meeting.

SECTION 2. Notice to Shareholders. If any By-Law regulating an impending
----------------------
election of directors is adopted, amended or repealed by the Board of Directors,
there shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed, together
with a concise statement of the changes made.

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EXHIBIT (14)
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POWERS OF ATTORNEY
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