STATE FARM LIFE INSURANCE CO VARIABLE LIFE SEPARATE ACCOUNT, 485APOS, 1999-02-09

STATE FARM LIFE INSURANCE CO VARIABLE LIFE SEPARATE ACCOUNT
485APOS, 1999-02-09

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<PAGE>

As Filed with the Securities and Exchange Commission on February 9, 1999

Registration No. 333-19521

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Post-Effective Amendment No. 3 to

-----------------------------
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2

STATE FARM LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
(Exact name of trust)

STATE FARM LIFE INSURANCE COMPANY
(Name of depositor)

One State Farm Plaza
Bloomington, Illinois 61710-0001
(Complete address of depositor's principal executive offices)

(Name and complete address
of agent for service) Copy to:

Laura P. Sullivan, Esq. Stephen E. Roth, Esq.
State Farm Life Insurance Company Sutherland Asbill & Brennan LLP
One State Farm Plaza 1275 Pennsylvania Avenue, N.W.
Bloomington, Illinois 61710-0001 Washington, DC 20004-2415

Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration Statement

Securities Being Offered: Variable Universal Life Insurance Policies

It is proposed that this filing become effective:

/ / Immediately upon filing pursuant to paragraph (b).
/ / On (date) pursuant to paragraph (b).

/X/ 80 days after filing pursuant to paragraph (a)(1).
/ / On (date) pursuant to paragraph (a)(1) of Rule 485.

<PAGE>

PROSPECTUS DATED MAY 1, 1999
VARIABLE UNIVERSAL LIFE INSURANCE POLICY

ISSUED BY

STATE FARM LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
OF STATE FARM LIFE INSURANCE COMPANY
P.O. Box 2307
Bloomington, Illinois 61702-2307
Telephone (888) 702-2307

State Farm Life Insurance Company ("State Farm," "we," "us," or "our") is
offering the variable universal life insurance policy (the "Policy") described
in this prospectus. State Farm designed the Policy to provide: (1) lifetime
insurance protection on the insured person named in the policy, and (2)
flexibility regarding premiums and death benefits. Subject to certain
restrictions, the purchaser of a Policy (the "Owner," "you," or "your") may:

- - change the frequency and amounts of premium payments;

- - change the level of death benefits; and

- - allocate premiums (after State Farm deducts a premium charge) and Policy
values to:

--) State Farm's general account (the "Fixed Account"), an account that
provides a specified minimum rate of interest; and

--) subaccounts of State Farm Life Insurance Company Variable Life Separate
Account (the "Variable Account"), a separate account allowing you to
invest in the following investment portfolios ("Funds") of the State Farm
Variable Product Trust (the "Trust"):

/ / Large Cap Equity Index Fund

/ / Small Cap Equity Index Fund

/ / International Equity Index Fund

/ / Stock and Bond Balanced Fund

/ / Bond Fund

/ / Money Market Fund

The accompanying prospectus for the Trust describes each of the investment
portfolios, including the risks of investing in each portfolio, and provides
other information about the Trust.

An Owner of a Policy can select between two death benefit options: (1) a
level insurance amount (Basic Amount) or (2) a level insurance amount plus the
Policy Account Value. As long as the Policy is in force, State Farm guarantees
that the death benefit will never be less than the Basic Amount less any
unrepaid Policy loans and past due charges.

The Policy provides for a Cash Surrender Value, which is the amount State
Farm would pay if you surrender the policy. Because this value varies with the
portfolio's performance, there is no guaranteed Cash Surrender Value or
guaranteed minimum Cash Surrender Value if you allocate premiums and Policy
values to the Trust. On any given day, the Cash Surrender Value could be more or
less than the premiums paid.

The Policy provides for a death benefit guarantee whereby the Policy will
not lapse so long as you pay certain minimum premiums. The Policy also allows
you to take loans, make withdrawals, and participate in a dollar-cost averaging
program or a portfolio rebalancing program.

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Please read this prospectus carefully and keep it for future reference. A
prospectus or prospectus profile for State Farm Variable Product Trust must
accompany this prospectus and you should read it in conjunction with this
prospectus.

INTERESTS IN THE POLICIES AND SHARES OF THE FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF OR GUARANTEED BY A BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. THE
POLICIES ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
POLICY OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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TABLE OF CONTENTS

<TABLE>
<S> <C>
Index of Terms.................... 4
Summary of the Policy............. 5
Premiums.......................... 9
Applying for a Policy........... 9
Exchanges from State Farm
Universal Life and State Farm
Traditional Ordinary Whole
Life.......................... 9
Free Look Right to Cancel
Policy........................ 9
Premiums........................ 9
Planned Premiums................ 10
Premiums to Prevent Lapse....... 10
Death Benefit Guarantee......... 10
Crediting Premiums to the
Policy........................ 11
Allocation Options................ 11
Net Premium Allocations......... 11
Subaccount Options.............. 11
Fixed Account Option............ 12
Transfers....................... 12
Dollar-Cost Averaging........... 13
Portfolio Rebalancing Program... 13
Charges and Deductions............ 13
How Your Policy Account Values
Vary............................ 15
Policy Account Value............ 15
Cash Value...................... 16
Cash Surrender Value............ 16
Subaccount Policy Value......... 16
Fixed Policy Account Value...... 16
Death Benefits.................... 16
Amount of Death Benefit
Payable....................... 16
Death Benefit Options........... 17
Changing the Death Benefit
Option........................ 17
Changing the Basic Amount....... 18
Effect of Withdrawals on the
Death Benefit................. 19
Changing the Beneficiary........ 19
Loan Benefits..................... 19
Loan Account.................... 19
Interest........................ 19
Loan Repayment.................. 19
Effect of Policy Loan........... 20
Surrender Benefits................ 20
Full Surrender.................. 20
Withdrawals..................... 20
Hypothetical Illustrations of
Accumulated Premiums, Policy
Account Values, Cash Surrender
Values, and Death Benefits...... 20
Requesting Payments and Telephone
Transactions.................... 29
Requesting Payments............. 29
Telephone Transactions.......... 30
Other Policy Benefits and
Provisions...................... 30
Exchange Provision.............. 30
Other Policy Provisions......... 30
Beneficiary..................... 31
Reinstatement................... 31
Other Changes................... 31
Reports to Policy Owners........ 31
Assignment and Change of
Owner......................... 31
Supplemental Benefits........... 31
State Farm and The Fixed
Account......................... 32
State Farm Life Insurance
Company....................... 32
State Farm Directors and
Officers...................... 32
The Variable Account and The
Trust........................... 38
Tax Considerations................ 39
Tax Treatment of Policy
Benefits........................ 40
Additional Information............ 41
</TABLE>

THE POLICY MAY NOT BE AVAILABLE IN ALL JURISDICTIONS. THIS PROSPECTUS
CONSTITUTES AN OFFERING ONLY IN THOSE JURISDICTIONS WHERE SUCH OFFERING MAY
LAWFULLY BE MADE.

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INDEX OF TERMS

This prospectus uses the following special terms:

AGE--Age means the age on the Insured's last birthday as of the Policy Date
and each Policy Anniversary. If the Policy Date falls on the Insured's birthday,
the Age will be the age the Insured reaches on the Policy Date.

CASH VALUE--Policy Account Value less any applicable surrender charge.

CASH SURRENDER VALUE--Cash Value less any Loan Amount.

DEATH BENEFIT--The amount of insurance provided under the Policy determined
by the Death Benefit Option and any insurance amounts provided by riders. State
Farm will reduce the amount payable on the Insured's death by any Loan Amount
and any unpaid Monthly Deductions.

DEDUCTION DATE--The Policy Date and each monthly anniversary of the Policy
Date.

FUND--An investment portfolio of the State Farm Variable Product Trust.

HOME OFFICE--P.O. Box 2307, Bloomington, IL 61702-2307, 1-888-702-2307.

ISSUE DATE--The date State Farm issues the Policy.

LOAN ACCOUNT--A part of our general account to which we transfer Policy
Account Value in the Variable Account and the Fixed Account to provide
collateral for any loan you take under the Policy.

LOAN POLICY ACCOUNT VALUE--The value of the Loan Account for this Policy.

LOAN AMOUNT--The sum of all outstanding Policy loans including both
principal plus accrued interest.

MINIMUM PREMIUM--For any Policy Month during the first 10 Policy Years
(first 9 Policy Years for Policies issued in Texas) the cumulative minimum
monthly premium required to keep the Death Benefit Guarantee in effect.

POLICY--The variable life insurance policy described in this prospectus. The
Policy contains the Basic Plan, any amendments, endorsements and riders, and a
copy of the application. The Policy is the entire contract.

POLICY ANNIVERSARY--The same day and month as the Policy Date each year that
the Policy remains in force.

POLICY DATE--If we issue the Policy as applied for and we receive the
premium before the Issue Date, the Policy Date is the later of the application
date or the date we receive the premium. Otherwise, the Policy Date is the Issue
Date. We measure Policy Months, Years and Anniversaries from the Policy Date.
The Policy Date cannot be the 29th, 30th, or 31st day of any month.

POLICY ACCOUNT VALUE--The combined value of your Policy in all of the
Subaccounts of the Variable Account, the Fixed Account, and the values held in
our general account to secure Policy loans.

POLICY YEAR--Any 12-month period starting with the Policy Date or a Policy
Anniversary.

TRUST--State Farm Variable Product Trust.

VALUATION DAY--Each day on which both the New York Stock Exchange and the
Home Office are open for business except for a day that a Subaccount's
corresponding Fund does not value its shares. The New York Stock Exchange is
currently closed on weekends and on the following holidays: New Year's Day;
Reverend Dr. Martin Luther King, Jr. Holiday; Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
During 1999, the days on which the New York Stock Exchange is open, but the Home
Office is closed are November 26, December 23, December 24, and December 31.

VALUATION PERIOD--The period that starts at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next succeeding Valuation Day.

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SUMMARY OF THE POLICY

The following paragraphs summarize certain prospectus information and the
important features of the Policy. Please read this summary along with the more
detailed information appearing elsewhere in this prospectus. Unless otherwise
indicated, the description of the Policy in this prospectus assumes that the
Policy is in force and there is no outstanding Loan Amount. Please refer to the
Index of Terms for definitions of certain terms this prospectus uses.

PURPOSE OF THE POLICY. State Farm designed the Policy to provide insurance
benefits with a long-term investment element. You should consider the Policy in
conjunction with other insurance you own. Please consider carefully before
replacing existing insurance with the Policy.

COMPARISON WITH UNIVERSAL LIFE INSURANCE. The Policy is similar in many
ways to universal life insurance. As with universal life insurance:

- the Owner pays premiums for insurance coverage on the Insured;

- the Policy provides for the accumulation of a Cash Surrender Value that is
payable if you surrender the Policy during the Insured's lifetime; and

- the Cash Surrender Value may be substantially lower than the premiums
paid.

However, the Policy differs significantly from universal life insurance in
that the Policy Account Value may decrease if the investment performance of the
Subaccounts to which you allocated Policy Account Value is adverse (or not
sufficiently favorable). If the Cash Surrender Value becomes insufficient to
cover charges when due and the Death Benefit Guarantee is not in effect, the
Policy will lapse without value after a grace period. See "Premiums to Prevent
Lapse," page .

TAX CONSIDERATIONS. State Farm intends for the Policy to satisfy the
definition of a life insurance contract under Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"). Under certain circumstances, a
Policy could be treated as a "modified endowment contract." State Farm will
monitor Policies and will attempt to notify an Owner on a timely basis if his or
her Policy is in jeopardy of becoming a modified endowment contract. For further
discussion of the tax status of a Policy and the tax consequences of being
treated as a life insurance contract or a modified endowment contract, see "Tax
Considerations," page .

FREE LOOK RIGHT TO CANCEL POLICY. For a limited time after State Farm
issues a Policy, you have the right to cancel your Policy and receive a full
refund of all premiums paid. See "Free Look Right to Cancel Policy," page __.
During this limited period, State Farm will allocate Net Premiums paid to the
Fixed Account. See "Net Premium Allocations," page .

OWNER INQUIRIES. If you have any questions, you may write or call our Home
Office at P.O. Box 2307, Bloomington, IL 61702-2307, (888) 702-2307 (toll free).

PREMIUMS

- You select a payment plan but are not required to pay premiums according
to the plan. You can vary the frequency and amount, within limits, and can
skip planned premiums. See "Planned Premiums," page .

- Minimum initial premium and planned premium depend on the Insured's Age,
sex, rate class, Basic Amount selected, and any supplemental riders. See
"Premiums," page .

- You may pay unplanned premiums, within limits. See "Premiums," page .

- Under certain circumstances, you may need to pay extra premiums to prevent
lapse. See "Premiums to Prevent Lapse," page .

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ALLOCATING NET PREMIUMS

- State Farm deducts a 5% premium charge from each premium before allocation
resulting in a net premium.

- You direct the allocation of Net Premiums among six Subaccounts and the
Fixed Account. See "Net Premium Allocations," page , for rules and
limits.

- State Farm credits interest on amounts allocated to the Fixed Account at a
rate we determine, but not less than an annual effective rate of 4%. See
"Transfers," page , for rules and limits on Fixed Account allocations.

FUNDS AVAILABLE THROUGH SUBACCOUNTS

- The Subaccounts invest in corresponding portfolios of State Farm Variable
Product Trust. See "The Trust," page .

TABLE A

FUND ANNUAL EXPENSES
(as a percentage of average daily net assets)

The investment advisory fees shown below are the actual amounts incurred in
the fiscal year ended December 31, 1998 for each of the Funds. The Stock and
Bond Balanced Fund invests primarily in the Large Cap Equity Index Fund and the
Bond Fund. The Stock and Bond Balanced Fund will not pay investment advisory
fees directly, but will indirectly bear its share of the investment advisory
fees incurred by the Large Cap Equity Index Fund and the Bond Fund. Therefore,
the investment results of the Stock and Bond Balanced Fund will be net of these
fees. The relative amounts that the Stock and Bond Balanced Fund invests in the
Large Cap Equity Index Fund and the Bond Fund at any one time will fluctuate,
but under normal circumstances, the Stock and Bond Balanced Fund will attempt to
maintain approximately 60% of its net assets in shares of the Large Cap Equity
Index Fund and approximately 40% of its net assets in shares of the Bond Fund.
Based on these percentages, an approximate investment advisory fee was derived
for the Stock and Bond Balanced Fund. This derived fee is used for the purpose
of showing the Stock and Bond Balanced Fund's annual expenses in the table below
and for purposes of the Example below.

By investing in the Large Cap Equity Index Fund and the Bond Fund, the Stock
and Bond Balanced Fund will indirectly bear its share of those underlying Funds'
Other Expenses and will incur its own Other Expenses. Other Expenses reflect the
fact that the investment adviser to the Funds has agreed to bear the expenses
incurred by each Fund (other than the International Equity Index Fund), other
than the investment advisory fee, that exceed 0.10% of such Fund's average daily
net assets, and that the investment adviser to the Funds has agreed to bear all
of the Stock and Bond Balanced Fund's own Other Expenses. The investment adviser
to the Funds has agreed to bear the expenses incurred by the International
Equity Index Fund, other than the investment advisory fee, that exceed 0.20% of
that Fund's average daily net

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assets. These expense limitation arrangements are voluntary and the investment
adviser can eliminate them at any time.

<TABLE>
<CAPTION>
TOTAL
OTHER EXPENSES ANNUAL EXPENSES
INVESTMENT (AFTER EXPENSE (AFTER EXPENSE
FUND ADVISORY FEES LIMITATION) (*) LIMITATION) (*)
- ----------------------------------------------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C>
Large Cap Equity Index Fund...................................... 0.26% 0.06% 0.32%
Small Cap Equity Index Fund...................................... 0.40% 0.10% 0.50%
International Equity Index Fund.................................. 0.55% 0.20% 0.75%
Money Market Fund................................................ 0.40% 0.03% 0.43%
Bond Fund........................................................ 0.50% 0.07% 0.57%
Stock and Bond Balanced Fund..................................... 0.36% 0.06% 0.42%
</TABLE>

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

(*) Absent this expense limitation, Other Expenses for the Small Cap Equity
Index Fund, International Equity Index Fund, and Money Market Fund would be
0.15%, 0.38%, and 0.12%, respectively. During the year ended December 31,
1998, the investment adviser reimbursed a greater amount of expenses of the
Money Market Fund than required under the agreement, further reducing that
Fund's other expenses to 0.03%.

DEDUCTIONS FROM ASSETS

- State Farm makes a monthly deduction for cost of insurance, $6 current
monthly expense charge (maximum of $8 per month), and supplemental benefit
charges. See "Charges and Deductions Monthly Deduction," page .

- State Farm deducts a daily charge at a current annual rate of 0.80%
(maximum annual rate of 0.90%) from assets in the Subaccounts. See
"Charges and Deductions Mortality and Expense Risk Charge," page . State
Farm does not deduct this charge from assets in the Fixed Account.

POLICY ACCOUNT VALUE

- Policy Account Value is the amount in the Subaccounts and in the Fixed
Account credited to your Policy plus the value held in the general account
to secure the Loan Amount. See "Policy Account Value," page , "Fixed
Policy Account Value," page , and "Subaccount Policy Value," page .

- Policy Account Value varies from day to day to reflect Subaccount
investment experience, interest credited on any Fixed Account allocations,
charges deducted and other Policy transactions (such as Policy loans,
transfers and withdrawals).

- You may transfer Policy Account Value among the Subaccounts and the Fixed
Account. A $25 transfer processing fee may apply to transfers made after
the 12th transfer in a Policy Year. See "Transfers" for rules and limits.
Policy loans reduce the amount available for allocations and transfers.

- Policy Account Value serves as the starting point for calculating certain
values under a Policy, such as the Cash Surrender Value and the Death
Benefit.

- There is no minimum guaranteed Policy Account Value. The Policy may lapse
on a Deduction Date if the Cash Surrender Value is insufficient to cover
the Monthly Deduction then due and the Death Benefit Guarantee is not in
effect.

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CASH BENEFITS

- You may take loans for amounts up to 90% of Cash Value, at a net interest
rate of 2%. See "Loan Benefits," page , and "Tax Treatment of Policy
Benefits," page .

- You may make withdrawals up to 4 times each Policy Year provided there is
sufficient remaining Cash Surrender Value. A withdrawal processing fee
equal to the lesser of $25 or 2% of the amount requested for withdrawal
will apply to each withdrawal. See "Withdrawals," page , for rules and
limits.

- You can surrender the Policy at any time for its Cash Surrender Value
(Policy Account Value minus Loan Amount and minus any applicable surrender
charge). See "Full Surrender," page .

- State Farm will deduct a surrender charge from the Policy Account Value
upon a full surrender of the Policy during the first 10 Policy Years or
the first 10 years after an increase in Basic Amount. See "Surrender
Charge," page .

- A variety of payment options are available.

DEATH BENEFITS

- Death Benefits are available as a lump sum or under a variety of payment
options.

- The minimum Basic Amount available is $50,000.

- Death Benefits are available in two death benefit options:

- Option 1 (greater of Basic Amount plus any Net Premium payment received
since the last Deduction Date, or a specified percentage of Policy Account
Value); or

- Option 2 (greater of Basic Amount plus the Policy Account Value, or a
specified percentage of Policy Account Value). See "Death Benefits," page
.

- We provide flexibility to change the Basic Amount and to change the Death
Benefit option. See "Changing the Basic Amount" and "Changing the Death
Benefit Option," page , for rules and limits.

- The Death Benefit Guarantee keeps the Policy in force regardless of
sufficiency of Cash Surrender Value so long as cumulative premiums paid on
the Policy, less any withdrawals and less the Loan Policy Account Value,
are at least equal to the Minimum Premium. See "Death Benefit Guarantee,"
page .

- The Death Benefit should be excludible from the gross income of the
Beneficiary. See "Tax Treatment of Policy Benefits," page .

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PREMIUMS

APPLYING FOR A POLICY. To purchase a Policy, you must complete an
application and submit it to an authorized State Farm agent. You also must pay
an initial premium of a sufficient amount. See "Premiums," below. You can submit
your initial premium with your application or at a later date. Coverage becomes
effective as of the date we receive the premium, but is limited to $300,000
(unless the Insured is under 15 days old in which case coverage will not exceed
$3,000) until the application is approved.

Generally, State Farm will issue a Policy covering an Insured up to age 80
if evidence of insurability satisfies our underwriting rules and we have
received an initial premium of sufficient amount. This amount must be at least
equal to the minimum monthly premium if the payment mode of the Policy is
monthly, and 12 times the minimum monthly premium if the payment mode of the
Policy is annual. Evidence of insurability may include, among other things, a
medical examination of the Insured. We reserve the right not to accept an
application for any lawful reason.

EXCHANGES FROM STATE FARM UNIVERSAL LIFE AND STATE FARM TRADITIONAL ORDINARY
WHOLE LIFE. State Farm will permit the owner of a State Farm Universal Life
policy or a State Farm Traditional Ordinary whole life policy to exchange such
policy for a Policy subject to the following conditions:

(1) the initial Basic Amount for the Policy must equal or exceed the
Basic Amount less any policy loan and accrued loan interest for the original
policy;

(2) State Farm will waive evidence of insurability where the initial
Basic Amount of the Policy is equal to the Basic Amount less any policy loan
and accrued loan interest for the original policy, and where the death
benefit options are the same for exchanges from a Universal Life policy or
where the death benefit option is Option 1 for exchanges from a Traditional
Ordinary whole life policy; and

(3) the original policy must be terminated.

State Farm can change this program at any time.

On exchanges from a Universal Life policy to a Policy, State Farm will waive
the surrender charge on the Universal Life policy and will waive the 5% premium
charge on the Policy for the amount transferred from the Universal Life policy
to the Policy.

On exchanges from a Traditional Ordinary whole life policy to a Policy,
State Farm will waive the 5% premium charge on the Policy for the amount
transferred from the Traditional Ordinary whole life policy to the Policy.

FREE LOOK RIGHT TO CANCEL POLICY. During your "free-look" period, you may
cancel your Policy and receive a refund of all premiums paid. The free look
period expires 10 days after you receive your Policy. Some states may require a
longer period. If you decide to cancel the Policy, you must return it by mail or
other delivery to State Farm or to an authorized State Farm agent. Immediately
after mailing or delivery, State Farm will deem the Policy void from the
beginning.

PREMIUMS. The premium amounts sufficient to fund a Policy depend on a
number of factors, such as the Age, sex and rate class of the proposed Insured,
the desired Basic Amount, and any supplemental benefits. After you pay the
initial premium, you may pay additional premiums in any amount and at any time.
However, total premiums paid in a Policy Year may not exceed guideline premium
limitations for life insurance set forth in the Code. We reserve the right to
reject any premium that would result in the Policy being disqualified as life
insurance under the Code and will refund any rejected premium. In addition, we
will monitor Policies and will attempt to notify the Owner on a timely basis if
his or her Policy is in jeopardy of becoming a modified endowment contract under
the Code. See "Tax Considerations," page .

State Farm allows a credit on conversions of eligible State Farm term
insurance to the Policy. The amount of the credit is based on the premiums paid
on the term coverage during the 12 months prior to

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conversion. The amount of the credit will be added to the premium, if any,
submitted by the Owner converting the term coverage, and will be treated as part
of the initial premium for the Policy (except for purposes of the free look
provision). Therefore, the credit will be included in the premiums for purposes
of calculating and deducting the premium charge. See "Charges and Deductions
Premium Charge," page . State Farm will not recapture the credit if you
surrender the Policy. State Farm will not include the amount of the credit for
purposes of calculating agent compensation. See "Additional Information Sale of
the Policies," page .

PLANNED PREMIUMS. When you apply for a Policy, you select a monthly or
annual premium payment plan. You may arrange for monthly premiums to be paid via
automatic deduction from your checking account. You are not required to pay
premiums in accordance with this premium plan; rather, you can pay more or less
than planned or skip a planned premium entirely. You can change the amount of
planned premiums and payment arrangements, or switch between monthly and annual
frequencies, whenever you want by providing satisfactory written or telephone
instructions to the Home Office (if we have your telephone authorization on
file), which will be effective upon our receipt of the instructions.

Depending on the Policy Account Value at the time of an increase in the
Basic Amount and the amount of the increase requested, a change in the amount of
planned premiums may be advisable. See "Changing the Basic Amount," page .

PREMIUMS TO PREVENT LAPSE. Failure to pay planned premiums will not
necessarily cause a Policy to lapse. Rather, whether a Policy lapses depends on
whether its Cash Surrender Value is insufficient to cover the Monthly Deduction
when due. If the Cash Surrender Value on a Deduction Date is less than the
Monthly Deduction we are to deduct on that date and the Death Benefit Guarantee
is not in effect, the Policy will be in default and a grace period will begin.
See "Monthly Deduction," page __, and "Death Benefit Guarantee," below. This
could happen if the Cash Surrender Value has decreased due to insufficient
investment experience or because premiums paid have been insufficient to offset
the Monthly Deduction.

You have until the end of the grace period to pay the required premium. If
the grace period ends prior to the end of the Death Benefit Guarantee (See
"Death Benefit Guarantee"), the required premium must be large enough to provide
the lesser of

(1) the Minimum Premium required at the end of the grace period, or

(2) an amount large enough to provide an increase in the Cash Surrender
Value sufficient to cover the Monthly Deductions for the grace period and
any increase in the surrender charges.

If the grace period ends after the end of the Death Benefit Guarantee, the
required premium must be large enough to provide an increase in the Cash
Surrender Value sufficient to cover the Monthly Deductions for the grace period
and any increase in the surrender charges. State Farm will send notice of the
amount required to be paid during the grace period to your last known address
and to any assignee of record. The grace period will end 61 days after we send
the notice and your Policy will remain in effect during the grace period. If the
Insured should die during the grace period before you pay the required premium,
the Death Benefit will still be payable to the Beneficiary, although the amount
paid will reflect a reduction for the Monthly Deduction(s) due on or before the
date of the Insured's death. See "Amount of Death Benefit Payable," page . If
you do not pay the required premium before the grace period ends, your Policy
will lapse. It will have no value and no benefits will be payable. But see
"Other Policy Benefits and Provisions," page , for a discussion of your
reinstatement rights.

A grace period also may begin if the Cash Surrender Value is insufficient to
cover charges due to the outstanding Loan Amount. See "Effect of Policy Loan,"
page .

DEATH BENEFIT GUARANTEE. During the first 10 Policy Years (first 9 Policy
Years for Policies issued in Texas), so long as cumulative premiums paid, less
withdrawals and the Loan Policy Account Value, are at

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least equal to the Minimum Premium amount for your Policy, the Policy will
remain in force, regardless of the sufficiency of Cash Surrender Value to cover
Monthly Deductions.

CREDITING PREMIUMS TO THE POLICY. We will credit your initial premium to
the Policy on the Policy Date. We will credit any additional premium received
after the Policy Date to the Policy as of the end of the Valuation Period when
we receive the premium at our Home Office. We will deem any premiums we receive
on a non-Valuation Day as being received on the next succeeding Valuation Day.

ALLOCATION OPTIONS

NET PREMIUM ALLOCATIONS. When you apply for a Policy, you specify the
percentage of Net Premium you want to allocate to each Subaccount and the Fixed
Account. You can change the allocation percentages at any time by sending
satisfactory written or telephone instructions to the Home Office (if we have
your telephone authorization on file). The change will apply to all premiums we
receive with or after we receive your instructions. Net Premium allocations must
be in percentages totaling 100%, and each allocation percentage must be a whole
number.

Until the free look period expires, we will allocate all Net Premiums to the
Fixed Account. At the end of this period, we transfer the Policy Account Value
to the Subaccounts and/or retain it in the Fixed Account based on the net
premium allocation percentages in effect at the time of the transfer. See "How
Your Policy Account Values Vary," page . For this purpose, we assume your free
look period starts 10 days after we issue your Policy.

SUBACCOUNT OPTIONS. The Variable Account has six Subaccounts, each
investing in a specific Fund of the Trust. The Trust is a series-type fund
registered with the Securities and Exchange Commission ("SEC") as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). The paragraphs below summarize the investment
objective(s) of each of the Funds in which Subaccounts invest. There is no
assurance that a Fund will meet its objective(s).

- The Large Cap Equity Index Fund seeks to match the performance of the
Standard & Poor's Composite Index of 500 Stocks-Registered Trademark-.(2)
This Fund will pursue its objective by investing primarily on a
capitalization-weighted basis in the securities that make up the S&P 500.

- The Small Cap Equity Index Fund seeks to match the performance of the
Russell 2000 Small Stock Index-Registered Trademark-.(3) This Fund will
pursue its objective by investing primarily in a representative sample of
stocks found in the Russell 2000.

- The International Equity Index Fund seeks to match the performance of the
Morgan Stanley Capital International Europe, Australia and Far East Free
Index-Registered Trademark- (the "EAFE Free").(4) This

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

(2) Standard & Poor's-Registered Trademark-, S&P-Registered Trademark-, S&P
500-Registered Trademark-, Standard & Poor's 500 and 500 are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by State Farm
and the Trust. Neither the State Farm Variable Universal Life Policy, the
Large Cap Equity Index Fund, nor the Stock and Bond Balanced Fund (the
"Product and the Funds") is sponsored, endorsed, sold or promoted by
Standard & Poor's, and Standard & Poor's makes no representation regarding
the advisability of investing in the Product and the Funds. (For more
information regarding the S&P 500 Index, see "Relationships with the
Companies that Maintain the Benchmark Indices" in this prospectus.)

(3) The Russell 2000-Registered Trademark- Index is a trademark/service mark of
the Frank Russell Company. Russell is a trademark of the Frank Russell
Company. The Small Cap Equity Index Fund (the "Fund") is not sponsored,
endorsed, sold or promoted by the Frank Russell Company, and the Frank
Russell Company makes no representation regarding the advisability of
investing in the Fund. (For more information regarding the Russell 2000
Index, see "Relationships with the Companies that Maintain the Benchmark
Indices" in this prospectus.)

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<PAGE>

Fund will pursue its objective by investing primarily in a representative
sample of stocks found in the EAFE Free.

- The Bond Fund seeks to realize over a period of years the highest yield
consistent with prudent investment management through current income and
capital gains. This Fund will pursue its objective by investing primarily
in good quality bonds issued by domestic companies.

- The Stock and Bond Balanced Fund seeks long-term growth of capital,
balanced with current income. This Fund will pursue its objective by
investing primarily in the Trust's Large Cap Equity Index Fund and the
Bond Fund.

- The Money Market Fund seeks to maximize current income to the extent
consistent with the preservation of capital and maintenance of liquidity.
This Fund will pursue its objective by investing exclusively in high
quality money market instruments. THE U.S. GOVERNMENT DOES NOT INSURE OR
GUARANTEE AN INVESTMENT IN THE MONEY MARKET FUND. This Fund will attempt
to maintain a stable net asset value of $1.00 per share, BUT THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

The accompanying prospectus for the Trust contains further information about
the Funds. Please read the Trust's prospectus in conjunction with this
prospectus. See also "The Trust," page .

FIXED ACCOUNT OPTION. The Fixed Account is part of our general account. It
is not a separate account. We credit amounts allocated to the Fixed Account with
interest for the period of allocation at rates we determine in our sole
discretion, but in no event will interest credited on these amounts be less than
an effective annual rate of 4%. The current interest rate is the guaranteed
interest rate plus any excess interest rate. We determine the current interest
rate periodically. You assume the risk that interest credited may not exceed the
guaranteed minimum rate of 4% per year. See "State Farm's Fixed Account Option,"
page . There are significant limits on your right to transfer Policy Account
Value from the Fixed Account. See "Transfers," below.

TRANSFERS. You may transfer Policy Account Value from and among the
Subaccounts at any time after the end of the free look period. The minimum
amount of Policy Account Value that you may transfer from a Subaccount is $250,
or, if less, the Policy Account Value held in the Subaccount. You may transfer
Policy Account Value held in the Fixed Account to a Subaccount or Subaccounts
only once each Policy Year and only during the 30-day period following the end
of each Policy Year. Unused transfers do not carry over to the next year. The
maximum transfer amount is the greater of 25% of the Policy Account Value held
in the Fixed Account on the date of the transfer or $1,000, unless waived by us.
The amount transferred must be at least $250, or, if less, the Policy Account
Value held in the Fixed Account.

You may make transfer requests by satisfactory written or telephone request
(if we have your telephone authorization on file). A transfer will take effect
at the end of the Valuation Period during which we receive the request at the
Home Office. State Farm may, however, defer transfers under the same conditions
that we may delay paying proceeds. See "Requesting Payments," page . There is
no limit on the number of transfers from and among the Subaccounts. However,
State Farm reserves the right to impose a $25 per transfer processing fee on
each transfer in a Policy Year in excess of 12. For purposes of

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

(4) The Morgan Stanley Capital International Europe, Australia and Far East Free
(EAFE-Registered Trademark- Free) Index is the exclusive property of Morgan
Stanley & Co. Incorporated ("Morgan Stanley"). Morgan Stanley Capital
International is a service mark of Morgan Stanley and has been licensed for
use by the Trust. The International Equity Index Fund (the "Fund") is not
sponsored, endorsed, sold or promoted by Morgan Stanley and Morgan Stanley
makes no representation regarding the advisability of investing in the Fund.
(For more information regarding the Morgan Stanley Capital International
EAFE Free Index, see "Relationships with the Companies that Maintain the
Benchmark Indices" in this prospectus.)

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<PAGE>

assessing this fee, each transfer request is considered one transfer, regardless
of the number of Subaccounts affected by the transfer. Any unused "free"
transfers do not carry over to the next year. State Farm reserves the right to
modify, restrict, suspend or eliminate the transfer privileges, including
telephone transfer privileges, at any time, for any reason.

DOLLAR-COST AVERAGING. The dollar-cost averaging program permits you to
systematically transfer on a monthly, quarterly, semi-annual or annual basis a
set dollar amount from either the Subaccount investing in the Money Market Fund
(the "Money Market Subaccount") or the Subaccount investing in the Bond Fund
(the "Bond Subaccount") to any combination of Subaccounts and/or the Fixed
Account. If the Money Market Subaccount or the Bond Subaccount is the Subaccount
from which the transfer is made, it cannot also be used as one of the
Subaccounts in this combination.

The dollar-cost averaging method of investment is designed to reduce the
risk of making purchases only when the price of units is high, but you should
carefully consider your financial ability to continue the program over a long
enough period of time to purchase units when their value is low as well as when
it is high. Dollar-cost averaging does not assure a profit or protect against a
loss.

You may elect to participate in the dollar-cost averaging program at any
time by sending us a written request. To use the dollar-cost averaging program,
you must transfer at least $100 from the Money Market Subaccount or Bond
Subaccount, as applicable. Once elected, dollar-cost averaging remains in effect
from the date we receive your request until the value of the Subaccount from
which transfers are being made is depleted, or until you cancel the program by
written request or by telephone if we have your telephone authorization on file.
There is no additional charge for dollar-cost averaging. A transfer under this
program is not considered a transfer for purposes of assessing a transfer
processing fee. We reserve the right to discontinue offering the dollar-cost
averaging program at any time and for any reason. Dollar-cost averaging is not
available while you are participating in the portfolio rebalancing program.

PORTFOLIO REBALANCING PROGRAM. Once your money has been allocated among the
Subaccounts, the performance of each Subaccount may cause your allocation to
shift. You may instruct us to automatically rebalance (on a monthly, quarterly,
semi-annual or annual basis) the value of your Policy in the Subaccounts to
return to the percentages specified in your allocation instructions. You may
elect to participate in the portfolio rebalancing program at any time by sending
us a written request at the Home Office. Your percentage allocations must be in
whole percentages. You may make subsequent changes to your percentage
allocations at any time by providing written or telephone instructions to the
Home Office (if we have your telephone authorization on file). Once elected,
portfolio rebalancing remains in effect from the date we receive your written
request until you instruct us to discontinue portfolio rebalancing. There is no
additional charge for using portfolio rebalancing, and a portfolio rebalancing
transfer is not considered a transfer for purposes of assessing a transfer
processing fee. We reserve the right to discontinue offering the portfolio
rebalancing program at any time and for any reason. Portfolio rebalancing does
not guarantee a profit or protect against loss. You may not use amounts in the
Fixed Account in connection with the portfolio rebalancing program. Portfolio
rebalancing is not available while you are participating in the dollar-cost
averaging program.

CHARGES AND DEDUCTIONS

State Farm deducts the charges described below. Certain of the charges
depend on a number of variables, and are illustrated in the hypothetical
illustrations beginning on page . The charges are for the services and
benefits State Farm provides, costs and expenses State Farm incurs and risks
State Farm assumes under or in connection with the Policies.

Services and benefits State Farm provides include:

- the death, cash and loan benefits provided by the Policy;

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<PAGE>

- investment options, including Net Premium allocations, dollar-cost
averaging and portfolio rebalancing programs;

- administration of various elective options under the Policy; and

- the distribution of various reports to Owners.

Costs and expenses State Farm incurs include those associated with
underwriting applications, increases in Basic Amount, and riders, various
overhead and other expenses associated with providing the services and benefits
under the Policy, sales and marketing expenses, and other costs of doing
business, such as federal, state and local premium and other taxes and fees.

Risks State Farm assumes include the risks that Insureds may live for a
shorter period of time than estimated, therefore resulting in the payment of
greater death benefits than expected, and that the costs of providing the
services and benefits under the Policies will exceed the charges deducted.

- PREMIUM CHARGE. State Farm deducts a 5% charge from each premium before
allocating the resulting Net Premium to the Policy Account Value.

- MORTALITY AND EXPENSE RISK CHARGE. State Farm currently deducts a daily
charge from assets in the Subaccounts attributable to the Policies at an
annual rate of 0.80% of net assets. State Farm guarantees that this charge
will not exceed an annual rate of 0.90% of net assets. This charge does
not apply to Fixed Account assets attributable to the Policies. We factor
this charge into the net investment factor (see page ). State Farm may
profit from this charge and may use such profit for any lawful purpose
including paying our expenses related to selling the Policies.

- MONTHLY DEDUCTION. State Farm deducts the Monthly Deduction on each
Deduction Date from Policy Account Value in the Variable Account and the
Fixed Account on a pro rata basis. The Monthly Deduction for each Policy
consists of

(1) the cost of insurance charge discussed below,

(2) a current monthly expense charge of $6 (it cannot exceed $8 per
month), and

(3) any charges for additional benefits added by riders to the Policy
(see "Supplemental Benefits").

- SURRENDER CHARGE. If you surrender the Policy during the first 10 Policy
Years or the first 10 years after an increase in Basic Amount, State Farm
will deduct a surrender charge based on the Basic Amount at issue, or
increase, as applicable. State Farm will deduct the surrender charge
before we pay any surrender proceeds. The surrender charge depends on the
Insured's Age at issue, or on the Policy Anniversary preceding an
increase. We calculate the surrender charge based as an amount per $1,000
of the Basic Amount at issue (or increase). The maximum surrender charge
amount per $1,000 of Basic Amount is $21 which is for Insured's ages 70 to
80. During the 10-year period a surrender charge is in effect, it
increases monthly in the first two years, remains level for the next four
years, then decreases by 1/5 each year for the next five years to zero.
See Appendix A for sample surrender charges. Your Policy will state the
surrender charge for your Policy.

- Other Charges:

- State Farm reserves the right to impose a $25 transfer processing fee
on each transfer in a Policy Year in excess of 12. See "Transfers,"
page , for a discussion of the transfer processing fee.

- On each withdrawal, State Farm will assess a withdrawal processing fee
equal to the lesser of $25 or 2% of the amount withdrawn. See
"Withdrawals," page , for a discussion of the withdrawal processing
fee.

14
<PAGE>

- There are Fund expenses that range on an annual basis from 0.32% to
0.75% of the average daily value of your money invested in the Funds.
See "Summary of Policy," page , and the prospectus for the Trust
for a description of the investment advisory fees and other expenses
incurred by the Funds.

COMMENT ON COST OF INSURANCE. The cost of insurance is a significant charge
under your Policy because it is the primary charge for the death benefit
provided by your Policy. The cost of insurance charge depends on a number of
variables that cause the charge to vary from Policy to Policy and from Deduction
Date to Deduction Date. We calculate the cost of insurance for the Basic Amount
at issue and for any increase in the Basic Amount. The cost of insurance charge
is equal to the Company's current monthly cost of insurance rate for the Insured
multiplied by the net amount at risk under the Policy for the Basic Amount at
issue or as increased. The net amount at risk is equal to the difference between

(1) the amount of insurance attributable to the Basic Amount at issue or
as increased, as applicable, on the Deduction Date at the start of the month
divided by 1.0032737, and

(2) the Policy Account Value attributable to the Basic Amount at issue
or as increased, as applicable, on the Deduction Date at the start of the
month after the deduction of the part of the Monthly Deduction that does not
include the cost of insurance and the monthly charge for any Waiver of
Monthly Deduction rider.

Your Policy describes more specifically how we calculate this amount.

We base the cost of insurance rate for the Insured on his or her Age, sex
and applicable rate class. We currently place Insureds in the following rate
classes when we issue the Policy, based on our underwriting: a male or female or
unisex rate class where appropriate under applicable law (currently including
the state of Montana); and a tobacco or non-tobacco rate class. We place
juveniles in a male or female or unisex rate class. The original rate class
applies to the initial Basic Amount. If we approve an increase in Basic Amount,
a different rate class may apply to the increase, based on the Insured's
circumstances at the time of the increase.

We guarantee that the cost of insurance rates used to calculate the monthly
cost of insurance charge will not exceed the maximum cost of insurance rates set
forth in the Policy. We base the maximum cost of insurance rates on the
Insured's age last birthday at the start of the Policy Year, sex, and, for issue
ages 20 and over, tobacco use. If the Insured is age 20 and over on the Policy
Date or the effective date of any increase in Basic Amount, the Commissioners
1980 Standard Ordinary Non-Smoker Table applies if the Insured is classified as
non-tobacco; otherwise, the Commissioners 1980 Standard Ordinary Smoker
Mortality Table applies. If the Insured is under age 20 on the Policy Date or
the effective date of any increase in Basic Amount, the Commissioners 1980
Standard Ordinary Mortality Table applies. Modifications are made for rate
classes other than standard. See "Hypothetical Illustrations of Accumulated
Premiums, Policy Account Values, Cash Surrender Values, and Death Benefits" page
, for examples showing the effects of the cost of insurance charge.

HOW YOUR POLICY ACCOUNT VALUES VARY

POLICY ACCOUNT VALUE. The Policy Account Value serves as a starting point
for calculating certain values under a Policy. It is the aggregate of the value
of your Policy in all of the Subaccounts of the Variable Account, the Fixed
Account, and values held in our general account to secure Policy loans. See
"Loan Benefits," page . We determine the Policy Account Value on the Policy
Date and thereafter on each Valuation Day. The Policy Account Value will vary to
reflect the performance of the Subaccounts to which you allocate amounts,
interest credited on amounts allocated to the Fixed Account and Loan Account,
charges, transfers, withdrawals, Policy loans, Policy loan interest, and Policy
loan repayments. It may be more or less than premiums paid.

15
<PAGE>

CASH VALUE. The Cash Value on a Valuation Day is the Policy Account Value
reduced by any surrender charge that we would deduct if you surrendered the
Policy on that day.

CASH SURRENDER VALUE. The Cash Surrender Value on a Valuation Day is the
Cash Value reduced by any Loan Amount.

SUBACCOUNT POLICY VALUE. On any Valuation Day, for each Subaccount the
Subaccount Policy Value is equal to the number of Subaccount units credited to
the Policy multiplied by their unit value for that Valuation Day. When you
allocate an amount to a Subaccount, either by Net Premium allocation, transfer
of Policy Account Value or repayment of a Policy loan, we credit your Policy
with units in that Subaccount. We determine the number of units by dividing the
dollar amount allocated, transferred or repaid to the Subaccount by the
Subaccount's unit value for the Valuation Day when we effect the allocation,
transfer or repayment. The number of Subaccount units credited to a Policy will
decrease when we take the allocated portion of the Monthly Deduction from the
Subaccount, take a Policy loan from the Subaccount, transfer an amount from the
Subaccount, take a withdrawal from the Subaccount, or surrender the Policy.

UNIT VALUES. A Subaccount's unit value varies to reflect the investment
experience of the underlying Fund, and may increase or decrease from one
Valuation Day to the next. We arbitrarily set the unit value for each
Subaccount at $10 when we established the Subaccount. For each Valuation
Period after the date of establishment, we determine the unit value by
multiplying the value of a unit for a Subaccount for the prior Valuation
Period by the net investment factor for the Subaccount for the current
valuation period.

NET INVESTMENT FACTOR. The net investment factor is an index we use to
measure the investment performance of a Subaccount from one Valuation Period
to the next. The net investment factor for any Subaccount for any Valuation
Period reflects the change in the net asset value per share of the Fund held
in the Subaccount from one Valuation Period to the next, adjusted for the
daily deduction of the mortality and expense risk charge from assets in the
Subaccount. If any "ex-dividend" date occurs during the Valuation Period,
the per share amount of any dividend or capital gain distribution is taken
into account. Also, if any taxes need to be reserved, a per share charge or
credit for any taxes reserved for, which is determined by us to have
resulted from the operations of the Subaccount, is taken into account.

FIXED POLICY ACCOUNT VALUE. The Fixed Policy Account Value on any date on
or after the Issue Date is equal to:

(1) the sum of the following amounts in the Fixed Account: Net Premium
allocations, Policy Account Value transfers, and interest accruals (if the
date is a Policy Anniversary it also includes any dividend payments); minus

(2) the sum of any Monthly Deductions attributed to the Fixed Account,
any withdrawals or transfers (including any transfer processing fee or
withdrawal processing fee) from the Fixed Account, and Policy loans taken
from the Fixed Account.

DEATH BENEFITS

As long as the Policy remains in force, we will pay the Death Benefit once
we receive at our Home Office due proof of the Insured's death. See "Requesting
Payments," page . We will pay the Death Benefit to the Beneficiary.

AMOUNT OF DEATH BENEFIT PAYABLE. The amount of Death Benefit payable is

the amount of insurance determined under the Death Benefit Option in effect
on the date of the Insured's death, PLUS

any supplemental Death Benefit provided by riders, MINUS

16
<PAGE>

any Loan Amount on that date, and

if the date of death occurred during a grace period, minus the past due
Monthly Deductions.

Under certain circumstances, State Farm may further adjust the amount of the
Death Benefit. See "Incontestability," "Limited Death Benefit," and
"Misstatement of Age or Sex," page . If the Insured dies before we issue a
Policy, we limit the Death Benefit payable to $300,000, unless the insured is
under 15 days old in which case the Death Benefit payable will not exceed
$3,000.

DEATH BENEFIT OPTIONS. State Farm uses the Policy Account Value on the
Insured's date of death to determine the amount of insurance.

Under Option 1, the Death Benefit is the greater of

(1) the Basic Amount plus any Net Premiums received since the last
Deduction Date, or

(2) the applicable percentage amount of the Policy Account Value based
on the Insured's Age at the start of the current Policy Year, as determined
using the table of percentages prescribed by federal income tax law.

Under Option 2, the Death Benefit is the greater of

(1) the Basic Amount plus the Policy Account Value, or

The percentage is 250% to Age 40 and declines thereafter as the Insured's
Age increases. The table of percentages is shown below. We reserve the right to
change the table if the table of percentages currently in effect becomes
inconsistent with any federal income tax laws and/or regulations.

Under Option 1, the Death Benefit ordinarily will not change. Under Option
2, the Death Benefit will vary directly with the investment performance of the
Policy Account Value. To see how and when investment performance may begin to
affect the Death Benefit, please see the hypothetical illustrations beginning on
page .

17
<PAGE>

<TABLE>
<CAPTION>
TABLE OF PERCENTAGES OF POLICY ACCOUNT VALUE
- ----------------------------------------------------------------------
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
- --------- ----------- --- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
0 - 40 250% 54 157% 68 117%
41 243% 55 150% 69 116%
42 236% 56 146% 70 115%
43 229% 57 142% 71 113%
44 222% 58 138% 72 111%
45 215% 59 134% 73 109%
46 209% 60 130% 74 107%
47 203% 61 128% 75 - 90 105%
48 197% 62 126% 91 104%
49 191% 63 124% 92 103%
50 185% 64 122% 93 102%
51 178% 65 120% 94 101%
52 171% 66 119% 95+ 100%
53 164% 67 118%
</TABLE>

CHANGING THE DEATH BENEFIT OPTION. You select the Death Benefit Option when
you apply for the Policy. You may change the Death Benefit Option on your Policy
subject to the following rules:

You must submit each change by written request that we receive at our Home
Office, and

You may only change the Death Benefit Option once in any Policy Year.

The effective date of the change will be the date at the end of the
Valuation Period during which we receive the request for the change. We will
send you revised Policy schedule pages reflecting the new Death Benefit Option
and the effective date of the change.

If you request a change from Option 1 to Option 2, the Basic Amount will be
decreased by the Policy Account Value on the effective date of the change. When
you make a change from Option 2 to Option 1, the Basic Amount after the change
will be increased by the Policy Account Value on the effective date of the
change. The minimum monthly premium for the Death Benefit Guarantee will also
change when you change a Death Benefit Option.

CHANGING THE BASIC AMOUNT. You select the Basic Amount when you apply for
the Policy. You may change the Basic Amount, subject to the following
conditions:

(1) State Farm will not permit any change that may result in your Policy
being disqualified as a life insurance contract under Section 7702 of the
Code.

(2) You may only make one change (increase or decrease) during a Policy
Year.

To increase the Basic Amount, contact an authorized State Farm agent. To
decrease the Basic Amount, submit a written request to our Home Office. Any
increase in the Basic Amount must be at least $25,000 and you must submit an
application, along with evidence of insurability satisfactory to State Farm.
There must be enough Cash Surrender Value to make a Monthly Deduction that
includes the cost of insurance for the increase.

A change in planned premiums may be advisable based on the increase in Basic
Amount. See "Planned Premiums," page . Also, the minimum monthly premium for
the Death Benefit Guarantee will increase. If we approve the increase in Basic
Amount, the increase will become effective on the date you apply for it and we
will adjust the Policy Account Value to the extent necessary to reflect a
portion of the Monthly Deduction attributable to the increase as of the
effective date and any intervening Deduction Date based on the increase in Basic
Amount. The surrender charge will increase upon an increase in Basic Amount. We
will not allow any increases after the Policy Anniversary when the Insured is
age 80.

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<PAGE>

Any decrease in the Basic Amount must be at least $10,000, and the Basic
Amount after the decrease must be at least $50,000. A decrease in Basic Amount
will become effective on the date at the end of the Valuation Period during
which we receive a written request at our Home Office. Also, the minimum monthly
premium for the Death Benefit Guarantee will decrease. State Farm will use any
decrease first to reduce the most recent increase, then the next most recent
increases, then the initial Basic Amount. We will not deduct a surrender charge
upon a decrease in Basic Amount. We will not reduce the surrender charge upon a
decrease in Basic Amount.

EFFECT OF WITHDRAWALS ON THE DEATH BENEFIT. A withdrawal will affect your
Death Benefit in the following respects:

- If Death Benefit Option 1 is in effect, the withdrawal will also reduce
the Basic Amount dollar-for-dollar. If the Basic Amount reflects increases
in the Initial Basic Amount, the withdrawal will reduce first the most
recent increase, and then the next most recent increase, if any, in
reverse order, and finally the Initial Basic Amount.

- If Death Benefit Option 2 is in effect, the withdrawal will not affect the
Basic Amount.

CHANGING THE BENEFICIARY. You designate the Beneficiary(ies) when you apply
for the Policy. You may change the designated Beneficiary by submitting a
satisfactory written request received by us. If the Insured dies and there is no
surviving Beneficiary, the Insured's estate will be the Beneficiary.

LOAN BENEFITS

You may borrow an amount(s) up to 90% of your Cash Value at any time. See
"Requesting Payments," page . You may make requests for Policy loans in
writing or by telephone (if we have your telephone authorization on file). See
"Requesting Payments," page . Outstanding Policy loans, including accrued
interest, reduce the amount available for new loans.

LOAN ACCOUNT. Making a loan does not affect the Policy Account Value.
However, we transfer an amount equal to the loan proceeds from the Policy
Account Value in the Variable Account and Fixed Account to the Loan Account, and
hold this amount as "collateral" for the loan. If you do not direct an
allocation for this transfer when requesting the loan we will take it on a pro
rata basis. When you repay a loan, we transfer an amount equal to the repayment
from the Loan Account to the Variable Account and Fixed Account and allocate
this amount as you direct when submitting the repayment. If you provide no
direction, we will allocate the amount in accordance with your standing
instructions for Net Premium allocations.

INTEREST. We will charge interest daily on any outstanding Policy loan at
an effective annual rate of 8.0%. Interest is due and payable at the end of each
Policy Year while a Policy loan is outstanding. On each Policy Anniversary, any
unpaid amount of loan interest accrued since the last Policy Anniversary becomes
part of the outstanding loan. We transfer an amount equal to the unpaid amount
of interest to the Loan Account from each Subaccount and the Fixed Account on a
pro-rata basis according to the respective values in each Subaccount and the
Fixed Account. On each Deduction Date, we will credit the amount in the Loan
Account with interest at a minimum guaranteed annual effective rate of 6.0%. On
each Deduction Date, we will transfer the interest so earned to the Subaccounts
and the Fixed Account in accordance with the instructions for Net Premium
allocations then in effect.

LOAN REPAYMENT. You may repay all or part of your Loan Amount at any time
while the Insured is living and the Policy is in force. You must send loan
repayments to our Home Office and we will credit the repayment at the end of the
Valuation Period during which we receive them. State Farm does not treat a loan
repayment as a premium payment and loan repayments are not subject to the 5%
premium charge.

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<PAGE>

EFFECT OF POLICY LOAN. A Policy loan, whether or not repaid, will affect
Policy values over time because the investment results of the Subaccounts and
current interest rates credited on Policy Account Value in the Fixed Account
will apply only to the non-loaned portion of the Policy Account Value. The
longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the Subaccounts or credited interest
rates for the Fixed Account while the Policy loan is outstanding, the effect
could be favorable or unfavorable. Policy loans, particularly if not repaid,
could make it more likely than otherwise for a Policy to terminate. See "Tax
Considerations," page , for a discussion of adverse tax consequences if a
Policy lapses with Policy loans outstanding. If the Death Benefit becomes
payable while a Policy loan is outstanding, we will deduct the Loan Amount in
calculating the Death Benefit. If the Loan Amount exceeds the Cash Value on any
Deduction Date and the Death Benefit Guarantee is not in effect, the Policy will
be in default. We will send you, and any assignee of record, notice of the
default. You will have a 61-day grace period to submit a sufficient payment to
avoid lapse.

SURRENDER BENEFITS

FULL SURRENDER. You may surrender your Policy at any time for its Cash
Surrender Value. See "Requesting Payments," page . A surrender charge may
apply. See "Surrender Charge," page . Your Policy will terminate and cease to
be in force if you surrender it for a lump sum. You cannot later reinstate the
Policy.

WITHDRAWALS. You may make withdrawals under your Policy. See "Requesting
Payments," page . You may make withdrawal requests in writing or by telephone
(if we have your telephone authorization on file). See "Requesting Payments and
Telephone Transactions," page . The minimum withdrawal amount is $500. A
withdrawal must be less than the Cash Surrender Value on the day the request for
withdrawal is effective. You may not make more than four withdrawals during a
Policy Year. On each withdrawal, we will assess a withdrawal processing fee
equal to the lesser of $25 or 2% of the amount withdrawn. State Farm will deduct
this charge from your Policy Account Value along with the withdrawal amount
requested. When you request a withdrawal, you can direct us how to deduct the
withdrawal from your Policy Account Value. If you provide no directions, we will
deduct the withdrawal from your Policy Account Value in the Subaccounts and
Fixed Account on a pro-rata basis.

HYPOTHETICAL ILLUSTRATIONS OF ACCUMULATED PREMIUMS, POLICY ACCOUNT VALUES, CASH
SURRENDER VALUES, AND DEATH BENEFITS

The following illustrations show how certain values under a sample Policy
change with assumed investment performance over an extended period of time. In
particular, they illustrate how Policy Account Values, Cash Surrender Values and
Death Benefits under a Policy covering an Insured of a given Age on the Policy
Date would vary over time if planned premiums were paid annually at the
beginning of each Policy Year and the return on the assets in the Subaccounts
was a uniform gross annual rate of 0%, 6% or 12%, before deduction of any fees
and charges, including Fund fees and charges. The tables also show planned
premiums accumulated at 5% interest.

The values under a Policy would be different from those shown if the returns
averaged 0%, 6% or 12% but fluctuated over and under those averages throughout
the years shown. The hypothetical investment rates of return are illustrative
only and should not be deemed a representation of past or future investment
rates of return. Actual rates of return for a particular Policy may be more or
less than the hypothetical investment rates of return used in the illustrations.

The illustrations assume an average annual expense ratio of .50% of the
average daily net assets of the Funds available under the Policies, based on the
expense ratios for the Fund expenses and fees, as shown in the table appearing
above under "Summary of the Policy." For information on Fund expenses and fees,
see the prospectus for the Funds accompanying this prospectus. The current
charge illustrations also reflect the 0.80% mortality and expense risk charge to
the Variable Account. The maximum charge illustrations

20
<PAGE>

reflect the maximum 0.90% mortality and expense risk charge to the Variable
Account. After deduction of Fund expenses and fees and the mortality and expense
risk charge, the illustrated gross annual investment rates of return of 0%, 6%
and 12% would correspond to approximate net annual rates of return for the
Subaccounts of -1.29%, 4.63% and 10.55%, respectively, for the current charge
illustrations, and -1.39%, 4.53%, and 10.44% respectively, for the maximum
charge illustrations.

The illustrations also reflect the Monthly Deduction for the hypothetical
Insured. Separate illustrations on each of the following pages reflect our
current charges and the higher maximum charges we have the contractual right to
charge. All the illustrations reflect the fact that we currently make no charges
for Federal or state income taxes against the Variable Account and assume no
Loan Amount or charges for supplemental benefits.

We base the illustrations on our sex distinct rates for non-tobacco users.
Upon request, we will furnish a comparable illustration based upon the proposed
Insured's individual circumstances. Such illustrations may assume different
hypothetical rates of return than those illustrated in the following tables.

21
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 35 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $1,250 ANNUAL PREMIUM
DEATH BENEFIT OPTION 1
VALUES BASED ON CURRENT CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 961 1,025 1,088 703 767 830 100,000 100,000 100,000
2 2,691 1,905 2,092 2,287 1,389 1,576 1,771 100,000 100,000 100,000
3 4,138 2,831 3,203 3,606 2,315 2,687 3,090 100,000 100,000 100,000
4 5,657 3,737 4,358 5,057 3,221 3,842 4,541 100,000 100,000 100,000
5 7,252 4,624 5,558 6,654 4,108 5,042 6,138 100,000 100,000 100,000
6 8,928 5,489 6,805 8,410 4,973 6,289 7,894 100,000 100,000 100,000
7 10,686 6,333 8,100 10,343 5,920 7,687 9,931 100,000 100,000 100,000
8 12,533 7,153 9,443 12,471 6,844 9,134 12,161 100,000 100,000 100,000
9 14,472 7,951 10,838 14,814 7,744 10,631 14,607 100,000 100,000 100,000
10 16,508 8,724 12,284 17,394 8,621 12,181 17,291 100,000 100,000 100,000
15 28,322 12,192 20,361 34,861 12,192 20,361 34,861 100,000 100,000 100,000
20 43,399 14,894 30,052 63,682 14,894 30,052 63,682 100,000 100,000 100,000
25 62,642 16,511 41,636 111,225 16,511 41,636 111,225 100,000 100,000 149,041
30 87,201 16,337 55,457 188,632 16,337 55,457 188,632 100,000 100,000 230,131
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

THE HYPOTHETICAL RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE ACTUAL EXPERIENCE OF THE
ACCOUNTS. THE POLICY ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED 0.00%, 6.00%, AND 12.00% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATIONS
CAN BE MADE BY STATE FARM OR ANY OF THE FUNDS THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
VALUES ILLUSTRATED ARE NET OF ANY APPLICABLE CHARGES, SUCH AS PREMIUM CHARGES,
MORTALITY AND EXPENSE RISK CHARGES, MONTHLY EXPENSE CHARGES, COST OF INSURANCE
CHARGES, AND CHARGES FOR FUND EXPENSES AND FEES.

22
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 35 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $1,250 ANNUAL PREMIUM
DEATH BENEFIT OPTION 1
VALUES BASED ON MAXIMUM CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 906 968 1,030 648 710 772 100,000 100,000 100,000
2 2,691 1,793 1,973 2,160 1,277 1,457 1,644 100,000 100,000 100,000
3 4,138 2,657 3,013 3,398 2,141 2,497 2,882 100,000 100,000 100,000
4 5,657 3,498 4,090 4,755 2,982 3,574 4,239 100,000 100,000 100,000
5 7,252 4,316 5,204 6,243 3,800 4,688 5,727 100,000 100,000 100,000
6 8,928 5,109 6,355 7,874 4,593 5,839 7,358 100,000 100,000 100,000
7 10,686 5,875 7,544 9,661 5,463 7,131 9,248 100,000 100,000 100,000
8 12,533 6,616 8,772 11,623 6,306 8,462 11,313 100,000 100,000 100,000
9 14,472 7,329 10,040 13,776 7,122 9,833 13,569 100,000 100,000 100,000
10 16,508 8,013 11,348 16,140 7,909 11,245 16,037 100,000 100,000 100,000
15 28,322 10,943 18,512 31,995 10,943 18,512 31,995 100,000 100,000 100,000
20 43,399 12,809 26,709 57,811 12,809 26,709 57,811 100,000 100,000 100,000
25 62,642 12,972 35,784 100,290 12,972 35,784 100,290 100,000 100,000 134,389
30 87,201 10,312 45,533 168,714 10,312 45,533 168,714 100,000 100,000 205,831
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

23
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 35 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $1,250 ANNUAL PREMIUM
DEATH BENEFIT OPTION 2
VALUES BASED ON CURRENT CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 960 1,023 1,087 702 765 829 100,960 101,023 101,087
2 2,691 1,900 2,087 2,281 1,384 1,571 1,765 101,900 102,087 102,281
3 4,138 2,822 3,193 3,594 2,306 2,677 3,078 102,822 103,193 103,594
4 5,657 3,722 4,340 5,035 3,206 3,824 4,519 103,722 104,340 105,035
5 7,252 4,600 5,529 6,618 4,084 5,013 6,102 104,600 105,529 106,618
6 8,928 5,456 6,762 8,355 4,940 6,246 7,839 105,456 106,762 108,355
7 10,686 6,286 8,038 10,261 5,874 7,625 9,848 106,286 108,038 110,261
8 12,533 7,092 9,358 12,352 6,782 9,048 12,043 107,092 109,358 112,352
9 14,472 7,871 10,723 14,648 7,665 10,516 14,442 107,871 110,723 114,648
10 16,508 8,623 12,133 17,167 8,520 12,029 17,064 108,623 112,133 117,167
15 28,322 11,927 19,876 33,970 11,927 19,876 33,970 111,927 119,876 133,970
20 43,399 14,329 28,789 60,799 14,329 28,789 60,799 114,329 128,789 160,799
25 62,642 15,426 38,641 103,587 15,426 38,641 103,587 115,426 138,641 203,587
30 87,201 14,381 48,629 171,547 14,381 48,629 171,547 114,381 148,629 271,547
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

24
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 35 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $1,250 ANNUAL PREMIUM
DEATH BENEFIT OPTION 2
VALUES BASED ON MAXIMUM CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,313 904 966 1,028 646 708 770 100,904 100,966 101,028
2 2,691 1,787 1,967 2,154 1,271 1,451 1,638 101,787 101,967 102,154
3 4,138 2,646 3,001 3,384 2,130 2,485 2,868 102,646 103,001 103,384
4 5,657 3,480 4,068 4,730 2,964 3,552 4,214 103,480 104,068 104,730
5 7,252 4,289 5,169 6,201 3,773 4,653 5,685 104,289 105,169 106,201
6 8,928 5,069 6,303 7,808 4,553 5,787 7,292 105,069 106,303 107,808
7 10,686 5,821 7,470 9,563 5,408 7,057 9,151 105,821 107,470 109,563
8 12,533 6,543 8,670 11,482 6,234 8,361 11,173 106,543 108,670 111,482
9 14,472 7,235 9,903 13,579 7,028 9,697 13,373 107,235 109,903 113,579
10 16,508 7,894 11,169 15,871 7,791 11,066 15,768 107,894 111,169 115,871
15 28,322 10,631 17,939 30,935 10,631 17,939 30,935 110,631 117,939 130,935
20 43,399 12,137 25,188 54,317 12,137 25,188 54,317 112,137 125,188 154,317
25 62,642 11,678 32,099 90,287 11,678 32,099 90,287 111,678 132,099 190,287
30 87,201 8,104 37,122 145,282 8,104 37,122 145,282 108,104 137,122 245,282
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

25
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 50 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $2,500 ANNUAL PREMIUM
DEATH BENEFIT OPTION 1
VALUES BASED ON CURRENT CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,894 2,020 2,147 1,258 1,384 1,511 100,000 100,000 100,000
2 5,381 3,743 4,114 4,501 2,471 2,842 3,229 100,000 100,000 100,000
3 8,275 5,546 6,283 7,081 4,274 5,011 5,809 100,000 100,000 100,000
4 11,314 7,297 8,525 9,910 6,025 7,253 8,638 100,000 100,000 100,000
5 14,505 8,998 10,846 13,015 7,726 9,574 11,743 100,000 100,000 100,000
6 17,855 10,645 13,246 16,424 9,373 11,974 15,152 100,000 100,000 100,000
7 21,373 12,233 15,725 20,169 11,215 14,707 19,151 100,000 100,000 100,000
8 25,066 13,762 18,287 24,290 12,999 17,524 23,526 100,000 100,000 100,000
9 28,945 15,228 20,935 28,827 14,720 20,427 28,319 100,000 100,000 100,000
10 33,017 16,628 23,671 33,831 16,374 23,417 33,577 100,000 100,000 100,000
15 56,644 22,374 38,699 68,067 22,374 38,699 68,067 100,000 100,000 100,000
20 86,798 25,289 56,432 125,817 25,289 56,432 125,817 100,000 100,000 145,948
25 125,284 23,757 78,634 220,068 23,757 78,634 220,068 100,000 100,000 235,472
30 174,402 15,253 109,520 374,987 15,253 109,520 374,987 100,000 114,996 393,736
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

26
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 50 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $2,500 ANNUAL PREMIUM
DEATH BENEFIT OPTION 1
VALUES BASED ON MAXIMUM CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,748 1,870 1,992 1,112 1,234 1,356 100,000 100,000 100,000
2 5,381 3,436 3,789 4,156 2,164 2,517 2,884 100,000 100,000 100,000
3 8,275 5,059 5,753 6,506 3,787 4,481 5,234 100,000 100,000 100,000
4 11,314 6,612 7,761 9,057 5,340 6,489 7,785 100,000 100,000 100,000
5 14,505 8,090 9,809 11,828 6,818 8,537 10,556 100,000 100,000 100,000
6 17,855 9,490 11,897 14,842 8,218 10,625 13,570 100,000 100,000 100,000
7 21,373 10,807 14,022 18,124 9,789 13,005 17,107 100,000 100,000 100,000
8 25,066 12,039 16,187 21,707 11,276 15,424 20,944 100,000 100,000 100,000
9 28,945 13,181 18,389 25,625 12,672 17,881 25,116 100,000 100,000 100,000
10 33,017 14,224 20,625 29,915 13,970 20,371 29,660 100,000 100,000 100,000
15 56,644 17,586 32,156 58,813 17,586 32,156 58,813 100,000 100,000 100,000
20 86,798 16,424 43,872 108,121 16,424 43,872 108,121 100,000 100,000 125,420
25 125,284 6,745 55,200 188,761 6,745 55,200 188,761 100,000 100,000 201,974
30 174,402 0 65,374 319,843 0 65,374 319,843 0 100,000 335,835
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

27
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 50 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $2,500 ANNUAL PREMIUM
DEATH BENEFIT OPTION 2
VALUES BASED ON CURRENT CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET -1.29% NET 4.63% NET 10.55% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,886 2,011 2,138 1,250 1,375 1,502 101,886 102,011 102,138
2 5,381 3,719 4,087 4,470 2,447 2,815 3,198 103,719 104,087 104,470
3 8,275 5,495 6,224 7,015 4,223 4,952 5,743 105,495 106,224 107,015
4 11,314 7,210 8,421 9,786 5,938 7,149 8,514 107,210 108,421 109,786
5 14,505 8,863 10,678 12,808 7,591 9,406 11,536 108,863 110,678 112,808
6 17,855 10,448 12,992 16,098 9,176 11,720 14,826 110,448 112,992 116,098
7 21,373 11,959 15,357 19,679 10,941 14,340 18,661 111,959 115,357 119,679
8 25,066 13,394 17,775 23,579 12,631 17,012 22,815 113,394 117,775 123,579
9 28,945 14,748 20,239 27,822 14,239 19,730 27,313 114,748 120,239 127,822
10 33,017 16,014 22,744 32,439 15,760 22,490 32,184 116,014 122,744 132,439
15 56,644 20,645 35,507 62,150 20,645 35,507 62,150 120,645 135,507 162,150
20 86,798 21,356 47,341 106,431 21,356 47,341 106,431 121,356 147,341 206,431
25 125,284 16,151 55,450 171,865 16,151 55,450 171,865 116,151 155,450 271,865
30 174,402 3,224 56,353 269,336 3,224 56,353 269,336 103,224 156,353 369,336
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

28
<PAGE>

FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
MALE ISSUE AGE 35 STANDARD NON-TOBACCO
$100,000 INITIAL DEATH BENEFIT $2,500 ANNUAL PREMIUM
DEATH BENEFIT OPTION 2
VALUES BASED ON MAXIMUM CHARGES

<TABLE>
<CAPTION>
PREMIUM POLICY ACCOUNT VALUE CASH SURRENDER VALUE DEATH BENEFIT
ACCUMULATED ------------------------------------- ------------------------------------- -------------------------------------
- ------------- 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YR AT 5% -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET -1.39% NET 4.53% NET 10.44% NET
- --- -------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,738 1,859 1,980 1,102 1,223 1,344 101,738 101,859 101,980
2 5,381 3,405 3,754 4,118 2,133 2,482 2,846 103,405 103,754 104,118
3 8,275 4,995 5,679 6,421 3,723 4,407 5,149 104,995 105,679 106,421
4 11,314 6,501 7,628 8,899 5,229 6,356 7,627 106,501 107,628 108,899
5 14,505 7,918 9,595 11,563 6,646 8,323 10,291 107,918 109,595 111,563
6 17,855 9,238 11,571 14,423 7,966 10,299 13,151 109,238 111,571 114,423
7 21,373 10,456 13,550 17,493 9,438 12,532 16,476 110,456 113,550 117,493
8 25,066 11,568 15,527 20,789 10,805 14,764 20,026 111,568 115,527 120,789
9 28,945 12,566 17,492 24,324 12,057 16,983 23,815 112,566 117,492 124,324
10 33,017 13,438 19,430 28,110 13,184 19,176 27,856 113,438 119,430 128,110
15 56,644 15,442 28,104 51,178 15,442 28,104 51,178 115,442 128,104 151,178
20 86,798 11,916 32,734 81,983 11,916 32,734 81,983 111,916 132,734 181,983
25 125,284 0 28,068 120,697 0 28,068 120,697 0 128,068 220,697
30 174,402 0 4,550 164,091 0 4,550 164,091 0 104,550 264,091
</TABLE>

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

(1) Assumes annual premiums are paid at the beginning of each policy year.

(2) Assumes no policy loans or withdrawals are made.

(3) Zero values indicate termination of insurance coverage in the absence of
additional premium payments.

29
<PAGE>

REQUESTING PAYMENTS AND TELEPHONE TRANSACTIONS

REQUESTING PAYMENTS. You must send written requests for payment (except
where we authorize telephone requests) to our Home Office or give the requests
to an authorized State Farm agent for forwarding to our Home Office. We will
ordinarily pay any Death Benefit, loan proceeds or surrender or withdrawal
proceeds in a lump sum within seven days after receipt at our Home Office of all
the documents required for such a payment or, for surrenders and withdrawals, on
a later date if you so request. Other than the Death Benefit, which we determine
as of the date of the Insured's death, we will determine the amount as of the
end of the Valuation Period during which our Home Office receives all required
documents or, for surrenders and withdrawals, on a later date if you so request.

We generally will pay the Death Benefit through the State Farm Benefit
Management Account, an interest bearing checking account. We will send the State
Farm Benefit Management Account checkbook to you within seven days after we
receive all required documents. A Beneficiary will have immediate access to the
proceeds by writing a check on the State Farm Benefit Management Account. We
will pay interest on the amount in the State Farm Benefit Management Account
from the date of the Insured's death to the date the State Farm Benefit
Management Account is closed. Neither the Federal Deposit Insurance Corporation
nor any other agency insure amounts in the State Farm Benefit Management
Account.

We may delay making a payment or processing a transfer request if:

(1) the disposal or valuation of the Variable Account's assets is not
reasonably practicable because the New York Stock Exchange is closed for
other than a regular holiday or weekend, trading is restricted by the SEC,
or the SEC declares that an emergency exists; or

(2) the SEC by order permits postponement of payment to protect State
Farm's Policy Owners.

We also may defer making payments attributable to a check that has not
cleared, and we may defer payment of proceeds from the Fixed Account for a
withdrawal, surrender or Policy loan request for up to six months from the date
we receive the request. However, we will not defer payment of a withdrawal or
Policy loan requested to pay a premium due on a State Farm policy.

The Policy offers a wide variety of optional ways of receiving proceeds
payable under the Policy other than in a lump sum. An authorized State Farm
agent can explain these options upon request. None of these options vary with
the investment performance of a Variable Account because they are all forms of
fixed-benefit annuities.

TELEPHONE TRANSACTIONS. You may make certain requests under the Policy by
telephone provided we have your written authorization on file at the Home
Office. These include requests for transfers, withdrawals, Policy loans, changes
in premium allocation designations, dollar-cost averaging changes and changes in
the portfolio rebalancing program. Our Home Office will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
Such procedures may include, among others, requiring some form of personal
identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions, and/or tape recording of
telephone instructions. Your request for telephone transactions authorizes us to
record telephone calls. If we do not employ reasonable procedures, we may be
liable for any losses due to unauthorized or fraudulent instructions. However,
if we do employ reasonable procedures, we will not be liable for any losses due
to unauthorized or fraudulent instructions. We reserve the right to place
limits, including dollar limits, on telephone transactions.

OTHER POLICY BENEFITS AND PROVISIONS

EXCHANGE PROVISION. You have the right to transfer all of your Policy
Account Value to the Fixed Account. During the first two Policy Years (or the
first two years after an increase in Basic Amount), we do not count such
transfers for purposes of determining whether a transfer processing fee applies.

30
<PAGE>

OTHER POLICY PROVISIONS. The Policy contains provisions addressing the
following matters:

- DIVIDENDS. The Policy is participating. However, we do not anticipate
paying any dividends on the Policy.

- INCONTESTABILITY. The Policy limits our right to contest the Policy as
issued or as increased, for reasons of material misstatements contained in
the application, after it has been in force during the Insured's lifetime
for a minimum period, generally for two years from the Issue Date of the
Policy or effective date of the increase.

- LIMITED DEATH BENEFIT. The Policy limits the Death Benefit if the Insured
dies by suicide generally within two years after the Issue Date of the
Policy or effective date of the increase.

- MISSTATEMENT OF AGE OR SEX. State Farm will adjust the Death Benefit if
the application misstates the Insured's Age or sex.

BENEFICIARY. You may name the Beneficiary(ies) when you apply for the
Policy. The Beneficiary is entitled to the insurance benefits under the Policy.
You may change the Beneficiary or the order of payment during the Insured's
lifetime by providing a written request to the Home Office. We will effect your
change on the date you sign the request or on any later date specified in the
request, but the change will not affect any action we have taken before we
receive the request.

When the Insured dies, we will make payment in equal shares to the primary
Beneficiary(ies) living when payment is made. If no Beneficiary is living when
the Insured dies, we will make a one sum payment to you, if you are alive when
payment is made. Otherwise, we will make a one sum payment to the estate of the
last survivor of you and all Beneficiaries.

REINSTATEMENT. If you have not surrendered the Policy, you may reinstate
the Policy within five years after lapse, subject to compliance with certain
conditions, including the payment of a necessary premium and submission of
satisfactory evidence of insurability. See your Policy for further information.

OTHER CHANGES. At any time we may make such changes in the Policy as are
necessary:

to assure compliance at all times with the definition of life insurance
prescribed by the Code;

to make the Policy, our operations, or the Variable Account's operations
conform with any law or regulation issued by any government agency to which
they are subject; or

to reflect a change in the operation of the Variable Account, if allowed
by the Policy.

Only a State Farm officer has the right to change the Policy. No agent has
the authority to change the Policy or waive any of its terms. A State Farm
officer must sign all endorsements, amendments, or riders in order for those
documents to be valid.

REPORTS TO POLICY OWNERS. State Farm maintains records and accounts of all
transactions involving the Policy, the Variable Account, the Fixed Account and
the Loan Account. Each year, or more often if required by law, we will send you
a report showing information about your Policy for the period covered by the
report. State Farm also will send you an annual and a semi-annual report for
each Fund underlying a Subaccount to which you have allocated Policy Account
Value, as required by the 1940 Act. In addition, when you pay premiums (other
than by pre-authorized checking account deduction) or if you take out a Policy
loan, make transfers or make withdrawals, you will receive a written
confirmation of these transactions.

ASSIGNMENT AND CHANGE OF OWNER. You may assign the Policy subject to its
terms. We are not deemed to know of an assignment unless we receive a written
copy of it at our Home Office. We assume no responsibility for the validity or
effect of any assignment. In certain circumstances, an assignment may be a
taxable event. See "Tax Considerations", page __. You may change the Owner of
the Policy by sending a

31
<PAGE>

written request to our Home Office while the Insured is alive and the Policy is
in force. The change will take effect the date you sign the Written Request, but
the change will not affect any action we have taken before we receive the
Written Request. A change of Owner does not change the Beneficiary designation.

SUPPLEMENTAL BENEFITS. The following supplemental benefits are available
and you may add them to your Policy by rider. State Farm will deduct monthly
charges for these benefits from your Policy Account Value as part of the Monthly
Deduction (see page __).

- GUARANTEED INSURABILITY OPTION RIDER. Allows you to increase the Basic
Amount on the specific option dates without evidence of insurability.

- DISABILITY WAIVER OF MONTHLY DEDUCTION RIDER. Provides for the waiver of
the Monthly Deductions upon total disability of the Insured for as long as
the disability continues.

- ADDITIONAL INSURED RIDER. Provides level term insurance coverage for the
Insured's spouse to spouse's age 85.

- ACCIDENTAL DEATH BENEFIT RIDER. Provides additional death benefit if
accidental death occurs prior to age 70.

- CHILDREN'S TERM RIDER. Provides term life insurance on your eligible
children.

Additional rules and limits apply to these supplemental benefits. Please ask
your authorized State Farm agent for further information or contact our Home
Office.

STATE FARM AND THE FIXED ACCOUNT

STATE FARM LIFE INSURANCE COMPANY. State Farm is an Illinois stock life
insurance company that is wholly-owned by State Farm Mutual Automobile Insurance
Company, an Illinois mutual insurance company. State Farm's home office is
located at One State Farm Plaza, Bloomington, Illinois 61710-0001. State Farm
was incorporated in 1929 and has been continuously engaged in the life insurance
business since that year. State Farm is subject to regulation by the Insurance
Department of the State of Illinois as well as by the insurance departments of
all other states and jurisdictions in which it does business. State Farm sells
insurance in 46 states and the District of Columbia. State Farm also sells
insurance in the Canadian provinces of Alberta, New Brunswick, and Ontario.
State Farm submits annual statements on its operations and finances to insurance
officials in such states and jurisdictions. The Policy described in this
prospectus has been filed with and, where required, approved by, insurance
officials in those jurisdictions where it is sold.

STATE FARM DIRECTORS AND OFFICERS. A board of directors manages State Farm.
The following table sets forth the name and principal occupations during the
past five years of each of State Farm's directors. Each person's address is One
State Farm Plaza, Bloomington, Illinois 61710-0001.

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<PAGE>

BOARD OF DIRECTORS

Edward B. Rust, Jr. Director; President; Chairman of the Board, CEO State Farm Mutual
Chairman of the Board Automobile Insurance Company; President and CEO State
Farm Fire and Casualty Company; President and CEO
State Farm General Insurance Company; President State
Farm County Mutual Insurance Company of Texas;
Director State Farm Lloyds, Inc.; Chairman of the
Board, President and Treasurer State Farm Companies
Foundation; Director State Farm International
Services, Inc.; President and Director State Farm
Life Insurance Company, State Farm Annuity and Life
Insurance Company, State Farm Life and Accident
Assurance Company, State Farm Investment Management
Corp., State Farm Growth Fund, Inc., State Farm
Balanced Fund, Inc., State Farm Interim Fund, Inc.,
and State Farm Municipal Bond Fund, Inc.; President,
CEO and Director State Farm VP Management Corp.;
President, CEO and Trustee State Farm Variable
Product Trust (1997-present)

Roger B. Tompkins Director; Executive Vice Director and Executive Vice President State Farm Life
President Insurance Company, State Farm Annuity and Life
Insurance Company, and State Farm Life and Accident
Assurance Company (1997-present); Vice President
California State Farm Mutual Automobile Insurance
Company, State Farm Fire and Casualty Company, State
Farm General Insurance Company; Vice President and
Director (1997-present), State Farm VP Management
Corp.

Darrell W. Beernink Director; Vice President Vice President and Actuary Health State Farm Mutual
and Actuary Automobile Insurance Company; Director, Vice
President and Actuary State Farm Life Insurance
Company; Vice President and Actuary State Farm
Annuity and Life Insurance Company, and State Farm
Life and Accident Assurance Company
</TABLE>

33
<PAGE>

Wendy L. Gramm Director Director (1994-present) State Farm Mutual Automobile
Insurance Company; Director (1993-present) State Farm
Life Insurance Company; Director (1993-present) Enron
Corp.; Self-employed consultant (1993-present)

Roger S. Joslin Director Director, Senior Vice President and Treasurer State
Farm Mutual Automobile Insurance Company; Director,
Chairman of the Board and Treasurer State Farm Fire
and Casualty Company; Director, Vice President and
Treasurer State Farm General Insurance Company;
Treasurer State Farm County Mutual Insurance Company
of Texas; Director, Vice President and Treasurer
State Farm Lloyds, Inc.; Assistant Treasurer State
Farm Companies Foundation; Director, Vice President
and Treasurer State Farm International Services,
Inc., State Farm Investment Management Corp., State
Farm Growth Fund, Inc., State Farm Balanced Fund,
Inc., State Farm Interim Fund, Inc., and State Farm
Municipal Bond Fund, Inc.; Director State Farm Life
Insurance Company, State Farm Annuity and Life
Insurance Company, and State Farm Life and Accident
Assurance Company; Vice President, Treasurer and
Director (1997-present) State Farm VP Management
Corp.; Vice President, Treasurer and Trustee
(1997-present) State Farm Variable Product Trust
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH STATE FARM PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ------------------------------ -------------------------- ------------------------------------------------------
<S> <C> <C>
Kurt G. Moser Director; Senior Vice Vice President Investments State Farm Mutual
President Investments Automobile Insurance Company; Director and Vice
President Investments State Farm Fire and Casualty
Company, State Farm General Insurance Company, State
Farm Life Insurance Company, State Farm Annuity and
Life Insurance Company, and State Farm Life and
Accident Assurance Company; Vice President
Investments State Farm County Mutual Insurance
Company of Texas, State Farm Lloyds, Inc., and State
Farm International Services, Inc.; Investment Officer
State Farm Indemnity Company; Underwriter State Farm
Lloyds; Director and Senior Vice President State Farm
Investment Management Corp.; Vice President State
Farm Growth Fund, Inc., State Farm Balanced Fund,
Inc., State Farm Interim Fund, Inc., and State Farm
Municipal Bond Fund, Inc.; Director State Farm VP
Management Corp.; Vice President State Farm Variable
Product Trust (1997-present)

George L. Perry Director Director (1973-present) State Farm Mutual Automobile
Insurance Company; Director (1986-present) State Farm
Life Insurance Company; Senior Fellow (1970-present)
Brookings Institute

Vincent J. Trosino Director Director, Vice Chairman of the Board, President and
Chief Operating Officer State Farm Mutual Automobile
Insurance Company; Director and Vice President State
Farm Fire and Casualty Company, State Farm General
Insurance Company; Director State Farm Lloyds, Inc.;
Assistant Secretary State Farm Companies Foundation;
Director State Farm International Services, Inc.,
State Farm Life Insurance Company, State Farm Annuity
and Life Insurance Company, State Farm Life and
Accident Assurance Company, State Farm Investment
Management Corp.

W. H. Knight, Jr. Director Director (1998-present) State Farm Life Insurance
Company; Director (1995-present) State Farm Fire and
Casualty Company; Director (1996-present) State Farm
Mutual Automobile Insurance Company; Professor
(1983-1997), and Vice Provost (1997-present)
University of Iowa.
</TABLE>

<PAGE>

Jerry Porras Director Director (1997-present) State Farm life Insurance
Company; Director (1997-present) State Farm General
Insurance Company; Director (1996-present) State Farm
Mutual Automobile Insurance Company; Professor
Stanford University Graduate School of Business
(1972-present)
</TABLE>

The following table sets forth the names and principal occupations during
the past five years of the senior officers of State Farm (other than officers
listed above who are members of State Farm's Board of Directors). Each person's
address is One State Farm Plaza, Bloomington, Illinois 61710-0001.

SENIOR OFFICERS

Kim M. Brunner Vice President and General Vice President and General Counsel (1/99-present) and
Counsel Vice President and Regulatory General Counsel
(1997-1998) State Farm General Insurance Company;
Vice President and General Counsel (9/98-present)
State Farm Life and Accident Assurance Company, State
Farm Annuity and Life Insurance Company; Senior Vice
President and General Counsel (9/98-present) Vice
President and Regulatory General Counsel (1997-9/98)
and Vice President-Counsel (1993-1997) State Farm
Mutual Automobile Insurance Company; Vice President
and General Counsel (1998-present), Vice President
and Regulatory General Counsel (9/98-present) State
Farm Fire and Casualty Company
</TABLE>

36
<PAGE>

James G. Fisher Vice President Operations Vice President Operations (1995 - present) State Farm
Life Insurance Company; Executive Assistant (1994 -
1995), and Agency Director (1988 - 1994) State Farm
Insurance Companies

James A. Malay Vice President Vice President Policyholder Systems State Farm Mutual
Policyholder Systems Automobile Insurance Company, State Farm Fire and
Casualty Company, State Farm General Insurance
Company, and State Farm Life Insurance Company

Danny L. Scott, M.D. Vice President and Medical Vice President and Medical Director State Farm Life
Director Insurance Company, State Farm Annuity and Life
Insurance Company, and State Farm Life and Accident
Assurance Company

Laura P. Sullivan Vice President Counsel; Vice President Counsel and Secretary of the Board
and Secretary State Farm Mutual Automobile Insurance Company, State
Farm Fire and Casualty Company; Director Vice
President Counsel and Secretary of the Board State
Farm General Insurance Company; Assistant Secretary
Treasurer State Farm County Mutual Insurance Company
of Texas; Director and Assistant Secretary State Farm
Indemnity Company; Director, Vice President Secretary
State Farm Companies Foundation; Assistant Secretary
State Farm International Services, Inc.; Vice
President Counsel and Secretary of the Board State
Farm Life Insurance Company, State Farm Annuity and
Life Insurance Company, State Farm Life and Accident
Insurance Company

Dale R. Egeberg Vice President and Vice President and Controller Life State Farm Life
Controller Life Insurance Company, State Farm Annuity and Life
Insurance Company, and State Farm Life and Accident
Assurance Company (1997 - present); Controller State
Farm Life Insurance Company, State Farm Annuity and
Life Insurance Company, and State Farm Life and
Accident Assurance Company (through 1997)
</TABLE>

<PAGE>

Max E. McPeek Vice President Compliance Vice President Compliance (1998 - present), Assistant
Vice President Compliance (1997-1998), Assistant Vice
President (prior to 1997) State Farm Life Insurance
Company, State Farm Annuity and Life Insurance
Company, and State Farm Life and Accident Assurance
Company
</TABLE>

National Union Fire Insurance Company has issued a fidelity bond in the
amount of $5 million covering State Farm's directors, officers and employees.

STATE FARM'S FIXED ACCOUNT OPTION. The Fixed Account is part of State
Farm's general account assets. State Farm uses its general account assets to
support our insurance and annuity obligations other than those funded by
separate accounts. Subject to applicable law, State Farm has sole discretion
over the investment of the Fixed Account's assets.

Because of exemptive and exclusionary provisions, State Farm has not
registered interests in the Fixed Account under the Securities Act of 1933, nor
has State Farm registered the Fixed Account as an investment company under the
1940 Act. Accordingly, neither the Fixed Account nor any interests therein are
subject to the provisions of these Acts and, as a result, the staff of the
Securities and Exchange Commission has not reviewed the disclosure in this
prospectus relating to the Fixed Account. The disclosure regarding the Fixed
Account may, however, be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in a prospectus.

THE VARIABLE ACCOUNT AND THE TRUST

THE VARIABLE ACCOUNT. State Farm established the Variable Account as a
separate investment account under Illinois law on December 9, 1996. State Farm
owns the assets in the Variable Account and is obligated to pay all benefits
under the Policies. State Farm uses the Variable Account to support the Policies
as well as for other purposes permitted by law.

The Variable Account is registered with the SEC as a unit investment trust
under the 1940 Act and qualifies as a "separate account" within the meaning of
the federal securities laws. Such registration does not involve any supervision
by the SEC of the management of the Variable Account or State Farm. State Farm
has established other separate investment accounts, of which State Farm Life
Insurance Company Variable Annuity Separate Account is registered with the SEC
under the 1940 Act.

The Variable Account is divided into Subaccounts, each of which currently
invests in shares of a specific Fund of State Farm Variable Product Trust. These
Subaccounts buy and redeem Fund shares at net asset value without any sales
charge. Any dividend from net investment income and distribution from realized
gains from security transactions of a Fund is reinvested at net asset value in
shares of the same Fund. Income, gains and losses, realized or unrealized, of a
Subaccount are credited to or charged against that Subaccount without regard to
any other income, gains or losses of State Farm. Assets equal to the reserves
and other contract liabilities with respect to each Subaccount are not
chargeable with liabilities arising out of any other business or account of
State Farm. If the assets exceed the required reserves and other liabilities,
State Farm may transfer the excess to its general account.

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<PAGE>

The Variable Account may include other Subaccounts that are not available
under the Policy and are not otherwise discussed in this prospectus. State Farm
may substitute another subaccount or insurance company separate account under
the Policy if, in State Farm's judgment, investment in a Subaccount should no
longer be possible or becomes inappropriate to the purposes of the Policies, or
if investment in another subaccount or insurance company separate account is in
the best interest of Owners. No substitution may take place without notice to
Owners and prior approval of the SEC and insurance regulatory authorities, to
the extent required by the 1940 Act and applicable law.

THE TRUST. State Farm Investment Management Corp. ("SFIM"), a wholly owned
subsidiary of State Farm Mutual Automobile Insurance Company, serves as
investment adviser to the Trust. SFIM has engaged Barclays Global Fund Advisors
as the investment sub-adviser to provide day-to-day portfolio management for the
Large Cap Equity Index Fund, the Small Cap Equity Index Fund, and the
International Equity Index Fund. Please see the accompanying prospectus for the
Trust for more information concerning the investment adviser and investment
sub-adviser.

VOTING OF FUND SHARES. State Farm is the legal owner of shares held by the
Subaccounts and as such has the right to vote on all matters submitted to
shareholders of the Funds. However, as required by law, State Farm will vote
shares held in the Subaccounts at regular and special meetings of shareholders
of the Funds in accordance with instructions received from Owners with Policy
Account Value in the Subaccounts.

To obtain voting instructions from Owners, before a meeting of shareholders
of the Funds State Farm will send Owners voting instruction material, a voting
instruction form and any other related material. Shares held by a Subaccount for
which no timely instructions are received will be voted by State Farm in the
same proportion as those shares for which voting instructions are received.
Should the applicable federal securities laws, regulations or interpretations
thereof change so as to permit State Farm to vote shares of the Funds in its own
right, State Farm may elect to do so.

State Farm may, if required by state insurance officials, disregard Owner
voting instructions if such instructions would require shares to be voted so as
to cause a change in sub-classification or investment objectives of one or more
of the Funds, or to approve or disapprove an investment advisory agreement. In
addition, State Farm may under certain circumstances disregard voting
instructions that would require changes in the investment policy or investment
adviser of one or more of the Funds, provided that State Farm reasonably
disapproves of such changes in accordance with applicable federal regulations.
If State Farm ever disregards voting instructions, State Farm will advise Owners
of that action and of the reasons for such action in the next report to Owners.

TAX CONSIDERATIONS

INTRODUCTION. The following summary provides a general description of the
Federal income tax considerations associated with the Policy and does not
purport to be complete or to cover all tax situations. This discussion is not
intended as tax advice. Please consult counsel or other competent tax advisors
for more complete information. This discussion is based upon State Farm's
understanding of the present Federal income tax laws. State Farm makes no
representation as to the likelihood of continuation of the present Federal
income tax laws or as to how the Internal Revenue Service (the "IRS") may
interpret such laws.

TAX STATUS OF THE POLICY. In order to qualify as a life insurance contract
for Federal income tax purposes and to receive the tax treatment normally
accorded life insurance contracts under Federal tax law, a Policy must satisfy
certain requirements which are set forth in the Internal Revenue Code. Guidance
as to how these requirements are to be applied is limited. Nevertheless, State
Farm believes that a Policy issued on the basis of a standard risk class should
satisfy the applicable requirements. There is less guidance with respect to
Policies issued on a substandard basis (i.e., a premium class involving higher
than

39
<PAGE>

standard mortality risk), and it is not clear whether such a Policy would
satisfy the applicable requirements, particularly if the Owner pays the full
amount of premiums permitted under the Policy. If it is subsequently determined
that a Policy does not satisfy the applicable requirements, State Farm may take
appropriate steps to bring the Policy into compliance with such requirements and
reserves the right to restrict Policy transactions in order to do so.

In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the Variable Account supporting their contracts due to their ability to
exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
the Variable Account assets. There is little guidance in this area, and some
features of the Policies, such as the flexibility of an Owner to allocate
premium payments and Policy Account Values, have not been explicitly addressed
in published rulings. While State Farm believes that the Policies do not give
Owners investment control over Variable Account assets, State Farm reserves the
right to modify the Policies as necessary to prevent an Owner from being treated
as the owner of the Variable Account assets supporting the Policy.

In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. State Farm intends that the
Variable Account, through the Funds, will satisfy these diversification
requirements.

The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.

TAX TREATMENT OF POLICY BENEFITS

IN GENERAL. State Farm believes that the Death Benefit under a Policy
should be excludible from the gross income of the Beneficiary. Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Owner or Beneficiary. Consult a tax
advisor on these consequences.

In recent years, Congress has adopted new rules relating to life insurance
owned by businesses. Any business contemplating the purchase of a new Policy or
a change in an existing Policy should consult a tax advisor.

Generally, the Owner will not be deemed to be in constructive receipt of the
Policy Account Value until there is a distribution. When distributions from a
Policy occur, or when loans are taken out from or secured by (e.g., by
assignment), a Policy, the tax consequences depend on whether the Policy is
classified as a "Modified Endowment Contract."

MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life
insurance contracts are classified as "Modified Endowment Contracts," with less
favorable tax treatment than other life insurance contracts. Due to the
flexibility of the Policies as to premiums and benefits, the individual
circumstances of each Policy will determine whether it is classified as a
Modified Endowment Contract. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy Years. Certain changes in a Policy after it is issued could also cause it
to be classified as a Modified Endowment Contract. A current or prospective
Owner should consult with a competent advisor to determine whether a Policy
transaction will cause the Policy to be classified as a Modified Endowment
Contract. State Farm will monitor the Policies, however, and will attempt to
notify an Owner on a timely basis if it believes that such Owner's Policy is in
jeopardy of becoming a Modified Endowment Contract.

DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as
Modified Endowment Contracts are subject to the following tax rules:

40
<PAGE>

(1) All distributions, including distributions upon surrender and
withdrawals, will be treated as ordinary income subject to tax up to an
amount equal to the excess (if any) of the unloaned Policy Account Value
(Cash Surrender Value for surrenders) immediately before the distribution
plus prior distributions over the Owner's total investment in the Policy at
that time. "Total investment in the Policy" means the aggregate amount of
any premiums or other considerations paid for a Policy, plus any previously
taxed distributions, minus any credited dividends.

(2) Loans taken from or secured by (e.g., by assignment), such a Policy
are treated as distributions and taxed accordingly.

(3) A 10 percent additional income tax is imposed on the amount included
in income except where the distribution or loan is made when the Owner has
attained age 59 1/2 or is disabled, or where the distribution is part of a
series of substantially equal periodic payments for the life (or life
expectancy) of the Owner or the joint lives (or joint life expectancies) of
the Owner and the Owner's Beneficiary or designated Beneficiary.

DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT
CONTRACTS. Distributions from a Policy that is not a Modified Endowment
Contract are generally treated first as a recovery of an Owner's investment in
the Policy and only after the recovery of all investment in the Policy as
taxable income. However, certain distributions which must be made in order to
enable the Policy to continue to qualify as a life insurance contract for
Federal income tax purposes if Policy benefits are reduced during the first 15
Policy Years may be treated in whole or in part as ordinary income subject to
tax.

Loans from or secured by a Policy that is not a Modified Endowment Contract
are generally not treated as distributions.

Finally, neither distributions from nor loans from or secured by a Policy
that is not a Modified Endowment Contract are subject to the 10 percent
additional tax.

POLICY LOANS. In general, interest on a loan from a Policy will not be
deductible. Before taking out a Policy loan, an Owner should consult a tax
advisor as to the tax consequences.

MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by
State Farm (or its affiliates) to the same Owner during any calendar year are
treated as one Modified Endowment Contract for purposes of determining the
amount includible in the Owner's income when a taxable distribution occurs.

POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the Policy
could change by legislation or otherwise. It is possible that any legislative
change could be retroactive (that is, effective prior to the date of the
change). Consult a tax advisor with respect to legislative developments and
their effect on the Policy.

ADDITIONAL INFORMATION

SALE OF THE POLICIES. State Farm VP Management Corp., a subsidiary of State
Farm Mutual Automobile Insurance Company, acts as the principal underwriter of
the Policies. State Farm VP Management Corp. also acts as principal underwriter
for State Farm Life Insurance Company Variable Annuity Separate Account, a
separate account also established by State Farm, and may act as principal
underwriter for other separate accounts established by affiliates of State Farm.
State Farm VP Management Corp. is a corporation organized under the laws of the
state of Delaware in 1996, is registered as a broker-dealer under the Securities
Exchange Act of 1934, and is a member of the National Association of Securities
Dealers, Inc. (the "NASD"). The Policies may not be available in all states. The
Policies are sold by certain registered representatives of State Farm VP
Management Corp. who are also appointed and licensed as State Farm insurance
agents.

41
<PAGE>

Commissions are payable to the broker-dealer under two alternative
commission schedules, depending on which schedule is elected by the registered
representatives. Under the first schedule, commissions will not exceed 40% of
the premiums received up to the Primary Compensation Premium (as defined in
agreements between State Farm VP Management Corp. and its registered
representatives) and 3 of all other premiums received. Under the second
schedule, commissions will not exceed 30% of the premiums received up to the
first Primary Compensation Premium, 15% of the premiums received up to the next
two Primary Compensation Premiums, and 4% of all other premiums received. In
addition, State Farm may pay incentive bonuses or expense reimbursements.

OTHER INFORMATION. State Farm has filed a registration statement under the
Securities Act of 1933 with the SEC relating to the offering described in this
prospectus. This prospectus does not include all the information set forth in
the registration statement. You may obtain the omitted information at the SEC's
principal office in Washington, D.C. by paying the SEC's prescribed fees. The
omitted information is also available at the SEC's Internet site
(http://www.sec.gov).

INSURANCE MARKETPLACE STANDARDS ASSOCIATION. State Farm Life Insurance
Company and State Farm Life and Accident Assurance Company are members of the
Insurance Marketplace Standards Association (IMSA). IMSA is an independent and
voluntary organization created by the American Council of Life Insurance (ACLI)
to improve customer confidence in the life insurance industry. Life insurers
that are members of IMSA agree to meet and maintain high standards of ethical
conduct in their dealings with consumers for individual life insurance and
annuity products.

PREPARING FOR YEAR 2000. Like all financial services providers, State Farm,
in administering the Policies, utilizes systems that may be affected by Year
2000 transition issues and relies on service providers that also may be
affected. State Farm has developed, and is in the process of implementing, a
Year 2000 transition plan, and is confirming that its service providers are also
so engaged. The resources that are being devoted to this effort are substantial.
We are unable to predict the outcome of these efforts; however, as of the date
of this prospectus, it is not anticipated that Owners will experience negative
effects with respect to their Policies as a result of Year 2000 transition
implementation. Business application systems and external interfaces will be
tested, prioritized and remediated as necessary to provide continuous,
uninterrupted service. Our target date for completion is June, 1999 or earlier
for most activities, but there can be no assurance that State Farm will be
successful, or that interaction with other service providers will not impact
State Farm's services at that time.

LITIGATION. State Farm and its affiliates, like other life insurance
companies, are involved in lawsuits, including class action lawsuits. In some
class action and other lawsuits involving insurers, substantial damages have
been sought and/or material settlement payments have been made. Although we
cannot predict the outcome of any litigation with certainty, State Farm believes
that at the present time there are no pending or threatened lawsuits that are
reasonably likely to have a material adverse impact on the Variable Account or
State Farm.

LEGAL MATTERS. The legal matters in connection with the Policy described in
this prospectus have been passed on by Kim M. Brunner, the Senior Vice President
and General Counsel of State Farm. Sutherland Asbill & Brennan LLP of
Washington, D.C. has provided advice on matters relating to the federal
securities laws.

42
<PAGE>

RELATIONSHIPS WITH THE COMPANIES THAT MAINTAIN THE BENCHMARK INDICES.

STANDARD & POOR'S

Standard & Poor's, S&P, S&P 500, Standard & Poor's 500 and 500 are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
State Farm and the Trust. Neither the State Farm Variable Universal Life Policy,
the Large Cap Equity Index Fund, nor the Stock and Bond Balanced Fund (the
"Product and the Funds") is sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P").

S&P makes no representation or warranty, express or implied, to the owners
of the Product and the Funds or any member of the public regarding the
advisability of investing in securities generally or in the Product and Funds
particularly or the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to State Farm and the Trust is the
licensing of certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard to State
Farm, the Trust, the Product, or the Funds. S&P has no obligation to take the
needs of State Farm, the Trust or the owners of the Product or the Funds into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Product or the Funds or the timing of the issuance or sale of
the Product or the Funds or in the determination or calculation of the equation
by which the Product or the Funds are to be converted into cash. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Product or the Funds.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY STATE FARM, THE TRUST, OWNERS OF THE
PRODUCT AND FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES,
AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

FRANK RUSSELL COMPANY

1) The Russell 2000 Index is a trademark/service mark of the Frank Russell
Company. Russell is a trademark of the Frank Russell Company. The Small Cap
Equity Index Fund is not promoted, sponsored or endorsed by, nor in any way
affiliated with Frank Russell Company. Frank Russell Company is not responsible
for and has not reviewed the prospectus for the Small Cap Equity Index Fund nor
any associated literature or publications and Frank Russell Company makes no
representation or warranty, express or implied, as to their accuracy, or
completeness, or otherwise.

2) Frank Russell Company reserves the right, at any time and without
notice, to alter, amend, terminate or in any way change its Index. Frank Russell
Company has no obligation to take the needs of any particular fund or its
participants or any other product or person into consideration in determining,
composing or calculating the Index.

3) Frank Russell Company's publication of the Index in no way suggests or
implies an opinion by Frank Russell Company as to the attractiveness or
appropriateness of investment in any or all securities upon which the Index is
based. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS
TO THE ACCURACY, COMPLETENESS, RELIABILITY, OR

43
<PAGE>

OTHERWISE OF THE INDEX OR ANY DATA INCLUDED IN THE INDEX. FRANK RUSSELL COMPANY
MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE RESULTS OF USE, OF
THE INDEX OR ANY DATA INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF)
COMPRISING THE INDEX. FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED
WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING, WITHOUT
MEANS OF LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA OR ANY SECURITY (OR COMBINATION
THEREOF) INCLUDED THEREIN.

MORGAN STANLEY & CO. INCORPORATED

The Morgan Stanley Capital International Europe, Australia, and Far East
Free (EAFE Free) Index is the exclusive property of Morgan Stanley & Co.
Incorporated ("Morgan Stanley"). Morgan Stanley Capital International is a
service mark of Morgan Stanley and has been licensed for use by the Trust.

The International Equity Index Fund (the "Fund") is not sponsored, endorsed,
sold or promoted by Morgan Stanley. Morgan Stanley makes no representation or
warranty, express or implied, to the owners of this Fund or any member of the
public regarding the advisability of investing in funds generally or in this
Fund particularly or the ability of the Morgan Stanley Capital International
EAFE Free Index to track general stock market performance. Morgan Stanley is the
licensor of certain trademarks, service marks and trade names of Morgan Stanley
and of the Morgan Stanley Capital International EAFE Free Index which is
determined, composed and calculated by Morgan Stanley without regard to the
issuer of this Fund. Morgan Stanley has no obligation to take the needs of the
issuer of this Fund or the owners of this Fund into consideration in
determining, composing or calculating the Morgan Stanley Capital International
EAFE Free Index. Morgan Stanley is not responsible for and has not participated
in the determination of the timing of, prices at, or quantities of this Fund to
be issued or in the determination or calculation of the equation by which this
Fund is redeemable for cash. Morgan Stanley has no obligation or liability to
owners of this Fund in connection with the administration, marketing or trading
of this Fund. ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN
OR FOR USE IN THE CALCULATION OF THE INDEX FROM SOURCES WHICH MORGAN STANLEY
CONSIDERS RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE
ACCURACY AND /OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN.
NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE TRUST, THE TRUST'S CUSTOMERS AND
COUNTERPARTIES, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED
HEREUNDER OR FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES
ANY EXPRESS OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.

EXPERTS. The statutory basis statements of admitted assets, liabilities and
surplus of State Farm Life Insurance Company as of December 31, 1998 and 1997,
and the related statutory basis statements of income and changes in surplus, and
cash flows for the years then ended, appearing in this prospectus have been
audited by PricewaterhouseCoopers LLP, independent accountants, with offices in
Chicago, Illinois, whose report thereon is set forth elsewhere herein, and are
included in reliance upon the authority of such

44
<PAGE>

firm as experts in accounting and auditing. As stated in their report, State
Farm prepared these financial statements in conformity with the accounting
practices prescribed or permitted by the Insurance Department of the State of
Illinois (statutory basis), which practices differ from generally accepted
accounting principles (GAAP). The effect on the financial statements of the
variances between the statutory basis of accounting and GAAP, although not
reasonably determinable, are presumed to be material. Therefore, their report
contains a qualified opinion on the financial statements of State Farm in
conformity with GAAP, but an unqualified opinion in conformity with statutory
basis accounting. Actuarial matters included in this prospectus have been
examined by Gerry Brogla, F.S.A., Actuary of State Farm, whose opinion is filed
as an exhibit to the registration statement.

FINANCIAL STATEMENTS. The audited statutory basis statements of admitted
assets, liabilities and surplus of State Farm Life Insurance Company as of
December 31, 1998 and 1997, and the related statutory basis statements of income
and changes in surplus, and cash flows for the years then ended, as well as the
Report of the Independent Accountants, appear in Appendix B. The financial
statements of State Farm should be considered only as bearing on our ability to
meet our obligations under the Policies. THEY SHOULD NOT BE CONSIDERED AS
BEARING ON THE INVESTMENT PERFORMANCE OF THE ASSETS HELD IN THE VARIABLE
ACCOUNT.

The audited statutory basis statements of admitted assets, liabilities and
surplus of the Variable Account as of December 31, 1998, and the related
statutory basis statements of income and changes in surplus, and cash flows for
the year then ended, as well as the Report of the Independent Accountants, also
appear in Appendix B.

45
<PAGE>

APPENDIX A
EXAMPLE OF SURRENDER CHARGES

<TABLE>
<CAPTION>
POLICY ISSUED TO MALE AGE 35
------------------------------ POLICY ISSUED TO MALE AGE 50
$50,000 INCREASE ---------------------------------
POLICY $100,000 IN BASIC AMOUNT, $50,000 INCREASE
YEAR INITIAL POLICY $100,000 IN BASIC AMOUNT,
- --------------- POLICY BASIC BEGINNING OF INITIAL BEGINNING OF
BEGINNING MONTH AMOUNT YEAR 16 (AGE 50) BASIC AMOUNT YEAR 16 (AGE 65)
- --------------- ----------- ----------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
1 1 $ 21.50* $ 0.00 $ 53.00* $ 0.00
1 6 129.00 0.00 318.00 0.00
1 12 258.00 0.00 636.00 0.00
2 6 387.00 0.00 954.00 0.00
2 12 516.00 0.00 1,272.00 0.00
3 1 516.00 0.00 1,272.00 0.00
4 1 516.00 0.00 1,272.00 0.00
5 1 516.00 0.00 1,272.00 0.00
6 1 516.00 0.00 1,272.00 0.00
7 1 412.80 0.00 1,017.60 0.00
8 1 309.60 0.00 763.20 0.00
9 1 206.40 0.00 508.80 0.00
10 1 103.20 0.00 254.40 0.00
11 1 0.00 0.00 0.00 0.00
12 1 0.00 0.00 0.00 0.00
13 1 0.00 0.00 0.00 0.00
14 1 0.00 0.00 0.00 0.00
15 1 0.00 0.00 0.00 0.00
16 1 0.00 26.50* 0.00 40.42*
16 6 0.00 159.00 0.00 242.50
16 12 0.00 318.00 0.00 485.00
17 6 0.00 477.00 0.00 727.50
17 12 0.00 636.00 0.00 970.00
18 1 0.00 636.00 0.00 970.00
19 1 0.00 636.00 0.00 970.00
20 1 0.00 636.00 0.00 970.00
21 1 0.00 636.00 0.00 970.00
22 1 0.00 508.80 0.00 776.00
23 1 0.00 381.60 0.00 582.00
24 1 0.00 254.40 0.00 388.00
25 1 0.00 127.20 0.00 194.00
26 1 0.00 0.00 0.00 0.00
</TABLE>

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

* In this example, the Surrender Charge increases by approximately this amount
each month through the first 2 years after issue or increase. The Surrender
Charge then remains level through the end of the 6th year. Starting at the
beginning of the 7th year after issue or increase, the surrender charge
decreases by 1/5 at the beginning of each year, until it is zero in the 11th
year.

46
<PAGE>

APPENDIX B

STATE FARM LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY)
REPORT ON AUDITS OF FINANCIAL STATEMENTS STATUTORY BASIS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

STATE FARM LIFE INSURANCE COMPANY VARIABLE LIFE SEPARATE ACCOUNT
REPORT ON AUDITS OF FINANCIAL STATEMENTS STATUTORY BASIS
FOR THE YEAR ENDED DECEMBER 31, 1998

[TO BE ADDED BY AMENDMENT]

47
<PAGE>

Part II

1
<PAGE>

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

RULE 484 UNDERTAKING

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant 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
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

Illinois Business Corporation Act Chapter 805 Section 5/8.75 is a
comprehensive provision that defines the power of Illinois corporations to
provide for the indemnification of its officers, directors, employees and
agents. This Section also authorizes Illinois corporations to purchase and
maintain insurance on behalf of directors, officers, employees or agents of the
corporation.

The Articles of Incorporation, as amended, and the Bylaws of State Farm
Life Insurance Company do not provide for the indemnification of officers,
directors, employees or agents of the Company.

REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)

State Farm Life Insurance Company hereby represents that the fees and
charges deducted under the Policy, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred, and the risks
assumed by State Farm Life Insurance Company.

2
<PAGE>

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents:

The facing sheet.
The prospectus consisting of ___ pages.
Undertaking to file reports.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons: Kim M. Brunner, Esq.,
Gerry Brogla, F.S.A., Coopers & Lybrand L.L.P., and Sutherland, Asbill &
Brennan LLP
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:

1.
A.
(1) Resolution of the Board of Directors of State Farm Life Insurance
Company establishing State Farm Life Insurance Company Variable
Life Separate Account 1
(2) Not Applicable
(3) (a) Not Applicable
(b) Form of Distribution Agreement 2
(c) Not Applicable
(4) Not applicable
(5) (a) Specimen Flexible Premium Variable Universal Life
Insurance Policy 1
(b) Policy Riders and Endorsements 1
(6) (a) Articles of Incorporation of State Farm Life Insurance
Company 1
(b) By-laws of State Farm Life Insurance Company 1
(7) Not applicable
(8) Form of participation agreement 2
(9) Not applicable
(10) Application form 3
(11) Description of issuance, transfer and redemption procedures 3
(12) Powers of Attorney 2

B. Not applicable

C. Not applicable

3
<PAGE>

2. Opinion and consent as to the legality of the securities being
registered 3

3. Not applicable

4. Not applicable

5. Not applicable

6. Opinion and consent of Gerry Brogla, F.S.A. as to actuarial matters
pertaining to the securities being registered 3

7. (a) Consent of Independent Accountants (to be filed by amendment)
(b) Consent of Sutherland, Asbill & Brennan LLP (to be filed by
amendment)

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

1. Incorporated herein by reference to the initial registration statement on
Form S-6 (File No. 333-19521), filed on behalf of State Farm Life Insurance
Company Variable Life Separate Account on January 10, 1997.

2. Incorporated herein by reference to Pre-Effective Amendment No. 1 to a
Registration Statement on Form N-4 (File No. 333-19189), filed on behalf of
State Farm Life Insurance Company Variable Annuity Separate Account with the
Securities and Exchange Commission on October 10, 1997.

3. Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
registrant's registration statement on Form S-6 (File No. 333-19521),
filed with the Securities and Exchange Commission on January 30, 1998.

4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant,
State Farm Life Insurance Company Variable Life Separate Account, has duly
caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed
and attested, all in the City of Bloomington and the State of Illinois, on
this 4th day of February, 1999.

State Farm Life Insurance Company
Variable Life Separate Account
(Registrant)

(SEAL)
By: State Farm Life Insurance Company
(Depositor)

Attest: /s/ Terry L. Huff By: *
----------------- ---------------
Terry L. Huff Edward B. Rust, Jr.
President
State Farm Life Insurance Company

<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.

Signature Title Date
- --------- ----- ----

* President and Director ---------
- ------------------ (Principal Executive Officer)
Edward B. Rust, Jr.

* Executive Vice President and Director ---------
- ------------------
Roger B. Tompkins

* Vice President and Controller ---------
- ------------------ (Principal Accounting Officer)
Dale R. Egeberg

* Director, Vice President and Actuary ---------
- ----------------- (Principal Financial Officer)
Darrell W. Beernink

* Director ---------
- ----------------
Marvin D. Bower

* Director ---------
- ----------------
Wendy L. Gramm

* Director ---------
- ----------------
Roger S. Joslin

Director ---------
- ----------------
W. H. Knight, Jr.

* Director and Senior Vice President ---------
- ----------------
Kurt G. Moser

* Director ---------
- ----------------
George L. Perry

Director ---------
- ----------------
Susan M. Phillips

Director ---------
- ----------------
Jerry Porras

* Director ---------
- ------------------
Vincent J. Trosino

* Director ---------
- -----------------
Charles R. Wright

* By /s/ Terry L. Huff 2/4/99
--------------------------- ----------
Terry L. Huff Date
Pursuant to Power of Attorney